Commissioner of Income Tax, Coimbatore v. M/s. P.Sekar Trust & Ors.

JUDGMENTK.RAVIRAJA PANDIAN, J.All these 15 appeals are filed at the instance of the revenueagainst the common order of the Income Tax Appellate Tribunal 'A'Bench, Chennai, dated 24.02.2004 made in I.T.As. Nos.2023 to 2033 of2003 and 2045 to 2048 of 2003. Tax Case Appeals Nos.866 to 870 of2004 and 454 to 459 of 2005 arise out of I.T.As. Nos.2023 to 2033 of2003 relate to the assessment years 1989-90 to 1999-2000 in respectM/s. Sekar Trust and Tax Case Appeals Nos.929 to 932 of 2004 ariseout of ITA Nos.2045 to 2048 of 2003 relate to the assessment years1994-95 to 1997-98 pertaining to M/s.Peegee Trust. 2. The appeals in T.C. (As.) Nos.866 to 870 of 2004 and 454 to459 of 2005 were admitted by this Court on 10.02.2005 on thefollowing substantial question of law :"Whether on the facts and in the circumstances of thecase, the Income Tax Appellate Tribunal was right inholding that in the case of the assessee Trust, thebeneficiaries and their shares are determinate and,therefore, the trustees could not be assessed for taxand the provisions of section 164 of the Income Tax Actare not attracted?"The appeals in T.C. (As) Nos.929 to 932 of 2004 were admitted by thisCourt on 20.07.2005 on two substantial questions of law, the firstone being the same as that of the one in T.C. (As.) Nos.866 to 870 of2004 and 454 to 459 of 2005 which is extracted above and the secondquestion of law is as follows : "Whether on the facts and in the circumstances of thecase, the Income Tax Appellate Tribunal was justified infollowing the decision in Advance Ruling reported in 224ITR 473 (AAR) does not have binding effect on theassessee's case?"3. As the order of the Tribunal is common order and the issueinvolved in these appeals is one and the same, all the appeals aredisposed of by this common judgment. For the purpose of narration offacts, which are common in all the appeal, Tax Case (Appeal) No.866of 2004 is taken as a typical case. 4. The assessee was a Trust created by a Trust Deed dated01.04.1986. The author of the Trust was one Smt. A. Lalitha. TheTrustees were Sri P.Sekar, Smt. S.Gowri and Sri P.Badri. The Trustwas created for the benefit of seven beneficiaries. The beneficiariesand their beneficial interest in the income of the Trust other thanthe income which forms part of the corpus or capital fund of the https://hcservices.ecourts.gov.in/hcservices/ Trust were as under :From 01.04.1986 to 31.03.1989 the following were thebeneficiaries with the following sharing ratios :1. Smt. P.Girija in the status of individual-15%2. Sri P.Sekar in the status of individual-20%3. Smt.S.Gowri in the status of individual-15%4. Sri P.Badri in the status of individual-25%5. Sri P.Prabhakar in the status of individual-25%From 01.04.1989 to the determination period of 25 years from01.04.1986 the following were the beneficiaries with equalsharing ratios:1. Sri D.Parthasarathy in the status of individual2. Smt. P.Girija in the status of individual3. Sri P.Sekar as karta of Hindu Undivided Family4. Sri P.Sekar in the status of individual5. Smt.S.Gowri in the status of individual6. Sri P.Badri in the status of individual till the date ofhis marriage and separately in the status of the individualand Hindu Undivided Family consisting of himself and hiswife from the date of marriage.7. Sri P.Prabhakar in the status of individual till the dateof his marriage and separately in the status of individualand Hindu Undivided Family consisting of himself and hiswife from the date of marriage.5. The material terms of the trust deed culled out from theorder of the Tribunal, are as follows :(a) As and when Sri P.Badri and Sri P.Prabhakar are married,their spouses would automatically become beneficiaries along with theother continuing beneficiaries in the said accounting year andsubsequent accounting years and equally divide the beneficialinterest in income of the aforesaid beneficiaries. (b) As and when any child/children is/are born to Sri P.Sekar,Sri P.Badri and Sri P.Prabhakar such child/children shouldautomatically become beneficiaries along with the other continuingbeneficiaries in the said accounting year and subsequent accountingyears and equally divide the beneficial interest in income along withthe aforesaid beneficiaries including spouse. (c) In the case of death of any beneficiaries, the male legalheir or heirs of the deceased beneficiary shall automatically becomebeneficiary in his or her place. In the absence of a male legalheir, the other legal heirs shall be treated as beneficiaries inrespect of the said accounting year and subsequent accounting yearsalong with the other surviving beneficiaries and the share incomeratio of the deceased beneficiary alone should be divided in equal https://hcservices.ecourts.gov.in/hcservices/ shares as per the number of substituted beneficiaries succeeding tothe shares of the deceased beneficiary without changing the sharingratio of other continuing and surviving beneficiaries at the end ofeach accounting year and pay one part to each of the saidbeneficiaries or credit to his or her personal account in the booksof the trust.(d) In case of the deceased being the kartha of the HinduUndivided Family, it should be represented by any other senior memberof the family irrespective of gender, as manager and the beneficialinterest and/or the share income of the trust of the said HinduUndivided Family shall always be deemed to be the beneficial interestand/or income of the Hindu Undivided Family beneficiaries. (e) The property vested in the Board of Trustees should be heldfor the benefit of the beneficiaries and the beneficiaries shall havebeneficial interest and right in the corpus or capital fund of theTrust in the ratio of their beneficial interest inter se till thedetermination of Trust, which is for 25 years or sooner if thetrustees or beneficiaries unanimously agree, and shall be paid suchcapital fund upon extinguishment of the Trust. The corpus of theTrust or capital fund shall not be divided and distributed among thebeneficiaries during the subsistence of the Trust.(f) 10% of the income of the trust should be distributed to thebeneficiaries and the balance 90% should be accumulated to the corpusfund. (g) 'Corpus' or 'capital fund' of the Trust would include thesum of Rs.1,000/- declared by the author of the trust. It shouldalso include any other gifts, donations and endowments given by anyother person or persons and include 9/10th share of net agriculturalincome, 9/10th share of the net capital gains after deductingexpenditures, and 9/10th share of all other net income and theircorresponding investments. Losses suffered in respect of investmentactivity or agricultural business of the trust or on sale of itsinvestments (i.e., assets) of the Trust should be deducted fromcapital fund. 6. The trust deed clarified that in order to avoid doubts andmisunderstandings, misinterpretations, that the beneficiaries wereidentifiable and that the shares of the beneficiaries in a givenparticular accounting year are specific and determinable in theratio, as provided, it could not be said that the beneficiaries arenot identifiable on the date of the Trust deed and the share of thebeneficiaries were unknown and not determinate in respect of the saidaccounting year as the beneficiaries and the shares are expresslystated. 7. The beneficiaries filed returns admitting 10% incomedistributed to them in their individual returns. In respect of theaccumulated income in the corpus fund, the assessing officer was onthe view that 90% of the income received by the trustees have not https://hcservices.ecourts.gov.in/hcservices/ been subjected to tax either under section 161 or 164 of the IncomeTax Act, rejecting the objection of the assessee to the notice undersection 148 of the Income Tax Act (hereinafter referred to as 'theAct") that whatever the beneficial interest, the beneficiaries had inthe income of the Trust have been directly assessed under section 166of the Act in the hands of the beneficiaries and so no liabilityarises in the hands of the Trustees under section 161, or undersection 164 of the Act framed the assessment under section 164 of theAct treating the trustees as the representative assessee in respectof 90% of the accumulated income. The assessee carried on the matterbefore the Commissioner of Income Tax (appeals), who dismissed theappeals on the very same ground that prevailed with the assessingofficer. Ultimately, the matter was taken up before the Tribunal.The Tribunal, after construing the Trust Deed held that thebeneficiaries were known and that the shares were determinate andtherefore, the question of assessing the Trust under section 164 ofthe Act did not arise. The correctness of the said order is nowcanvassed before us in these appeals.8. Mr.T.Ravikumar, learned standing counsel for the revenuecontended that the reliance on the decision of the advance rulingauthority by the Tribunal is misplaced reliance for the reason thatthe said ruling pronounced by the authority shall be binding only onthe applicant who had sought for it, in respect of the transaction inrelation to which the ruling had been sought and on the Commissionerand the Income Tax authorities subordinate to him, in respect of theapplicant and the said transaction only. He further contended thatthe various decisions relied on by the Tribunal to decide thatsection 164 of the Act was not attracted, are not identical to thefacts of the present case. If the facts are not identical and are invariance, the decision relied on cannot be made applicable. In orderto bring home his contention, he relied on the decision of theSupreme Court in the case of Commissioner of Central Excise,Bangalore v. Sri Kumar Agencies, 2009 AIR SCW 942. On facts, hesubmitted that though the beneficiaries are known and the share ofthe beneficiaries are determinate apparently, but are fluctuatingdepending upon the contingencies, such as, getting married, begettingchildren. He further submitted that number of beneficiaries would beless in the beginning of the accounting year , but more at the end ofthe accounting year, if such contingencies happen. Hence, thebeneficiaries cannot be regarded as known. He relied on the judgmentsin the cases of CIT v. Atreya Trust [1992] 193 ITR 716,Commissioner of Income-tax v. Trustees of Keshav Mohta Family Trust,[1998] 232 ITR 875, Anasuya Muthanna v. CIT [1998] 232 ITR 561, A.V.Reddy Trust v. CWT, [1999] 240 ITR 409, CIT v. Saroja Raman, (1999)238 ITR 34, Vairavan Chettiar (VE. A.) v. CIT, [1973] 92 ITR 474, CITv. Nirmala Bala Sarkar, 74 ITR 268, Allahabad Bank v. CIT, (1953) 24ITR 519 and CIT v. Muthukrishnan, (2003) 260 ITR 526.9. Mr.C.Sarangan, learned senior counsel appearing for therespondents/assessees contended that the first question of law inthese appeals is identical to the one in the case of CIT v. https://hcservices.ecourts.gov.in/hcservices/ Muthukrishnan, (2003) 260 ITR 526, which has been decided in favourof the assessees by the Division Bench of this Court. Hence, anycontention raised on the part of the revenue to differentiate thefacts, has to be rejected, particularly in view of the statement madeby the tribunal in its order to the effect that the decision reliedupon by the assessee (260 ITR 526) is squarely applicable to thefacts of the present case. By his argument, he differentiated thejudgments relied on by the learned counsel for the revenue and soughtfor sustaining the order of the Tribunal.10. Heard the learned counsel on either side and perused thematerials available on record.11. Section 5 of the Act deals with the scope of the totalincome of any previous year of residents and non residents. Section4 of the Act deals with the charge of income tax in respect of totalincome of the previous year of every person "subject to theprovisions of this Act". Chapter XV of the Act deals with theliability in special cases. Representative assessees are dealt insection 160 of the Act. Section 160(1)(iv) of the Act provides thatin respect of income which a trustee appointed under a trust declaredby a duly executed instrument in writing whether testamentary orotherwise (including any wakf deed, which is valid under the MusalmanWakf Validity Act, 1913 (6 of 1913) receives or is entitled toreceive on behalf of or for the benefit of any person such trustee ortrustees will be representative assessee. Section 161 provides forthe extent of the liability of the representative assessee to theeffect that every representative assessee as regards the income inrespect of which he is a representative assessee, shall be subject tothe same duties, responsibilities and liabilities as if the incomereceived by or accruing to or in favour of him beneficially, andshall be liable to assessment in his own name in respect of thatincome; but any such assessment shall be deemed to be made upon himin his representative capacity only, and the tax shall, subject tothe other provisions contained in Chapter XV, be levied upon andrecovered from him" in like manner and to the same extent as it wouldbe leviable upon and recoverable from the person represented by him".12. Section 41 of 1922 Act, which is similar to section 160 ofthe 1961 Act was considered by Bombay High Court in CIT v.Balwantrai Jethalal Vaidya, (1958) 34 ITR 187 Chagla C.J., speakingfor the Bench observed in that case as follows :"Whether the assessee carries on business or is the owner ofa property or owns shares and receives dividend, if he is atrustee and if he is being assessed as a trustee then section41 must come into play and his liability to pay tax must bedetermined according to the provisions of section 41. Thesole question, which should be easy to answer, would be : Isthe assessment being made upon a trustee or not ? If theassessment is made upon a trustee, whatever the nature of theproperty, whatever the nature of the income, whatever the https://hcservices.ecourts.gov.in/hcservices/ mode of computation, his liability to pay tax must bedetermined in accordance with section 41."13. The apex Court in the case of Nagappa (C.R.) v. CIT, (1969)73 ITR 626 considered section 64(V), section 161 (1) and (2) as alsosection 166 of the Act. The Court quoted with approval, theobservations of Chagla C.J., in Balwantrai Jethalal Vaidya, referredto supra, as follows :"The basic idea underlying section 41, and which is inconformity with principle, is that the liability of thetrustees should be co-extensive with that of thebeneficiaries and in no sense a wider or a larger liability.Therefore, it is clear that every case of an assessmentagainst a trustee must fall under section 41, and it isequally clear that, even though a trustee is being assessed,the assessment must proceed in the manner laid down inChapter III."The Court further observed that the legislature, while enacting thenew Act, to avoid doubts has given effect to the observations made byChagla C. J. in Balwantrai Jethalal Vaidya's case and has enactedthat where the income is assessable under Chapter XV in the hands ofa person in the capacity of a representative assessee it is notliable to be assessed under any other provision of the Act, that is,the tax is not liable to be levied under any other provision of theAct. 14. In yet another case in CIT v. Nandlal Agarwal, (1966) 59 ITR758, a case arising out of the old Act, the apex Court whileconsidering the manner in which a guardian of the person andproperties of minors and who receives income on behalf of the minorshould be assessed, held that assessment on guardian should be madeonly under section 40 of the old Act. 15. The apex Court in the case of CIT v. Kamalini Khatau, [1994]209 ITR 101, a decision rendered by a three Judge Bench, afterreviewing the earlier decisions of the Court as also the decisions ofthe Bombay High Court in the case of CIT v. Balwantrai JethalalVaidya [1958] 34 ITR 187 summarized the law with regard to therepresentative assessee as follows : "As the judgments of this court referred to above lay down,a representative assessee may be assessed in respect ofincome received by him as such and tax recovered from himthereon only under and in the manner provided by theprovisions in the statute dealing with representativeassessees. A trustee may, therefore, be assessed in respectof the income of the trust and tax recovered from himthereon only under and in the manner provided by sections160 to 166 of the Act." https://hcservices.ecourts.gov.in/hcservices/

16. Thus, the scheme of the Act, the statutory provisions, aswell as the line of judgments referred to above clearly state thatthough section 5 referred to total income of the person whose incomeis being assessed and the charge on income tax under section 4 of theAct is on the total income, what could be taxed in the hands of therepresentative assessee is only the income which the beneficiariescould be said to have received or to be deemed to have received inIndia or in whose favour the income has accrued or arises or isdeemed to accrue or arise to him in India; or accrues or arises tohim outside India during the relevant year. Though the Trust mayreceive the income, the extent to which the same can be taxed is tothe extent to which tax would leviable and recoverable from thebeneficiaries.Section 161 of the Act specifically provides that thetax to be levied on the representative assessee and to be recoveredfrom him is to be "in the like manner and to the same extent as itwould be leviable upon and recoverable from the person represented byhim." (emphasis supplied)17. Section 164 of the Act gets attracts only when the shares ofthe beneficiaries are unknown, which is manifest from the marginalheading of that section itself, viz., Charge of tax where the shareof the beneficiaries unknown. That section comes into play onlywhere any income or any part thereof is not specifically receivableon behalf of or for the benefit of any one person or where theindividual shares of the persons on whose behalf or for whose benefitsuch income or such part thereof is receivable are indeterminate orunknown, and in such case, the relevant income, or part of therelevant income shall be charged at the maximum marginal rate. 18. From this, it is clear that in order to attract section 164(1) of the Act, the beneficiaries on whose benefit, such income orsuch part thereof is receivable are indeterminate and unknown. 19.Coming to the facts of the case, as stated earlier, thebeneficiaries are five in number for the period from 01.04.1986 to31.03.1989 and the respective share of each beneficiary is indifferent percentage as stated in the deed itself. From 01.04.1989onwards the beneficiaries are seven in number and their shares in theincome is equal. The shares in respect of 6th and 7th beneficiaries areequal in the status of individual till the date of their marriage andseparately in the status of the individual and Hindu Undivided Familyconsisting of themselves and their respective wife from the date ofmarriage. As per clause 3(b)(i) as and when Badri and Prabhakar aremarried, their spouses would automatically become beneficiaries alongwith the other continuing beneficiaries in the said accounting yearand subsequent accounting years and equally divide the beneficialinterest in income of the aforesaid beneficiaries. Likewise, as andwhen any child or children is/are born to the said Badri andPrabhakar the child or children so born shall automatically become abeneficiary/beneficiaries along with the other continuingbeneficiaries in the said accounting year and subsequent accountingyears and equally divide the beneficial interest in income of the https://hcservices.ecourts.gov.in/hcservices/ aforesaid beneficiaries. From the above, it is clear that the sharesof the beneficiaries is equal and as and when the two statedbeneficiaries get married, they become HUF and on the birth ofchild/children, it or they also become the beneficiaries. With theincrease of numbers, the share of each person gets reduced. So, theshare income is determinate. 20. An identical case has been decided by a Division Bench ofthis High Court, in which one of us is a party (Raviraja Pandian,J.), in the case of CIT v. Muthukrishnan, (2003) 260 ITR 526, whereinone of the questions of law referred for the opinion of the Court,was as to whether the Appellate Tribunal’s view that the share of thebeneficiaries are clearly known and determinate is reasonable,supported by valid material and sustainable in law, has been answeredin the affirmative on the following facts :"One L. Narayana Iyer created a trust on May 27, 1982, bycontributing a sum of Rs. 1,500 for the benefit ofL.Muthukrishnan, Smt. M. Thrayambika Devi, minorM.Sathishkumar and Shri K. Kuppusamy, the first three tohave 1/15th share and the last 12/15ths share.Muthukrishnan, Balasubramanian and K. Kuppusamy wereappointed as trustees. The instrument directed thetrustees to augment the corpus with all gifts, donations,etc., received and any prize money received on lotterytickets as well as 2/3rds share of the net interestearned from investments made by the trustee. The trustdeed also provided that the corpus of the trust shall notbe divided or distributed among the beneficiaries untilthe duration of the trust which was to be for a period offifteen years, or sooner, if all the beneficiariesunanimously agreed to terminate the trust even before theexpiry of fifteen years. Out of the interest income ofthe trust, the beneficiaries were to receive only one-third and the balance was to be accumulated. The trusteeswere also empowered to carry on business and invest thefunds of the trust and loss, if any, was to be deductedfrom the corpus. For the assessment year 1983-84, thetrustees filed a return of income and claimed a refund oftax deducted at source amounting to Rs. 3,75,000 out of asum of Rs. 15,00,000 which had been received by them as alottery prize under the U. P. State Lottery Scheme inJanuary, 1983. The Income-tax Officer rejected the claimfor refund and held that the entire amount receivedshould be treated as income in the hands of the trusteeswho were to be taxed in the status of association ofpersons. On appeal, the Commissioner affirmed that viewof the Income-tax Officer. On further appeal, theTribunal set aside the assessment that had been made anddirected the assessing officer to frame fresh assessmentin accordance with law on the ground that the share ofthe beneficiaries are clearly known and determinate." https://hcservices.ecourts.gov.in/hcservices/ In the circumstances, the Court has answered the question in favourof the assessee by observing that,"In the assessment year with which we are concerned,having regard to the terms of the trust, thebeneficiaries had no right to receive any part of thecorpus of the trust to which the income received by thetrustees by way of prize money on the lottery ticket wasrequired to be credited. The right to the beneficiary wasonly to share in the division of that corpus at the endof the fifteen year period or sooner, if all thebeneficiaries unanimously agreed to terminate the trust.The beneficiaries could not have been assessed to tax inrespect of any part of this prize money in the year inwhich that money was received by the trust. The prizemoney received by the trustees on the lottery tickets notbeing an amount in which the beneficiaries, whoseidentities are known and whose shares are determinate,could claim a share in the year of account and whichamount could not have been assessed in their hands astheir income in whole or in part, therefore, was notassessable in the hands of the trustees who onlyrepresented the beneficiaries for the purposes ofassessment and who could only be assessed in the samemanner and to the same extent as the beneficiaries couldhave been assessed. The trustees assumed no higherliability than the beneficiaries themselves wererequired to bear under the law. If the beneficiary wasnot to be taxed, that tax could not be levied on thetrustee who only represented the beneficiary and no more,in cases where the identity of the beneficiary was knownand the share of the beneficiary was determinate.