ITO, Non corporate Ward 1(3), Chennai V. Murasoli Maran Family Trust, Chennai

ITA 2272/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5629 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 15-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: V DEVANATHAN
• Keywords: Maximum Marginal Rate

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NOS.2271 & 2272 /MDS./2017 ( ASSESSMENT YEAR : 2007-08 & 2008-09 ) THE INCOME TAX OFFICER, NON CORPORATE WARD 1(3), CHENNAI. VS. M/S. MURASOLI MARAN FAMILY TRUST, NO. 4,II AVENUE, BOAT CLUB ROAD, R.A.PURAM, CHENNAI 600 028. PAN AAATM 0863 H ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.B.SAGADEVAN, JCIT, D.R / RESPONDENT BY : MR.V.DEVANATHAN,ADVOCATE ! ' / DATE OF HEARING : 28.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 20.12.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED B Y THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-2, CHENNAI DATED 29.06.2017 PERTAINING TO ASSESSMENT YEARS 2007-08 & 2008-09. SINCE THE ASSESSEE IS COMMON IN THE SE TWO APPEALS, ITA NOS. 2271 & 2272/MDS/2017 2 THESE APPEALS ARE CLUBBED TOGETHER, HEARD TOGETHER, DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE HAS RAISED THE FOLLOWING COMMON GRO UNDS IN ITS APPEALS FOR ADJUDICATION. 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO L AW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN TREATING THE TRUST A S VALID, WITHOUT APPRECIATING THE FACT THAT THE MEETING OF THE BOARD OF TRUSTEES HELD ON 5.6.2003, WITHOUT THE MAIN TRUSTEE HAD EXTENDED THE TRUST PERIOD FOR ANOTHER 20 YEARS, WHICH IS VIOLATION OF THE PROVISI ONS OF SECTION 47 AND 48 OF THE INDIAN TRUST ACT, AND SUCH AN EXTENSION IN VARI ANCE TO THE ORIGINAL TRUST DEED IS INVALID IN LAW. 3. THE LEARNED CIT(A) ERRED IN HOLDING THE TRUST AS VALID, WITHOUT APPRECIATING THE FACT THAT THERE WAS VARIATION IN S HARE ALLOCATION TABLE , IN AS MUCH AS THE SAME REFLECTS 14 BENEFICIARIES, WHEREAS THE TRUST DEED NAMES ONLY 10 BENEFICIARIES. 4. THE LEARNED CIT(A) ERRED IN HOLDING THE TRUST AS VALID, THEREBY ALLOWING THE BENEFITS OF SECTION 161 OF THE IT ACT, WHEREAS FOR THE SHORTCOMINGS IN EXTENSION OF THE TRUST AND SHARE AL LOCATION TABLE IN RESPECT OF BENEFICIARIES, THE ENTITY OUGHT TO HAVE BEEN SUB JECTED TO TAX AT MAXIMUM MARGINAL RATE U/S. 167 OF THE IT ACT, AS APPLICABLE TO AOP. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE WAS A PRIVATE TRUST REGISTERED ON 28.06.1983 BY ONE SHRI K.SANTHA NAM (AUTHOR OF ITA NOS. 2271 & 2272/MDS/2017 3 THE TRUST). THE AUTHOR OF THE TRUST TRANSFERRED A S UM OF 10,000/- IN FAVOUR OF TWO TRUSTEES WHO WERE (A) SHRI MURASOLI M ARAN (B) SMT. MALLIKA MARAN, TO HOLD OFFICES FOR THEIR LIFE TIME OR TILL EXPIRATION OF TRUST. THE TUST DEED SPECIFIED 10 BENEFICIARIES AND THEIR SHARES. IN CLAUSE 15 OF THE TRUST DEED, THE DURATION OF THE TR UST HAS BEEN DETERMINED AS BEING A PERIOD OF 20 YEARS FROM THE D ATE OF EXECUTION OF THE DEED I.E. TILL 28.06.2003, BUT MAY BE EXTEND ED FOR A LIKE TIME T THE DISCRETION OF THE TRUSTEES. THE TRUSTEES ARE AL SO EMPOWERED TO DETERMINE THE TRUST WITHIN A PERIOD OF 20 YEARS. T HE LD. ASSESSING OFFICER PASSED ASSESSMENT ORDER U/S.147 R.W.S.143(3 ) OF THE ACT FOR ASSESSMENT YEAR 2007-08 ON 28.3.2016 & 2008-09 ON 2 8.03.2016 AND HELD THAT THE TRUST HAD BECOME INVALID ON ACCOU NT OF CERTAIN DEVIATIONS FROM/VIOLATION OF ORIGINAL TRUST DEED, H ENCE BENEFIT OF SEC.161 CLAIM WAS DISALLOWED. AGGRIEVED BY THE ORDE R OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) TREATING THE TRUS T AS VALID. AGAINST THE ORDER OF LD.CIT(A), NOW THE REVENUE IS IN AP PEAL BEFORE TRIBUNAL. ITA NOS. 2271 & 2272/MDS/2017 4 4. BEFORE TRIBUNAL, THE LD.D.R SUBMITTED THAT THE RESOLUTION OF BOARD OF TRUSTEES OF THIS TRUST, WHICH WAS PASSED O N 05.06.2003 IS INVALID AS THE MAIN TRUSTEE WAS NOT ATTENDING THE S AID MEETING. FURTHER, LD.D.R SUBMITTED THAT THE FINDINGS OF THE TRIBUNAL IN EARLIER ASSESSMENT ORDER FOR ASSESSMENT YEARS 2005-06 & 200 6-07 IN ITA NOS.2663 & 2664/MDS./2016 & C.O NOS.163 & 164/MDS./ 2016 VIDE ORDER DATED 31.01.2017 WAS DELIVERED ON THE PREMISE S THAT THERE ARE THREE TRUSTEES, OUT OF WHICH TWO TRUSTEES ARE ATTEN DING THE MEETING. THEREFORE, THE RESOLUTION IS VALIDLY PASSED BY THE MAJORITY OF THE TRUSTEES, EVEN IF SHRI MURASOLI MARAN WAS NOT PRESE NT IN THE TRUST MEETING, WHICH WAS HELD ON 05.06.2003. 5. ON THE OTHER HAND, LD.A.R SUBMITTED THAT THIS I SSUE IS SQUARELY COVERED BY THE EARLIER ORDER OF TRIBUNAL CITED SUPR A. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. ADMITTEDLY, ON EARLIER OCCASION THE TRIBU NAL IN THE EARLIER ASSESSMENT YEARS 2005-06 & 2006-07 GIVEN A FINDING THAT THERE ARE THREE TRUSTEES, OUT OF WHICH TWO TRUSTEES ATTENDED THE MEETING, THEREFORE, THE RESOLUTION VALIDLY PASSED BY THE MAJ ORITY OF THE ITA NOS. 2271 & 2272/MDS/2017 5 TRUSTEES, EVEN IF SHRI MURASOLI MARAN WAS NOT PRESE NT IN THE TRUST MEETING. HOWEVER, IN THE PRESENT CASE, I HAVE GONE THROUGH THE RESOLUTION PASSED ON 05.06.2003, WHICH IS REPRODUCE D HEREIN BELOW:- M.M.F. TRUST 93. KODAMBAKKARN HIGH ROAD CHENNAI 600 034. DATE MINUTES MEETING OF THE BOARI) OF TRUSTEES OF MMF TR