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, Sri Suresh B. Mehta, s/o Bapalal Mehta,
(3.) SRI Naresh M. Mehta, s/o Manilal Mehta, and;