TaxTMI 
TaxTMI 
2008 (9) TMI 917
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.... Section 256 (1) of the Income-tax Act, 1956 (for short 'Act') for A.Y. 1981 - 82 in all the reference applications filed by the revenue, which gave rise to the present Income-tax references. Since identical question is involved in all the Income-tax references, for the sake of convenience, the question is reproduced from I.T.R. No. 01 of 1998 and facts are also taken from the said reference. The question is as under :- Whether the Appellate Tribunal is right in law and on facts in holding that share income of the assessee as a beneficiary from M/s. Bharat Trust / Navbharat Trust, Norma Trust should be assessed on substantive basis ? 2. The responde....
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.... came to the conclusion that all the beneficiaries of the said Trusts were known and their shares were determinate and the income of the Trust has to be computed and apportioned in terms of the provisions of Section 161 (1) of the Income-tax Act, 1961 and their income cannot be subjected or brought to tax at the maximum marginal rate under Section 164 (1) of the Act. It has, therefore, been contended on behalf of the assessee that the income of the main Trust having been allocated amongst the beneficiaries as per Section 161 (1) of the Act, income received in the hands of the beneficiaries deserve to be assessed on substantive basis. In this view of the matter, the Tribunal upheld the order of the first Appellate Authority in the cases of t....
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....e such income has been substantively assessed in the hands of the main Trust, the same income cannot be again assessed in the hands of the beneficiary. However, another Division Bench of this Court wherein one of us (K. A. Puj, J.) was a party did not agree with the view taken by the earlier Division Bench and admitted Special Civil Application No. 7110 of 2002 with Special Civil Application No.7244 to 7257 of 2002 on 14.08.2002 and passed an order that having regard to the order dated 30.07.2001 passed by another Division Bench of this Court in Tax Appeal Nos.188 to 228 of 2001, with which the subsequent Division Bench was not inclined to agree, the petitions were ordered to be listed before a larger Bench after obtaining appropriate order....
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.... of the Assessing Officer, the Commissioner of Income-tax had no jurisdiction to invoke Section 263 and pass the revisional orders contested therein. 11. Being aggrieved by the said order of the Tribunal, the revenue has filed Tax Appeals before this Court and all the tax appeals were disposed of by this Court on 26.06.2008. From amongst these tax appeals, the assessees of the present references are also covered. A detailed chart showing the name of the assessee, assessment year, ITR number, name of the main Trust and corresponding Tax Appeal number is furnished during the course of hearing of these references. The same is as under :- Sr. No. Name Asst. Year ITR No. Name of Main Trust High Court Tax Appeal No. 01. ....
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....arat Trust should be assessed on substantive basis. 13.As against the submission of the respondent - assessee, it was contended on behalf of the revenue that simply because the main Trusts have settled their dispute under KVSS, it does not become automatically the income of the main Trust. The orders passed by the first Appellate Authority and the Tribunal directing to assess the income in the hands of the beneficiaries on substantive basis is just and proper. By taking advantage under KVSS and by paying the tax at a lesser amount, the group as a whole has taken the refund of Crores of Rupees which cannot be permitted in law. Submission is, therefore, made that the reference may be decided accordingly. 14. A contention is also urged b....