UST (MARAN FAMILY TRUST) HELD ON THURSDAY THE 5 TH JUNE 2003 . THE MEETING WAS ATTENDED BY MRS. MALLIKA MARAN, TRU STEE AND MR. KALANITH MARAN, REPRESENTING MR. MURASOLI MARAN, ANOTHER TRU STEE WHO COULD NOT ATTEND THE MEETING AS HE WAS SERIOUSLY INDISPOSED. MRS. MA LLIKA MARAN, TRUSTEE TOOK THE CHAIR AND PRESIDED THE MEETING. THE MEETING TOOK NOTE OF CLAUSE 15 OF THE TRUST DEE D DATED 28T DAY OF JUNE I983 WHICH PROVIDES THAT THE DURATION OF THE TRUST SHALL BE FOR A PERIOD OF 20 YEARS FROM THE DATE O EXECUTION OF THE DEED I.E., TILL 27 TH DAY OF JUNE 2003. THE MEETING AFTER DISCUSSION UNANIMOUSLY DECIDED TO EXTEND THE DURATION OF THE TRUST IN ACCORDANCE WITH SAID CLAUSE 15 TH BY A TERM OF 20 YEARS FROM THE DATE ON WHICH THE INITIAL TERM EXPIRES. ACCORDINGLY THE DURATION OF THE TRUST WAS EXTENDED. THE MEETING THANKED THE CHAIR AND CONCLUDED AS THER E WAS NO OTHER BUSINESS TO DISCUSS. SIGNED THIS DAY AND DATE REFERRED TO ABOVE FOR AND ON BEHALF OF M/S MMF TRUST. - 1. MRS. MALLIKA MARAN SD/- TRUSTEE & CHAIRMAN OF THIS MEETING 2. MR. KALANITHIMARAN SD/- REPRESENTING MR. MURASOLI MARAN, TRUSTEE. AS SEEN FROM THE ABOVE, THE RESOLUTION WAS SIGNED B Y MRS. MALLIKA MARAN, WHO IS THE TRUSTEE & CHAIRMAN OF THE MEETING , AND ITA NOS. 2271 & 2272/MDS/2017 6 MR.KALANITHI MARAN REPRESENTING MR.MURASOLI MARAN, TRUSTEE. IT IS ALSO ADMITTED FACT THAT MR.KALANITHI MARAN WAS NOT A TRUSTEE. ON THE OTHER HAND, HE IS THE BENEFICIARY AS OBSERVED FROM THE MEMORANDUM OF FAMILY SETTLEMENT DATED 10.04.1995. 6.1 THE BENCH HAS PUT A SPECIFIC QUERY TO THE LD. A.R WHEN MR.KALANITHI MARAN BECOMES THE TRUSTEE OF THE TRUST . LD.A.R SUBMITTED THAT BENEFICIARY COULD BE THE TRUSTEE AND HE COULD HAVE DUAL CAPACITY, ONE AS A TRUSTEE AND OTHER AS A BENE FICIARY. FURTHER, LD.A.R DREW MY ATTENTION THAT ON EARLIER OCCASION F OR ASSESSMENT YEARS 2005-06 & 2006-07, THE DEPARTMENT CAME IN APP EALS BEFORE THIS TRIBUNAL IN ITA NOS.2663 & 2664/MDS./2016 & C. O NOS.163 & 164/MDS./2016 VIDE ORDER DATED 31.01.2017 CONSIDERE D THE SAME RESOLUTION AND OBSERVED AS UNDER:- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER FOUND THAT THERE ARE THREE TRUSTEES IN THE ASSESSEE -TRUST, OUT OF WHICH ONE WAS INDISPOSED AND ADMITTED IN THE HOSPITAL FOR TRE ATMENT. THE REMAINING TWO TRUSTEES ATTENDED THE MEETING HELD ON 05.06.200 3 AND PASSED THE RESOLUTION FOR EXTENDING THE TRUST FOR ANOTHER 20 Y EARS. THIS RESOLUTION WAS FOUND TO BE NOT VALID BY THE ASSESSING OFFICER SINC E ONE OF THE TRUSTEES, NAMELY, SHRI MURASOLI MARAN COULD NOT ATTEND THE ME ETING ON 05.06.2003. IT IS NOT IN DISPUTE THAT SHRI MURASOLI MARAN WAS A DMITTED IN THE HOSPITAL AND HE WAS TAKING TREATMENT. TOTALLY THERE WERE TH REE TRUSTEES, OUT OF ITA NOS. 2271 & 2272/MDS/2017 7 WHICH TWO TRUSTEES ATTENDED THE MEETING, THEREFORE, THE RESOLUTION WAS VALIDLY PASSED BY THE MAJORITY OF TRUSTEES. EVEN I F SHRI MURASOLI MARAN WAS PRESENT AT THE MEETING HELD ON 05.06.2003 AND O BJECTED TO PASSING OF THE RESOLUTION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DECISION TAKEN BY THE MAJORITY OF TRUSTEES HAS TO BE TAKEN A S VALID DECISION FOR EXTENDING THE TRUST FOR ANOTHER 20 YEARS. THEREFOR E, ABSENCE OF SHRI MURASOLI MARAN IN THE MEETING ON 05.06.2003 WOULD N OT BE OF ANY CONSEQUENCE AT ALL. MOREOVER, AT NO POINT OF TIME EITHER SAID SHRI MURASOLI MARAN OR HIS LEGAL HEIR OBJECTED TO THE RESOLUTION PASSED ON 05.06.2003 EXTENDING THE TRUST PERIOD FOR ANOTHER 20 YEARS. I N THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY FOUND THAT THE ASSESSEE-TRUST IS ELIGIBLE TO CLAIM BENEFIT AVAILABLE UNDER SECTION 161 OF THE ACT. THEREFORE, THE ORDER OF TH E ASSESSING OFFICER TO ASSESS THE INCOME AT MAXIMUM MARGINAL RATE UNDER SE CTION 167 OF THE ACT IS NOT JUSTIFIED. IN VIEW OF THE ABOVE DISCUSSION, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. IN VIEW OF THE ABOVE DECISION OF THE TRIBUNAL, I AM OF THE OPINION THAT THE DECISION IS HAVING BINDING EFFECT ON THIS ASSES SMENT YEAR ALSO AND IT HAS TO BE FOLLOWED IN TRUE LETTER AND SPIRIT . FURTHER, THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. L. G. RAMAMURTHI IN [1977] 110 ITR 453 (MAD) WHEREIN HELD THAT:- IN THE ABSENCE OF ANY FRESH MATERIAL, THE TRIBUNAL WAS NOT JUSTIFIED IN COMING TO AN ENTIRELY DIFFERENT AND CONTRARY CONCLU SION ON THE SAME SET OF FACTS. ITA NOS. 2271 & 2272/MDS/2017 8 FURTHER, ONCE AGAIN, THE JURISDICTIONAL HIGH COURT IN THE CASE OF LAKSHMI VILAS BANK LTD. VS. CIT IN [2006] 284 ITR 9 3 (MAD) WHEREIN HELD THAT THE TRIBUNAL HAVING DECIDED THE CASE IN E ARLIER YEARS IN FAVOUR OF ASSESSEE ON IDENTICAL FACTS, IT IS NOT PR OPER FOR THE TRIBUNAL TO TAKE A DIFFERENT VIEW FOR THE SUBSEQUENT YEAR ON THE SAME SET OF FACTS. 6.2 IN VIEW OF THE ABOVE, I AM INCLINED TO DECIDE THE ISSUE IN FAVOUR OF ASSESSEE AND AGAINST THE DEPARTMENT, SINCE THE I SSUE IS SIMILAR TO THAT ONE CONSIDERED BY THE TRIBUNAL IN THE EARLIER ASSESSMENT YEARS I.E. 2005-06 & 2006-07. 7. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE ALLOWED. ORDER PRONOUNCED ON 20.12.2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 20.12.2017 K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF