ASHOK C PRATAP, MUMBAI V. ADDL CIT 11(2), MUMBAI

ITA 4615/MUM/2011

• Counselvise Citation: 461519914 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 08-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Assessee Lawyers: Y P TRIVEDI AW MR P D GAN DHI
• Keywords: Gift; Maximum Marginal Rate; Earning of tax free income; Revenue expenditure; Capital expenditure
• Section: 11; 14A; 12AA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , . . , BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER . / ITA NO. 4615/MUM./2011 ( !' #' / ASSESSMENT YEAR : 200708 ) MR. ASHOK C. PRATAP OFFICE NO.115, FREE PRESS HOUSE FREE PRESS MARG, NARIMAN POINT MUMBAI 400 021 .. $% / APPELLANT ! V/S ADDL. COMMISSIONER OF INCOME TAX RANGE11(2), MUMBAI .... &'$% / RESPONDENT $ ( . / PERMANENT ACCOUNT NUMBER NO. AABPP3708P !')* + , / ASSESSEE BY : MR. Y.P. TRIVEDI A/W MR. P.D. GAN DHI + , / REVENUE BY : MR. P.K.B. MENON ! + *-( / DATE OF HEARING 09.07.2012 . /0# + *-( / DATE OF ORDER 18/07/2012 . . . . / ORDER PER I.P. BANSAL, J.M. THE PRESENT APPEAL PREFERRED BY THE ASSESSEE, IS D IRECTED AGAINST THE IMPUGNED ORDER DATED 15 TH MARCH 2011, PASSED BY THE LEARNED COMMISSIONER (APPEALS)III, MUMBAI, FOR ASSESSMENT YEAR 200708, ON THE FOLLOWING GROUNDS: MR. ASHOK C. PRATAP 2 ADDITION UIS 56 [1] AND 56 [2] [VI] ON ACCOUNT OF R ECEIPTS FROM DISSOLUTION OF SANT TRUST: 1.1 THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS ] MISDIRECTED HERSELF IN LAW AND ON FACTS IN CONSTRUING THE PROVI SION OF SANT TRUST, SETTLED BY MRS VINODINI C PRATAP, MOTHER OF THE APP ELLANT. 1.2 THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS ] MISDIRECTED HERSELF IN LAW AND ON FACTS IN CONSTRUING THE PROVI SIONS OF THE INDIAN TRUSTS ACT. 1.3 THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS ] ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AMOUNT RECEIVE D BY THE APPELLANT CONSTITUTE INCOME IN THE HANDS OF THE APPELLANT AND APPLYING THE PROVISIONS OF SECTION 2[24] [IV A] READ WITH PROVIS IONS OF SECTION 56 [1] AND 56 [2] [VI] OF THE INCOME TAX ACT, 1961. 1.4 WITHOUT PREJUDICE, THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] FAILED TO APPRECIATE THAT THE AUTHOR, TRU STEES AND BENEFICIARIES OF THE TRUST ARE RELATED TO EACH OTHE R AND IF THE APPELLANT HAS RECEIVED MONEY FROM THEM THE SAME CANNOT CONSTI TUTE INCOME U/S 56 [2] [VI], AS IT IS COVERED BY THE EXEMPTION CLAU SE. 2. THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] HAS ERRED IN TREATING A SUM OF ` 10,417, ON ACCOUNT OF EXPENDITURE ON LEGAL AND TECHNICAL BOOKS, AS CAPITAL EXPENDITURE INSTEAD OF TREATING IT AS A REVENUE EXPENDITURE. 