1996 (8) TMI 57

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....the Commissioner of Income-tax (Appeals) who directed to make two separate assessments for the periods from January 1, 1981, to June 30, 1981, and July 1, 1981, to December 31, 1981 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the order of the Commissioner of Income-tax (Appeals) who held that the first trust executed on August 1, 1978, was validly extinguished on July 1, 1981 ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the trust created on July 1, 1981, could not be said to be unlawful not to apply the provisions of section 161 of the Income-tax Act, 1961 ? " The brief facts giving rise to this refer....

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....s of the trust who had their shares were as under : (1) Smt. Karuna Bansal, w/o. Dharampal Bansal, (2) Kumari Sheetal Bansal, and (3) Master Rajnish Bansal. This trust continued for the assessment year 1981-82. The assessment was duly completed and the beneficiaries were directly taxed under section 161 of the Act. This trust came to an end on June 30, 1981, and an intimation to this effect was given to the Income-tax Officer, Bhilai, on July 30, 1981. Another trust was created by Bhawarlal Surana on July 1, 1981, under the deed of settlement executed on the same date, in the name and style of Dharampal Family Trust, appointing Dharampal Bansal and Smt. Karuna Bansal as trustees. The beneficiaries of this trust were as under : ....

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.... and consent to the same. But that is not the case here. As the trust had not been extinguished either in terms of section 78 of the Trusts Act, or otherwise also, no useful purpose would be served in giving a finding that the trust survives, for the reason that all the corpus of the trust was withdrawn and then invested in another trust which had been created in 1981. The Tribunal in this background has affirmed the finding of the Commissioner of Income-tax (Appeals) where the Commissioner of Income-tax (Appeals) has observed that the Inspecting Assistant Commissioner (Assessment) should make two separate assessments --- one for the period from January 1, 1981, to June 30, 1981, and the other for the period from July 1, 1981, to December 3....