Commissioner of Income Tax vs Gangadhar Sikaria

D. Pathak, Actg. C.J.

By this application u/s 256(2) of the income tax Act, 1961 (''the Act''), the revenue prays the High Court for directing the Tribunal, Gauhati to submit a statement of the case to the High Court for considering the questions of law that have arisen out of the order of the Tribunal in the appeal before the Tribunal by the revenue against the assessee. The assessee is a HUF. The major members of the HUF including the karta created a trust, viz., Gangadhar Sikaria Family Trust out of certain properties of the HUF with major members as trustees and all the members of the HUF except the karta as beneficiaries.

The ITO holding that the trust is not a valid trust included the income of the trust in the assessment of the HUF. On appeal by the assessee, the AAC allowed the appeal holding that the trust is a valid trust. The Tribunal, on the appeal preferred by the revenue, upheld the decision of the AAC holding that the trust is a valid one.

On the other hand, in the return filed by the trust itself, the ITO rejected the plea that the trust was a valid trust. However, he assessed the trustees as association of persons as protective measures. On appeal by the trust, the AAC allowed the appeal of the assessee-trust holding the trust as a valid trust. On appeal by the revenue, the Tribunal upheld the decision of the AAC holding that the trust is valid under the law and not to include the income of the trust in the income of HUF. Against this decision of the Tribunal on a reference, viz., IT Reference No. 3 of 1977 and other analogous references, this Court held the trust to be a valid trust and answered the questions of law accordingly. The answer to the questions of law posed in the present application will be dependent on the very fact whether the trust is a valid trust or not. If the answer to question as to the validity of the trust is in affirmative, then the inevitable answer to the questions of law posed will be in the affirmative and in favour of the assessee. As the trust in question, validity of which goes to the very root of the questions have once been considered and held by this Court as valid, the said decision will cover the decision of the questions of law raised now, as such there is no purpose of calling the statement of the case as prayed for the same is self-evident from the decision by this Court. The petition is rejected. No order as to costs.