Investcorp Real Estate Yield Fund, BANDRA, MUMBAI V. ITO-23(1)(1), MUMBAI

ITA 4638/MUM/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0403 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-07-2024
• Assessment Year: misc
• Appeal Filed On: 17-12-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKSHAY TAPADIYA
• Assessee Lawyers: DHANESH BAFNA AW CHANDANI SHAH
• Keywords: TDS
• Section: 234B; 143(1)

Judgement Text

| आयकर अपीलीय अिधकरण यपी , मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & SHRI RAJ KUMAR CHAUHAN, HON’BLE JUDICIAL MEMBER I.T.A. No. 4638/Mum/2023 Assessment Year: 2015-16 Investcorp Real Estate Yeild Fund Unit No. 2, 6 th Floor Godrej BKC, Plot C-68 G Block, Bandra Kurla Complex Bandra (East) Mumbai - 400051 [PAN: AABTI0798Q] Vs Income-tax Officer – 23(1)(1), Mumbai अपील / (Appellant) य / (Respondent) Assessee by : Shri Dhanesh Bafna a/w Ms. Chandani Shah & Ms. Riddhi Maru, A/Rs Revenue by : Shri Akshay Tapadiya, D/R सुनवाई की तारीख/Date of Hearing : 24/07/2024 घोषणा की तारीख /Date of Pronouncement: 07/08/2024 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order of the ld. CIT(A)- Mysore, dt. 20/10/2023, pertaining to AY 2015-16. 2. The grievance of the assessee reads as under:- “1. On the facts and in the circumstances of the case and in law, the order passed by the Additional / Joint Commissioner of Income-tax (Appeal), Mysore ['JCIT(A)'], is bad in law to the extent the same is prejudicial to the Appellant. 2. On the facts and in the circumstances of the case and in law, the JCIT(A), after having held that the income and the tax has to be assessed in the hands of the Appellant in its capacity as Representative Assessee, erred in directing the AO to ensure that no similar credit for prepaid taxes is availed by the beneficiaries. I.T.A. No. 4638/Mum/2023 2 3. On the facts and in the circumstances of the case and in law, the JCIT(A), erred in directing the AO to verify the claim of prepaid taxes (advance tax and tax deducted at source) in the hands of each beneficiary of the Appellant without appreciating that the same ought to be granted in the hands of the Appellant irrespectively. 4. On the facts and in the circumstances of the case and in law, the JCIT(A) erred in not directing the AO to delete the interest under section 234B of the Income- tax Act, 1961 ('the Act') computed in the Intimation under section 143(1) of the Act of INR 59,38,049. 5. On the facts and in the circumstances of the case and in law, the JCIT(A) erred in not directing the AO to delete the interest under section 234C of the Income- tax Act, 1961 ('the Act') computed in the Intimation under section 143(1) of the Act of INR 12,89,455.” 3. Representatives were heard, case records carefully perused and the documentary evidences duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 4. Briefly stated the facts of the case are that the assessee is a Trust established under the Indian Trusts Act, 1882, by way of trust deed dated 21/11/2013 and is registered under the Registration Act, 1908. The return of income filed on 28/08/2015 declaring total income of Rs.47,21,77,219/- on which taxes were paid at Rs.16,05,81,079/- with advance tax of Rs.11,07,69,253/- and TDS of Rs.4,98,11,826/-. 5. The assessee is registered as an Alternative Investment Fund (AIF) under Securities and Exchange Control board of India (Alternative Investment Funds) Regulations, 2012 and as per Section 160(1)(iv) of the Act, the assessee is a representative of the beneficiaries of the funds. Accordingly, the trustee of the fund computes the taxable income of the fund and pays applicable taxes thereon in its capacity as a representative assessee of the beneficiaries of the fund. In the first quarter of FY 2014-15, trustees of the fund, paid taxes on the share of I.T.A. No. 4638/Mum/2023 3 income of each beneficiary under PAN of such beneficiary and gave a declaration under Rule 37BA(2) of the Income Tax Rules, 1962 (‘Rules’) to investee companies to deduct TDS under the PAN of the beneficiaries. For the remaining three (3) quarters of FY 2014-15, the fund paid taxes on income of the fund in its capacity as a representative assessee using its own PAN and accordingly revoked declaration given to investee companies under Rule 37BA(2) of the Rules. Thereafter, taxes were deducted at source by investee companies using PAN of the fund. The fund filed its return of income offering to tax, the entire income of the fund earned by it in its capacity as a representative assessee and claimed credit of tax paid and deducted, using PAN of the beneficiaries as well as its own PAN. 5.1. While processing the return of income, the CPC has not considered the advance tax to the tune of Rs. 2,84,60,753/- paid by the trustee of the assessee trust. 6. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the return of income filed by the assessee is filed in the capacity of representative assessee. The assessee furnished a statement of income to each of the beneficiaries indicating share of income under each head of income and share of taxes paid by the trustee of the assessee in the representative capacity. The trustee has also paid the tax on the share of income of each beneficiary under the respective PANs of the beneficiaries and gave a declaration as required under Rule 37BA(2) of the Rules. Thus, for the first quarter for the year under consideration, TDS was made by the investee companies under the PAN of the beneficiaries and advance tax was paid by the assessee. I.T.A. No. 4638/Mum/2023 4 7. Subsequently, the assessee withdrew the declaration following the CBDT Circular No. 13/2014 dated 28/07/2014 which applies to the later quarter of the FY 2014-15. The circular is extracted at page 7 & 8 of the order of the ld. CIT(A) and we find that this circular has been issued with an intention to clarify the tax position for onshore funds setup as AIF. The conditions which need to be fulfilled are:- (i). Beneficiaries of the income arising to the trust are identifiable on the date of the trust deed; and (ii) the share of income of each beneficiary is ascertainable o the date of indenture. 7.1. Facts on record show that the assessee fulfills both the conditions to be eligible for passing through taxation. Since the corresponding income has been offered by the assessee in the capacity of the representative assessee within the meaning of Section 160(1)(iv) r.w.s. 164(1) of the Act, the assessee deserves to be allowed the credit of TDS and advance tax as claimed by it under return of income. The relevant findings of the ld. CIT(A) read as under:- “Therefore, since corresponding income has been offered by the Appellant Trust in the capacity of Representative Assessee within the meaning of Section 160(1)(iv) rws 164(1) of the Act, it is held that the appellant deserves to be allowed the credits of TDS and advance tax as claimed by it in the return of income. Without being unmindful of the fact that the advance tax has been paid by the Appellant under the PANS of such beneficiaries, since the corresponding income is offered in the appellant's return of income in the capacity of Representative Assessee, the claim of the appellant with regard to the allowability of advance tax to the tune of Rs. 2,84,60,753/- and TDS claim not allowed to the tune of Rs. 65,57,000. While allowing the credits for prepaid taxes, the Assessing Officer is directed to ensure no similar credit for TDS or advance tax is availed by the beneficiaries therein and allow the credit for TDS and advance tax in favour of the appellant. The AO shall also ensure that the Hon'ble jurisdictional High Court of Bombay has not taken any contrary view on the subject matter. With regard to charging of interest u/s.234B & 234C, since the same is consequential in nature, the Assessing Officer is directed to charge correct interest u/s.234B & 234C of the Act after giving effect to this order. Under the circumstances, all the grounds of the appeal are allowed.” I.T.A. No. 4638/Mum/2023 5 8. After giving a thoughtful consideration to the aforestated findings of the ld. CIT(A) on the facts of the case discussed hereinabove, we do not find any error or infirmity in the above mentioned findings of the ld. CIT(A) and uphold the same. 9. In the result, appeal of the assessee is dismissed. Order pronounced in the Court on 7 th August, 2024 at Mumbai. Sd/- Sd/- (RAJ KUMAR CHAUHAN) (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 07/08/2024 *SC SrPs *SC SrPs*SC SrPs *SC SrPs की ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु!)अपील (/ The CIT(A)- 5. िवभागीय ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai