Income-tax Officer VS K. C. Trust

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD
Accountant Member , Judicial Member , R.M. Mehta , R.L. SANGANI
Income-tax Officer -Appellant
Versus
K.C. Trust -Respondent
INCOME-TAX APPEAL NOS. 2409 AND 2410 (AHD.) OF 1987
Decided On : 03-06-1991

ORDER

R. L. Sangani, Judicial Member - These three appeals, two by the Department and one by the assessee, were hearted together with the consent of the parties and are being decided by this common order.

Income-tax Appeal No. 2410/Ahd/1987; Assessment year 1984-85

1. The assessee is K.C. Trust, Ahmedabad of which the following are the beneficiaries:

1. Fakirchand & Sons HUF	10 per cent
2. Fakirchand M. HUF	10 per cent
3. Ahokkumar A. HUF	10 per cent
4. Mahavirprasad A. HUF	10 per cent
5. Mahavirprasad Avishkri Huf	10 per cent
6. Anshulkumar A.	14 per cent
7. Anita w/o Ashokkumar	14 per cent
8. Rajeshkumar Dalipchand	7 per cent
9. Krishorchand F. Trust	15 per cent

It would be seen from the above table that eight beneficiaries are either individuals or HUFs and share of each of those beneficiaries was determinate. The total share of these eight beneficiaries come to 85 per cent. The balance 15 per cent share is in favour of Kishorechand Family Trust which is a discretionary trust. 15 per cent of the income came to Rs. 39,555. On this the ITO charged tax at maximum marginal rate. The assessee filed appeal before the Commissioner (Appeals) who allowed the same. The Department is now in appeal before the Tribunal.

2. The submission of the learned counsel for the assessee is that Kishorechand Family trust was created by will and as such proviso to section 164 would be applicable as far as assessment of the income receivable by that trust was concerned and under the said proviso the income would not be chargeable at maximum rate. The submission on behalf of the Department is that no such plea had been raised before the ITO and as such the said plea could not be considered.

3. We have considered that rival submissions. We find that no such plea had been raised before the ITO. However, in the written submission before the Commissioner (Appeals) this plea was raised. The Commissioner (Appeals) has not discussed the relevant aspects in their proper perspective. He has disposed of the appeal by making the following observations:

"The relevant portions of the trust deed have also been discussed. The will of Shri Kishorechand Kesairmal Jain which has been brought on record has also been discussed. In this background, I hold that the finding of the ITO in his order that the share income of Kishore Chand Family Trust should be taxed at maximum marginal rate treating it as discretionary trust is,. therefore, legally wrong and unwarranted."

The learned counsel for the assessee admitted before us copy of the will had not been produced before the ITO. It is, thus, clear that the ITO had no occasion to consider the will in question. In the circumstances, it is admitted before us that proper course would to restore the matter to the ITO with direction to consider the will by which Kishorechand Family Trust is said to have been created. We accordingly, restore the matter to the ITO with direction that he would give opportunity to the assessee to produce the will by which Kishorechand Family Trust is said to have been created. The ITO would examine the will and then decide the point in controversy in accordance with law after giving reasonable opportunity of being heard to the assessee. We do not express any opinion one way or the other on the point in controversy in this order.

Income-tax Appeal No. 2409/Ahd/1987; Assessment year 1984-85

4. The assessee (K.C. Trust Ahmedabad) had paid interest to various parties. Out of this interest Rs. 1,28,606 had been paid to 25 parties and in case of each of these parties the amount exceeded Rs. 1,000 and the assessee did not deduct tax at source nor did it obtain Form No. 15A from the parties to whom the interest was paid. According to the ITO, the assessee trust was required to deduct tax on the amount of Rs. 1,28,606 under section 194A of the Act but the assessee failed to do so and thereby committed defau

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INCOME TAX APPELLATE TRIBUNAL, AHMEDABADAccountant Member , Judicial Member , R.M. Mehta , R.L. SANGANIIncome-tax Officer -AppellantVersusK.C. Trust -RespondentINCOME-TAX APPEAL NOS. 2409 AND 2410 (AHD.) OF 1987Decided On : 03-06-1991

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INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD
Accountant Member , Judicial Member , R.M. Mehta , R.L. SANGANI
Income-tax Officer -Appellant
Versus
K.C. Trust -Respondent
INCOME-TAX APPEAL NOS. 2409 AND 2410 (AHD.) OF 1987
Decided On : 03-06-1991