3. THE LEARNED ADDITIONAL COMMISSIONER OF INCOME TA X [APPEALS] HAS ERRED IN DISALLOWING EXPENSES OF ` 3,52,493 U/S 14A, WITHOUT APPRECIATION THAT NO EXPENDITURE WAS INCURRED BY TH E APPELLANT FOR EARNING EXEMPT INCOME. 2. THE ASSESSEE, IN THE PRESENT CASE, IS A BARRISTER A ND PRACTICES LAW. HE IS A PROPRIETOR OF ASHOK PRATAP & CO.,, BARRISTERS AND ADVOCATES, AND HAS FILED HIS RETURN OF INCOME AT ` 3,92,04,185, WHICH HAS BEEN ASSESSED AT AN INCOME OF ` 5,31,87,920, BY ASSESSMENT ORDER DATED 30 TH DECEMBER 2009, PASSED UNDER SECTION 143(3)(II) OF THE INCOME TAX A CT, 1961 (FOR SHORT THE ACT ). 3. THE MAIN ISSUE RAISED IN THIS APPEAL IS REGARDING A DDITION OF ` 1,36,00. 595, MADE ON ACCOUNT OF A TRUST DISSOLUTION PROCEED INGS WHICH ARE ADDED TO THE INCOME OF THE ASSESSEE BY APPLYING THE PROVISIO NS OF SECTION 2(24)(IV)(A) R/W PROVISIONS OF SECTIONS 56(1) AND 56(2)(VI) OF T HE ACT. MR. ASHOK C. PRATAP 3 4. THE OTHER ISSUES WHICH ARE RAISED IN GROUND NO.2, H AVE NOT BEEN PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE AND , CONSEQUENTLY, THE SAME ARE DISMISSED AS NOT PRESSED . 5. WITH RESPECT TO GROUND NO.3, IT WAS THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT IT RELATES TO DISALLO WANCE MADE UNDER SECTION 14A OF THE ACT, WHICH HAS BEEN COMPUTED WITH REFERE NCE TO RULE 8D, WHICH IS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION AND, THEREFORE, THIS ISSUE HAS TO BE RESTORED TO THE FILE OF ASSESSING OFFICER WIT H A DIRECTION TO RECOMPUTE THE SAME IN ACCORDANCE WITH THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN GODREJ & BOYCE MFG. CO. LTD. V/S DCIT, [2010], 328 ITR 081 (BOM.). 6. AFTER HEARING BOTH THE PARTIES, WE RESTORE THIS ISS UE TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO RECOMPUTE THE DISALLOWANCE UNDER SECTION 14A, IN ACCORDANCE WITH THE JUDGMENT OF HON 'BLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. (SUPRA). CONS EQUENTLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 7. WE NOW LEFT WITH THE MAIN ISSUE WHICH IS EXPRESSED IN GROUND NO.1. IT IS NECESSARY TO NARRATE FEW FACTS TO UNDERSTAND THE ISSUE. 8. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN P ARA6 OF HIS ORDER. A PRIVATE TRUST NAMELY SANT TRUST WAS CREATED BY MRS. VINODINI C. PRATAP, MOTHER OF THE ASSESSEE BY TRUST DEED DATED 19 TH JANUARY 1978. THE TRUSTEES OF THE SAID TRUST WERE THE ASSESSEE AND HIS WIFE NA MELY MRS. SANDHYA A. PRATAP, AND THE BENEFICIARIES WERE TWO DAUGHTERS OF THE ASSESSEE NAMELY MS. NATASHA AND MS. TANYA, BEING GRANDDAUGHTERS OF THE SETTLER. BY LETTER DATED 15 TH JANUARY 2001, THE ASSESSEE AND HIS WIFE WERE ADDED AS BENEFICIARIES TO THE SAID TRUST AND, THUS, THEY BEC AME ADDITIONAL BENEFICIARIES OF THE SAID TRUST. 