THE COMM.OF INCOME TAX.HYD. V. G.V.FAMILY TRUST HYD.

RC/66/1996

AI Insights

The case involves a reference made by the Income-Tax Appellate Tribunal, A.P., Hyderabad to the High Court of Andhra Pradesh concerning the interpretation of section 161(1-A) of the Indian Income Tax Act, 1961. The core issue was whether the maximum marginal rate of tax should be applied to the income of each beneficiary individually or to the aggregate income of all beneficiaries managed by the trustees. The High Court, referencing its earlier decisions, concluded that the tax should be applied to each beneficiary's income separately, supporting the assessee's position, G.V. Family Trust, Hyderabad.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 682852 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 22-02-2010
• Assessment Year: misc
• Other Referred Cases: RC.No. 42 of 1993, RC.No.258 of 1996
• Laws Referred To: Indian Income Tax Act, 1961
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: G PAVAN KUMAR
• Assessee Lawyers: S R ASHOK
• Keywords: Maximum Marginal Rate; Trustees; Income of beneficiaries
• Section: 256(1); 161(1-A)

Judgement Text

"IN THE HIGH COURT OF JUDICATURE ANDHRA PRADESH AT HYDERABAD MONDAY THE TWENTYSECOND DAY OF FEBRUARY TWO THOUSAND AND TEN PRESENT THE HONOURABLE SRI JUSICE B. PRAKASH RAO AND THE HONOURABLE SRI JUSTICE REDDY KANTHA RAO REFERRED CASE No. 6 6 OF 1996 {under section 256 (1) of the Indian Income Tax Act, 1961 in RA.No. 716/Hyd/95 dated 26-2-1996 Andhra Pradesh of ITAT Hyderabad Bench ‘A’} Between: The Commissioner of Income-tax Andhra Pradesh-II, Hyderabad. …. Petitioner V/s. G.V. Family Trust, Hyderabad. …. Respondent Counsel for the Applicant : Sri S.R. Ashok Senior Counsel Counsel for the Respondent: Sri G.Pavan Kumar THE HONOURABLE SRI JUSTICE B. PRAKASH RAO AND THE HONOURABLE SRI JUSTICE REDDY KANTHA RAO REFERRED CASE No. 6 6 of 1996 J U D G M E N T : (Per the Hon'ble Sri Justice B.Prakash Rao) RC.No. 66 of 1996 is referred to this Court by the Income- Tax Appellate Tribunal, A.P., Hyderabad under section 256 (1) of the Indian Income Tax Act, 1961 in RA.No. 716/Hyd/95 dated 26- 2-1996 Andhra Pradesh of ITAT Hyderabad Bench ‘A’ on its file for decision on the following questions of law viz., Whether on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the maximum marginal rate chargeable under the provisions of section 161 (1-A) was to be applied on the whole of the income of each beneficiary and not on the aggregate of the income of all the beneficiaries in the hands of the trustees ? 2. Heard the learned standing counsel for the petitioner and the learned counsel for the respondent. 3. Having regard to the question, which is arising under this reference made under section 256 (1) of the Indian Income Tax Act, especially in regard to the maximum marginal rate chargeable under section 161 (1-A) to be applied on the whole income of each beneficiary and not on the aggregate income of all the beneficiaries in the hands of trustees. 4. As already submitted by both sides, the question under this reference made under section 256 (1) of the Indian Income Tax Act, 1961 is no longer res integra and it is squarely covered by the judgment of this court in RC.No. 42 of 1993 dated 22-12-2004 and also RC.No.258 of 1996, dated 25-6-2009, wherein this Court held the question under reference in favour of the assessee. 5. Following the judgment of this court in RC.No. 42 of 1993 dated 22-12-2004 and also RC.No.258 of 1996, dated 25-6-2009, the question referred to is answered in favour of the assessee. 6. Accordingly, RC.No. 66 of 1996 is disposed of. No costs. __________________________ JUSTICE B. PRAKASH RAO ______________________________________ JUSTICE REDDY KANTHA RAO 22-02-2010. I s L THE HONOURABLE SRI JUSTICE B. PRAKASH RAO AND THE HONOURABLE SRI JUSTICE REDDY KANTHA RAO REFERRED CASE No. 6 6 OF 1996 Judgment of the Division Bench delivered by the Hon'ble Sri Justice B.Prakash Rao) Circulation Entry No. 131 Date: 22-02-2010 COMPUTER No. 43 Court Master: I s L "