2001 PLP 2802 (PTD)

S.H. KAPADIA, J.‑‑‑At the instance of the Department, the Income‑tax Appellate Tribunal has referred the following question of law for the opinion of this Court for the assessment year 1978‑79 under section 256(1) of the Income Tax Act, 1961: "Whether, on the facts and in the circumstances of the case, and having regard to the terms of the trust deed, dated May 5, 1973, the Tribunal was right in law in holding that the assessee‑trust in not a discretionary trust and consequently the provisions of section 164(1) of the Income Tax Act, 1961, are not applicable?" The assessee claimed before the Income‑tax Officer that the section 164(1) of the Income Tax Act, 1961 ("the Act"), was not applicable in the case of the assessee‑trust. The Income‑tax Officer did not agree with the claim of the assessee. Being aggrieved, the assessee carried the matter before the Commissioner of Income‑tax (Appeals), who allowed the claim of the assessee. The Commissioner of Income‑tax (Appeals) found that the trust was created by Mrs. Suneeti Raje A. Apte on May 9, 1973; that the beneficiaries finder clause 5(b) of the deed were persons who are known and whose shares were specified. Under the above circumstances, the Commissioner of Income‑tax (Appeals) allowed the claim of the assessee, Being aggrieved, the Department came in appeal before the Income‑tax Appellate Tribunal (the "Tribunal"). Before the Tribunal, the learned representative of the assessee relied upon the order of the Tribunal in I.T.A. No.3103/Bom. of 1980, dated August 24, 1981, in the case of the same assessee wherein the claim of the assessee was allowed. Following the order of the Tribunal in the case of the same assessee for the earlier year 1977‑78, the view taken by the Commissioner of Income‑tax (Appeals) came to be confirmed. Under the above circumstances, reference has come before this Court for opinion. At the outset, it may be mentioned that the order of the Tribunal in respect of the earlier assessment year 1977‑78 has not been annexed to the paper book. As stated hereinabove, the above question referred for opinion of this Court in the present reference concerns the assessment year 1978‑79. The trust was created on May 9, 1973. The beneficiaries to the income are specified persons having determined shares. The income of the trust for the assessment year 1978‑79 has been distributed to three beneficiaries. The beneficiaries have included their shares of income in their individual returns and have paid taxes thereon. Following the order of the Tribunal in the case of this very assessee for the earlier assessment year 1977‑78 the order of the Commissioner of Income‑tax (Appeals) was confirmed by the Tribunal in the present case. Situated thus, there is no material before us to hold $hat section 164(1) of the Act is applicable in the present case. To repeat, the order of the Tribunal for the earlier assessment year 1977‑78 has also not been placed before this Court. Hence, the above question is answered in the affirmative and against the Department. The reference is disposed of accordingly with no order as to costs M.B.A./286/FC Order accordingly.