Jayant M. Patel, J.

1. As in the present group of appeals, substantial questions of law, to some extent, are interconnected and they are also common in certain group, they are being considered simultaneously. We may record that in order to appreciate the respective questions formulated in the respective matters, the questions can be reformulated and thereafter based on the answer, in facts of each case, the ultimate decision can be recorded. In our view, mainly two substantial questions of law would arise in the present group of matters as referred to hereinafter and to be specific in the first group of matter, comprising of Tax Appeal No. 20 of 2001, IT Ref. No. 28 of 2000, IT Ref. No. 25 of 2003, IT Ref. No. 74 of 1996 and IT Ref. No. 141 of 1996, following question would be required to be considered : ‘Whether on facts and circumstances of the case, the Tribunal has substantially erred in law in holding that since some or all beneficiaries of the trust are discretionary trust, to the extent of share of beneficiary as discretionary trust, the tax can be charged at the maximum marginal rate under s. 164 and not under s. 161 of the IT Act, 1961 (hereinafter referred to as the, ‘Act’).

2. Whereas, in the second group of IT Ref. No. 42 of 2000, IT Ref. No. 43 of 2000, IT Ref. No. 44 of 2000 and Tax Appeal No. 141 of 2001, the substantial question of law which may be required to be considered, would be as under :

“Whether on facts and circumstances of the case, the Tribunal was right in taxing income of the assessee holding it as real income of the assessee ?”

3. The relevant facts in brief in each of the group can be summarized as under :

“Tax Appeal No. 20 of 2001

The appeal is preferred against the order of the Tribunal dt. 18th April, 2000 in ITA No. 2795 and 2772/Ahd/1986. Initially, AO assessed the appellant-trust as discretionary trust under s. 164 of the Act and charged the tax at the maximum marginal rate. The matter was carried in appeal before the CIT(A) who confirmed the order of AO. The matter was further carried in appeal before the Tribunal and the Tribunal held that the income to the extent of 60.5 per cent which was allocated to the beneficiary trust can be taxed at the maximum marginal rate while the income to the extent of 39.5 per cent which was allocated to the another beneficiary is to be treated in tax under s. 161 of the Act. Against the said decision of the Tribunal, the present appeal.

IT Ref. No. 28 of 2000

The AO, after examining the various aspects of the case, held the status of the assessee to be discretionary trust and assessed the tax at the maximum marginal rate by applying provisions of s. 164(1) of the Act. The matter was carried in appeal and the CIT(A) confirmed the order of AO. The matter was further carried in appeal before the Tribunal and the Tribunal reversed the order of the first appellate authority and directed the AO to treat the assessee as specific trust against which, the present reference by the Revenue.

IT Ref. No. 25 of 2003

The AO found that the assessee trust is a discretionary trust and, therefore, charged tax at the maximum marginal rate under s. 164 of the Act. The matter was carried in appeal and the CIT(A) confirmed the order passed by the AO The matter was further carried in appeal before the Tribunal and the Tribunal held that s. 164 of the Act would not apply and found that the trust is still specific and consequently, for the purpose of tax, the effect of the order of the Tribunal is that tax will be leviable under s. 161 of the Act. Under the circumstances, the present reference before this Court for applicability of s. 164 or 161 of the Act to the assessee.

IT Ref. No. 74 of 1996

The AO held that the trust cannot be treated as specific trust and will have to be regarded as discretionary trust liable to tax at the maximum marginal rate. The matter was carried in appeal before CIT(A) and CIT(A) confirmed the order of the AO. The matter was further carried before the Trib