( 1 ) THE Tribunal, Allahabad has referred the following question of law under Section 256 (1) of the IT Act, 1961 (hereinafter referred to as "the Act") for opinion to this Court :

"whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding the assessee trust to be a valid one in spite of the fact that the trust, deed did not provide for the eventuality of both the minor beneficiaries expiring before attaining majority ?"

( 2 ) THE reference relates to the asst. yr. 1983-84.

( 3 ) BRIEFLY stated the facts giving rise to the present reference are as follows : the respondent is a trust which had filed its return of income for the first time for the asst. yr. 1983-84 on 20th Jan. , 1986 declaring total income of Rs. 9,105. The return was filed in the status of AOP. The trust was created in the form of a letter dt. 29th March, 1978 which was written by km. Ranjana Mehra to M/s Mehra Hosiery Factory Sales, Lucknow, whereby a sum of Rs. 8,900 was settled in trust in favour of two minor girls as beneficiaries. In the first paragraph of the letter, it was stated that on both the minor attaining majority, the trustees should have a right to dissolve the trust. It was also stipulated that, in the event of one of the minor beneficiaries expiring before attaining majority, the other should become the sole beneficiary. However, the trust document was silent on the point as to what will happen in the event of both the minors expiring before attaining majority. The ITO had held that the trust was invalid because the trust deed did not provide for the eventuality of both the minor beneficiaries expiring before attaining majority. He also noted that the provisions of Section 15 of the Hindu Succession Act would come into play only when the minors attained majority and became absolute owners of the property. Considering all these facts, the ITO had held that the entire income should be assessed in the hands of the settlor and as the settlor was reported to have already expired, in the hands of legal heirs. However, as the trust had offered the income for taxation, the assessment in that case was completed on a protective basis on the same income as disclosed in the return adopting the same status as shown by the respondent. Feeling aggrieved, the respondent preferred an appeal before the AAC, who had rejected the appeal. He had agreed with the findings given by the ITO. Still feeling aggrieved, the respondent preferred second appeal before the Tribunal. The Tribunal has held that it cannot be said that the trust was invalid for uncertainty because the letter dt. 29th march, 1978 clearly stipulates that both the beneficiaries were to enjoy income equally. The tribunal has further held that the status of AOP could not be adopted in the case and the income should be taxed in the hands of the beneficiaries.

( 4 ) WE have heard Sri Shambhoo Chopra, learned standing counsel for the Revenue. Nobody has appeared on behalf of the respondent-assessee.

( 5 ) THE learned standing counsel submitted that as the trust deed did not provide for the eventuality of both the minor girls if they die before attaining majority, the trust was invalid. He further submitted that as the trust was invalid the AO has rightly assessed the entire income at the hands of the settlor. In support of his contention, he has relied upon the following decisions : 1. Chiranjilal Shtilal and Ors. v. CIT CIT v. Atreya Trust, (1992) 193 ITR 716 (Cal)3. Dr. D. E. Anklesharia v. CIT CIT v. Trustee of Keshav Mohta Family Trust.

( 6 ) HE has also referred to the Explanation to Sub-section (3) of Section 164 of the Act and submitted that as the eventuality in case the two minor girls die before attaining majority had not been provided in this deed, it leads to only one conclusion that the trust is not a valid trust and the entire income was liable to tax at the hands of the settlor.

( 7 ) AFTER giving anxious consideration to the various submissi

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