Income Tax Appellate Tribunal - Mumbai
Ito 23(1)(4), Mumbai vs Dhfl Venture Capital Fund, Mumbai on 26 June, 2019
1 आयकर अपीलीय अिधकरण "डी" ायपीठ मुंबई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI माननीय ी महावीर िसं ह, ाियक सद एवं माननीय ी मनोज कुमार अ वाल ,ले खा सद के सम ।
BEFORE HON'BLE SHRI MAHAVIR SINGH, JM AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ I.T.A. No.5914/Mum/2017 (िनधा रण वष / Assessment Year: 2012-13) Income tax Officer-(23)(1)(4) M /s. D HF L V en t u r e ca p it al F u n d Room No.107, Matru Mandir बनाम/ Ground Floor, HDIL Towers Tardeo Road, Grant Road Vs. Anant Kanekar Marg Mumbai-400 007. Bandra (East), Mumbai-51.
थायीले खासं ./जीआइआरसं ./PAN/GIR No. AAATD-8633-L (अ पीलाथ!/Appellant) : ("#थ! / Respondent) Revenue by : Shri D.G. Pansari-Sr. DR Assessee by : Shri Sailee Meghraj- Ld. AR सुनवाई की तारीख/ : 21/06/2019 Date of Hearing घोषणा की तारीख / : 26/06/2019 Date of Pronouncement आदे श / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)
1. Aforesaid appeal by revenue for Assessment Year [AY] 2012-13 contest the order of Ld. Commissioner of Income-Tax (Appeals)-32, Mumbai, [CIT(A)], Appeal No. CIT(A)-32/IT-37/23(1)(4)/15-16 dated 29/05/2017 on following grounds of appeal: -
1. Whether in the facts and circumstance of the case and in law, the Ld. CIT(A) was correct in holding that the assessee is a private specific trust with revocable transfer and not an AOP as held by AO.
2. Whether in the facts and circumstances of the case, and in law, Ld. CIT(A) erred in disregarding the AO's invocation of section 164(1) of the l.T.Act, 1961 without assigning any reasons.2
3. Whether in the facts and circumstances of the case, and in law, the Ld CIT(A) was justified in deleting the addition made by the Assessing Officer amounting to Rs.8,31,34,663 under business income.
4. Whether in the facts and circumstances of the case, and in law, the Ld CIT(A) was justified in deleting the addition made by the Assessing Officer of Rs.16,500/- u/s 14A of the I. T. Act, 1961.
5. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the A.O. be restored."
The assessment for impugned AY was framed by Ld. Income Tax Officer- 23(1)(4), Mumbai [AO] u/s 143(3) on 13/03/2015 wherein the income of the assessee was determined at Rs.831.51 Lacs after certain additions / adjustments as against 'Nil' return filed by the assessee on 29/09/2012. The assessee is shown to be a venture capital fund.
2.1 During assessment proceedings, it transpired that the assessee was a Trust set up under Indian Trust Act, 1882 vide Trust Deed dated 19/08/2005. The trust was also said to be registered as venture capital fund with Securities & Exchange Board of India [SEBI] under SEBI Venture Capital Fund [VCF] Regulations, 1996 and stated to be specific revocable trust as per Clause 15.1 of the Trust Deed.
2.2 It was pointed out that the income earned by the venture capital fund from investments was credited to various contributors' / Members' account appearing in the books of funds, which is subject matter of onward distribution. In terms of Section 61 & 63 of the Act, the income earned by the fund was stated to be directly taxed in the hands of the contributors / beneficiaries and not in the hands of assessee. It was also submitted that fund was not into the business of sale / purchase of goods and accordingly, no business incomes exists in its case.