9. FURTHER, ON 30 TH MARCH 2001, TWO DAUGHTERS OF THE ASSESSEE NAMELY MS. NATASHA AND MS. TANYA, BOTH BEING MAJOR, SIGNED THE DOCUMENT OF RELEASE OF SANT TRUST BY RELINQUISHING THEIR RIGHTS , TITLE, INTEREST, SHARE AND MR. ASHOK C. PRATAP 4 BENEFITS IN AND FROM THE PROPERTY AND ASSETS OF THE SAID TRUST. THEREFORE, THE SAID TRUST WAS DISSOLVED AS PER THE DEED OF DISSOLU TION DATED 27 TH FEBRUARY 2007, AND THE ASSETS WERE EQUALLY DISTRIBUTED BETWE EN THE TWO REMAINING BENEFICIARIES I.E., THE ASSESSEE AND HIS WIFE MRS. SANDHYA A. PRATAP. 10. IT IS THE CASE OF THE ASSESSING OFFICER THAT THOUGH THE AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE BEING BENEFICIARIES AT THE TIME OF DISSOLUTION OF THE TRUST BUT STILL THAT AMOUNT RETAINS THE CHARACTER O F INCOME, AS ENVISAGED IN SECTION 2(24)(IVA) OF THE ACT, BECAUSE THE ASSESSEE CANNOT ACT IN DUAL CAPACITY. ACCORDING TO THE ASSESSING OFFICER, IF TH E ASSESSEE CLAIMS TO BE A TRUSTEE, HIS STATUS WILL REMAIN ALWAYS AS OF TRUSTE E AND IF THE ASSESSEE CLAIMS TO BE ONE OF THE BENEFICIARIES, HE HAS NO RIGHT TO DISSOLVE THE TRUST. THE ASSESSING OFFICER ALSO NOTICED THAT THE TRUST OF TH E ASSESSEE WAS NEVER REGISTERED UNDER SECTION 12AA OF THE ACT. 11. ON THE AFOREMENTIONED FACTS, THE ASSESSING OFFICER APPLIED THE PROVISIONS OF SECTION 77(B) OF THE INDIAN TRUST ACT , AND ADDED A SUM OF ` 1,36,00,595, TO THE TOTAL INCOME OF THE ASSESSEE. 12. THE AFOREMENTIONED ACTION OF THE ASSESSING OFFICER WAS CHALLENGED BEFORE THE LEARNED COMMISSIONER (APPEALS) BY RAISIN G VARIOUS ISSUES AND QUOTING VARIOUS PROVISIONS OF THE INDIAN TRUST ACT AS WELL AS THE JUDICIAL PRONOUNCEMENTS ON THE ISSUE. THE LEARNED COMMISSION ER (APPEALS), AFTER CONSIDERING VARIOUS PROVISIONS AND CASE LAWS, HAS R ECORDED HER CONCLUSION IN PARA2.1.7, BY MAKING REFERENCE TO SECTIONS 4, 11, 58 AND 77 OF THE INDIAN TRUST ACT. SHE HELD THAT THE TWO DAUGHTERS OF THE A SSESSEE HAVING BECAME MAJOR AND BEING BENEFICIARIES, WERE ENTITLED TO MOD IFY THE TERMS OF THE TRUST AND SUCH ACTION IS PERMITTED IN THE INDIAN TRUST AC T. REFERRING TO SECTION 58, WHICH REGULATES THE RIGHT TO TRANSFER BENEFICIAL IN TEREST, THE LEARNED COMMISSIONER (APPEALS) FOUND THAT IT DID NOT PROHIB IT THE ACTION OF THE ORIGINAL TWO BENEFICIARIES. BY THEIR FIRST ACTION, THE ORIGINAL BENEFICIARIES DILUTED THEIR BENEFICIARY RIGHTS FROM THE SAID TRUS T AND REQUESTED FOR THE TRUST TO BE MADE A DISCRETIONARY TRUST. SECTION 11 OF THE INDIAN TRUST ACT WHICH EMPOWERS THE TRUSTEE TO EXECUTE THE TRUST. THE TRUS TEES WERE BOUND TO ACT IN MR. ASHOK C. PRATAP 5 CONSONANCE WITH THE CONSENT OF ALL THE BENEFICIARIE S. THE ORIGINAL TWO BENEFICIARIES, BY THEIR ACTION ON 30 TH MARCH 2001, HAD COMPLETELY RELINQUISHED THEIR RIGHTS, TITLE, INTEREST, SHARE A ND BENEFITS IN TO AND FROM THE PROPERTY AND ASSETS OF THE SAID TRUST INCLUDING ACC UMULATED INCOME. SHE FURTHER OBSERVED THAT THOUGH IN THE LETTER OF RELIN QUISHMENT, WHICH IS NAMED AS RELEASE OF SANT TRUST, IT IS NOT STATED BUT IN E FFECT THE SAID RELINQUISHMENT HAS RESULTED IN THE TRUST RECEIVING THE ENTIRE RIGH TS, TITLE, INTEREST, SHARE AND BENEFITS IN TO AND FROM THE PROPERTY AND ASSETS OF THE SAID TRUST INCLUDING ACCUMULATED INCOME OF THE ORIGINAL TWO BENEFICIARIE S. SHE OBSERVED THAT NEITHER THERE IS SPECIFIC TRANSFER NOR GIFT BY MS. NATASHA AND MS. TANYA, TO THEIR PARENTS. THE MODIFICATION IN THE TERMS OF CON TRACT BY CONSENT OF ALL THE BENEFICIARIES IS IN ACCORDANCE WITH THE PROVISIONS OF INDIAN TRUST ACT AND ACCORDING TO THE VARIOUS RULINGS OF THE COURTS. IT IS ON THESE GROUNDS, THE LEARNED COMMISSIONER (APPEALS) HAS OBSERVED THAT TH E REASONS ENUMERATED IN THE BODY OF THE ORDER PASSED BY THE ASSESSING OF FICER, CANNOT BE ACCEPTED THAT THE TRUST WAS UNLAWFUL WITHIN THE PROVISIONS O F SECTION 77(B) OF THE INDIAN TRUST ACT, AND IN THIS MANNER, THE LEARNED C OMMISSIONER (APPEALS) HAS UPHELD THE VALIDITY OF THE TRUST. SHE ALSO OBSE RVED THAT THE ASSESSING OFFICER WAS WRONG IN OBSERVING THAT THE ASSESSEE CA NNOT ACT IN DUAL CAPACITY, AS, ACCORDING TO THE PROVISIONS OF THE INDIAN TRUST ACT, THE ASSESSEE COULD ACT IN DUAL CAPACITY. SHE ALSO NOTICED THAT, ACCORD ING TO THE DETAILS FURNISHED IN THE SHAPE OF RETURN OF INCOME FILED BY THE SAID TRUST, IT HAS PAID MAXIMUM MARGINAL RATE OF TAX BEING A DISCRETIONARY TRUST. T HE DISSOLUTION PROCEEDS RECEIVED BY THE ASSESSEE AS BENEFICIARIES ARE SHOWN BY THE ASSESSEE IN HIS INDIVIDUAL CAPACITY AND THE SAID TRUST HAS FILED IT S RETURN OF INCOME FOR THE PERIOD ENDING 31 ST MARCH 2007 SEPARATELY. SHE HELD THAT THE ASSESSEE DID NOT RECEIVE THE SAID SUM OF ` 1,36,00,595, IN HIS CAPACITY AS TRUSTEE I.E., REPRESENTATIVE ASSESSEE FOR THE PURPOSE OF THE TRUS T. HAVING RECORDED THESE CONCLUSIONS, THE LEARNED COMMISSIONER (APPEALS) HAS FURTHER REFERRED TO THE PROVISIONS OF SECTION 56(2)(VI). ACCORDING TO HER, THE SAID TRUST DOES NOT FALL WITHIN THE AMBIT OF THE WORD RELATIVE , DESCRIBED IN THE PROVISIONS OF SECTION 56(2)(VI), THEREFORE, THE EXEMPTION FROM THE APPLIC ABILITY OF THE PROVISIONS OF SECTION 56(2)(VI) IS NOT AVAILABLE TO THE ASSESSEE AS THE SAID SUM OF MONEY, MR. ASHOK C. PRATAP 6 THE