JUDGMENT
P.A. Mohammed, J.
1. The questions of law referred to us for our decision in these reference cases are the following :
” Whether, on the facts and in the circumstances of the case–‘
(i) the Tribunal is right in holding that ‘the Appellate Assistant Commissioner was justified in directing vacation of the assessments’ ?
(ii) the beneficiaries are known and their shares determinate ?
(iii) the Tribunal is right in law in holding that ‘it was not possible for the Income-tax Officer to assess again the trustee’ ?”
2. The above questions of law were referred to us at the instance of the Commissioner of Income-tax, Trivandrum. The assessee in these cases
is a trust. The assessment years involved in these references are 1981-82 and 1982-83. While passing the assessment orders for the aforesaid years, the Income-tax Officer took the view that the beneficiaries under the trust and their shares were indeterminate and, therefore, the trust should be assessed directly. Being aggrieved by the aforesaid orders, the assessee filed appeals before the Appellate Assistant Commissioner, who while disposing of the appeals found that the question whether the beneficiaries are known and their shares determinate had been considered by the Tribunal in the wealth-tax appeal for the assessment year 1975-76 filed by the trust. The Tribunal found that the shares of the beneficiaries are specific and certain and in that view of the matter the Tribunal directed the lower authorities to complete the assessment under Section 21(1) of the Wealth-tax Act. As a consequence, the Appellate Assistant Commissioner found that as far as income-tax is concerned there cannot be any assessment on the assessee itself at the maximum marginal rate. It was further found that the beneficiaries had already been assessed and, therefore, it was not open to the Income-tax Officer to assess again the trustees. Against the above order of the Appellate Assistant Commissioner, the Revenue came up in second appeal before the Tribunal. After evaluating the entire materials on record the Tribunal sustained the order of the Appellate Assistant Commissioner. It was in the above circumstance that the reference applications were filed before the Tribunal by the Revenue.
3. While disposing of the reference applications the Tribunal had observed that there had been an earlier reference in the case of the same assessee against the order in I. T. A. No. 948/Coch. of 1983 August 8, 1984. It came to our notice that as against the order in the above I.T.A, relating to the assessment year 1980-81 a reference was made at the instance of the Revenue to this court as Income-tax Reference No. 268 of 1985 (CIT v. Dr. David Joseph [1995] 214 ITR 658). In the aforesaid case, this court found that the Tribunal was right in holding that the assessee-trust cannot be taxed in view of the fact that one of the beneficiaries of the trust had earlier been assessed by the assessment proceedings dated December 31, 1980, in his capacity as beneficiary of the trust.
4. The prime dispute involved in this case is whether the trust in question is a discretionary trust or a specific trust. If the trust is found to be a discretionary trust, the beneficiaries are not entitled to receive income or corpus in definite proportions because it is the discretion of the trustees as to how the shares should be apportioned among the beneficiaries. Once the trust is found to be a specific one, the beneficiaries are
entitled to receive the income or corpus in definite proportion. In such a case, the allotment of income to the beneficiaries is not dependent on the discretion of the trustees. As far as the present case is concerned, it is unnecessary for us to embark upon a fresh enquiry on this question because there is a categoric finding by the Appellate Assistant Commissioner and the Tribunal as to the nature of the trust. The Appellate Assistant Commissioner observed thus: “A perusal of records yields that the shares of the beneficiaries in the appellant-trust are definite and determinable. Again, the beneficiaries have been individually assessed on their shares in the appellant-trust”. The Tribunal also found that the shares of the beneficiaries are determinate and certain. In view of this concurrent finding of fact, we have no hesitation to say that the trust involved in this case is a specific trust, that is to say, the shares of the beneficiaries in the income is specific, determinate and certain. The argument of the Revenue appears to be that it is a discretionary trust inasmuch as the Income-tax Officer in the assessment order found that the members were to be assessed in the status of an association of persons at the rates applicable to it. That conclusion was arrived at by the Income-tax Officer on the basis of an earlier order for the year 1979-80 wherein the contention of the assessee that the shares of the beneficiaries are determinate was rejected. By the aforesaid assessment order the trust was assessed in the status of association of persons. We have already found that the trust in question is a specific trust. That means it is not a discretionary trust. That being the position, we do not find any error in the order passed by the Tribunal.
5. Learned standing counsel for the Revenue, however, contended, relying on the decision of the Supreme Court in ITO v. Ch. Atchaiah [1996] 218 ITR 239, that the Income-tax Officer has no option either to assess an association of persons or its members individually under the present Act, though such option was available under the 1922 Act. Therefore, “he can, and he must, tax the right person and the right person alone. By ‘right person’ is meant the person who is liable to be taxed, according to law, with respect to a particular income”. What standing counsel, therefore, pleads is that the Income-tax Officer in this case shall be directed to assess the “right person” inasmuch as there was no option available to him. It is difficult for us to countenance this argument because in the present case though the Officer has assessed the trust as an association of persons the Appellate Assistant Commissioner as well as the Tribunal found that the beneficiaries of the trust had already been assessed. When a “right person” has already been assessed, there is no question of directing the Income-tax Officer to assess the right person over again. Further, this
point was never argued before the Appellate Assistant Commissioner or before the Tribunal. For the first time such a point is argued before us and we do not see any substance in the argument in view of the concurrent finding of the authorities below that the beneficiaries of the trust had already been assessed. Such assessment cannot be said to be on a “wrong person”, under any circumstances.
6. In view of the discussion aforesaid, the questions referred to us are answered in the affirmative, that is to say, against the Revenue and in favour of the assessee.
7. A copy of this judgment under the seal of this court and the signature of the Registrar will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.