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Showing contexts for: revocable trust in M/S. Tamil Nadu Urban Development Fund, ... vs Ito, Chennai on 23 March, 2017Matching Fragments
3.0 The assessee is a Trust set up by Government of Tamilnadu and constituted a trust deed dated 29/11/2006 and filed it's return of income under the status of AOP (Trust) admitting Nil income on 22.09.2008. The AO taken up the case for scrutiny and completed the assessment u/s.143(3) on total income of Rs.18,50,37,858/-. The assessee is having excess of income over expenditure amounting to Rs.18,34,07,282/- and the assessee has claimed deduction of provisions relating to non performing assets which was disallowed by the AO and computed the Income at Rs.185037858/-. During the assessment proceedings the assessee contended that the provisions of section 61 was applicable to the assessee for the reason that the trust is revocable trust as the Unit capital contributions made by the three financial institutions can called back with accretion at any time after three years and such revocable transfer of unit contribution has to be taxed only in the hands of transferors. The ITA Nos.2316 & 2317/Mds/2016 :- 3 -:
1. DCIT v. India Advantage Fund-VII (2014) 036 ITR (Trib) 0304.
2. ITO v. India Advantage Fund-I (2015) 43 CCH 0459 BangTrib.
3. Jyotendrasinghji v. S.I.Tripathi & Ors. (1993) 201 ITR 0611 (SC).
4. CIT v. T.A.V.Trust (2003) 264 ITR 52 (Ker).
ITA Nos.2316 & 2317/Mds/2016 :- 5 -:
6.0 The Ld.AR taken us to the Trust Deed Page No.5, 23, 22, 43 and 78 for referring the meaning of projects, investments, revocable trust, distribution of profits and supplementary deed for grants of Government of Tamil Nadu and explained that the Trust is not carrying on any business activity, the shares of the beneficiaries are determined and hence the trust is a revocable Trust. The Ld.AR argued that Sec.61 is applicable in the assessee's case and Sec.161(1A) has no application in the assessee's case. On the other hand, the Ld.DR relied on the lower authorities orders. 7.0 We heard the rival submissions and perused the material placed on record and we have also gone through the provisions of Sec.61 of Income Tax Act and the various clauses of Trust Deed and the contributors agreement referred by the Ld.AR. For ready reference, we reproduce Sec.61 of Income Tax Act hereunder:
From the above extracts of the Paper Book, which are extracted from the Trust Deed and the contributor's agreement, it is evident that the assessee is not carrying on any business with commercial motive. The beneficiaries of the trust are identifiable and the shares are determined by contributor's agreement and the contributors are free to call upon the Trust to cancel any units held by them and return the value. Therefore, the trust is revocable trust and squarely covered by section 61 of Income tax act. Accordingly, we hold that Trust is a revocable Trust and the income derived by the assessee required to be taxed in the hands of the beneficiaries in accordance with the provisions of section 61 and 161(1) of income tax act. This view is supported by the decision of the Co-ordinate Bench in the case of DCIT v. India Advantage Fund-VII cited supra relied upon by the assessee. The assessee also filed evidence regarding the admission of income by the beneficiaries in Page Nos.81 to 83 from the contributors ICICI Bank, IL&FS and the HDFC. Therefore, the appeals of the assessee for the A.Ys 2008-09 and 2009-10 are allowed and the orders of the lower authorities are set-aside.