Income Tax Appellate Tribunal - Madras
Deputy Commissioner Of Income-Tax vs Manilal Bapalal Family Benefit Trust on 26 August, 1997
Equivalent citations: [1998]66ITD179(MAD)
ORDER
Kalsian, A.M.
1. This appeal by the Department relates to assessment year 1985-86 and arises out of the order of the CIT(Appeals)-III, Madras dated 15-3-1989. The following grounds are raised in this appeal :
"1. The order of the CIT(Appeals) is contrary to law and facts of the case.
2. The CIT(Appeals) has erred in holding that no assessment should be made in the hands of the trust.
2.1 The CIT(Appeals) has failed to appreciate that the trustees have carried on business on behalf of the beneficiaries and the latter have acquiesced to the sharing of income.
2.2 The CIT(Appeals) has failed to appreciate that by virtue of mandatory accountability to the beneficiaries, the trustees are to be assessed in fiduciary capacity on representing the association of persons (Trust).
2.3 The CIT(Appeals) has failed to appreciate that the ratio of the decision of the Supreme Court in the case of N. V. Shanmugam clearly applies to the assessee's case.
2.4 The CIT(Appeals) has failed to appreciate that by an implied mandate the trustees carry on the business on behalf of the beneficiaries, which is collectively an association of persons involved in the conduct/earning of income for the trust, viz-a-viz., beneficiaries."
2. The brief facts of the case are that the trust, "Manilal Bapalal Family Benefit Trust" was created by one Smt. Joiti Bai, wife of late Bapalal B. Mehta Jain, on 26-10-1981. The trust was valid for a period of ten years from the date of creation. The trustees were given discretion to extend the period of ten years also. Smt. Joiti Bai transferred a sum of Rs. 50,000 to the trust for the benefit of 30 beneficiaries mentioned in para 13(a) of the trust deed. Five trustees were appointed by the settlor. These trustees are :
1. Sri Surendra M. Mehta, s/o Manilal Mehta,
2. Sri Harindra M. Mehta, s/o Manilal Mehta,
3. Sri Suresh B. Mehta, s/o Bapalal Mehta,
4. Sri Naresh M. Mehta, s/o Manilal Mehta, and
5. Sri Tushar S. Mehta, s/o Surendra Mehta.
All the four trustees other than Sri Naresh M. Mehta were residing in Madras at the relevant time as per their address given in the trust deed. Sri Naresh M. Mehta was however, residing in Bombay. The number of beneficiaries in the assessment year 1985-86 has increased to 33 due to gift of shares by the existing beneficiaries. The Assessing Officer treated the trustees as Association of Persons and assessed the income in their hands at the stage of its first accrual. Since the shares of the beneficiaries were considered as indeterminate under section 167A, the tax was levied at the maximum marginal rate. The Assessing Officer also held that the trustees are liable to be taxed as representative assessees at maximum marginal rate under the provisions of section 161(1A) of the Act, introduced from 1-4-1985. The Assessing Officer therefore, determined the income of the assessee at Rs. 10,02,140 and charged tax at the maximum marginal rate in the hands of the assessee, namely, M/s. Manilal Bapalal Benefit Trust.
3. In first appeal, the CIT(Appeals) held that provisions of section 167A will not be applicable and the status cannot be adopted as Association of Persons. The CIT(Appeals), however, considered the application of the provisions of section 161(1A) and came to the conclusion that the whole of the beneficial share in the business income has to be taxed in the hands of the representative assessees at the maximum marginal rate. The CIT(Appeals) also held that there is no case to allow deduction under section 80C while computing the income in the hands of the representative-assessee and levied tax at the maximum marginal rate (para 9 of the impugned order). The Revenue felt aggrieved with the order of the CIT(Appeals) and has preferred the present appeal before the Tribunal.
4. It is argued by the learned Departmental Representative that provisions of section 161(1A) are applicable and under the said section "profits and gains of business" shall be charged on the whole of the income in respect of which persons mentioned in section 160(1)(iv) is so liable at the maximum marginal rate. It is argued that since the income is to be charged in the hands of the trustees the status of the assessee should be adopted as Association of Persons because all the trustees are carrying on business. The learned D.R. relied on the decision of the Tribunal, Bangalore Bench in the case of P. S. V. Rasquinha v. ITO [1989] 30 ITD 132/[1990] 48 Taxman 223.
