TaxTMI 
TaxTMI 
1996 (3) TMI 25
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....er of the said Tribunal : " Whether, on the facts and in the circumstances of the case, the provisions of section 161(1) of the Income-tax Act, 1961, were applicable and the assessee could not be assessed as an association of persons ? " The applicant is a private trust which was created by the settlor, Neelam Chand Berdia, vide a registered settlement deed on November 26, 1979. The trust was formed with a capital of Rs. 1,000 for the benefit of seven persons of whom two were major and five were minor children. The relevant clauses of the settlement deed read as follows : " 2. For effecting the settlement, he, the settlor, doth hereby transfer and assign up to the trustees all the said sum of Rs. 1,000 (rupees one thousand only) by....
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....by intimation of his retirement to the trustees before the expiry of determination of the trust, the share of income due to the deceased/retiring beneficiary shall be payable equally to all the surviving beneficiaries. Provided also that in case where the beneficiary No. 4, i.e., Miss Jyoti Berdia, gets married before the determination of the trust, her share in the income assets and the trust fund shall cease and that share shall be payable equally to all the surviving beneficiaries. Provided further that where any money is advanced by any beneficiary or his/her guardian on behalf of the beneficiary as a loan for any business of the trust, interest shall be allowed on such money at such rate as may be agreed upon before determining t....
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....in the status of an association of persons. We have heard learned counsel for the parties and perused the record. In N. P. Saraswathi Ammal v. CIT [1982] 138 ITR 19, their Lordships of the Madras High Court have observed : " Body of individuals is a new classification in the fiscal statute. Right from 1939, if not from 1922 onwards, the Income-tax Act had known and recognised the distinct category of taxpayers going by the name of association of individuals or association of persons. Although the expressions were left undefined, courts used to associate this class of persons with certain attributes, chief amongst which was their being associated in a common endeavour for producing taxable income. This at once excluded from the categor....
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.... individuals concerned may have something or other in common which brings them together with reference to an income or its source ; it may be common intention ; it may be common holding out ; or it may be a sharing of common spoils, The list is not exhaustive. Nor is it necessary that all these characteristics must be present in every case. Much might depend on the relationship in the gross to the income or to the income yielding asset in question. " In the case in hand, it is clear that in accordance with the terms of the settlement deed, the beneficiaries had no role to play in the business carried on by the trust and the entire income was to remain with the trust till its distribution as expressed in clause 4(a) of the settlement deed....