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<h1>Supreme Court rules on Revenue's appeals regarding discretionary trusts distribution</h1> The Supreme Court allowed the Revenue's appeals against the Gujarat HC's judgment on distributions from discretionary trusts. The first question was ... Assessment of distributions from discretionary trusts - taxability under section 164 of the Incometax Act, 1961 - exemption of trust distributions where source is dividends exempt under section 80K - remand for fresh considerationAssessment of distributions from discretionary trusts - taxability under section 164 of the Incometax Act, 1961 - Whether distributions received by the assessee from various discretionary trusts were assessable only in the hands of the trustees under section 164 and not in the hands of the assessee - HELD THAT: - The High Court had held that such distributions were assessable only in the hands of the trustees and not in the hands of the assessee. This Court, however, agreed with the Revenue that the High Court's conclusion must be reversed in view of the decision in CIT v. Kamalini Khatau [1994] 209 ITR 101. The Court answered the question against the High Court's view and in favour of the Revenue, thereby displacing the High Court's finding that the distributions were assessable solely in the hands of the trustees under section 164.Answered in the negative; the High Court's conclusion is reversed in favour of the Revenue.Exemption of trust distributions where source is dividends exempt under section 80K - remand for fresh consideration - Whether the amount received by the assessee from various discretionary trusts is exempt from tax because it was paid out of dividends received by the trusts which were exempt under section 80K - HELD THAT: - The High Court declined to decide this question because of its earlier answer to the first question. Having reversed the High Court's answer to the first question, this Court remitted the matter to the High Court to consider and answer question No.2 alone in accordance with law. No determination on the merits of the exemption under section 80K was made by this Court; the question is left for fresh consideration by the High Court.Remitted to the Gujarat High Court for consideration and answer in accordance with law.Final Conclusion: Appeals allowed in part: the High Court's conclusion on assessability under section 164 is reversed in favour of the Revenue; the question concerning exemption under section 80K is remitted to the High Court for determination. No costs. The Supreme Court allowed the Revenue's appeals against the Gujarat High Court's judgment regarding distributions from discretionary trusts. The first question was answered in favor of the Revenue, following a previous court decision. The second question was remitted back to the High Court for consideration. Appeals were allowed in part, and the matters were sent back to the High Court with no costs.
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