1983 (4) TMI 19

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....d on April 8, 1975, was not merely clarificatory/declaratory of pre-existing state of things but it modified and changed the basic structure of a trust and could be invoked only for subsequent period and not for the earlier period ?  (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the requirements of the two beneficiaries would be unequal? " The facts giving rise to this reference briefly stated are as follows The assessee is a family trust. The assessment years involved are 1974-75 and 1975-76. The accounting year for the assessment year 1975-76 ended on March 31, 1975. The ITO held that the shares of the beneficiaries of the trust were indeterminate and, therefore....

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....ere are more beneficiaries than one and they must not execute the trust for the advantage of one at the expense of the other. However, from this provision it cannot be contended that the interest of beneficiaries, which was indeterminate according to the trust deed, becomes determinate. Moreover, the trust has already been executed in regard to the assessment years in question before the execution of the rectification deed and, therefore, it is difficult to appreciate how the rectification deed can be given retrospective effect. The rectification deed, therefore, cannot have any effect on the assessment of the assessee for the assessment years in question, the accounting year of the last assessment year, as stated above, having expired befo....

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....ties whose requirements were equal and, therefore, their interest in the trust property may be treated as equal. But in the present case the requirement of the beneficiaries, who are the mother and the son and one of them being major and the other minor, were unequal and, therefore, it cannot be held that their interest in the trust property was equal. This really relates to a question of fact and not a question of law. Paragraph 5 of the trust deed provides that the credit balance in favour of the beneficiaries shall be utilised for their benefit alone jointly or severally as required by the first beneficiary (mother) and for the education of the second beneficiary (minor son) and incidental expenses and for such other purposes as the t....