JUDGEMENT
F.C.Rustagi, -
(1.)THE only ground raised by the assessee in this appeal under the Income-tax Act for assessment year 1980-81 is that the income earned by a trust, of which the sole beneficiary was the assessee's son, Master Yash Bharat Divecha, should not have been taxed in the hands of the assessee.
(2.)Briefly to state the facts, after the assessment of the assessee, Mrs. Sunita Divecha, was framed, the same came to be reopened under Section 263. The ITO reframed the assessment and while doing so, added a sum of Rs. 38,000 earned by Yash Trust, the trustees of which were the assessee and Himanshu Bharat Divecha. The beneficiary was Shri Yash Bharat Divecha. The said commission of Rs. 38,000 was assessed in the hands of the assessee.
When the matter came before the Dy. CIT(A), he confirmed the finding of the ITO adding the income of Rs. 38,000 on account of commission earned by Yash Trust from M/s. Industrial Tube Manufacturing Company.
(3.)THE learned authorised representative for the assessee submitted that it was after 1985 that the amendment came to the effect that the trust would not be doing any business. In the light of K.T. Doctor v. CIT [1980] 124 ITR 501 (Guj.) and CIT v. K.K. Birla [1982] 137 ITR 126 (Cal.) besides IT0 v. U.P. Tractors [1986] 19 ITD 199 (Jab.), he submitted that the income earned by Yash Trust on account of commission from M/s. Industrial Tube Manufacturing Company should not have been added in the hands of the assessee. He placed before me not only a copy of the trust deed but also the deed of dissolution by which the trust became defunct. He also placed before me a copy of the account as per which the accumulated profits of the trust came to be enjoyed by the minor son of the assessee. He also submitted that the veil is got to be pierced by the Revenue only in corporation matters and not in the case of trusts. THE learned Departmental Representative, on the other hand, relied on the orders of the two lower authorities. In the rejoinder, the learned authorised representative for the assessee submitted that for subsequent year, namely, 1981-82, it is the trust which has been subjected to tax in respect of the commission income and not the assessee. On a query from the learned Departmental Representative that there is no proof to the fact that the assessee's assessment was not made in respect of the commission earned by the trust, the learned Authorised Representative for the assessee unequivocally submitted that no assessment was made in respect of the commission income in the hands of the assessee.
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