ITO, CHENNAI V. M/s. Murasoli Maran Family Trust, CHENNAI

ITA 2664/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7888 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N DEVANATHAN
• Keywords: Reopening of assessment; Maximum Marginal Rate

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !.. # $%, ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.2663 & 2664/MDS/2016 & C.O. NOS.163 & 164/MDS/2016 (IN I.T.A. NOS.2663 & 2664/MDS/2016) + ,+ / ASSESSMENT YEARS : 2005-06 & 2006-07 THE INCOME TAX OFFICER, NON-CORPORATE WARD 1(3), CHENNAI - 600 034. PAN : AAATM 0863 H V. M/S MURASOLI MARAN FAMILY TRUST, NO.4, II AVENUE, BOAT CLUB ROAD, R.A. PURAM, CHENNAI - 600 028. (.// APPELLANT) ( RESPONDENT & CROSS OBJECTOR) ./ 0 1 / APPELLANT BY : SMT. SUMATHY VENKATRAMAN, JCIT 23./ 0 1 / RESPONDENT BY : SH. N. DEVANATHAN, ADVOCATE # 0 4' / DATE OF HEARING : 22.12.2016 56, 0 4' / DATE OF PRONOUNCEMENT : 31.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE REVENUE HAS FILED THE APPEALS AGAINST THE CO MMON ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APP EALS)-2, CHENNAI, DATED 30.06.2016. THE ASSESSEE HAS ALSO F ILED CROSS- OBJECTIONS SUPPORTING THE ORDER OF THE CIT(APPEALS) . THEREFORE, WE 2 I.T.A. NOS.2663 & 2664/MDS/16 C.O. NOS.163 & 164/MDS/16 HEARD THE APPEALS AND THE CROSS-OBJECTIONS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SMT. SUMATHY VENKATRAMAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE-TRUST E XTENDED THE TRUST FOR A PERIOD OF 20 YEARS ON THE BASIS OF THE RESOLUTION PASSED IN THE BOARD MEETING HELD ON 05.06.2003. ACCORDING TO THE LD. D.R., THERE ARE THREE TRUSTEES IN THE TRUST. THEY ARE AS FOLLOWS:- (1) SHRI MURASOLI MARAN (2) SMT. MALLIKA MARAN (3) SHRI KALANITHI MARAN OUT OF THREE TRUSTEES, SHRI MURASOLI MARAN WAS ADMI TTED IN THE HOSPITAL AND OTHER TWO TRUSTEES PARTICIPATED IN THE TRUST MEETING WHICH WAS HELD ON 05.06.2003. THE TWO TRUSTEES EXT ENDED THE PERIOD OF THE TRUST IN THE ABSENCE OF SHRI MURASOLI MARAN. ACCORDING TO THE LD. D.R., SHRI MURASOLI MARAN HAD NOT NOMINATED ANYBODY TO ATTEND THE MEETING. THEREFORE, THE EXTE NSION OF TRUST FOR ANOTHER PERIOD OF 20 YEARS WAS NOT JUSTIFIED. HENCE, THE ASSESSEE-TRUST WAS ASSESSED UNDER SECTION 167 OF TH E INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AT MAXIMUM MARGINAL RATE. THE CIT(APPEALS), WITHOUT APPRECIATING THE FACT THAT TH E EXTENSION WHICH WAS SAID TO BE APPROVED IN THE RESOLUTION DATED 05. 06.2003, HELD 3 I.T.A. NOS.2663 & 2664/MDS/16 C.O. NOS.163 & 164/MDS/16 THAT THE EXTENSION WAS NOT VALID AND ALLOWED THE AP PEAL OF THE ASSESSEE. 3. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER POIN TED OUT THAT THE SHARES OF THE BENEFIT WAS VARIED VIS--VIS THE ACTUAL ALLOCATION IN THE ORIGINAL TRUST DEED. ACCORDING TO THE LD. D.R. , THE ACCUMULATED INCOME OF THE BENEFICIARIES SHALL PASS TO THE LEGAL HEIRS ON THE DEATH OR MARRIAGE OF THE RESPECTIVE BENEFICIARIES. ACCOR DING TO THE LD. D.R., WHEN THE TRUST DEED NAMES 10 BENEFICIARIES, T HE ALLOCATION OF BENEFITS WAS MADE TO 13 BENEFICIARIES. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY FOUND THAT THE TRUST WAS INVALI D, ACCORDINGLY, THE SAME WAS ASSESSED AS ASSOCIATION OF PERSONS UNDER S ECTION 167 OF THE ACT. 4. ON THE CONTRARY, SH. N. DEVANATHAN, THE LD.COUNS EL FOR THE ASSESSEE, SUBMITTED THAT THE REOPENING OF ASSESSMEN T ON THE BASIS OF MATERIAL AVAILABLE ON RECORD DURING THE COURSE O F REGULAR ASSESSMENT, CANNOT BE A REASON FOR REOPENING THE AS SESSMENT. THE ENTIRE PARTICULARS GATHERED BY THE ASSESSING OF FICER IS VERY MUCH AVAILABLE AT THE TIME OF REGULAR ASSESSMENT, T HEREFORE, THE REOPENING OF ASSESSMENT ITSELF IS INVALID. 