BOMBAY HIGH COURT

                                        Commissioner of Income-Tax

                                                         Vs

                                            Pushpaben Family Trust

                                   (B.N. Srikrishna and S V Manohar, JJ.)

                                                    02.11.1992

                                                  JUDGMENT

B.N. Srikrishna J.
1. Filing of paper books dispensed with.

2. The Department has sought and obtained reference under section 256(1) of the Income-tax
Act, 1961, of the following three questions which relate to the assessment year 1972-73 :

        "1. Whether, in relation to the previous year ended March 31, 1972, the beneficiaries of
        the income under the trust were the settlor's grand-daughters, Chhaya and Sangeeta, or
        also Pushpaben, the wife of the settlor's son, Gunvantrai Amratlal Sanghrajka ?

        2. Whether, on the facts and in the circumstances of the case, the case fell within the
        category specified in clause (i) of the proviso to section 164(1) of the Income-tax Act,
        1961 ?

3. Whether, on the facts and in the circumstances of the case, tax was chargeable on the income
of the trust for the assessment year 1972-73 as if the relevant income were the total income of an
association of persons ?"

3. In CIT v. B. A. Sanghrajka Trust [1990] 181 ITR 484 (Bom), another family trust of the
assessee, containing similar provisions to the effect that the trustees were entitled, in their
absolute discretion, to utilise some part of the trust income for the benefit of the two grand-
daughters and the corpus of the trust, including the accumulation, had to be distributed among
the grand-daughters and the daughter-in-law at any time after the expiry of a stipulated period,
the Revenue had taken the view that the daughter-in-law was also one of the beneficiaries under
the trust, and since she had income chargeable to tax, the trust could not avail of the exception
clause under section 164 of the Income-tax Act, 1961. This court, after analysing the provisions
of the trust deed, took the view that the daughter-in-law had no right or interest in the income of
the trust from any year, and that she had only an interest in the trust, in so far as she was entitled
to get such portion, if an, as the trustees might, in their absolute discretion, think fit to give her
out of the corpus of the trust, when it was distributed. In the case of the assessee before us also,
the terms of the trust are similar. The daughter-in-law. Pushpaben Gunvantrai, has not right under
the trust deed, except to receive such portion as may be distributed by the trustees at their
discretion, upon the completion of the terms of the trust. Following the reasoning adopted by this
court in CIT v. B. A. Sanghrajka Trust [1990] 181 ITR 484, the questions referred for the opinion
of this court are answered as under :

Question No. 1 : In relation to the previous year ended March 31, 1972, the beneficiaries of the
income under the trust were the settlor's grand-daughters, Chhaya and Sangeeta, Pushpaben, the
wife of the settlor's son, was not a beneficiary.

Question No. 2 is answered in the affirmative and in favor of the assessee.

Question No. 3 is answered in the affirmative and in favor of the assessee.

4. There shall be no order as to costs.