Determinable beneficiary shares under a trust deed kept section 164 inapplicable to trustee assessment.

Section 164 of the Income-tax Act applies only where beneficiaries or their shares are indeterminate or unknown. On the trust deed, the beneficiaries were specifically identified and their shares were ascertainable, and later contingencies such as marriage or birth of children did not make those shares uncertain because the deed provided a mechanism for substitution and adjustment. The trustees therefore could not be assessed under section 164. The separate issue on the advance ruling did not survive independently because the Tribunal had relied on binding judicial precedent, not on the ruling as a standalone basis.

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Issues: (i) Whether the trustees of the trust could be assessed under section 164 of the Income-tax Act, 1961, when the beneficiaries were identified and their shares were stated in the trust deed; (ii) Whether the advance ruling referred to by the Tribunal had binding effect in the assessees' case, and whether that question survived for adjudication.

Issue (i): Whether the trustees of the trust could be assessed under section 164 of the Income-tax Act, 1961, when the beneficiaries were identified and their shares were stated in the trust deed.

Analysis: The scheme of Chapter XV of the Income-tax Act, 1961 confines assessment of a representative assessee to the income of the beneficiaries and to the same extent as would be leviable on them. Section 164 applies only where the beneficiaries or their shares are indeterminate or unknown. On the terms of the trust deed, the beneficiaries were specifically described and the shares were ascertainable, even though future contingencies such as marriage or birth of children could alter the number of beneficiaries. Those contingencies did not make the beneficiaries unknown or the shares indeterminate, because the deed itself provided the mechanism for identifying substituted beneficiaries and adjusting shares.

Conclusion: Section 164 was not attracted and the assessment of the trustees under that provision could not be sustained.

Issue (ii): Whether the advance ruling referred to by the Tribunal had binding effect in the assessees' case, and whether that question survived for adjudication.

Analysis: The statutory scheme makes an advance ruling binding only within the limits prescribed by section 245S. The Tribunal, however, did not base its decision on the advance ruling as an independent source of binding authority; it relied on the reasoning of this Court's own decisions on determinate shares and representative assessment. Since the Tribunal's conclusion rested on binding judicial precedent and not on the advance ruling as such, the question of its binding effect did not arise for decision from the order under challenge.

Conclusion: The advance ruling did not furnish a separate binding basis for the Tribunal's decision, and the question framed on its binding effect did not survive for adjudication.

Final Conclusion: The trust deed created identifiable beneficiaries with determinate shares, so the trustees were not liable to be assessed under section 164; the companion issue regarding the advance ruling was academic on the Tribunal's reasoning. The appeals failed.

Ratio Decidendi: Section 164 applies only where the beneficiaries or their shares are indeterminate or unknown; where the trust deed identifies the beneficiaries and the shares are determinable, the trustee can be assessed only in the representative capacity under the provisions governing representative assessees.

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