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3. The main issue raised in this appeal is regarding addition of ` 1,36,00. 595, made on account of a trust dissolution proceedings which are added to the income of the assessee by applying the provisions of section 2(24)(iv)(a) r/w provisions of sections 56(1) and 56(2)(vi) of the Act.

Mr. Ashok C. Pratap

4. The other issues which are raised in ground no.2, have not been pressed by the learned Counsel for the assessee and, consequently, the same are dismissed as "not pressed".

11. On the aforementioned facts, the Assessing Officer applied the provisions of section 77(b) of the Indian Trust Act, and added a sum of ` 1,36,00,595, to the total income of the assessee.

12. The aforementioned action of the Assessing Officer was challenged before the learned Commissioner (Appeals) by raising various issues and quoting various provisions of the Indian Trust Act as well as the judicial pronouncements on the issue. The learned Commissioner (Appeals), after considering various provisions and case laws, has recorded her conclusion in Para-2.1.7, by making reference to sections 4, 11, 58 and 77 of the Indian Trust Act. She held that the two daughters of the assessee having became major and being beneficiaries, were entitled to modify the terms of the trust and such action is permitted in the Indian Trust Act. Referring to section 58, which regulates the right to transfer beneficial interest, the learned Commissioner (Appeals) found that it did not prohibit the action of the original two beneficiaries. By their first action, the original beneficiaries diluted their beneficiary rights from the said trust and requested for the trust to be made a discretionary trust. Section 11 of the Indian Trust Act which empowers the trustee to execute the trust. The trustees were bound to act in Mr. Ashok C. Pratap consonance with the consent of all the beneficiaries. The original two beneficiaries, by their action on 30th March 2001, had completely relinquished their rights, title, interest, share and benefits in to and from the property and assets of the said trust including accumulated income. She further observed that though in the letter of relinquishment, which is named as release of Sant Trust, it is not stated but in effect the said relinquishment has resulted in the trust receiving the entire rights, title, interest, share and benefits in to and from the property and assets of the said trust including accumulated income of the original two beneficiaries. She observed that neither there is specific transfer nor gift by Ms. Natasha and Ms. Tanya, to their parents. The modification in the terms of contract by consent of all the beneficiaries is in accordance with the provisions of Indian Trust Act and according to the various rulings of the Courts. It is on these grounds, the learned Commissioner (Appeals) has observed that the reasons enumerated in the body of the order passed by the Assessing Officer, cannot be accepted that the trust was unlawful within the provisions of section 77(b) of the Indian Trust Act, and in this manner, the learned Commissioner (Appeals) has upheld the validity of the Trust. She also observed that the Assessing Officer was wrong in observing that the assessee cannot act in dual capacity, as, according to the provisions of the Indian Trust Act, the assessee could act in dual capacity. She also noticed that, according to the details furnished in the shape of return of income filed by the said trust, it has paid maximum marginal rate of tax being a discretionary trust. The dissolution proceeds received by the assessee as beneficiaries are shown by the assessee in his individual capacity and the said trust has filed its return of income for the period ending 31st March 2007 separately. She held that the assessee did not receive the said sum of ` 1,36,00,595, in his capacity as "Trustee" i.e., representative assessee for the purpose of the trust. Having recorded these conclusions, the learned Commissioner (Appeals) has further referred to the provisions of section 56(2)(vi). According to her, the said trust does not fall within the ambit of the word "Relative", described in the provisions of section 56(2)(vi), therefore, the exemption from the applicability of the provisions of section 56(2)(vi) is not available to the assessee as the said sum of money, Mr. Ashok C. Pratap the aggregate of which exceeds ` 50,000, was received without consideration, cannot be said to have been received from any relative or on the occasion of the marriage of the individual, or under a will or by way of inheritance, or in contemplation of death of the payer, or from any local authority as defined in the explanation to clause (20) of Section 10, or from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution registered under section 12AA. It is in this manner, the learned Commissioner (Appeals) has confirmed the addition made by the Assessing Officer.

13. Before us, the learned Sr. Advocate, after narrating the facts, submitted that the learned Commissioner (Appeals) has accepted the validity of the trust after referring to the relevant sections of Indian Trust Act. He submitted that the learned Commissioner (Appeals) has also accepted the validity of the amendment and dissolution of trust, etc. The learned Commissioner (Appeals), having accepted all these things, has wrongly concluded that the amount received by the assessee on dissolution of trust is liable to be assessed under section 56(2)(vii), as the same is a money the aggregate of which is exceeded to ` 50,000, was without consideration and it was not from relative. He submitted that the said amount cannot be said to be received without consideration as the same was received by the assessee as per the terms of dissolution deed. He submitted that it is not even the case of the assessee that the said trust was ever registered under section 12AA of the Act or it was the institution described in clause (23C) of section

by an individual or HUF; and (iv) in any previous year, from any person, between the period 1st April 2006 and 1st October 2009. The said clause will not be applicable to the persons described in clauses (a) to (g), as mentioned in the proviso to clause (vi), which is reproduced above; The word "Relative" has been defined in Explanation which is also reproduced above. Unless all the aforementioned ingredients are fulfilled, the provisions of clause (vi) of s/section (2) of section 56 of the Act could not be applied. It is the main case of learned Counsel for the assessee that the amount has not been received by the assessee without consideration and that part of the condition cannot be said to have been fulfilled, therefore, it will be material to see that as to whether this amount can be said to have been received without consideration. If it is held that the said amount is not received by the assessee without consideration, then clause (vi), s/section (2) of section 56 of the Act will not be applicable. The facts are not in dispute. The assessee has received this amount on dissolution of trust in the capacity of beneficiaries. The status of beneficiary has already been accepted by the learned Commissioner (Appeals) when she has held that "in the background of the provisions of Indian Trust Act and the dissolution of the trust, appellant did not receive the sum of ` 1,36,595, in his capacity as a trustee i.e., representative assessee for the purpose of trust". The fact that the assessee has received the amount in the capacity of beneficiaries has also not been controverted, therefore, the amount received by the trust is in pursuance of dissolution of trust. The amount received in pursuance of dissolution of trust cannot be termed to be an amount received by the beneficiaries "without consideration". The fact that the trust had borne the Mr. Ashok C. Pratap tax at maximum marginal rate on its income has also not been controverted. Therefore, in our considered opinion, the addition cannot be upheld on the applicability of clause (vi) of sub-section (2) of section 56 of the Act, as the money received by the assessee is not "without consideration".