TVS Shriram Growth Fund, CHENNAI V. ITO Non Corporate Ward 3(5), CHENNAI

ITA 345/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1426 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 25-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KUMUTHA
• Assessee Lawyers: R VIJAYARAGHAVAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! ,% !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.344, 345, 346 & 347/CHNY/2018 ( )( / ASSESSMENT YEARS :2011-12 TO 2014-15 M/S TVS SHRIRAM GROWTH FUND, JAYALAKSHMI ESTATE, 29, (OLD NO.8), HADDOWS ROAD, CHENNAI - 600 006. PAN : AABTT 5582 H V. THE INCOME TAX OFFICER, NON CORPORATE WARD 3(5), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : MS. D. KUMUTHA, JCIT 1 / 2% / DATE OF HEARING : 29.10.2018 3') / 2% / DATE OF PRONOUNCEMENT : 15.11.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : ALL THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS) 4, CHENNAI, DATED 17.11.2017 AND PERTAI NING TO ASSESSMENT YEARS 2011-12 TO 2014-15. THEREFORE, WE HEARD ALL 2 I.T.A. NOS.344 TO 347/CHNY/18 THESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT IN THE ASSESSEE'S OWN CASE FOR ASSES SMENT YEARS 2009-10 AND 2010-11, THIS TRIBUNAL FOUND THAT THE A SSESSEE-FUND IS A DETERMINATE TRUST AND INCOME OF THE TRUST HAS TO BE ASSESSED ONLY IN THE HANDS OF THE BENEFICIARIES. ACCORDING TO TH E LD. COUNSEL, THIS TRIBUNAL PLACED ITS RELIANCE ON THE JUDGMENT OF KAR NATAKA HIGH COURT IN INDIA ADVANTAGE FUND (2017) 78 TAXMANN.COM 301. REFERRING TO THE INTEREST INCOME, THE LD.COUNSEL SU BMITTED THAT THERE WAS A CONFUSION IN THE MIND OF THE ASSESSING OFFICE R WHILE GIVING EFFECT TO THE ORDER OF THIS TRIBUNAL FOR THE ASSESS MENT YEARS 2009-10 AND 2010-11. THEREFORE, THE ASSESSEE HAD FILED MIS CELLANEOUS PETITION BEFORE THIS TRIBUNAL IN M.P. NOS.310 & 311 /CHNY/2017. ACCORDING TO THE LD. COUNSEL, THIS TRIBUNAL BY AN O RDER DATED 04.04.2018, FOUND THAT PASS THROUGH STATUS WAS GIVE N TO THE ASSESSEE-FUND, THEREFORE, THE ENTIRE INCOME OF THE ASSESSEE-FUND HAS TO BE ASSESSED ONLY IN THE HANDS OF THE BENEFIC IARIES AND NOT IN THE HANDS OF THE TRUST / FUND. IN VIEW OF THIS DEC ISION OF THE TRIBUNAL FOR ASSESSMENT YEARS 2009-10 AND 2010-11, ACCORDING TO THE LD. 3 I.T.A. NOS.344 TO 347/CHNY/18 COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFI RMING THE ORDER OF THE ASSESSING OFFICER. 3. WE HEARD MS. D. KUMUTHA, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., TH E BENEFICIARIES DID NOT OFFER THE INTEREST INCOME FOR TAXATION. HO WEVER, THEY HAD ADJUSTED AGAINST THE EXPENDITURE RELATING TO DIVIDE ND. ACCORDING TO THE LD. D.R., THE CIT(APPEALS) BY PLACING RELIANCE ON THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER, FOUND TH AT THE STATUS AS A REPRESENTATIVE ASSESSEE IS RESTRICTED ONLY IN RESPE CT OF THE INCOME EARNED FROM VENTURE CAPITAL FUND. THEREFORE, ACCOR DING TO THE LD. D.R., THE CONCEPT CANNOT BE EXTENDED IN RESPECT OF THE INTEREST INCOME EARNED BY THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2009-1 0 AND 2010- 11, FOUND THAT THE ASSESSEE-TRUST IS A DETERMINATE ONE AND BENEFICIARIES ARE IDENTIFIABLE, THEREFORE, THE INCO ME OF THE ASSESSEE- FUND HAS TO BE ASSESSED ONLY IN THE HANDS OF THE BE NEFICIARIES. THIS FINDING OF THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2009-10 AND 2010-11 ATTAINS FINALI TY. IN FACT, THIS 4 I.T.A. NOS.344 TO 347/CHNY/18 TRIBUNAL FOR ASSESSMENT YEARS 2009-10 AND 2010-11 I N I.T.A. NOS.981 & 982/MDS/2016 HAS OBSERVED AS FOLLOWS:- 6.7 IN THE INSTANT CASE, THE ASSESSEE HAS CREATED A TRUST WHICH WAS REGISTERED AND THE BENEFICIARIES HAVE BEE N IDENTIFIED