SOHANLAL JAWAHAR FAMILY TRUST, MUMBAI V. ITO RG 14(3)(1), MUMBAI

ITA 2847/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93138 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA P YADAV
• Assessee Lawyers: NARAYAN ATAL
• Keywords: Principle of natural justice
• Section: 143(3); 131; 11

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SANJAY ARORA , AM ./ I.T.A. NO. 2847/MUM/2015 ( / ASSESSMENT YEAR: 2010 - 11) SOHANLAL JHAWAR FAMILY TRUST, 285, PRINCESS STREET, C.J.HOUSE, 2 ND FLOOR,MUMBAI - 400002 / VS. ITO 14(3)(1), MUMBAI. ./ ./ PAN/GIR NO. AA BTS 8862K ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI NARAYAN ATAL / RESPONDENT BY : SHRI AKHILENDRA P. YADAV / DATE OF HEARING : 04.06.2015 / DATE OF PRONOUNCEMENT : 08 .0 7 .2015 PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE A SSESSEE DIRECTED AGAINST THE O RDER BY THE CIT(A) - 37, MUMBAI ( CIT (A) FOR SHORT) DATED 11.02 .2015, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSESSM ENT FOR ASSESSMENT YEAR (AY) 2010 - 11 VIDE ORDER U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 31.12.2012. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST CREATED BY THE WILL DATED 31.10.1997 OF LATE SRI SO HANLAL JHAWAR . A S PER ITS TERMS, 20% SHARE EACH IN THE PROFIT OF THE TRUST IS GRANTED TO THE FOLLOWING FOUR PERSONS, WITH THE BALANCE 20% BEING RETAINED BY THE TRUST ITSELF: - A) SMT. JAMNADEVI S . J . (WIFE) 20% B) SMT. LAXMI M.J. (DAUGHTER - IN - LAW) 20% ITA NO.284 7/MUM/2015 SOHANLAL JHAWAR FAMILY TRUST 2 D) SMT. VANDANA V.J. (DAUGHTER - IN - LAW) 20% E) SMT. KANTADEVI J. (DAUGHTER - IN - LAW) 20% FURTHER, SMT. JAMUNADEVI S. JHAWAR HAVING SINCE EXPIRED, HER SHARE (20%) DE VOLVED ON THE OTHER FOUR CO - SHARERS, RESULTING IN EACH OF THEM BEING ENTITLED TO A 25% (1/4) SHA RE . D EDUCTION WAS ACCORDINGLY CLAIMED IN THE ASSESSMENT OF INCOME FOR THE YEAR TOWARD THE 75% OF THE PROFIT FALLING TO THE SHARE OF THE THREE BENEFICIARIES, WHO, IT WAS CLAIMED , HAD RETURNED THE SAME PER THEIR RESPECTIVE RETURNS OF INCOME. THE SAME WAS DEN IED IN THE ABSENCE OF THE ASSESSEE LEADING EVIDENCE TOWARD THE SAME FOR THE CURRENT YEAR, EVEN AS RETURNS FOR AYS 2008 - 09 AND 2009 - 10 WERE FILED TO EXHIBIT THE SAME (REFER PARAGRAPH 5 5.2 OF THE IMPUGNED ORDER). DURING THE HEARING THE LEARNED AR WOULD AL SO ADVERT MY ATTENTION TO PAGES 16 - 39 OF THE PAPER BOOK (PB) CONTAINING THE COMPUTATION OF TOTAL INCOME OF THE TRUST AS WELL AS THE BENEFICIARY /S (OF THE TRUST) FOR ALL THE THREE YEARS, I.E., AY 2008 - 09 AND 2010 - 11. 