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(c) Further recoveries, refunds, assets more particularly tax recoveries and refund if any, arises or are received, the same shall belong to and be allotted all the beneficiaries in proportion to their shares in the corpus of the Trust as on the date of dissolution.

(d) to (f) not reproduced as not being relevant to decide the issue.

2. FURTHER RESOLVED THAT the Bank Account No. 3277 with the Kalupur Com. Co-op. Bank Ltd. alongwith the credit Balance amount of Rs. 86,36,112.94 has been allotted to Karsanbhai Khodidas Patel HUF and the Beneficiary. The said HUF is liable for the said Balance amount. But to facilitate attending to the future transactions relating to the activities, objectives, and purposes of the dissolution of Trust the said Bank account shall remain in operation to be operated by (i) Shri Karsanbhai Khodidas Patel, (ii) Shri Kanjibhai Vandas Patel and (iii) Shri Jagdishchandra Nathalal Brahmbhatt for the aforesaid purpose and they have been authorized hereby by the Trustees and the beneficiaries of this Ninna Specific Family Trust to attend to all the matters for realization, distribution of the money/assets and/or to effect the required payments and to execute all such deeds, documents and papers as may be required for distribution of the Corpus/assets and meeting all the liabilities and administer the dissolution of the Mirma Specific Family Trust as specified herein. Notwithstanding such future administration/ration the Trust stands dissolved on and from the date 20-12-1987. That the same Bank Account shall be operated for all transactions for and on behalf of this Trust and its Beneficiaries and the above shall at as Constituted Attorneys for the purpose.

12. The CIT(A) held that Section 41(1) covers the contingency when business is discontinued and not the contingency of discontinuance of the assessee. He held that the trusts were dissolved and, therefore, the issue was settled by the Supreme Court decision in the case of Saraswati Industrial Syndicate Ltd. v. CIT [1990] 186 ITR 278 wherein according to him, it was held that the benefit received by the amalgamated company is not taxable as amalgamating company is no more in existence and has lost its identity. He further noticed that 1TAT, Delhi in the case of Maman Chand Ramji Das v. ITO [1989] 28 IT D 487 discussed a similar case where a new firm was formed and the benefit was derived by the new firm for the trading liability of the old firm and the same was held to be non-taxable. Narrating the reference at pages 2 and 4 of the deed of dissolution wherein it was slated that the trust has been dissolved with effect from 20-12-1987 coupled with the fact that the assets have actually been distributed no doubt was left in regard to dissolution of the trust. Reference to the appointment of the constituted attorney to look after the income-tax matters and the operation of the bank accounts for depositing of refund was irrelevant consideration to decide the issue of dissolution of the trust. According to him, the functions carried on by the constituted attorneys were such as given to the amalgamated company for amalgamating company which has lost its identity in the case before the Supreme Court or to a new firm by the old firm as discussed in the case of the Tribunal decision. He, therefore, held that the appointment of constituted attorney did not lead to any inference that the trust has not been dissolved. In view of the above finding that the trust has been dissolved, he held that custom duty refund was not taxable under Section 41(1).

23. Let us, therefore, examine whether there is an identity between the person who was granted deduction and the person who received the benefit of refund. Here in the present case, the custom duty was paid by the two trusts before they were dissolved and the refund was allowed after the dissolution and distributed to the beneficiaries of the erstwhile trusts in the same ratio as they were having in the original trust deeds.

24. The learned DR submitted that the refund was actually allowed to the trusts themselves and received in their name, deposited in the trusts' accounts and then distributed to the beneficiaries and, therefore, it was a case of continuance of the same trust. At the first impression the argument seems to be impressive but it lacks merits for the following reasons: (1) the trusts were admittedly dissolved on 20-12-1987 and 30-11 -1991 respectively, much before the refund was received; (2) the refund was issued in the names of M/s. Noble Industries and M/s. Navbharat Industries, the proprietary concerns of the erstwhile name of the trusts, it was for ministerial/secretarial purposes and for collection thereof; (3) a fresh bank account was opened in the erstwhile names of the trusts by the constituted attorney as authorised by the dissolution deed. By these actions, a new obligation was created. They did not give life to the old obligation which ended by the dissolution of the trust deed. The new obligations by way of trusts were surfaced and acted under the erstwhile names of the trusts.

30. In the present case, it is true that the trusts were dissolved, it is also true that the trusts and the beneficiaries are different persons, but the fact remains that the refund was received by persons other than the original trusts though in the erstwhile names of the trusts and deposited in a bank account opened in the names of these trusts for and on behalf of the beneficiaries as authorised by the dissolution deeds of the trusts by the constituted attorneys. The said provision is an authority by the beneficiaries to collect the amount on their behalf and consequently it was a receipt for and on behalf of the beneficiaries of the erstwhile trusts by the trustees in an identically similar name of the trusts which were discontinued. Here, the constituted attorneys are receiving the money for and on behalf of the beneficiaries under a new obligation created by the dissolution of the trust deeds of the erstwhile trusts. It has the effect of emergence of a new obligation creating another trust for the receipt of the money' by the beneficiaries of the amount or the realisation of the assets of the erstwhile trusts which stood dissolved on 20-12-1987 and 30-12-1991. This is what was admitted by the assessees in their letter dated 21-2-1985, by stating that the trust in any case would come into existence after dissolution. The assessments are also completed through constituted attorneys of the new obligation and not on the trustees of the erstwhile trust. The provisions of Section 176(3A) read with Section 41(1) are therefore, correctly applied by the Assessing Officer.