AGGREGATE OF WHICH EXCEEDS ` 50,000, WAS RECEIVED WITHOUT CONSIDERATION, CANNOT BE SAID TO HAVE BEEN RECEIVED FROM ANY RELATIVE OR ON THE OCCASION OF THE MARRIAGE OF THE INDIVIDUAL, OR UNDER A WILL OR BY WAY OF INHERITANCE, OR IN CONTEMPLATION OF DEATH OF THE PA YER, OR FROM ANY LOCAL AUTHORITY AS DEFINED IN THE EXPLANATION TO CLAUSE ( 20) OF SECTION 10, OR FROM ANY FUND OR FOUNDATION OR UNIVERSITY OR OTHER EDUCA TIONAL INSTITUTION OR HOSPITAL OR OTHER MEDICAL INSTITUTION OR ANY TRUST OR INSTITUTION REGISTERED UNDER SECTION 12AA. IT IS IN THIS MANNER, THE LEARN ED COMMISSIONER (APPEALS) HAS CONFIRMED THE ADDITION MADE BY THE AS SESSING OFFICER. 13. BEFORE US, THE LEARNED SR. ADVOCATE, AFTER NARRATIN G THE FACTS, SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) H AS ACCEPTED THE VALIDITY OF THE TRUST AFTER REFERRING TO THE RELEVANT SECTIO NS OF INDIAN TRUST ACT. HE SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) H AS ALSO ACCEPTED THE VALIDITY OF THE AMENDMENT AND DISSOLUTION OF TRUST, ETC. THE LEARNED COMMISSIONER (APPEALS), HAVING ACCEPTED ALL THESE T HINGS, HAS WRONGLY CONCLUDED THAT THE AMOUNT RECEIVED BY THE ASSESSEE ON DISSOLUTION OF TRUST IS LIABLE TO BE ASSESSED UNDER SECTION 56(2)(VII), AS THE SAME IS A MONEY THE AGGREGATE OF WHICH IS EXCEEDED TO ` 50,000, WAS WITHOUT CONSIDERATION AND IT WAS NOT FROM RELATIVE. HE SUBMITTED THAT THE SAID A MOUNT CANNOT BE SAID TO BE RECEIVED WITHOUT CONSIDERATION AS THE SAME WAS R ECEIVED BY THE ASSESSEE AS PER THE TERMS OF DISSOLUTION DEED. HE SUBMITTED THAT IT IS NOT EVEN THE CASE OF THE ASSESSEE THAT THE SAID TRUST WAS EVER R EGISTERED UNDER SECTION 12AA OF THE ACT OR IT WAS THE INSTITUTION DESCRIBED IN CLAUSE (23C) OF SECTION 10. EVEN IF IT IS NOT SO, THE AMOUNT RECEIVED BY TH E ASSESSEE ON DISSOLUTION OF TRUST IN THE CAPACITY OF ITS BENEFICIARIES, IT C ANNOT BE TAXED UNDER SECTION 56(2)(VI) AS THE SAME IS NOT A MONEY RECEIVED WITHO UT CONSIDERATION. HE SUBMITTED THAT IT HAS BEEN MADE CLEAR IN THE FINDIN GS RECORDED BY THE LEARNED COMMISSIONER (APPEALS) THAT THE TRUST IN QU ESTION HAS SUFFERED THE TAX AT MAXIMUM MARGINAL RATE, THEREFORE, HE PLEADED THAT THE REASONING GIVEN BY THE LEARNED COMMISSIONER (APPEALS) TO UPHO LD THE ACTION OF THE ASSESSING OFFICER IS CONTRARY TO LAW. HE SUBMITTED THAT WHILE THE LEARNED COMMISSIONER (APPEALS) HAS ACCEPTED THE VALIDITY OF THE TRUST, MODIFICATION MR. ASHOK C. PRATAP 7 THERETO AND THE REVENUE DID NOT PREFER ANY APPEAL A GAINST THOSE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS), IT IS THE CASE OF THE ASSESSEE THAT ADDITION HAS WRONGLY BEEN SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) AND THE SAME IS REQUIRED TO BE DELETED. 14. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESE NTATIVE, RELYING ON THE ORDERS PASSED BY THE AUTHORITIES BELOW, SUBM ITTED BEFORE US THAT THE ADDITION HAS RIGHTLY BEEN SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) AND HER ORDER SHOULD BE UPHELD. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. SINCE THE FINDINGS OF TH E ASSESSING OFFICER THAT THE TRUST IS ILLEGAL AND ITS TERMS COULD NOT BE MODIFIE D, HAVE BEEN REVERSED BY THE LEARNED COMMISSIONER (APPEALS) AND THE REVENUE HAS NOT PREFERRED ANY APPEAL AGAINST THOSE FINDINGS, WE PROCEED TO DECIDE THE PRESENT ISSUE ONLY IN THE LIGHT OF THE PROVISIONS OF SECTION 56(2)(VI) BY APPLICATION OF WHICH THE LEARNED COMMISSIONER (APPEALS) HAS SUSTAINED THE AD DITION. IT WILL BE APPROPRIATE TO QUOTE RELEVANT PORTION OF SECTION 56 (2)(VI) OF THE ACT, WHICH READS AS FOLLOWS: F.INCOME FROM OTHER SOURCES INCOME FROM OTHER SOURCES. 56. (1) INCOME OF EVERY KIND WHICH IS NOT TO BE EXC LUDED FROM THE TOTAL INCOME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME -TAX UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IF IT IS NOT CHAR GEABLE TO INCOME- TAX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14, ITEMS A TO E. (2) (I) TO (V) (VI) ANY LINEAL ASCENDANT OR DESCENDANT OF THE SPO USE OF THE INDIVIDUAL; (VII) SPOUSE OF THE PERSON REFERRED TO IN CLAUSES (II) TO (VI);] [(VI) WHERE ANY SUM OF MONEY, THE AGGREGATE VALUE O F WHICH EXCEEDS FIFTY THOUSAND RUPEES, IS RECEIVED WITHOUT CONSIDER ATION, BY AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, IN ANY PREV IOUS YEAR FROM ANY PERSON OR PERSONS ON OR AFTER THE 1ST DAY OF APRIL, 2006 [BUT BEFORE THE MR. ASHOK C. PRATAP 8 1ST DAY OF OCTOBER, 2009], THE WHOLE OF THE AGGREGA TE VALUE OF SUCH SUM: PROVIDED THAT THIS CLAUSE SHALL NOT APPLY TO ANY SU M OF MONEY RECEIVED (A) FROM ANY RELATIVE; OR (B) ON THE OCCASION OF THE MARRIAGE OF THE INDIVID UAL; OR (C) UNDER A WILL OR BY WAY OF INHERITANCE; OR (D) IN CONTEMPLATION OF DEATH OF THE PAYER; OR (E) FROM ANY LOCAL AUTHORITY AS DEFINED IN THE EXP LANATION TO CLAUSE (20) OF SECTION 10; OR (F) FROM ANY FUND OR FOUNDATION OR UNIVERSITY OR O THER EDUCATIONAL INSTITUTION OR HOSPITAL OR OTHER MEDICAL INSTITUTIO N OR ANY TRUST OR INSTITUTION REFERRED TO IN CLAUSE (23C) OF SECTION 10; OR (G) FROM ANY TRUST OR INSTITUTION REGISTERED UNDER SECTION 12AA. