Savita Gouri Malani Grand Children Trust, Kolkata V. ITO, Ward-31(4), Kolkata. , Kolkata

ITA 1370/KOL/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1986 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 11-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Maximum Marginal Rate
• Section: 154; 250

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA डॉ. मनीष बोरड, ल े खा सदस्य एवं श्री प्रदीप क ु मार चौब े , न्याधयक सदस्य क े समक्ष Before DR. MANISH BORAD, ACCOUNTANT MEMBER & PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.A. Nos.: 1369 & 1370/KOL/2023 Assessment Years: 2012-13 & 2013-14 Savita Gouri Malani Grand Children Trust..............................Appellant [PAN: AABAS 8565 N] Vs. ITO, Ward-32(4), Kolkata......................................................Respondent Appearances: Assessee represented by: Anil Kochar, Adv. Department represented by: Nicholash Murud, Addl. CIT, DR. Date of concluding the hearing : May 2 nd , 2024 Date of pronouncing the order : May 30 th , 2024 ORDER Per Pradip Kumar Choubey, Judicial Member: Both these appeals filed by the assessee pertaining to the Assessment Years (in short ‘AY’) 2012-13 & 2013-14 are directed against separate orders passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income-tax (Appeals)-NFAC, Delhi [in short ld. ‘CIT(A)’] dated 01.12.2023 arising out of the assessment order framed u/s 154 of the Act dated 11.04.2018. 2. The brief facts of the case of the appellant are that the assessee Savita Gouri Malani had executed a last will in favour of four persons making the name of Trust as Savita Gouri Malani Grand Children Trust. The beneficiaries I.T.A. Nos.: 1369 & 1370/KOL/2023 Assessment Years: 2012-13 & 2013-14 Savita Gouri Malani Grand Children Trust. Page 2 of 5 are (a) Hemal B. Malani, (b) Jigar B. Malani (Both sons of Bhikhu J. Malani), (c) Jay N. Malani & (d) Vidhi N. Malani (Son & daughter of Naresh J. Malani). Return of income was filed by the assessee on 29.08.2012 declaring therein total income of Rs. 3,59,537/- with tax liability of Rs. 18,490/- determined at normal rates. The CPC while processing the return of income adopted the tax liability at Rs. 1,38,658/- at the maximum marginal rates without changing the total income. Assessee filed a rectification petition u/s 154 of the Act and requested to determine the tax as per the 2 nd proviso to Section 164(1) of the Act treating the assessee as an AOP and to tax it in conjunction with Section 160(iv) of the Act. The Assessing Officer (in short ld. 'AO') rejected the petition confirming the tax at maximum marginal rates in short MMR. Being aggrieved, the assessee preferred appeal before ld. CIT(A) but wherein also assessee failed in getting relief, as a result of which, the present appeal has been preferred. 3. ld. Counsel for the assessee challenged the impugned order thereby saying that order passed by the lower authorities are arbitrary, erroneous and without proper reasons. His main contention is that there is a family Trust and at the creation of the family Trust income has been determined as it appears from the last will of the executor Savita Gouri Malani. The ld. Counsel for the assessee further, submits that the ld. AO and ld. CIT(A) have wrongly held that the share of income of the Trust is unknown and indeterminative, so relevant income shall be taxed at maximum marginal rates. He had produced the photocopy of the last will of Late Savita Gouri Malani, names and PANs of the beneficiaries of the said Trust, copy of the acknowledgment of the ITR filed for the relevant assessment years, computation of profit and loss account and balance sheet. 4. After hearing the rival submissions of the Counsels of the respective parties, perused the orders and it admits of no doubt that there was a Trust namely Savita Gouri Malani Grand Children Trust. From perusal of the order of ld. CIT(A) it appears to us that he took the assistance of Section 164(1) of the Act in calculation of the tax by saying that in the present case share of I.T.A. Nos.: 1369 & 1370/KOL/2023 Assessment Years: 2012-13 & 2013-14 Savita Gouri Malani Grand Children Trust. Page 3 of 5 the income of the Trust is unknown and not determinative. The submission of ld. Counsel for the assessee is that in the present case determination of the tax should be as per the 2 nd proviso to Section 164(1) of the Act treating the assessee as an AOP and to tax it in conjunction with Section 160(iv) of the Act. We have gone through Section 160(iv) of the Act which reads thus: “In respect of income which a trustee appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise [including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913),] receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees;” 4.1. We have perused 2 nd proviso to Section 164(1) of the Act which reads as under: “164. (1) Subject to the provisions of sub-sections (2) and (3), where any income in respect of which the persons mentioned in clauses (iii) and (iv) of sub-section (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as "relevant income", "part of relevant income" and "beneficiaries", respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate: Provided that in a case where— (i) none of the beneficiaries has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or (ii) the relevant income or part of relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or (iii) the relevant income or part of relevant income is receivable under a trust created before the 1st day of March, 1970, by a non-testamentary instrument and the Assessing Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust was created bona fide exclusively for the benefit of the relatives of the settlor, or where the settlor is a Hindu undivided family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly dependent on the settlor for their support and maintenance; or I.T.A. Nos.: 1369 & 1370/KOL/2023 Assessment Years: 2012-13 & 2013-14 Savita Gouri Malani Grand Children Trust. Page 4 of 5 (iv) the relevant income is receivable by the trustees on behalf of a provident fund, superannuation fund, gratuity fund, pension fund or any other fund created bona fide by a person carrying on a business or profession exclusively for the benefit of persons employed in such business or profession, tax shall be charged on the relevant income or part of relevant income as if it were the total income of an association of persons.......................” 4.2. On perusal of the documents filed by the assessee it appears to us that last will of the executor Savita Gouri Malani reveals thus: “The name of this Trust shall be SAVITA GAURI MALANI GRANDCHILDREN TRUST and its beneficiaries will be the followings: (a) Hemal B. Malani (b) Jigar B, Malani (both sons of Sri Bhikhu J. Malani) (c) Jay N Malani (d) Nidhi N. Malani (son and daughter of Sri Naresh J Malani All the aforesaid beneficiaries shall have equal rights, titles and interests in the corpus and its income” 5. On perusal of the above, it appears to us that share and income of the trustees have already been determined in the last will. So, we find substance in the arguments of the ld. Counsel for the assessee that tax should be computed at normal rate and not at the maximum marginal rate in short MMR. 6. In the result, both the appeals filed by the assessee are allowed. Order pronounced in the open Court on 30 th May, 2024. Sd/- Sd/- [Manish Borad] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 30.05.2024 Bidhan (P.S.) I.T.A. Nos.: 1369 & 1370/KOL/2023 Assessment Years: 2012-13 & 2013-14 Savita Gouri Malani Grand Children Trust. Page 5 of 5 Copy of the order forwarded to: 1. Savita Gouri Malani Grand Children Trust, 4, Lower Rowdon Street, Kolkata, West Bengal, 700020. 2. ITO, Ward-32(4), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata