Cit Vs. Sharad Narandas Patel

Cit vs Sharad Narandas Patel

Type Court Judgment Court Gujarat Decided Feb 14, 2002

~4 min read

https://sooperkanoon.com/case/748439

For advocates & juniors · 7-day free trial

Brief this judgment before chambers

Stop skimming 50 pages - get an 18-section AI Brief on this case, ask scoped follow-ups, and find related precedents with Semantic Search. Full trial, no card required.

18-section brief - facts, issues, ratio, relief
Ask this case - answers cite the judgment
Semantic search - find precedents by meaning
Research drawer - sections, cites, related cases

Citation: sooperkanoon.com/748439
Court: Gujarat High Court
Decided On: Feb 14, 2002
Case Number: IT Ref. Nos. 73, 73A, 73B, 73C, 73D, 100 & 100A of 1987 14 February 2002 A.Y. 1978-79 to 1982-83
Subject: Direct Taxation

Case Summary

AI-generated summary - not the official court judgment text.

Counsels: Bharat Naik for Manish R. Bhatt, for the Revenue None, for the Assessee Head Note: INCOME TAX Clubbing of income under s. 60--TRANSFERNo transfer of assets Catch Note: Assessee was managing trustee of family trust, beneficiaries of which were sons of assessee--Assessing officer made addition to assessee'...

Key legal issue: Direct Taxation

Parties & Advocates

Appellant / Petitioner

Cit

Advocate Bharat Naik for Manish R. Bhatt, <i>for the Revenue </i>None, <i>for the Assessee</i>

Respondent

Sharad Narandas Patel

Legal References

Reported In: (2002)176CTR(Guj)41

Excerpt

counsels: bharat naik for manish r. bhatt, for the revenue none, for the assessee head note: income tax clubbing of income under s. 60--transferno transfer of assets catch note: assessee was managing trustee of family trust, beneficiaries of which were sons of assessee--assessing officer made addition to assessee's income on ground that entire business of trust was handled by assessee, so entire income of trust belonged to assessee--not justified--trust was not created by assessee, so income of trust was not taxable in hands of assessee. ratio: where trust was not created by assessee managing trustee of family trust, the income of trust was not taxable in hands of assessee. held: in the present case, the trust was created by r who was related to the beneficiaries. the trust was admittedly not created by the managing trustee. in this view of the matter, applying the decision in the case of assessee-trust. the income of sharad family trust was not taxable in the hands of the assessee, who was its managing trustee and answer the question referred in the negative in favour of the assessee and against the revenue. case law analysis: k. t doctor v. cit (1980) 124 itr 501 (guj) applied. application: also to current assessment year. decision: in favour of assessee. income tax act 1961 s.60 in the gujarat high court r.k. abichandani & k.a. puj, jj. - .....five references. they are numbered as it ref. 73, 73a, 73b, 73c and 73d of 1987 for the respects years 1978-79 to 1982-83.2. the tribunal has referred the following question in these references for the opinion of this court :'whether, in law and on facts, the income of the sharad family trust was taxable in the hands of the assessee?'3. reference no. 100 of 1987 (arising from two appeals 122 and 123 of 1985) is directed to be split up into two references, namely, 100 and 100a of 1987 in respect of the two assessment years 1978-79 and 1979-80, respectively. the tribunal has referred the following question for the opinion of the high court in those references :'whether, on the facts and in the circumstances of the case, the tribunal was right in holding that the income of the assessee-trust was not liable to be included in the individual income of shri sharad narandas under section 60 of the income tax act, 1961?'4. in ref. no. 73, 73a, 73b, 73c and 73d of 1987, the assessee is the individual who was the managing trustee of sharad family trust, the beneficiaries of which are the sons of the assessee. according to the income tax officer, the entire business and administration of the trust was being handled by the assessee and the other trustees had no knowledge of the affairs of the trust whatsoever. it was held that the entire income of the trust belonged to the assessee and was brought to tax accordingly. the commissioner (appeals), however, deleted the addition following its decision in the case of sharad family trust (it appeals nos. 178 to 180) decided on 6-6-1983. the tribunal held that the income of the trust was to be assessed in the hands of the trust and not the managing trustee who was the assessee in that case and confirmed the order of the commissioner (appeals).5. in the order from which the it ref. nos. 100 and 100a of 1987 arise, in the case of the assessee-trust, the tribunal confirmed the order of the appellate assistant commissioner by which he had.....

Full Judgment

R.K. Abichandani, J.

The original IT Ref. No. 73 of 1987 which related to five assessment years, namely, 1978-79 to 1982-83 arising out of five appeals (ITA Nos. 1842 to 1846) decided by the Tribunal is ordered to be split up into five references. They are numbered as IT Ref. 73, 73A, 73B, 73C and 73D of 1987 for the respects years 1978-79 to 1982-83.

2. The Tribunal has referred the following question in these references for the opinion of this court :

'Whether, in law and on facts, the income of the Sharad Family Trust was taxable in the hands of the assessee?'

3. Reference No. 100 of 1987 (arising from two appeals 122 and 123 of 1985) is directed to be split up into two references, namely, 100 and 100A of 1987 in respect of the two assessment years 1978-79 and 1979-80, respectively. The Tribunal has referred the following question for the opinion of the High Court in those references :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income of the assessee-trust was not liable to be included in the individual income of Shri Sharad Narandas under section 60 of the Income Tax Act, 1961?'

4. In Ref. No. 73, 73A, 73B, 73C and 73D of 1987, the assessee is the individual who was the managing trustee of Sharad Family Trust, the beneficiaries of which are the sons of the assessee. According to the Income Tax Officer, the entire business and administration of the trust was being handled by the assessee and the other trustees had no knowledge of the affairs of the trust whatsoever. It was held that the entire income of the trust belonged to the assessee and was brought to tax accordingly. The Commissioner (Appeals), however, deleted the addition following its decision in the case of Sharad Family Trust (IT Appeals Nos. 178 to 180) decided on 6-6-1983. The Tribunal held that the income of the trust was to be assessed in the hands of the trust and not the managing trustee who was the assessee in that case and confirmed the order of the Commissioner (Appeals).

5. In the order from which the IT Ref. Nos. 100 and 100A of 1987 arise, in the case of the assessee-trust, the Tribunal confirmed the order of the Appellate Assistant Commissioner by which he had directed the protective assessment made by the Income Tax Officer in the hands of the trust to be made substantive on the finding that the business genuinely belonged to the trust.

6. It is pointed out to us that in respect of the earlier assessment years 1975-76 to 1977, in the case of assessee-trust, the Tribunal had referred to the High Court for its opinion in IT Ref. No. 63 of 1984 (arising out of IT Appeals Nos. 178 of 180) the question as to whether the income of the assessee-trust was not liable to be included in the individual income of the assessee who was the managing trustee under section 60 of the Income Tax Act. The Division Bench of this court (Coram : P.R. Gukulakrishnan, C.J., & G.T. Nanavati, J.) by their order dated 27-3-1987, upheld the findings of the Tribunal following the earlier decision of the High Court in K.T. Doctor v. CIT : [1980]124ITR501(Guj) and answered the question in favour of the assessee and against the revenue.

7. In K.T. Doctor v. CIT (supra), this court held that the provisions of section 60 of the Income Tax Act, 1961, could not be invoked at all in that case since the trust was created not by the assessee but by his mother. In the present case, the trust was created by Ramanbhai Narandas on 18-6-1974, who was related to the beneficiaries. The trust was admittedly not created by the managing trustee. In this view of the matter, applying the decision of this court in IT Ref. No. 63 of 1984

(i) In IT Ref. Nos. 73, 73A, 73B, 73C and 73D of 1987, we hold that the income of Sharad Family Trust was not taxable in the hands of the assessee Sharad Narandas who was its managing trustee and answer the question referred in the negative in favour of the assessee and against the revenue.

(ii) In IT Ref. Nos. 100 and 100A of 1987, we hold that the Tribunal was right in holding that the income of the assessee Sharad Family Trust was not liable to be included in the individual income of the managing trustee Sharad Narandas under section 60 of the Income Tax Act, 1961, and the question referred is, therefore, answered in the affirmative in favour of the assessee-trust and against the revenue.

All these references stand disposed of accordingly with no order as to costs.

Same Court & Year Gujarat · 2002 Same Parties Cit vs Sharad Narandas Patel Same Subject Direct Taxation

Direct Taxation