3 . THE PARTIES STAND DULY HEARD AND THE RECORD PERUSED. THE PRIMARY FACTS ARE NOT IN DISPUTE, AND THE ASSESSEE IS THE ONLY TRUST CRE A TED BY THE SETTL O R UNDER HIS WILL, DEFINING THE SHARE OF ITS BENEFICIARIES. THE SECOND PROVISO TO SAID SECTION 164(1) IS THUS OSTENSI B LY ATTRACTED . T HE SAI D SECTION , HOWEVER, AS APPARENT, ONLY CONCERNS THE RATE OF TAX TO BE APPLIED TO THE TRUST INCOME ON THE CONDITION /S OF THE SECTION BEING ME T , AND DOES NOT SPECIFY THE MA NN ER OF THE COMPUTATION OF ITS INCOME. RATHER, IN VIEW OF THE NON - SPECIFICATION OF THE BENEFICIARIES OF THE PROFITS OF THE TRUST TO THE EXTENT OF 25% RETAINED BY THE TRUST , AND WHICH COULD THEREFORE BE APPLIED FOR THE BENEFIT OF ANY ONE OR SOME OF THE BENEFICIARIES I.E., TO ANY EXTENT, IT WOULD NEED TO BE DECIDED I F THE SAID SECTION WOULD AP PLY TO A PART OF THE TRUST INCOME, OR NOT AT ALL. THEN, AGAIN, IT MAY WELL BE THAT THE PROFIT RETAINED BY THE TRUST IS NOT FOR THE BENEFICIARIES, BUT, AT THE DISCRETION OF THE TRUSTEES, TOWARD THE DEFINED OBJECTS OF THE TRUST. THE MATTER BEING NOT ARGUED BEFORE ME ON THESE LINES , I , OBSERV ING THE PRINCIPLES OF NATURAL JUSTICE, REFRAIN FROM ISSUING ANY FINDING IN THE MATTER , WHICH SHALL BE ADJUDICATED BY THE REVENUE IN THE SET - ASIDE PROCEEDINGS. NO DIRECTION QUA DEDUCTIB I L ITY OR OTHERWISE IN LAW OF THE 75% SHARE OF PROFIT IS THEREFORE BEING ISSUED. IN FACT, THE DECISION BY THE TRIBUNAL FOR THE EARLIER YEARS (ITA NOS. 1407 AND 5345/MUM/2007 DATED 23.08.2014/ P.B. PAGE 4 9), WHEREIN THE SAID ISSUE ALSO CAME UP, ITA NO.284 7/MUM/2015 SOHANLAL JHAWAR FAMILY TRUST 3 IS ALSO ON THE SAME LINES; THE TRIBUNAL RESTORING THE MATTER BACK TO THE FILE OF THE AO FOR A DECISION IN ACCORDANCE WITH LAW (REFER PARAGRAPH 12 OF THE SAID ORDER). IT MAY APPEAR THAT IN DIRECTING THE REVENUE TO CONSIDER THE ISSUES NOT DIRECTLY RAISED IN APPEAL, THE TRIBUNA L HAS THUS ACTED OUTSIDE ITS AMBIT/JURISDICTION. THIS IS NOT THE CASE EVEN AS T HERE IS NO ESTOPPEL AGAINST THE LAW. THE LAW IN THE MATTER IS TRITE , SO THAT THE TRIBUNAL IS , RATHER , DUTY BOUND TO CONSIDER ALL THE ASPECT S OF THE MATTER. R EFERENCE IN THIS CON TEXT B E MADE, INTERALIA, TO THE DECISIONS , AS IN THE CASE OF KAPURCHAND SHRIMAL VS. CIT [1981] 131 ITR 451 ( SC ) AND AHMEDABAD ELECTRICITY CO. LTD. VS. CIT [1993] 199 ITR 351 (BOM) (FB). I DECIDE ACCORDINGLY , WHICH IS THOUGH, IT MAY BE CLARIFIED, TO BE CONSTRUED AS AN OPEN SET ASIDE . 4 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ACCORDINGLY ON 08 .0 7 .2015 SD/ - (SANJAY ARORA) / ACCOUNTANT MEMBER MUMBAI ; DATED : 08 .0 7 .2015 . ./ SK , PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE // TRUE COPY // / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI