COMMISSIONER OF INCOME-TAX vs. ABIMAY FAMILY TRUST

ITR/203/1993HC GujaratGJHC24021253199322 June 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI6 pages
AI SummaryRemanded

What were the facts?

The Commissioner of Income-tax (CIT) referred a question to the Gujarat High Court concerning Assessment Year 1984-85. The Assessing Officer (AO) had treated the assessee, Abhinay Family Trust, as a discretionary trust and levied tax at the maximum marginal rate. This was upheld by the CIT (Appeals). The assessee appealed to the Income-tax Appellate Tribunal (ITAT). The ITAT disposed of the appeal on 27th January 1992, without independent reasoning, stating the issue was concluded by its order in the case of Joyti Family Trust (ITA Nos. 1050 and 1051/Ahd/1988). However, the ITAT's statement of case for the present reference incorrectly suggested a reference had been made to the High Court in the Joyti Family Trust case. The High Court, investigating this, found that the ITAT had rejected the reference in the Joyti Family Trust case, and a subsequent application to the High Court to direct a reference was also rejected. The Supreme Court had also dismissed a Special Leave Petition filed by the CIT in the Joyti Family Trust case.

What did the High Court hold?

The High Court held that the reference was made under an erroneous impression. The Tribunal's statement that a reference had been made in the case of Joyti Family Trust was incorrect. The High Court found that the Tribunal had rejected the reference in the Joyti Family Trust case, and the High Court itself had rejected an application to direct a reference. Furthermore, the Supreme Court had dismissed the CIT's Special Leave Petition in that case. Since the Tribunal had not assigned independent reasons in the present case and relied on a mistaken premise regarding the Joyti Family Trust case, the reference was not required to be answered. The High Court returned the reference unanswered.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in directing the Income-tax Officer to treat the assessee as a specific trust and levy normal rate of tax? (Question of law and fact, concerning the classification of the trust and consequential tax rate). Assessee's Contention: Not explicitly recorded, but the appeal to the Tribunal was against the AO's order treating it as a discretionary trust. The assessee likely argued it should be treated as a specific trust. Revenue's Contention: The revenue, through the CIT, sought to uphold the AO's order classifying the trust as discretionary and levying tax at the maximum marginal rate. The reference to the High Court indicates the revenue disagreed with the Tribunal's direction to treat it as a specific trust and levy normal tax rates.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 203 of 1993 For Approval and Signature: THE HON'BLE MR.JUSTICE D.A.MEHTA HON'BLE MS.JUSTICE H.N.DEVANI ========================================================== 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 of any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================== COMMISSIONER OF INCOME-TAX - Petitioner(s) Versus ABHINAY FAMILY TRUST - Respondent(s) ========================================================== Appearance : MS MM BHATT for Petitioner No(s).: 1. MR SN SOPARKAR for Respondent No(s).: 1. ========================================================== CORAM :THE HON'BLE MR.JUSTICE D.A.MEHTA HON'BLE MS.JUSTICE H.N.DEVANI Date : 22/06/2005 ORAL JUDGMENT (Per : THE HON'BLE MR.JUSTICE D.A.MEHTA)

1.

The Income-tax Appellate Tribunal, Ahmedabad Bench O­IT

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