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'RELA TIVE' MEANS (I) SPOUSE OF THE INDIVIDUAL; (II) BROTHER OR SISTER OF THE INDIVIDUAL; (III) BROTHER OR SISTER OF THE SPOUSE OF THE INDIVI DUAL; (IV) BROTHER OR SISTER OF EITHER OF THE PARENTS OF THE INDIVIDUAL; (V) ANY LINEAL ASCENDANT OR DESCENDANT OF THE INDIV IDUAL; (VI) ANY LINEAL ASCENDANT OR DESCENDANT OF THE SPOU SE OF THE INDIVIDUAL; (VII) SPOUSE OF THE PERSON REFERRED TO IN CLAUSES (II) TO (VI);] 16. THE AFOREMENTIONED PROVISIONS WILL DESCRIBE THAT TH E INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED FROM THE TOTAL INC OME UNDER THE INCOME TAX ACT, 1961, SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FROM OTHER SOURCES , IF IT IS NOT CHARGEABLE TO INCOME TAX UNDER ANY O F THE HEADS SPECIFIED IN SECTION 14, ITEMS (A) TO (E). SUBSECT ION (2) DESCRIBES THAT, IN PARTICULAR AND WITHOUT PREJUDICE TO THE GENERALITY OF SUBSECTION (1), THE INCOME DESCRIBED IN VARIOUS CLAUSES, INTERALIA, IN CLUDING CLAUSE (VI) WHICH HAS BEEN REPRODUCED ABOVE, THE INCOME SHALL BE CHAR GEABLE TO INCOME TAX UNDER THE HEAD INCOME FROM OTHER SOURCES . CLAUSE (VI) OF S/SECTION (2) OF MR. ASHOK C. PRATAP 9 SECTION 56 OF THE ACT WILL DESCRIBE THAT IN A CASE WHERE ANY SUM OF MONEY, THE AGGREGATE OF WHICH EXCEEDS ` 50,000, IS RECEIVED WITHOUT CONSIDERATION BY AN INDIVIDUAL OR HUF IN ANY PREVIOUS YEAR FROM A NY PERSON OR PERSONS AND/OR AFTER 1 ST APRIL 2006 (BUT BEFORE 1 ST OCTOBER 2009), THE WHOLE OF AGGREGATE VALUE OF SUCH SUM SHALL BE LIABLE TO BE A SSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES . INGREDIENTS FOR APPLICATION OF CLAUSE (VI) WILL BE (I) THAT THERE SHOULD BE A SUM OF MONEY; (II) THAT ITS AGGREGATE VALUE EXCEEDS ` 50,000; (III) THAT IT SHOULD BE RECEIVED WITHOUT CONSIDERATION BY AN INDIVIDUAL OR HUF; AND (IV) IN ANY PREVIOUS Y EAR, FROM ANY PERSON, BETWEEN THE PERIOD 1 ST APRIL 2006 AND 1 ST OCTOBER 2009. THE SAID CLAUSE WILL NOT BE APPLICABLE TO THE PERSONS DESCRIBED IN CLAUS ES (A) TO (G), AS MENTIONED IN THE PROVISO TO CLAUSE (VI), WHICH IS R EPRODUCED ABOVE; THE WORD RELATIVE HAS BEEN DEFINED IN EXPLANATION WHICH IS ALSO REPRO DUCED ABOVE. UNLESS ALL THE AFOREMENTIONED INGREDIENTS AR E FULFILLED, THE PROVISIONS OF CLAUSE (VI) OF S/SECTION (2) OF SECTION 56 OF TH E ACT COULD NOT BE APPLIED. IT IS THE MAIN CASE OF LEARNED COUNSEL FOR THE ASSESSE E THAT THE AMOUNT HAS NOT BEEN RECEIVED BY THE ASSESSEE WITHOUT CONSIDERATION AND THAT PART OF THE CONDITION CANNOT BE SAID TO HAVE BEEN FULFILLED, TH EREFORE, IT WILL BE MATERIAL TO SEE THAT AS TO WHETHER THIS AMOUNT CAN BE SAID T O HAVE BEEN RECEIVED WITHOUT CONSIDERATION. IF IT IS HELD THAT THE SAID AMOUNT IS NOT RECEIVED BY THE ASSESSEE WITHOUT CONSIDERATION, THEN CLAUSE (VI), S /SECTION (2) OF SECTION 56 OF THE ACT WILL NOT BE APPLICABLE. THE FACTS ARE NO T IN DISPUTE. THE ASSESSEE HAS RECEIVED THIS AMOUNT ON DISSOLUTION OF TRUST IN THE CAPACITY OF BENEFICIARIES. THE STATUS OF BENEFICIARY HAS ALREAD Y BEEN ACCEPTED BY THE LEARNED COMMISSIONER (APPEALS) WHEN SHE HAS HELD TH AT IN THE BACKGROUND OF THE PROVISIONS OF INDIAN TRUST ACT AND THE DISSO LUTION OF THE TRUST, APPELLANT DID NOT RECEIVE THE SUM OF ` 1,36,595, IN HIS CAPACITY AS A TRUSTEE I.E., REPRESENTATIVE ASSESSEE FOR THE PURPOSE OF TR UST . THE FACT THAT THE ASSESSEE HAS RECEIVED THE AMOUNT IN THE CAPACITY OF BENEFICIARIES HAS ALSO NOT BEEN CONTROVERTED, THEREFORE, THE AMOUNT RECEIV ED BY THE TRUST IS IN PURSUANCE OF DISSOLUTION OF TRUST. THE AMOUNT RECEI VED IN PURSUANCE OF DISSOLUTION OF TRUST CANNOT BE TERMED TO BE AN AMOU NT RECEIVED BY THE BENEFICIARIES WITHOUT CONSIDERATION . THE FACT THAT THE TRUST HAD BORNE THE MR. ASHOK C. PRATAP 10 TAX AT MAXIMUM MARGINAL RATE ON ITS INCOME HAS ALSO NOT BEEN CONTROVERTED. THEREFORE, IN OUR CONSIDERED OPINION, THE ADDITION CANNOT BE UPHELD ON THE APPLICABILITY OF CLAUSE (VI) OF SUBSECTION (2) OF SECTION 56 OF THE ACT, AS THE MONEY RECEIVED BY THE ASSESSEE IS NOT WITHOUT CONSIDERATION . 17. IN VIEW OF OUR AFOREMENTIONED FINDINGS, WE DO NOT C ONSIDER IT NECESSARY TO GO INTO THE OTHER SUBMISSIONS OF THE L EARNED SR. ADVOCATE, WHICH, INTERALIA, INCLUDES THE ARGUMENTS THAT THIS AMOUNT CANNOT BE ASSESSED FOR THE REASONS THAT IT WILL TANTAMOUNT TO TAXING THE INCOME TWICE AND ALSO THE ARGUMENT THAT, IN ANY CASE, AS THE TRU ST WAS CREATED BY MOTHER OF THE ASSESSEE, ITS EXCLUSION WILL ALSO FALL WITHI N THE PURVIEW OF CLAUSE (VI) OF THE EXPLANATION DESCRIBED IN CLAUSE (VI) OF THE EXP LANATION WHERE THE WORD RELATIVE HAS BEEN DEFINED AS LINEAL ASCENDANT OR DESCENDANT OF THE SPOUSE OF THE INDIVIDUAL , ETC. 18. IN VIEW OF THE ABOVE DISCUSSION, WE DELETE THE ADDI TION AND ALLOW THE GROUND OF THE ASSESSEE. 19. ) *1 !')* + . 2* + * 34 5 18. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. . + 0# ( 6 7!1 18/07/2012 0 + 8 5 ORDER PRONOUNCED IN THE OPEN COURT ON 18/07/2012 SD/- . . G.E. VEERABHADRAPPA PRESIDENT SD/- . . I.P. BANSAL JUDICIAL MEMBER MUMBAI, 7! 7! 7! 7! DATED: 18/07/2012 MR. ASHOK C. PRATAP 11 . . . . + ++ + &*9 &*9 &*9 &*9 : 9#* : 9#* : 9#* : 9#* / COPY OF THE ORDER FORWARDED TO : (1) !')* / THE ASSESSEE; (2) / THE REVENUE; (3) ; ( ) / THE CIT(A); (4) ; / THE CIT, MUMBAI CITY CONCERNED; (5) 98 &*! , , / THE DR, ITAT, MUMBAI; (6) 8<' = / GUARD FILE. '9* &* / TRUE COPY .! .! .! .! / BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY > >> > / 3 3 3 3 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI