JYOTI FAMILY TRUST vs. COMMISSIONER OF INCOME-TAX

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ITR/109/1997HC GujaratGJHC24020273199730 August 2006Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.S.GARG3 pages

AI SummaryRemanded

What did the High Court hold?

The High Court of Gujarat, acknowledging the submissions of both the assessee and the revenue, noted that the present Tax References were squarely covered by its previous order dated July 13, 2006, in the case of Sanjiv Family Trust vs. C.I.T. Consequently, the Court set aside the orders passed by the Income Tax Appellate Tribunal. The matters were remanded back to the Tribunal with a specific direction to decide them afresh in accordance with law. The Tribunal was granted the liberty to reconsider the entire matter and redetermine the tax liability of the assessee, specifically the beneficiary of the first-level trust. The Tribunal was also permitted to take into consideration judgments in McDowell & Co. Ltd. v. CTO (154 ITR 148), Union of India v. Azadi Bachao Andolan (263 ITR 706), and other cited cases (263 ITR 706, 209 ITR 101, and 231 ITR 540). The Court refrained from making any observations on the merits of the case to avoid prejudicing either party.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad 'A' Bench, referred three Income Tax References (Nos. 108, 109, and 110 of 1997) to the High Court of Gujarat. These references arose from Income Tax Appeal Nos. 1444-1445/Ahd/92, 1442-1443/Ahd/92, and 1440-1441/Ahd/92, concerning assessment years 1985-86 and 1986-87. The core issue revolved around whether the assessee trust was a discretionary family trust liable to be taxed at the maximum marginal rate. The parties submitted that these references were covered by a previous order of the High Court dated July 13, 2006, in the case of Sanjiv Family Trust vs. C.I.T. They agreed to set aside the ITAT orders and remand the matters back to the Tribunal for fresh adjudication.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee trust was a discretionary family trust liable to be taxed at the maximum marginal rate? Assessee's Contention: The assessee's learned counsel submitted that the present Tax References are squarely covered by the High Court's order dated July 13, 2006, passed in Income Tax Reference No. 149 of 1995 in the matter of Sanjiv Family Trust vs. C.I.T. The assessee, along with the revenue, agreed to set aside the orders of the Tribunal and remand the matters back to the Tribunal with a direction to decide them afresh in accordance with law. Revenue's Contention: The revenue's learned counsel also submitted that the present Tax References are squarely covered by the High Court's order dated July 13, 2006, passed in Income Tax Reference No. 149 of 1995 in the matter of Sanjiv Family Trust vs. C.I.T. The revenue, along with the assessee, agreed to set aside the orders of the Tribunal and remand the matters back to the Tribunal with a direction to decide them afresh in accordance with law.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

ITR/108/1997 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 108 of 1997 With INCOME TAX REFERENCE No. 109 of 1997 With INCOME TAX REFERENCE No. 110 of 1997 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= KINNARY FAMILY TRUST - Applicant(s) Versus COMMISSIONER OF INCOME-TAX - Respondent(s) ========================================================= Appearance : MR R.K. Kothari for the Applicant(s) : 1, MR MANISH R BHATT for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG and HONOURABLE MR.JUSTICE M.R. SHAH Date : 30/08/2006

ORAL COMMON JUDGMENT (Per : HONOURABLE MR.JUSTICE R.S.GARG)

ITR/108/1997 2/3 JUDGMENT . . . ,

. Mr R K Kothari learned counsel for the assessee . ,

Mrs Bhatt learned counsel for the Revenue The parties are . heard . 2

The Income Tax Appellate 'A'

has referred the following question to this Court for its opinion

. & / / arising out of Income Tax Appeal No 1444 1445 Ahd 92

- ; relating to assessment years 1985 86 and 1986 87

'Whether on the facts and in the

circumstances of the case the income tax

Appellate Tribunal was right in law in holding

that the assessee trust was a discretionary

family trust liable to be taxed at maximum

marginal rate ?' . 3

In Income Tax Reference No 109 of 1997 the Income

Tax Appellate 'A' has referred the

abovesaid question to this Court for its opinion arising out of

. & / /

Income Tax Appeal No 1442 1443 Ahd 92 relating to

- . assessment years 1985 86 and 1986 87 . 4

In Income Tax Reference No 110 of 1997 the Income

Tax Appellate 'A' has referred the

abovesaid question to this Court for its opinion arising out of

. & / /

Income Tax Appeal No 1440 1441 Ahd 92 relating to

- . assessment years 1985 86 and 1986 87

ITR/108/1997 3/3 & . . . . . .,

judgments in the matter of McDowell Co Ltd v C T O 154 ITR ;

; 148 Union of India v Azadi Bachao Andolan 263 ITR 706 263

;

ITR 706 209 ITR 101 and 231 ITR 540 As we are remanding

the matters back to the we refuse to make any

observation on the merits of the matters as the same is likely to

affect the rights of the either party All the References stand

accordingly disposed of No costs [ . . , . ] R S Garg J . rmr [ . . , . ] M R Shah J

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