5. The learned counsel for the assessee, on the other hand, supported the order of the CIT(Appeals) and argued that the status of the trust should be taken as Individual. He relied on the Hyderabad Special Bench decision of the Tribunal in the case of Mohammed Omer Family Trust v. ITO [1991] 40 ITD 1. It is also stated by the learned counsel for the assessee, that the beneficiaries have all been assessed to tax and once the beneficiaries are assessed to tax then the income cannot be assessed in the hands of the trustees. He relied on the decision of the Kerala High Court in the case of CIT v. Dr. David Joseph [1995] 214 ITR 658. It is also stated by the learned counsel for the assessee that the income has been charged at the maximum marginal rate in the hands of the beneficiaries and it would not make any difference even if the income is charged in the hands of the trustees, but since the income is charged in the hands of the beneficiaries it would be double taxation if the income is again charged in the hands of the trustees. The learned counsel also referred to the provisions of section 166 and stated that the provisions of the said section override the provisions of section 161A. The learned counsel therefore, argued that, balance of convenience is in favour of the assessee. He also filed copies of assessment orders in the case of some of the beneficiaries.
6. We have carefully considered the rival submissions, case law cited and the material on record as well as the paper book filed by the assessee's counsel. Two issues emerge from the grounds of appeal raised by the Revenue as well as the rival submissions of the parties. The first issue is whether the income of the trust should be assessed in the hands of the trustees or in the hands of the beneficiaries in respect of their shares, and the other issue is as to what is the status to be adopted if the income is to be assessed in the hands of the trustees.
7. Provisions of section 161(1A) were inserted by Finance Act, 1984, w.e.f. 1-4-1985. In order to appreciate the purpose for which this section was inserted by the Finance Act, 1984, it would be necessary to mention the notes on clauses and memorandum explaining the provisions in Finance Bill, 1984. The notes on clauses and memorandum explaining the provisions of the Bill are given at pages 143 and 166 to 168 of 146 ITR (St.), which are reproduced below :
P. 143 Notes on clauses :-
"Clause 20 seeks to amend section 161 of the Income-tax Act relating to liability of representative assessee.
Sub-section (1) of section 161 provides that every representative assessee, as regards the income in respect of which he is a representative assessee, shall be liable to assessment in his own name in respect of such income and tax shall be charged upon and recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him.
The proposed amendment seeks to insert a new sub-section (1A) in section 161 of the Act. The new sub-section provides that where any income in respect of which the person mentioned in clause (iv) of sub-section (1) of section 160 is liable as a representative assessee consists of, or includes, profits and gains of business, tax shall be charged on the whole of the income in respect of which such person is so liable at the "maximum marginal rate". The proposed provision will, however, not apply in cases where such profits and gains are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him.
For the purpose of the new provision, the term "maximum marginal rate" shall have the same meaning as in Explanation 2 to section 164 of the Income-tax Act.
The proposed amendment will take effect from 1st April, 1985, and will, accordingly apply in relation to the assessment year 1985-86 and subsequent years ...."
Pp. 166 to 168 Memorandum :-
"Taxation of business profits of private trusts at maximum margina" rate of Income-tax.
44. Trustees of a private trust are ordinarily not expected to carry on any business because, implicit in the nature of business is the possibility of incurring loss and no prudent trustee would risk the trust's property in business venture. However, it has come to notice that taxpayers are increasingly conducting business through the medium of private trusts. Such arrangements are entered into for purposes of tax avoidance, the main object being to avoid payment of the registered firm's tax which would become payable if the business is carried on in partnership.
45. In order to counteract such attempts at tax avoidance, it is proposed to make a provision in the Income-tax Act, that where any income in respect of which any person mentioned in clause (iv) of sub-section (1) of section 160 of the Act (i.e., a trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise, including wakf deed) is liable as representative assessee consists of or includes profits and gains of business, income-tax shall be charged on the whole of the income in respect of which such person is so liable at the maximum marginal rate. "Maximum marginal rate", for the purpose, means the rate of income-tax (including surcharge) applicable in relation to the highest slab of income in the case of an individual or an association of persons as specified in the Finance Act of the relevant year. However, with a view to avoiding hardship in genuine cases, it has been specifically provided that the proposed provision for charging the entire income of the trust at the maximum marginal rate of income-tax will not apply in a case where the profits and gains of business are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him.
46. It is relevant to mention that under an existing provision in the Income-tax Act, income received by trustees or discretionary trusts is charged to tax at the maximum marginal rate of income-tax (A trust is regarded as a "discretionary trust" if the income or any part thereof is not specifically receivable by the trustee on behalf of or for the benefit of any person or where the individual shares of the persons on whose behalf or for whose benefit such income or part is receivable are indeterminate or unknown). The Income-tax Act, however, provides that income received by discretionary trusts will not be charged to tax at the maximum marginal rate, but at the normal rates of tax applicable to individuals, association of persons, etc., in cases where any one of the following conditions is fulfilled, namely :-
(i) none of the beneficiaries has any other income chargeable under the Income-tax Act exceeding the exemption limit or is a beneficiary under any other trust;
(ii) the trust is declared by a person by will and such trust is the only trust so declared by him;
(iii) the trust has been created before 1st March, 1970, by a non-testamentary instrument and the ITO is satisfied that the trust was created bona fide exclusively for the benefit of the relatives of the settlor or where the settlor is a Hindu Undivided Family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly dependent on the settlor for their support and maintenance;
(iv) the trust has been created bona fide by a person carrying on business or profession exclusively for the benefit of his employees.
The Bill seeks to provide that the aforesaid provisions will not apply in a case where the income of the discretionary trust consists of or includes, profits and gains of business. In such cases, the entire income of the trust would be charged at the maximum marginal rate of tax, except in cases where the profits and gains are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him. In such cases, the income of the discretionary trust would be charged to tax at normal rates applicable to individuals and not at the maximum marginal rate of income-tax.
47. The proposed provisions will take effect from 1st April, 1985, and will, accordingly, apply in relation to the assessment year 1985-86, and subsequent years."
8. The notes on clauses and memorandum explaining the provisions of the Finance Bill, 1984 are reproduced above, in order to understand the object of the statute to effectuate the legislative intention. As laid down by the Hon'ble Supreme Court in the case of CIT v. Gwalior Rayon Silk Mfg. Co. Ltd. [1992] 196 ITR 149/62 Taxman 471, it is a rule of interpretation that tax laws have to be interpreted reasonably and in consonance with justice adopting a purposive approach. The purpose of introducing the provisions of section 161(1A) was to counteract attempts of tax avoidance in cases where income in respect of which any person mentioned in clause (iv) of section 160(1), i.e., trustee, appointed under a trust declared, by a duly executed instrument in writing, is liable as a representative assessee consists of or includes profits and gains of business. In such cases income-tax shall be charged on the whole of the income in respect of which such person, i.e., trustee is so liable at maximum marginal rate. "Maximum marginal rate" has been defined in Explanation 2 to section 164, which means the rate of Income-tax including surcharge on Income-tax, if any, applicable in relation to the highest slab of income in the case of association of persons, as specified in the Finance Act of the relevant year. Section 161(1A) of the Act starts with a non obstante clause. The non obstante clause normally used in a provision indicate that the provisions shall prevail despite anything to the contrary in other provisions of the Act mentioned in such non obstante clause. The provisions of section 161(1A) are specific provisions dealing with the income which consists of or includes profits and gains of business for which a representative assessee, i.e., trustee/trustees are liable. Therefore, in our opinion since the language of section 161(1A) is clear and applicable to the case of the assessee before us, as the assessee is deriving income from profits and gains of business. Since section 161(1A) begins with a non obstante clause and being a specific charging section, has an overriding effect on other general sections. It prevails over other general sections laid down in the Act we therefore, hold that the Assessing Officer was justified in charging maximum marginal rate in the hands of the trustees on the whole of the income in respect of which such trustees are liable. Under section 160(1)(iv) "representative assessee" means, in respect income of which a trustee/trustees appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise, receives or is entitled to receive on behalf or for the benefit of any person.
