The main legal point established in the judgment is that the beneficiaries under a trust cannot be equated with an association of persons, and the liability of trustees to income tax is co-extensive with that of the beneficiaries and cannot be a larger liability.

M.P. Chandrakantaraj Urs, J.—We propose to dispose of these petitions by the following common order inasmuch as the questions of law involved are the same.

2. The facts of the cases fall within a narrow compass depending on the trust deeds which are all more or less family trusts. The trusts represented by the trustees have been assessed by the concerned Income Tax Officer under the provisions of sub-section (1) of section 161 of the Income Tax Act, 1961, and the corresponding provisions under the 1922 Act, viz., section 41 of the latter mentioned Act. It is held that as a representative assesses, the trustee or trustees, as the case may be, is/are liable to pay tax to the extent the beneficiary or beneficiaries would be liable and form whom such tax is/are recoverable. The Commissioner of Income Tax, Karnataka, has considered that such assessment orders are prejudicial to the interests of the Revenue and has, therefore, set aside the orders of assessment and directed the Income Tax Officer to assess the liability of the trustee or trustees in their representative capacity as an association of persons calling upon them to pay tax on the total income of the trust as a single unit. Aggrieved by such orders, the assesses-trustee or trustees preferred appeals to the Income Tax Appellate Tribunal, Bangalore Bench. In all the cases. The Tribunal has set aside the order of the Commissioner holding that the assessments concluded by the Income Tax Officer concerned were correct and did not call for interference by the Commissioner. In those circumstances, the applications made before the Tribunal to get certain questions referred to this court for answer by this court, came to be rejected by the Tribunal. Therefore, the present petitions under sub-section (2) of section 256 seeking a direction calling for reference by the Tribunal stating the cases.

3. Mr. Chander kumar appearing for the Revenue in all the above petitions contended that the question formulated in the first of the petitions above, viz., 501 of 1988, ought to have been referred for consideration by this court in all the petitions with the appropriate statements of cases in each of the petitions.

4. We may, at this stage, mention that, in all the cases, we are concerned with sub-section (1) of section 161 of the Income Tax Act, 1961, (hereinafter referred to as "the Act"). As it stood before the amendment effected on April 1, 1985 by the Finance Act of 1984 to which we will make a reference at the appropriate stage. The thrust of the argument is that the beneficiaries under the trust have the advantage of the income from the trust property or trust money and, therefore, the trust income out of such property or money in the hands of the trustee is liable to be taxed as that of an association of persons carrying on business particularly when such income of the trust is out of the business carried on by the trust which should have been construed as business carried on on behalf of the beneficiaries in the character of an association of persons. He has, in that behalf, placed reliance on the decisions of the Supreme Court in the following cases : N.V. Shanmugam and Co. Vs. The Commissioner of Income Tax, Madras, AIR 1970 SC 1707 , Mohamed Noorullah, Representing The Estate of Late Khan Sahib Mohd. Oomer Sahib Vs. The Commissioner of Income Tax, Madras, AIR 1961 SC 1043 and Commissioner of Income Tax, Bombay Vs. Smt. Indira Balkrishna, (1960) 39 ITR 546 SC.

5. In the first of the cases, the Supreme Court indeed held that the business was carried on by an order of the court in a suit for dissolution of partnership by partners through receivers after the business of the partnership had come to an end by directing the business to be carried on by receivers and income derived was income of the firm the dissolution of which had been sought in the suit and it was so carried on with the consent of the partners and, therefore, it was on behalf of the partners and as such the i