Kalpesh Classes

Question 1 (ID 051) (Private Trust) (Revision ​​ / Home work)

Assessee trust was a 20% beneficiary of the main trust & its only source of income was 5% share in the​​ income of main trust. Trust claims that its share should be taxed at normal rate as none of the beneficiaries was a beneficiary in any other trust & none of them had income exceeding maximum limit not liable to tax. But A.O.'s view is that assessee was a chain trust created for avoiding tax, so income should be charged at maximum marginal rate (MMR). What is your opinion ?

Question 2 (ID 052) (Private Trust) (Revision ​​ / Home work)

The settler of the trust amended certain clauses to rectify certain​​ mistakes in order to make the trust wholly for charitable & religious purposes. Can the trust acquire such status and claim the exemption u/s. 11?

Question 3 (ID 054) (Private Trust) (Revision ​​ / Home work)

A trust deed named granddaughter of the author of the trust as the beneficiary on attaining majority. During the P.Y., she had not attained majority. The payment of income to the beneficiary was left to the absolute discretion of the trustees. The trustees claim that beneficiary is only one who is known. Hence, income of the trust should not be charged at​​ MMR.​​ Do you agree with this view? Also explain the relevant provisions for rates of taxes of private trust.

Question 4 (ID 055) (Private Trust) (Revision ​​ / Home work)

An assessee was a trustee of a trust created by Will. She was a wife of the executor (T). She was the sole trustee of the trust as well as beneficiary. She had a life interest in the trust and after her death the children were to become beneficiaries in the shares determined in the deed and immovable property used by her as residence which was sold and new house was purchased. She claimed u/s.54. A.O. disallowed it. Do you think it is proper?​​ ​​ 

Question 5 (ID 056) (Private Trust) (Revision ​​ / Home work)

Can the character of discretionary​​ trust be changed by a resolution passed by trustees to give income to only one beneficiary out of the many?  ​​ ​​ ​​ ​​ ​​​​ 

Question 6 (ID 057) (Private Trust) (Revision ​​ / Home work)

There is a private specific trust in which the shares of the beneficiaries are certain. Mr. L and Mr. M are the trustees. The beneficiaries are all minors and there are several items of assets as envisaged by section 2(ea). Mr. B, the father of the minor children also has taxable net wealth. What is the best possible manner in which the Assessing Officer should complete the assessment of the trust, so as to maximize the tax revenue?

Question 7 (ID 053) (Private Trust)​​ 

A trust was created with a sole beneficiary, it was provided in the deed that all the assets of the trust were to be​​ regarded as one single fund. Can it be said that vesting of income in the beneficiary is not a precondition to claim that sec.164 should not apply. The trustees had the discretion of the time at which to extend the benefit to the beneficiary. Do you think​​ section 164 is applicable?

Question 8 (ID 032 001) (Private Trust)

Welfare trust is a private discretionary trust, which derived income from the following sources.

What will be the tax liability of the trust ?

Question 9 (ID 032 021) (Private Trust)​​ 

XY trust derives a total income of Rs. 6,40,000. Out of Rs 6,40,000, Rs. 1,40,800 is meant for​​ public charitable purposes and the balance Rs. 4,99,200 is for the benefits of X (29 years) and Y (31 years) whose individual shares are not known. The trust has actually applied Rs. 40,000 toward public charitable purposes during the previous year. Determine the tax liability of the trust for the assessment year under the following situations:

• X and Y neither beneficiaries under any other trust nor their taxable income exceeds Rs. 1,00,000.

• X is member of another trust (no income is derived for the trust),​​ though taxable income of X and Y does not exceed Rs. 1,00,000.

• Taxable income of X and / or Y is Rs. 8,00,010 though they are not beneficiaries under any other trust