Case Law Details
Arcil CPS 002 XIII Trust Vs ITO (ITAT Mumbai)
Assessee trust is a Revocable Trust and contribution by beneficiaries is a revocable transfer. Hence, the income shall be taxed in the hands of the beneficiaries.
Facts- The assessee is an AOP in the nature of trust in the business of securitization of debts and processing of such bad debts mainly of bank and sick companies. Assessee filed ROI declaring total income as NIL.
The assessee has shown the interest income @ Rs.94,030/- and realization over acquisition cost at Rs.93,45,157/- against which the assessee has claimed expenses at Rs.117.96 crores which includes acquisition expenses at Rs.23.09 lakhs, protection, preservation & insurance expenses at Rs.3.24 crores, management fees at Rs.6.49 crores and impairment provision at Rs.107.99 crores. The net result was deficit for the beneficiaries at Rs.117.01 crores. The assessee has shown nil income on the ground that it was determinate trust and the share of the beneficiaries was to be considered in their hands. Thereafter, taxability of income was determined and accordingly the income of the assessee was assessed in sum of Rs.76,90,150/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the order of the AO, therefore, the assessee has filed the present appeal before us.
Conclusion- As per principles laid down in the decision of the Bangalore Bench of the Tribunal in the case of India Advantage Fund-VII and the Mumbai Bench of ITAT in Milestone Army Navy Trust we hold that the assessee Trust is a revocable Trust and contribution by beneficiaries is a revocable transfer. Having held thus, it follows that the income shall be taxed in the hands of the beneficiaries.
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