Kunti Trust vs Commissioner of Income Tax

Dr. B.P. Saraf, J.—By this reference u/s 256(1) of the income tax Act, 1961, (''the Act'') made at the instance of the assessee, the following two questions have been referred by the income tax Appellate Tribunal to this Court for opinion : " 1. Whether, on the facts and in the circumstances of the case, the Trustees of the assessee trust are ''representative assessee'' as designed in section 160(1)(iv) of the income tax Act, 1961 ?

Whether, on the facts and in the circumstances of the case, the provisions of section 164 of the income tax Act, 1961, are attracted in the case of the assessee for the accounting periods relevant to the assessment years 1971-72 and 1972-73 ?"

This reference pertains to the assessment years 1972-73 and 1973-74. The trust was created by Shri Y.T. Maneklal as an oral trust for the benefit of his minor daughter Kunti and 250 shares of T. Maneklal Manufacturing Company Limited were transferred to the above trust. Admittedly, the trust was not declared by a duly executed instrument in writing. On 15-9-1971, the terms of the trust were recorded in writing in an instrument by the trustees. The controversy that has been raised in this case is whether the trustees of such a trust can be termed ''representative assessee'' within the meaning of section 160(1)(iv) of the Act. Dr. Balasubramaian, the learned counsel for the revenue, fairly stated before us that though provision has been made in the Act now by incorporation of Explanation 1 in section 160(1) to provide that a trust which is not declared by a duly executed instrument in writing shall be deemed for the purposes of clause 4(1) to be a trust declared by a duly executed instrument in writing, if a statement in writing signed by the trustees setting out the purpose of the trust, particulars of the trustees, the beneficiaries and the trust property is forwarded to the Assessing Officer within time set out therein with effect from 1-4-1981, the said provision would not be applicable to the assessment years 1972-73 and 1973-74 to which this reference pertains. He, therefore, clearly submitted before us that question No. I has to be answered in the negative and in favour of the assessee. We answer question No. 1 accordingly.

It is further stated by the counsel for the parties that in view of the above answer to question No. 1, question No. 2 need not be answered. The question No. 2 is, therefore, returned unanswered. The reference is disposed of accordingly. No order as to costs.