9. In this connection we may refer to the decision of the Special Bench of the ITAT, Hyderabad in the case of Mohammed Omer Family Trust (supra). Paragraphs 20 and 21 are reproduced below :
"20. Now what is the departure that the non obstante clause has made with reference to the existing provision. Before we understand the departure made, we must know the existing provisions. Under the existing provisions without sub-section (1A) if a representative assessee receives income on behalf of the beneficiaries from profits and gains of business, tax has to be charged not at the maximum marginal rate. As pointed out in the memorandum explaining the provisions of the Bill, the trustees of the private trust are originally not expected to carry on any business because implicit in the nature of business is the possibility of incurring losses and no prudent trustee would risk the trust property in a business venture. However since tax payers are increasingly conducting business through the medium of private trust, such arrangements are resulting in tax avoidance, namely, payment of registered firm's tax which would become payable if the business is carried on in partnership. This is the existing provision.
21. The departure made by insertion of sub-section (1A) is to counteract such attempts at tax avoidance by making it obligatory that where any trustee appointed in a trust is liable as a representative assessee receives income which consists of or includes, profits and gains of business, income-tax shall be charged on the whole of the Income in respect of which such person is so liable at the maximum marginal rate. Thus, the departure made was that if the income receivable by a representative assessee consists of or includes profits and gains of business, income-tax shall be charged on the whole of the income of the representative assessee at the maximum marginal rate. In other words, what sub-section (1A) provided for or seeks to achieve is to impose a higher rate of tax on the income of a representative assessee if the income received by that representative assessee includes income from profits and gains of a business. This is made clear from the wording of sub-section (1A) when it provided that "tax shall be charged on the whole of the income in respect of which such person is so liable at the maximum marginal rate". The expression "the whole of the income" means the income of the representative assessee in respect of which he is so liable as a trustee. That, it was the income in respect of which he is liable as a trustee is also made clear by the use of the expression "in respect of which such person is so liable". Here the expression "in respect of which" means that income and the expression "such person" means the person referred to in clause (iv) of sub-section (1) of section 160. So a plain reading of this section would indicate in most unambiguous terms and unequivocally that if the person referred to in clause (iv) of sub-section (1) of section 160 (i.e.,), a trustee, is liable as a representative of the assessee in respect of income of the beneficiaries and if that income includes profits and gains of business, tax shall be charged on the whole of the income at the maximum marginal rate irrespective of the fact whether the income in the hands of the representative assessee, consisted of the income from the profits and gains alone or it is made up of income from some other heads like property, dividends and interest, etc. To put it differently, the expression "the whole of the income" refers to that part of the income which was received on behalf of a beneficiary by the trustee and not to the whole of the income of all the beneficiaries together. There is no warrant for the view that the expression "whole of income used here would encompass the aggregate incomes of all the beneficiaries in the hands of the trustees. The income of each beneficiary is his own income. How can the income of one beneficiary be clubbed with the income of another beneficiary which will be the outcome, if the interpretation of the revenue is accepted. To construe it differently would not only be against the very object with which this provision was introduced as explained in the memorandum of Finance Bill but also to the plain meaning of the words and also to the concept of taxing the trustee in respect of the income of the beneficiaries limiting the liability of the trustee to the liability of the beneficiary in respect of which he is assessable and to allow it to exceed the liability of the beneficiary."
10. The CIT(Appeals) has also given a similar finding in para 9 of his appellate order. But in para 7 the CIT(Appeals) gave a direction to compute the assessee's total income and allocate it to the beneficiaries and assess the representative assessees under section 161(1A) of the Act since the entire income-consists of only income from business. The CIT(Appeals) has also held in the same para 7 that there is no justification to assess the appellant to tax. These are contradictory findings given by the CIT(Appeals) in para 7 of his appellate order because the assessees being representative assessees consists of trustees and there was no question of considering the assessee as a trust. The assessees are trustees being representative assessees under section 160(1)(iv) and therefore, we clarify by this order that when the assessment is made by the Assessing Officer in the name of M/s. Manilal Bapalal Benefit Trust, then the assessment is made in the hands of the trustees, who are representing the beneficiaries as representative assessees in terms of section 160(1)(iv). We, therefore, reverse the order of the CIT(Appeals) to that extent which is contrary to our findings.
11. The second issue is as to what is the status to be adopted in the case of representative assessees. In the case of Mohammed Omer Family Trust (supra), the Special Bench of the Hyderabad Tribunal in para 23 held as under :
"The contention of the revenue that the status of the trustees should be taken as an 'association of persons' because of the provisions of sub-section (1A) is devoid of any merit. This is because sub-section (1A) does not state any where that the status should be taken as an 'association of persons'. It only states, when read with Explanation, that the tax imposable shall be the maximum marginal rate applicable to association of persons. Thus the object of sub-section (1A) is only to impose higher rate of tax in the circumstances mentioned therein and not to create an association of persons by imposing tax at the maximum marginal rate which happened to be the rate applicable to an association of persons. The non obstante clause did not wipe out the settled legal position that it is only the share of the beneficiary that is liable to be taxed in the hands of the trustee as representative assessee. In our considered opinion the view expressed by the Bangalore Bench did not correctly appreciate the law on the point. Therefore, the answer to the first question is that the assessments in this case have to be made only in the status of an 'Individual' and cannot be made in the status of 'association of persons', even while making the assessment under the provisions of sub-section (1A) of section 161. Consequently, the answer to the second question is that the tax at the maximum marginal rate has to be charged only in respect of the whole of the income of each beneficiary and not on the aggregate income of all the beneficiaries in the hands of the trustee."
12. Similarly, in the case of CIT v. Deepak Family Trust No. 1[1995] 211 ITR 575/[1994] 72 Taxman 406, the Hon'ble Gujarat High Court held that discretionary trust must be considered to be an individual for the purpose of deduction under section 80L. In that case the Revenue's argument that status of the discretionary trust should be adopted as association of persons was rejected by the Gujarat High Court. It was held by their Lordships that in the case of discretionary trust, neither the trustees nor the beneficiaries can be considered as having come together with the common purpose of earning income. The beneficiaries have not set up the trust. The trustees derive their authority under the terms of the trust deed. They are merely in receipt of income. The mere fact that the beneficiaries or the trustees, being representative assessees, are more than one, cannot lead to the conclusion that they constitute an association of persons. It was therefore, held that the trustees of a discretionary trust have to be assessed in the status of 'individual', and consequently deduction under section 80L of the Income-tax Act, is allowable to them. Therefore, the ratio laid down by the Hon'ble Gujarat High Court in the aforesaid case and the decision of the Special Bench of the Tribunal, Hyderabad Bench in the case of Mohammed Omer Family Trust (supra) clearly apply to the facts of the present assessee's case, and we accordingly direct the Assessing Officer to adopt the status of the assessee as Individual.
13. The learned counsel for the assessee has raised another argument to the effect that the managing trustee has filed return of income in respect of each beneficiaries and income in the hands of the beneficiaries has been taxed at maximum marginal rate, and therefore it would amount to double taxation in the hands of the beneficiaries as well as trustees. The assessee's counsel filed copies of assessment orders as well as order of the Tribunal in certain cases of beneficiaries. It is also argued by the learned counsel that after completion of assessments in the hands of the beneficiaries, the trustees cannot be assessed thereafter. Reliance was placed on the Kerala High Court's decision in the case of Dr. David Joseph (supra) and provisions of section 166 of the Income-tax Act, 1961.
14. After considering the submissions of the learned counsel for the assessee we are of the opinion that provisions of section 161(1A) are charging section and it was the legislative intention to tax the person mentioned in section 160(1)(iv) who is liable as a representative assessee in respect of income consisting or including profits and gains of business at the maximum marginal rate. The use of the expression "shall be charged on the whole of the income" in section 161(1A) clearly indicate the intention of the Legislature to charge the trustees on the whole of the income including profits and gains of business at the maximum marginal rate. Provisions of section 166 are general in nature and those provisions could be applied by the Assessing Officer where he found that due to some reason a representative-assessee is not traceable or due to some reason the assessment cannot be made in his hands. Power has been given to the Assessing Officer under section 166 to make direct assessment of the person on whose behalf or for whose benefit income is receivable and also to recover from such person the amount of tax due in respect of such income. The provisions of section 166 are applicable to every representative assessee including legal representative or agent of a non-resident, whereas the provisions of section 161(1A) is specifically applicable to representative assessees mentioned in section 160(1)(iv) of the Act, in respect of income which includes or consists of profits and gains of business. Therefore, the provisions of section 161(1A), which is a charging section, overrides the provisions of section 166 because the provisions of section 161(1A) are charging provisions and specific in nature whereas section 166 is general in nature and it is trite law that specific provisions always override the general provision.
15. The decision of the Kerala High Court in Dr. David Joseph's case (supra) was rendered by their Lordships in the context of provisions of section 164(1) for the assessment year 1980-81. Now after the insertion of provisions of section 161(1A) making it obligatory for the Assessing Officer to charge tax at the maximum marginal rate in the hands of the trustees, in respect of income consisting of or including profits and gains of business, the aforesaid Kerala High Court decision is not applicable to the facts of the assessee's case. Therefore, the argument of the learned counsel that once the income has been assessed in the hands of the beneficiaries the trustees cannot be assessed thereafter is devoid of any merit.
16. What is material is that it is the duty of the Assessing Officer to tax the right person and the right person alone. In the case of ITO v. Ch. Atchaiah [1996] 218 ITR 239, the Apex Court held that the Assessing Officer 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. The expression 'wrong person' is obviously used as the opposite of the expression 'right person'. Merely because a wrong person is taxed with respect to a particular income, the Assessing Officer is not precluded from taxing the right person with respect to that income.
17. The Kerala High Court in the case of Neela Productions v. CIT [1997] 223 ITR 504 dealt with a similar situation. The facts of that case were that the members of a body of individuals were assessed to tax individually. There were legal representatives of the deceased who continued the business. Six legal representatives of the deceased had other income also. Six of the legal representatives filed individual returns for the assessment year 1979-80 wherein they included the share income received from the business. The ITO had completed their individual assessments and tax due thereon had also been collected. The seventh legal heir was also assessed on her income which did not include the share income from business. Notwithstanding the fact that the income received by the legal heirs, six in number out seven persons, had been separately assessed in the hands of the individuals, these seven persons jointly as a unit-body of individuals-filed a return of income for the assessment year 1979-80 declaring a total income of Rs. 1,04,490. The ITO before whom this return was filed, without noticing the fact that the same income had already been assessed at the hands of the legal heirs, completed the assessment in the status of body of individuals and accepted the said return. The first appellate authority held that the assessment of the body of individuals was unsustainable. The Tribunal took the view that the appellate authority was in error in cancelling the assessment of the body of individuals. On a reference, the Hon'ble Kerala High Court held that neither the Assessing Officer nor the first appellate authority considered the real issue nor was it considered by the Tribunal. The Tribunal ought to have addressed the question as to whether the earlier assessments made on the "wrong person", for, only if it is found that the earlier assessments were made on the "wrong person" the assessing authority will be clothed with the authority to make the assessment on the body of individuals.
18. Though in the present case, the assessments might have been completed in the hands of the beneficiaries, but in our opinion the correct person to be assessed under section 161(1A) is the person mentioned in section 160(1)(iv), i.e., trustees who are liable as representative assessees in respect of income consisting of or including profits and gains of business. Such whole income consisting of profits and gains of business, is chargeable at the maximum marginal rate in the hands of the trustees. The provisions of section 161(1A) being a charging section there is no option to the Assessing Officer to tax the beneficiaries. The Assessing Officer is bound to complete the assessment in the hands of the trustees as representative assessees in respect of the whole income consisting of profits and gains of business at the maximum marginal rate. If the trustees have filed the returns of income in the case of beneficiaries then that action of the trustees was not correct. On some issues the assessments in the case of beneficiaries might have travelled up to the Tribunal, but the issue whether income was to be assessed in the hands of beneficiaries or in the hands of the trustees was not considered by the Tribunal in those cases and on a perusal of the papers filed by the assessee's counsel it seems that the issue before the Tribunal was whether the beneficiaries are entitled to deduction under section 80C or not. The issue whether the income consisting of profits and gains of business is to be assessed in the hands of the trustees or beneficiaries was not before the Tribunal. Therefore, simply because the beneficiaries are also assessed in view of the fact that the returns were filed by the trustees in the case of beneficiaries, the Assessing Officer is not precluded from taxing the correct person, i.e., trustees as a representative assessees on the whole of income consisting of profits and gains of business at maximum marginal rate. Since grounds of appeal and issues arising therefrom are partly decided in favour of the Revenue, the grounds raised by the Revenue are treated as partly allowed.
19. In the result, the revenue's appeal is partly allowed.