- (1.) In this instant application, the following question of law has been referred for our opinion : "Whether, on the facts and in the circumstances of the case and on a correct interpretation of Explanation (1) below Section 164(3) of the Income-tax Act, 1961, the Tribunal was justified in law in holding that the 'would be wife' of the minor satisfied the above condition and thereby directing the Assessing Officer to tax in the status of association of persons at the rate applicable to association of persons and not at the maximum marginal rate ?"
(2.) The assessee is a trust which filed a return with the Income-tax Officer, SC-I, Calcutta, on July 29, 1980. The trust was settled with a trust deed dated March 27, 1979. From the trust deed it is seen that Shri Krishna Kumar Mohta settled Rs. 5,000 on the "would be wife" of the minor, Shri Keshav Kumar Mohta. Shri Krishna Kumar Mohta had made himself trustee jointly with Shri Narendra Kumar Mohta.
(3.) The source of income of the trust is share income from the firm, Mohta Marketing Syndicate, and income from share dealing. From the trust deed, it is further revealed that the income of the trust is to be kept for the purpose of the "would-be wife" of the minor, Shri Keshav Kumar Mohta. According to the Income-tax Officer the beneficiary is not definite and the trust has been formed for the benefit of some unknown person, which cannot be determined at any length of time. This makes the trust a discretionary one and calls for invoking Section 164(1) of the Income-tax Act, 1961. Therefore, the assessee has to pay tax at the maximum rate as representative assessee as provided under the said Section of the Act and the income-tax assessee has to pay tax accordingly.;