4 I.T.A. NOS.2663 & 2664/MDS/16 C.O. NOS.163 & 164/MDS/16 5. COMING TO THE MERIT OF THE ASSESSMENT AT THE MAX IMUM MARGINAL RATE, THE LD.COUNSEL SUBMITTED THAT WHEN T HE ASSESSING OFFICER CAME TO A CONCLUSION THAT THE TRUST CEASED TO EXIST AND BECAME INVALID, THE ASSESSMENT CANNOT BE MADE IN TH E HANDS OF THE VERY SAME TRUST. MOREOVER, WHEN THERE ARE 3 TRUSTE ES, OUT OF WHICH 2 TRUSTEES PARTICIPATED IN THE MEETING AND PA SSED A RESOLUTION TO EXTEND THE PERIOD OF TRUST, THE RESOL UTION PASSED IS LEGALLY SUSTAINABLE. ONE OF THE TRUSTEES COULD NOT ATTEND THE MEETING SINCE HE WAS INDISPOSED AND ADMITTED IN THE HOSPITAL AT THE RELEVANT POINT OF TIME. AFTER THE RESOLUTION DATED 05.06.2003, THE SAID SHRI MURASOLI MARAN HAS NOT OBJECTED FOR EXTEN DING OF TRUST AT ANY POINT OF TIME. ACCORDING TO THE LD. COUNSEL, E VEN AFTER THE DEATH OF SHRI MURASOLI MARAN, THE LEGAL HEIRS OF SH RI MURASOLI MARAN DID NOT OBJECT TO THE RESOLUTION PASSED ON 05.06.20 03, THEREFORE, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE A SSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER 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 HOS PITAL FOR TREATMENT. THE REMAINING TWO TRUSTEES ATTENDED THE MEETING HELD 5 I.T.A. NOS.2663 & 2664/MDS/16 C.O. NOS.163 & 164/MDS/16 ON 05.06.2003 AND PASSED THE RESOLUTION FOR EXTENDI NG THE TRUST FOR ANOTHER 20 YEARS. THIS RESOLUTION WAS FOUND TO BE NOT VALID BY THE ASSESSING OFFICER SINCE ONE OF THE TRUSTEES, NAMELY , SHRI MURASOLI MARAN COULD NOT ATTEND THE MEETING ON 05.06.2003. IT IS NOT IN DISPUTE THAT SHRI MURASOLI MARAN WAS ADMITTED IN TH E HOSPITAL AND HE WAS TAKING TREATMENT. TOTALLY THERE WERE THREE TRUSTEES, OUT OF WHICH TWO TRUSTEES ATTENDED THE MEETING, THEREFORE, THE RESOLUTION WAS VALIDLY PASSED BY THE MAJORITY OF TRUSTEES. EV EN IF SHRI MURASOLI MARAN WAS PRESENT AT THE MEETING HELD ON 0 5.06.2003 AND OBJECTED TO PASSING OF THE RESOLUTION, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE DECISION TAKEN BY THE M AJORITY OF TRUSTEES HAS TO BE TAKEN AS VALID DECISION FOR EXTE NDING THE TRUST FOR ANOTHER 20 YEARS. THEREFORE, ABSENCE OF SHRI M URASOLI MARAN IN THE MEETING ON 05.06.2003 WOULD NOT BE OF ANY CONSE QUENCE AT ALL. MOREOVER, AT NO POINT OF TIME EITHER SAID SHRI MURA SOLI 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 O PINION THAT THE CIT(APPEALS) HAS RIGHTLY FOUND THAT THE ASSESSEE-TR UST IS ELIGIBLE TO CLAIM BENEFIT AVAILABLE UNDER SECTION 161 OF THE AC T. THEREFORE, THE ORDER OF THE ASSESSING OFFICER TO ASSESS THE INCOME AT MAXIMUM 6 I.T.A. NOS.2663 & 2664/MDS/16 C.O. NOS.163 & 164/MDS/16 MARGINAL RATE UNDER SECTION 167 OF THE ACT IS NOT J USTIFIED. 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. 7. SINCE THE CROSS-OBJECTIONS FILED BY THE ASSESSEE ARE IN SUPPORT OF THE ORDER OF THE CIT(APPEALS), THE CROSS -OBJECTIONS HAVE BECOME INFRUCTUOUS. 8. IN THE RESULT, BOTH THE APPEALS AND THE CROSS-OB JECTIONS STAND DISMISSED. ORDER PRONOUNCED ON 31 ST JANUARY, 2017 AT CHENNAI. SD/- SD/- ( ! . . # $% ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 31 ST JANUARY, 2017. KRI. 0 24$9 :9,4 /COPY TO: 1. ./ /APPELLANT 2. 23./ /RESPONDENT 3. # ;4 () /CIT(A)-2, CHENNAI-34 4. PRINCIPAL CIT-1, CHENNAI 5. 9< 24 /DR 6. !+ = /GF.