cannot be any doubt about the fact that merely because one of the known beneficiaries whose share

is specified dies and such beneficiaries interest devolves on the deceaseds heir or heirs as the case may be, the specified trust would not become an unspecified trust because in place of the deceased beneficiaries her legal heir are substituted. Commissioner of Income-Tax vs. Devshi Trust ((2005) 199 CTR Bom 600, 2005 279 ITR 519 Bom)5: In this case the question before the Bombay High Court was - whether the assesseetrust was a non-discretionary trust for the purposes of the applicability of appropriate rate of tax? On the basis of the findings recorded by the authorities and the material available on record, it was observed that resolutions adopted by the trustees and the demarcation of shares made by them in favour of the beneficiaries in the ratio of 50 : 50, clearly indicates that the power vested in the board of trustees was exercised by them at their meeting held on June 28, 1980, wherein the shares of the beneficiaries were defined though initially the trust was a discretionary trust, i.e., up to March 31, 1980. But after having defined the specific shares of each beneficiary, the definite trust came into existence. In that view of the matter, it was upheld by the Court the trust has to be held as a non-discretionary trust. If that be so, the question referred has to be answered in the affirmative, i.e., in favour of the assessee and against the Revenue. Reliance was placed on the Bombay High Court ruling in case of CIT v. Trustees of the Trust of Mrs. Manorama L. Apte Trust ((2002) 178 CTR Bom 231)6

Comparative taxation of a Fund being set-up in different organizational structure:

Company Points of difference Tax at entity 30% plus level: applicable surcharge and cess LLP 30% plus cess Firm 30% plus cess Association Trust of person Same as AOP If shares of investors are known, then tax rate as applicable on investors, otherwise tax