(emphasis supplied)21. The next objection on behalf of the revenue was that thereare certain contingencies like getting married and begettingchildren, which differentiates Muthukrishnan's case referred tosupra. 22. From the facts of the present case and from the terms of thetrust deed, we find that the intention of the author of the trustcannot be said to be uncertain. The shares of the beneficiaries arestated to be equal and in case the unmarried beneficiaries getmarried and begetting children, they would also become thebeneficiaries and with the increase in the number, shares of eachperson can be reduced. So long as the trust deed gives the details ofthe beneficiaries and the description of the person who is to bebenefitted, the beneficiaries cannot be said to be uncertain, merelybecause wife/children cannot be known until the marriage andbegetting of children by the stated beneficiaries. The deed alsoprovided that in the event of death of a beneficiary what should be https://hcservices.ecourts.gov.in/hcservices/ done. The above view of us is fortified by the decision of thisCourt in the case reported in 147 ITR 500 referred to supra.23. The judgment of a Division Bench of this Court in the caseof CIT v. Bhandari (P.), (1984) 147 ITR 500, in which the facts arecomparable to the facts of the present case, can be taken in aid. Inthat case, the assessee created a trust for the prospective wife ofhis minor son and on the same day, the assessee's wife createdanother trust for the benefit of the prospective wife of anotherminor son of the assessee. The Income Tax Officer, with the viewthat income accruing to the trust created by the assessee should beincluded in his assessment, reopened the assessments and subjected totax the proportionate share income of the trust as his income on theground that both the trusts were invalid. The Appellate AssistantCommissioner, held that the reopening of the assessments on a merechange of opinion was invalid, held that the two trusts in favour ofprospective daughters-in-law were not invalid as they did not violatethe rule against perpetuity. The Tribunal, however, held that thoughthe reopening of the assessment was proper and justified, the trustswere valid and did not offend the rule against perpetuity andconsequently the income arising to the trusts should not be includedin the income of the assessee. A reference was made before the Courtby framing the two questions of law. The second question of law isrelevant to the facts of the present case, which is as follows :"Whether, on the facts and in the circumstances of thecase, the Appellate Tribunal was right in holding that thebeneficiary of each of the Trusts is not indeterminate anduncertain?"The Division Bench has held that,"Coming to the contention of the Revenue that the purpose ofthe trust and also the beneficiary are vague andindeterminate, we find that the intention of the testatorcannot be said to be uncertain. The object of creating thetrust is to benefit the prospective wife of Dileep Kumar andif that clause fails, the benefit will have to go to theprospective wife of Pradip Kumar and if that object alsofails, it will go to public charitable purposes. Theproperties which were originally those of the assessee arevested with the trustees for administering the same for thebenefit of the beneficiaries. It is no doubt true that it isnot possible to say at the stage of the execution of thetrust deed as to who is the actual person to be benefited bythe trust. But so long as the trust deed gives thedescription of the person who is to be benefited, thebeneficiary cannot be said to be uncertain merely becausethe actual beneficiary cannot be known until the marriage ofDileep Kumar or Pradeep Kumar takes place. It is also saidthat since there is a possibility of both of them notmarrying, the beneficiary should be taken to be uncertain. https://hcservices.ecourts.gov.in/hcservices/ It is well established that a trust may be created in favourof an unborn person provided it satisfies the conditionslaid down in s. 13 of the Transfer of Property Act, eventhough the coming, into existence of such a beneficiary isuncertain." (emphasis supplied)The very same reasoning of the Division Bench in respect of theprospective wife would well be applied in respect of the child orchildren also. 24. In CIT v. M.K.Kannan Marriage Benefit Trust, (1999) 240 ITR785 the Division Bench of this Court, while construing the trustdeed, which was for the benefit of son-in-law to be and daughter-in-law to be of the settler has held that the beneficiaries were knownpersons and it could not be said that they were non existent on thedate of the execution of the relevant trust deeds. When thebeneficiaries are known, the provisions of section 164 of the Actwere not attracted.25. A Division Bench of this Court in which one of us was aparty (Raviraja Pandian, J.), in an unreported judgment in the caseof CIT v. Manilal Bapalal Family Benefit Trust in Tax case Nos.320to 322 of 1997 decided on 18.09.2002 held to the following effect :"The beneficiaries of the Trust included the prospectivespouses of some of the beneficiaries. The Trust deed alsoprovided that in the event of a beneficiary dying beforemarriage or not marrying before the Trust came to an end,that part of the benefit which was to be given to the spousewould be given to the heir of the beneficiary or to thebeneficiary himself or herself." ..."The share to beallotted to the beneficiaries being determinate under thetrust deed and the beneficiaries also being known, theTribunal has rightly held the Commissioner was in error inrevising the order of the assessment officer on the groundthat the shares were indeterminate and that the trust deedis void for vagueness."26. Hence, having regard to the terms of the trust deed, whichclearly prescribes the beneficiaries and the shares they are entitledto and other terms relevant to the share of interest in the corpus ondetermination or termination of the trust, we are of the consideredview that section 164 of the Act is not attracted.27. Coming to the decision relied on by the learned counsel forthe revenue, the decision of the Supreme Court in the case ofCommissioner of Central Excise, Bangalore v. Sri Kumar Agencies, 2009AIR SCW 942, wherein it was held that when the facts are different,the Court should not blindly apply the precedent. This propositionis a well recognised proposition of law. But the said case is notapplicable to the facts of the present case, as we have come to theconclusion that the beneficiaries are known and the share of income https://hcservices.ecourts.gov.in/hcservices/ is determinate in the given set of facts.28. The cases of CIT v. Athreya Trust, [1992] 193 ITR 716, CITv. Trustees of Keshav Mohta Family Trust, [1998] 232 ITR 875, AnasuyaMuthanna v. CIT [1998] 232 ITR 561 are all cases in which the trusthas been created for the benefit of the would be minor children andthe would be wife, on minor attaining majority. In AnusuyaMuthanna's case, the Trust was a discretionary Trust giving absolutediscretion to the trustees in respect of disbursement of income tothe beneficiaries and thus those decisions are in variance on factsto the present case. 29. Counsel for the revenue relied on the decision of the apexCourt in the case of A.V. Reddy Trust v. CWT, [1999] 240 ITR 409 tobring home his contention that the assessment on the income of thebeneficiaries has to be done under section 164 of the Act. We areafraid, as to how that decision is in favour of the revenue. In thatcase, the Supreme Court, after construing the terms of the Trust, hascome to the conclusion that it was apparent that the right of thebeneficiaries to get the corpus of the trust fund come intoexistence on a future date when the condition regarding the survivalis fulfilled, with regard to clause 18 of the trust deed and havingfound that the shares of the beneficiaries on whose benefit theassets were held were not indeterminate and unknown, approved thedecision of the High Court to that extent. Moreover, in the body ofthe order, the Supreme Court reproduced the ratio laid down in thecase of CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth)Trust [1977] 108 ITR 555 to the effect that once it was establishedthat a trustee of a trust could be assessed only in accordance withthe provisions of section 21 and under these provisions, it is onlythe beneficial interests which are taxed in the hands of the trustee,it must follow as a necessary corollary that no part of the value ofthe corpus in excess of the aggregate value of the beneficialinterest can be brought to tax in the assessment of the trustee.This decision tilts the case in favour of the assessee.30. In CIT v. Saroja Raman, (1999) 238 ITR 34, the DivisionBench of this Court has held :"There can be no manner of doubt in this case, having regardto the terms of the trust deed, that the trustees have nodiscretion whatsoever with regard to the choice of thebeneficiary. All assets held by them are meant to be heldsolely for the benefit of the one beneficiary viz., T. G. C.Raman, and no part of the assets can be utilised by thetrustees for others or for the benefit of any other thirdperson. The income received by the trustees is clearly incomereceived for the benefit of the beneficiary. The discretionavailable to the trustees with regard to the time at which,and the extent to which the money may be disbursed is not ofany materiality for the purpose of deciding as to whether thesection is or is not attracted in the circumstances of this https://hcservices.ecourts.gov.in/hcservices/ case."This case, we are of the view, rather supports the view of theTribunal, which is now questioned by the revenue. 31. The decision in the case of Vairavan Chettiar (VE. A.) v.CIT, [1973] 92 ITR 474 was also relied on. It was a case in which itwas found as a fact that the shares of various beneficiaries of theTrust are indeterminate and unknown and as a matter of fact, thebeneficiaries themselves are fluctuating body of persons. Havingregard to the peculiar facts of the case that a certain amount ofmoney and a bungalow were set apart for meeting the marriage and"rPh;Kiw" expenses, which means gift to female members of the family,the asset and the income were credited to an account called"Ch;bghJr;bryt[." which means general expenses of the village, it washeld that beneficiaries were unknown and the share income wasindeterminate. The reliance placed on the decision in the case ofCIT v. Nirmala Bala Sarkar, 74 ITR 268, is also a misplaced one sincethe contingencies stated in the trust deed did not arise in any ofthe assessment years in that case and hence there was uncertaintywith regard to the beneficiaries. In Allahabad Bank v. CIT, (1953) 24ITR 519, wherein it was held that there was uncertainty as regardsthe beneficiaries and there was absence of any obligation to grantpension with the result that no legal and effective trust could besaid to have been created. Hence, this decision also is of no use tothe revenue and these decisions are having no bearing on the issueinvolved in the present case.32. Having regard to the terms contained in the trust deed thatthe beneficiaries are known and the shares are determinate, andhaving regard to the provisions of the Act, extracted above andhaving regard to the decisions in the cases of CIT v. Muthukrishnan,(2003) 260 ITR 526. CIT v. Bhandari (P.), (1984) 147 ITR 500, CIT v.Manilal Bapalal Family Benefit Trust in Tax case Nos.320 to 322 of1997 decided on 18.09.2002 and CIT v. M.K.Kannan Marriage BenefitTrust, (1999) 240 ITR 785, the first question of law has necessarilyto be answered in favour of the assessee and against the revenue. Thesame is answered as such. 33. As regards the second question of law raised, as per thestatutory provision, section 245S, the ruling of the advanced rulingauthority is not binding on others. In this case, though theTribunal has observed in its order that, "we refer to the decision ofthe Advance Ruling Authority brought on record, which examined one ofthe points as to whether beneficiaries of the trust are ascertainableand shares determinable on the basis of the trust deed." But theTribunal has not rested its decision on the advance ruling authority,rather the decision of this Court has been taken in aid and reliedon. We are of the view that there is no bar for the Tribunal to takea view, have the reason or form opinion which is in consonance withthe reasoning of the advance ruling authority de hors the bindingnature. Hence, the second question of law does not arise for https://hcservices.ecourts.gov.in/hcservices/ consideration from the order of Tribunal. 34. The first question of law having been answered in favour ofthe assessee and the second question of law having been decided asnot arising out of the order of the Tribunal, the appeals standdismissed. No costs. Sd/-Asst.Registrar/True Copy/Sub.Asst.RegistrarmfTo1. The Assistant Registrar, Income Tax Appellate Tribunal, 'A' Bench,Rajaji Bhavan III Floor, Chennai,2. The Commissioner of Income Tax, Coimbatore.3. The Commissioner of Income Tax(Appeals)-II, Coimbatore.4. The Income Tax Officer Ward I(1), Pollachi.+ 4 CCs to Mr.J.Naresh Kumar, Sr.Standing Counsel for IT,SR.13906 to 13908+ 1 cc to Mr.R.Janakiraman,Advocate,SR.14472TC (As) Nos.866 to 870,929 to 932 of 2004 and454 to 459 of 2005JRG(CO)EM/29.8.09