Private specific trust beneficiaries with fixed shares are not an Association of Persons for tax assessment.

Beneficiaries of a private specific trust, whose shares are known and fixed under the trust deed, cannot be assessed as an Association of Persons where they have not come together to earn income from the trust property. The court treated the trust as a private specific trust and held that the beneficiaries' entitlement to income in definite proportions did not create the joint association needed for AOP status. The referred question was answered in the affirmative, in favour of the assessee and against the Revenue.

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Issues: Whether the beneficiaries of a private trust, whose shares are known and certain under the deed of trust, can be treated as an Association of Persons for assessment purposes.

Analysis: The trust was found to be a private specific trust and the beneficiaries were entitled to receive income in fixed proportions under the trust deed. They had not joined together or associated themselves for the purpose of earning income from the trust property. In such circumstances, the beneficiaries could not be regarded as an Association of Persons.

Conclusion: The answer to the referred question was in the affirmative, in favour of the assessee and against the Revenue.

Ratio Decidendi: Beneficiaries of a private specific trust with known and certain shares, who have not associated themselves to earn income, cannot be assessed as an Association of Persons.

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