BHAGABATI PRASAD BANERJEE ,J. - (1.) THE Tribunal has referred the following question of law to this Court under s. 256(1) of the IT Act, 1961 ("the Act") : "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the income of the trust is specifically receivable for the benefit of the individuals who are determinate and known and, as such, s. 164(1) of the IT Act, 1961, is not attracted ? "
(2.) THE assessment year involved is 1981-82 for which the relevant accounting period is the financial year ended on March 31, 1981. The facts of this case relevant for the purpose as evidenced from the statement of the case are as follows : "The year of assessment involved is 1981-82. One Sri Surendra Mohan Lakhotia created a trust by a deed dated 13th June, 1980, for the benefit of a minor, Sri Atreya Lakhotia, s/o. Shri R. M. Lakhotia, with the terms and conditions that five per cent. of the income of the trust shall be set apart every year and shall be held for the benefit of Sri Atreya Lakhotia and the balance of 95 per cent. of the income of the trust shall be accumulated for the benefit of the would be wife of Sri Atreya Lakhotia. These terms and conditions have been set out in detail in sub- cls. (a) to (d) of cl. 3 of the deed of trust. In view of the said terms and conditions, the ITO held that 95 per cent. of the income of the trust was to be accumulated for the benefit of a person not known and determinate since it was not known who would be the wife of Sri Atreya Lakhotia. He, accordingly, applied s. 164 of the IT Act, 1961, and assessed the income of the trust at the maximum marginal rate." On appeal by the assessee, the AAC held that simply because the prospective wife of Sri Atreya Lakhotia did not exist it could not be said that the beneficiary was not known and determinate. He, therefore, held that the ITO was not justified in applying s. 164 of the Act. Thereafter, the matter was taken before the Tribunal and the Tribunal also confirmed the view taken by the AAC. There is no dispute that the beneficiary was not determinate or known. s. 164(1) provides that the assessment will be made separately if the beneficiaries are known and determinate. Now, the position has been made clear by adding an Expln. to that section by the Finance (No. 2) Act, 1980, w.e.f. April 1, 1980. Expln. 1 provides as follows : "164. Charge of tax where share of beneficiaries unknown.-... Expln. 1. - For the purposes of this section,- (i) any income in respect of which the persons mentioned in cl. (iii) and cl. (iv) of sub-s. (1) of s. 160 are liable as representative assessee or any part thereof shall be deemed as being not specifically receivable on behalf or for the benefit of any one person unless the person on whose behalf or for whose benefit such income or such part thereof is receivable during the previous year is, expressly stated in the order of the Court or the instrument of trust or wakf deed, as the case may be, and is identifiable as such on the date of such order, instrument or deed ; (ii) the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is received shall be deemed to be indeterminate or unknown unless the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable, are expressly stated in the order of the Court or the instrument of trust or wakf deed, as the case may be, and are ascertainable as such on the date of such order, instrument or deed."
(3.) THE provisions of s. 164 of the Act were made explicit by the Explanation which was inserted w.e.f. April 1, 1980. In the instant case, the assessment year involved is 1981-82 and the said Explanation clearly applies to the instant case. In view of such an Explanation, the benefit of s. 164 could not be obtained unless the beneficiary was known and determinate. In the instant case, the beneficiary was the would be wife of Atreya Lakhotia. In the instant case, it is not a fact that the marriage has been fixed and the would be wife is identifiable. The trust deed provides that the trust was for the benefit of the would-be wife who was not in existence when the trust was created and there was no certainty that such a marriage would ever take place to fulfil the object of the trust.;