BY THE CONTRIBUTION AGREEMENT (PPM) AND THEIR SHARES ARE ALSO ASCERTAINABLE WITH RESPECT TO CONTR IBUTIONS AND THE UNITS. THE HON'BLE HIGH COURT CONSIDERED T HE ISSUE REGARDING IDENTIFICATION OF BENEFICIARIES AT THE TI ME OF FORMATION OF THE TRUST AND EXPRESSED VIEW THAT EVEN AFTER EXECUTION OF THE TRUST DEED IF THE BENEFICIARIES ARE IDENTIFIABLE AND THEIR SHARES ARE ASCERTAINABLE IT IS SUFFICIENT COMPLIANCE TO HOLD THE TRUST AS DETERMINATE TRUST. IN THE ASSESSEES CASE THE BENEFICIARIES ARE IDENTIFIABLE WITH PPM AND THEIR SHARES ARE ASCERTAINABLE AS DISCUSSED EAR LIER IN THIS ORDER. THE FACTS OF THE CASE ARE SIMILAR TO THAT O F INDIA ADVANTAGE FUND SUPRA AND THE DECISION RENDERED BY THE HON'BLE ITAT BANGALORE SQUARELY APPLIES IN THIS CASE . RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH OF BANGALORE AND HON'BLE KARNATAKA HIGH COURT SUPRA WE HOLD THAT THE ASSESSEES TRUST IS A DETERMINATE TRU ST AND THE APPEAL OF THE ASSESSEE IS ON THIS ISSUE IS ALLOWED. 5. IN RESPECT OF INTEREST INCOME, IT APPEARS THERE WAS A CONFUSION AND THE ASSESSEE FILED A MISCELLANEOUS PE TITION BEFORE THIS TRIBUNAL IN M.P. NOS.310 & 311/CHNY/2017. THI S TRIBUNAL BY AN ORDER DATED 04.04.2018 HAS OBSERVED AS FOLLOWS AT P ARAS 8 & 9:- 8. SINCE THE DETAILS OF THE INCOME AND EXPENDITURE IS NOT AVAILABLE IN THE PROFIT & LOSS ACCOUNT OR IN TH E DOCUMENT FILED BEFORE THIS TRIBUNAL, THIS TRIBUNAL REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR A L IMITED VERIFICATION TO COLLECT INFORMATION FROM BENEFICIAR IES AND ALLOW PASS THROUGH STATUS IN THE HANDS OF THE ASSES SEE. 5 I.T.A. NOS.344 TO 347/CHNY/18 THEREFORE, THE ASSESSING OFFICER MISUNDERSTOOD THE DIRECTION OF THE TRIBUNAL BY PICKING UP SAME WORDS HERE AND THERE AT PARA 7.2 AT PAGE 34 OF THE ORDER. HENCE, THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSING OFFICER IS NOT CORRECT IN SAYING THAT IN CASE THE I NCOME IS NOT ADMITTED / INCORRECTLY ADMITTED, IT HAS TO BE A SSESSED IN THE HANDS OF THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHETHER THE INCOME IS ADMIT TED BY THE RESPECTIVE BENEFICIARIES OR NOT, SINCE PASS THR OUGH STATUS WAS GIVEN TO THE ASSESSEE-FUND, THE ENTIRE I NCOME HAS TO BE ASSESSED ONLY IN THE HANDS OF THE BENEFIC IARIES AND NOT IN THE HANDS OF THE TRUST / FUND. THE ORDE R OF THIS TRIBUNAL IS MODIFIED / CLARIFIED ACCORDINGLY. 9. IN THE RESULT, BOTH THE MISCELLANEOUS PETITIONS F ILED BY THE ASSESSEE ARE ALLOWED. 6. IN VIEW OF THE ABOVE ORDER OF THE CO-ORDINATE BE NCH OF THIS TRIBUNAL, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORD ERS OF BOTH THE AUTHORITIES BELOW. THEREFORE, AS HELD BY THIS TRIB UNAL FOR ASSESSMENT YEARS 2009-10 AND 2010-11, THE ASSESSEE- FUND / TRUST IS A DETERMINATE TRUST AND THE BENEFICIARIES ARE ID ENTIFIABLE. THEREFORE, EVEN IN RESPECT OF INTEREST INCOME IRRES PECTIVE OF THE FACT IT WAS ADMITTED BY THE BENEFICIARIES OR NOT, A PASS THROUGH STATUS WAS GIVEN TO THE ASSESSEE. HENCE, THE ENTIRE INCOM E OF THE ASSESSEE-FUND HAS TO BE ASSESSED ONLY IN THE HANDS OF THE BENEFICIARIES AND NOT IN THE HANDS OF THE ASSESSEE- FUND / TRUST. 6 I.T.A. NOS.344 TO 347/CHNY/18 7. IN VIEW OF THE ABOVE, WE ARE UNABLE TO UPHOLD TH E ORDERS OF THE AUTHORITIES BELOW. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ADDITION MADE IN THE HANDS OF THE ASSESSEE IS DELETED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 15 TH NOVEMBER, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESA N) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 15 TH NOVEMBER, 2018. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A) 4. PRINCIPAL CIT, CHENNAI- 5. 7: -2 /DR 6. ;( < /GF.