(a) Income-tax---

----Reference---Question decided by Tribunal following decisions of Supreme Court and High Court---No question of law arises---Indian Income Tax Act, 1961, S. 256(2).

(b) Income-tax---

----Reference---Representative assessee---Trustee---Discretionary trust-- Tribunal correct in holding that assessment could not be made on trust as well as beneficiaries---Tribunal correct in directing Assessing Officer to compute income received on behalf of beneficiary assessee at appropriate rates as envisaged in S.164---No question of law arose for reference---Indian Income Tax Act, 1961, Ss. 164 & 256.

Held, dismissing the application for directing reference, that the Tribunal while considering the appeals of the Revenue, took note of the fact that in all the impugned assessments, the beneficiary assessee had been taxed on maximum rate for the shares of income where the principal trust had also been taxed for the same income. The Tribunal noted that the Supreme Court in the case of Joyotendrashinhji v. Tribpathi (S. I.) (1993) 201 ITR 611, held that the Revenue had an option in the case of a discretionary trust either to make an assessment upon the trustees or to make an assessment upon the beneficiaries and that both the trustees and the beneficiary cannot be simultaneously taxed in respect of the same income. Following the ratio of the said decision, the impugned assessments were set aside. In CIT v. Maharaja Daljitsinhji Trust (1993) 204 ITR 135 (Guj.) and CIT v. Deepak Family Trust (No.l) (1995) 211 ITR 575 (Guj.), the Gujarat High Court held that the mere fact that the beneficiaries or the trustees, being representative assessee, are more than one, cannot lead to the conclusion that they constitute an association of persons. The trustees of a discretionary trust have to be assessed in the status of "individual". Following the said two decisions the Tribunal gave a direction to the Assessing Officer to compute the income received on behalf of the beneficiary assessee at the appropriate rates as envisaged in section 164 of the Income Tax Act, 1961. It was clear that the Tribunal had rendered its decision following the decision of the Supreme Court in Jyontendrasinhji (1993) 201 ITR 611 and the two decisions of the Gujarat High Court, mentioned above and, therefore, no question of law requiring any opinion of the High Court arose from the orders of the Tribunal.

CIT v. Maharaja Kaljitishinhji Trust (1993) 204 ITR 135 (Guj.); CIT v. Deepak Family Trust (No. 1) (1995) 211 ITR 575 (Guj.); Jyotendrasinhji v. Tripathi (S. 1.) (1993) 201 ITR 611 (SC) and McDowell & Co. Ltd. v. CTO (1985) 154 ITR 148; (1995) 59 ITR 277 (SC) ref.

B.B. Nayak instructed by Manish R. Bhatt for Petitioner.

JUDGMENT

R. K. ABICHANDANI, J.---In these identical matters, the Revenue has suggested the following questions in paragraph 4 of the respective applications, seeking a direction to call for the statement of case in respect thereof from the Income-tax Appellate Tribunal under section 256(2) of the Income Tax Act, 1961:

"(1) Whether, the Appellate Tribunal is right in law and on facts in confirming the order passed by the Deputy Commissioner of Income-tax (Appeal) directing the Assessing Officer to levy tax at the normal rate as against the maximum marginal rate applied by the Assessing Officer?

(2) Whether, the Appellate Tribunal is right in law and on facts in confirming the order passed by the Deputy Commissioner of Income-tax (Appeals) holding that the assessee-trust is specific trust?

(3) Whether, the Appellate Tribunal not (ought ?) to have appreciated that a device was adopted with a motive for avoiding tax thereby the ratio of the decision of the Supreme Court in the case- of McDowell & Co.(1985) 154 ITR 148, was applicable?"

The applications which were made under section 256(1) of the Act by the Revenue before the Tribunal for referring these questions, were rejected on the ground that its orders were made following the decisions of the Supreme Court and the jurisdictional High Court and, therefore, no referable question of law would arise.

In all these matters, the Income-tax Officer rejected the claim of the assessee to be charged at the normal rate. The Assessing Officer treated the assessee-trusts as discretionary trusts and charged the maximum marginal rate. The assessees were admittedly beneficiary trusts of the main trust. The first appellate authority held that the Income-tax Officer was not justified in levying the tax at the maximum marginal rate on the assessee and directed to levy tax at the normal rate, allowing their appeals. The Tribunal. while considering the appeals of the Revenue, took note of the fact that in all the impugned assessments, the beneficiary assesssees had been taxed on maximum rate for the shares of income where the principal trust had also been taxed for the same income. The Tribunal noted that the Supreme Court in the case of Jyotendrasinhji v. S. I. Tripathi (1993) 201 ITR 611, hold that the Revenue had an option in the case of a discretionary trust either to make an assessment upon the trustees or to make an assessment upon the beneficiaries and that both the trustees and the beneficiary cannot be simultaneously taxed in respect of the same income. Following the ratio of the said decision, the impugned assessments were set aside. The Tribunal observed that, whether the appeals of the principal trusts are the subject matter of references or appeal before the first appellate authority or the Tribunal, this decision was applicable in all cases because it was not disputed in all these impugned assessments that the principal trust had already been assessed by the Revenue for the said income. In computing the tax payable by the principal trust for the Income received by the beneficiary assessee, the Assessing Officer was directed to compute it at the appropriate rates as envisaged in section 164 of the act, in view of the decisions of this Court in CIT v. Maharaja Daljitsinhji Trust (1993) 204 ITR 135 and CIT v. Deepak Family Trust No. l (1995) 211 ITR 575 in respect of the status. In Deepak Family Trust No. 1 (1995) 211 ITR 575, this Court held that the mere fact that the beneficiaries or the trustees, being representative assessees, are more than one, cannot lead to the conclusion that they constitute an association of persons. The trustees of a discretionary trust have to be assessed in the status of "individual". Following the said two decisions of this Court, the Tribunal gave a direction to the Assessing Officer to compute the income received on behalf of the beneficiary assessees at the appropriate rates as envisaged in section 164 of the Act. It is clear that the Tribunal has rendered its decision following the decision of the Supreme Court in Jyotendrasinhji (1993) 201 ITR 611 and the two decisions of this High Court, and, therefore, no question of law requiring any opinion of this Court arises from the orders of the Tribunal. All these applications are, therefore, rejected. Rule is discharged in each of them with no order as to costs.

M.B.A./4034/FCApplication rejected.