(Appeal by special leave from the judgment and order dated March 29, 1989 of the Gujarat High Court in I.T.A. No.59 of 1989)

Income-tax---

----Reference---Representative assessee---Trust---Discretionary trust-- Whether trustees' resolution to pay income to one beneficiary will alter character of trust---Whether assessment on trust at flat rate of 65 per cent, justified---High Court to examine questions in light of 209 ITR 101---Indian Income Tax Act, 1961, Ss. 161, 164 & 256.

Against the judgment of the High Court refusing to call for a reference of the questions whether the trustees' resolution to pay the income of the assessee-trust to one beneficiary would alter the character of the discretionary trust and whether the assessment, at a flat rate of 65 per cent. under section 164 of the Income Tax Act, 1961 was justified, the Department appealed to the Supreme Court:

The Supreme Court directed the High Court to examine the questions in the light of its ruling in CIT v. Kamalini Khatau (1994) 209 ITR 101 (SC).

J. Ramamurthy, Senior Advocate-(B.S. Ahuja and P. Parmeswaran, Advocates with him) for Appellant.

P.H. Parekh and Ms. Bind Gupta, Advocates for Respondent.

ORDER

Leave granted.

The impugned order of the High Court is set aside. The High Court is requested to examine the question in the light of the judgment of this Court in the case of CIT v. Kamalini Khatau (1994) 209 ITR 101 with reference to the facts of the present case.

The appeal is allowed. No costs.

M.B.A./1848/FC