2004 (4) TMI 59

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.... Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "the Tribunal"), vide its common order dated April 25, 1988, has allowed the applications filed by the Revenue under section 256(1) of the Income-tax Act, 1961 (for short "the Act"), and has referred the following question of law in all the three cases for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that there is no legal infirmity in so far as this trust is concerned and that it could not be treated as a discretionary one to be assessed as per the provisions of section 164 of the Income-tax Act, 1961?" Kartar Kaur Trust (Regd.) was created by a deed dated February 24, 19....

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....assessments for the two assessment years with a direction to the Income-tax Officer to re-examine the same. Pursuant to the order of the Commissioner, fresh assessment for the assessment year 1981-82 was framed by the Income-tax Officer on September 27, 1983, by holding that the share of the beneficiaries being indeterminate, the income of the trust was liable to be taxed in its hands at the maximum marginal rate as provided in section 164(1) of the Act. The assessee preferred an appeal before the Appellate Assistant Commissioner of Income-tax, Ludhiana, who allowed the same holding that since the original trust deed was valid, the shares as defined therein were also valid. Accordingly, it was held that the shares of the beneficiaries be....

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....d that all the children of the three sons of Gurmail Kaur were entitled to the benefits of the entire trust property in equal share per stirpes. In other words, one-third share was to be shared equally by the existing children of each of the three sons. Thus, in so far as the trust deeds are concerned, the shares of the beneficiaries were clearly determinate. The only ground on which the Revenue has treated these trusts as discretionary trusts is that the trustees had distributed the income of the trusts only to six beneficiaries while no share was given to some of the other beneficiaries. In other words, what is contended is that since the income has not been distributed to all the beneficiaries in accordance with their shares as specified....