Aquagel Promoter Group Shareholders Trust Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that the income of beneficiaries of trust cannot be treated as income in the hands of the trust. Accordingly, disallowance under section 143(1) of the Income Tax Act not justified.
Facts- The assessee is an Association of Person (Trust) which came into existence vide Trust Deed dated 24.12 2012. The Trust is comprising of 38 members who are having definite shares as beneficiaries in the assessee-trust and was created for the specific purpose namely to transfer the shares of M/s. Aquagel Chemicals Pvt. Ltd. to the Hindustan Uniliver Ltd. in an escrow mechanism manner. Thus the assessee-trust is escrow agent and essentially a holding tank. For the year under consideration the assessee has shown a total receipt of Rs.3,63,21,748/- which was liable to be distributed between its beneficiaries with their appropriate shares. Thus the assessee trust filed its Return of Income declaring Nil Income. However, one of the group of beneficiary comprising of 5 members have not received their shares of income as distributed by the assessee-trust on account of some dispute. Therefore, the CPC held that such income has to be taxed in the hands of the Assessee Trust only and accordingly added to the total income, while processing the intimation made u/s.143(1)(a) of the Act.