2.3 However, Ld. AO noted that the return of income was furnished specifying the status of the assessee as Any Other AOP / BOI artificial juridical person and the assessee reflected net surplus of Rs.10.81 Crores from 3 interest & dividend income which was stated to be distributed to the beneficiaries and accordingly, the income was reflected as Nil. The said facts led the Ld. AO to form an opinion that interest income was not exempt from tax and the assessee was show-caused as to why the claim of its being a revocable trust be rejected.
2.4 In response, the assessee, vide submissions dated 23/01/2015, inter- alia submitted that the assessee was a revocable specific trust to which the provisions of Section 61 to 63 were applicable and therefore, the income was taxable in the hands of the investors. To support the same, the attention was drawn to various clauses of the Trust Deed and sample contribution agreement made between assessee trust and investors. 2.5 It was further noted that the assessee trust was stated to be created as private trust through trust deed dated 19/08/2005 by its trustees namely M/s DHFL Ventures Trustees Co. Pvt. Ltd. [DHFL]. Subsequent to its creation, the assessee, vide contribution agreement dated 24/03/2006, entered into activity of providing financial assistance to investee undertaking by subscribing to equity, quasi-equity, equity related instruments in any other manner. As per the Trust deed, DHFL is appointed as settlor as well as trustee also and therefore, the trust was created with sole motive for benefit of the settlor / contributor as against the basic premise that Trust has three constituents i.e. Settler, Contributor and beneficiary and all three constituents are independent and distinct.
2.6 In the above background, Ld. AO proceeded to categorize the assessee as an Association of Person [AOP] and accordingly, held that the income was liable to be taxed in its hands in terms of Section 161 and the provisions of Section 61 to 63 were not applicable, as claimed by the assessee. Finally, the net surplus earned by the assessee has been held to be chargeable to tax.
42.7 Proceeding further, since the assessee earned exempt dividend income of Rs.2.50 Crores, Ld. AO, applying Rule 8D, worked out expense disallowance u/r 8D(2)(iii) at Rs.16,550/-.
3. Aggrieved, the assessee agitated the same before Ld. first appellate authority with success vide impugned order dated 29/05/2017, wherein relying upon this Tribunal's order in assessee's own case for AYs 2008-09 to 2010- 11, the matter was adjudicated in assessee's favor and both the additions were deleted. The relevant extract of the Tribunal order has already been reproduced in the impugned order. Aggrieved, the revenue is in further appeal before us.
4. In the above factual matrix, Ld. Authorized Representative for Assessee [AR], at the outset, submitted that the case was squarely covered by the earlier orders of Tribunal in assessee's own case for AYs 2008-09 to 2010-11, ITA Nos. 3263/M/2012, 3179/M/2014 & 734/M/2015 order dated 28/04/2017, a copy of which has been placed on record. It has further been submitted that following the same, similar view has been taken by the Tribunal for AY 2011- 12 in ITA No. 4099/M/2015 order dated 30/06/2017, a copy of which has also been placed on record. The Ld. DR could not controvert the aforesaid fact. Nothing has been brought on record to establish any distinguishing feature in the factual matrix or to submit that the aforesaid rulings of the Tribunal are not applicable for the impugned AY.
5. In view of the admitted position, no infirmity could be found in the impugned order. Respectfully following the binding judicial precedent in the shape of Tribunal's order in assessee's own case for earlier years, we confirm the impugned order and dismiss the revenue's appeal.
6. The appeal stands dismissed.
5Order pronounced in the open court on 26th June, 2019.
Sd/- Sd/-
(Mahavir Singh) (Manoj Kumar Aggarwal)
ाियक सद / Judicial Member लेखा सद / Accountant Member मुंबई Mumbai; िदनां क Dated : 26/06/2019 Sr.PS, Jaisy Varghese आदे शकी"ितिलिपअ$ेिषत/Copy of the Order forwarded to :
1. अपीलाथ!/ The Appellant
2. "#थ!/ The Respondent
3. आयकरआयु*(अपील) / The CIT(A)
4. आयकरआयु*/ CIT- concerned
5. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai
6. गाड/ फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai.