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Showing contexts for: revocable trust in Ito 23(2)(3), Mumbai vs Milestone Army Nay Trust, Mumbai on 17 April, 2018Matching Fragments
5.7 The relevant clauses of the Trust Deed and the Contribution Agreement reproduced above show, that the trust has been created as a revocable Trust wherein, it has been mentioned that the income generated by the trust will be assessed in the hands of the Contributors u/s 61 & 63 of the Act. It is also not in dispute that 35 crore has been brought in as capital contribution by the Army Group Insurance Fund and Naval Group I nsur ance Fund of t he I ndian Ar m y and Naval est abl ish m ent . The contribution of Shri Ved Prakash Arya is Rs. 20,000/- only. Thus, the entire contribution to the fund has been from the Army and Naval Group Insurance Funds. Moreover, the income of Army and Naval Group Insurance Funds is exempt u/s 10(23C)(iv) of the Act and, accordingly, section 193 and 194 I of the Act are also not applicable, as clarified vide CBDT Circular No. 736 dated 30.0 1.1996. In view of the above facts, the A.O.'s finding that the appellant created the smokescreen of Trust for investment in schemes or funds and earning interest income/profit arising out of the same, is nothing, but commercial transaction, is not valid or justified. I accordingly, annul and cancel this finding of the A.O. The issue now remains is whether the appellant being a revocable Trust, income of the Trust is assessable in the hands of the Trust or Contributors. In this regard, I find that the Bombay High Court in the case of CIT vs Mr. & Ms Govind B. C. Ghanekar (1994)206 ITR 438(Bom) has held "All income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income tax as the income of the transferor and shall be included in his total income."
ITA NO.4958/MUM/2016 (A. Y: 2012-13) M/s. Milestone Army Navy Trust .
5.8 In view of the above discussion, I hold that the appellant trust being a revocable Trust, income is taxable, if any, in the hands of the contributors, as mentioned in the Trust Deed and Contribution Agreements. The A.O. himself has not disputed or contradicted that appellant is not a revocable trust. On the contrary, he has accepted this fact. The assessment of income of Rs. 3,97,10,283/- in the hands of the Trust under the head income from the business and profession is, therefore, deleted and ground of appeal no. 3 allowed. Consequently, grounds of appeal no. 1,2,6 & 7 stand allowed. Grounds of appeal No. 4 & 5, being without prejudice to the main ground of appeal no. 3 are no longer valid and relevant hence, not taken up for discussion.
74. For the reasons stated above, we find no grounds to interfere with the order of the CIT(A). Consequently, the appeal by the Revenue is dismissed.
75. In the result, the appeal by the revenue is dismissed.
20ITA NO.4958/MUM/2016 (A. Y: 2012-13) M/s. Milestone Army Navy Trust .
5. As the facts and circumstances of the instant case before us are pari materia, respectfully following the order of the coordinate bench, we do not find any infirmity in the order of CIT(A) for holding that interest income was not liable to be taxed as business and profession in the hands of the assessee trust, being a revocable trust. However, such income is to be taxed in the hands of contributors."
7. Since, facts and circumstances are identical following the order of the Coordinate Bench in assessee's own case for the Assessment Year 2009-10 we uphold the order of the Ld.CIT(A) in holding that the interest income was not liable to be taxed as business income in the hands of the assessee trust being a revocable trust and such income is to be taxed in the hands of the contributors.
8. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on the 17th April, 2018.