SAVITA GOURI MALANI GRAND CHILDREN TRUST ,KOLKATA vs. ITO, WARD-32(4), KOLKATA, KOLKATA

The brief facts of the case of the appellant are that the assessee Savita Gouri Malani had executed a last will in favour of four persons making the name of Trust as Savita Gouri Malani Grand Children Trust. The beneficiaries .: 1369 & 1370/KOL/2023 Assessment Years: 2012-13 & 2013-14 Savita Gouri Malani Grand Children Trust. are (a) Hemal B. Malani, (b) Jigar B. Malani (Both sons of Bhikhu J. Malani), (c) Jay N. Malani & (d) Vidhi N. Malani (Son & daughter of Naresh J. Malani). Return of income was filed by the assessee on 29.08.2012 declaring therein total income of Rs. 3,59,537/- with tax liability of Rs. 18,490/- determined at normal rates. The CPC while processing the return of income adopted the tax liability at Rs. 1,38,658/- at the maximum marginal rates without changing the total income. Assessee filed a rectification petition u/s 154 of the Act and requested to determine the tax as per the 2nd proviso to Section 164(1) of the Act treating the assessee as an AOP and to tax it in conjunction with Section 160(iv) of the Act. The Assessing Officer (in short ld. 'AO') rejected the petition confirming the tax at maximum marginal rates in short MMR. Being aggrieved, the assessee preferred appeal before ld. CIT(A) but wherein also assessee failed in getting relief, as a result of which, the present appeal has been preferred. 3. ld. Counsel for the assessee challenged the impugned order thereby saying that order passed by the lower authorities are arbitrary, erroneous and without proper reasons. His main contention is that there is a family Trust and at the creation of the family Trust income has been determined as it appears from the last will of the executor Savita Gouri Malani. The ld. Counsel for the assessee further, submits that the ld. AO and ld. CIT(A) have wrongly held that the share of income of the Trust is unknown and indeterminative, so relevant income shall be taxed at maximum marginal rates. He had produced the photocopy of the last will of Late Savita Gouri Malani, names and PANs of the beneficiaries of the said Trust, copy of the acknowledgment of the ITR filed for the relevant assessment years, computation of profit and loss account and balance sheet.

After hearing the rival submissions of the Counsels of the respective parties, perused the orders and it admits of no doubt that there was a Trust namely Savita Gouri Malani Grand Children Trust. From perusal of the order of ld. CIT(A) it appears to us that he took the assistance of Section 164(1) of the Act in calculation of the tax by saying that in the present case share of I.T.A. Nos.: 1369 & 1370/KOL/2023 Assessment Years: 2012-13 & 2013-14 Savita Gouri Malani Grand Children Trust. the income of the Trust is unknown and not determinative. The submission of ld. Counsel for the assessee is that in the present case determination of the tax should be as per the 2nd proviso to Section 164(1) of the Act treating the assessee as an AOP and to tax it in conjunction with Section 160(iv) of the Act. We have gone through Section 160(iv) of the Act which reads thus:

In respect of income which a trustee appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise [including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913),] receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees; 4.1. We have perused 2nd proviso to Section 164(1) of the Act which reads as under:

On perusal of the above, it appears to us that share and income of the trustees have already been determined in the last will. So, we find substance in the arguments of the ld. Counsel for the assessee that tax should be computed at normal rate and not at the maximum marginal rate in short MMR.

In the result, both the appeals filed by the assessee are allowed.