ITO 23(1)(4), MUMBAI V. DHFL VENTURE CAPITAL FUND, MUMBAI

ITA 734/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1079 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PURUSHOTTAM KUMAR SR
• Keywords: Business income; Maximum Marginal Rate; Revocable transfer; Revised return
• Section: 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 ASSESSMENT YEARS: 2008-09, 2009-10 & 2010-11 INCOME-TAX OFFICER-19(3)(1), ROOM NO.307, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, LALBAUG, MUMBAI - 400012 VS. M/S. DHFL VENTURE CAPITAL FUND, 6 TH /4 TH FLOOR, DHEERAJ ARMA, ANANT KANEKAR MARG, BANDRA (E), MUMBAI 400 051 PAN: AAATD8633L (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI PURUSHOTTAM KUMAR, SR. A.R. REVENUE BY : SHRI VIJAY MEHTA, D.R. DATE OF HEARING : 09.03.2017 DATE OF PRONOUNCEMENT : 28.04.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: ALL THESE APPEALS ARE FILED BY THE REVENUE INVOLVI NG ASSESSMENT YEARS 2008-09, 2009-10 & 2010-11. THE ISSUES RAISED IN A LL THE APPEALS ARE IDENTICAL, THEREFORE FOR THE SAKE OF CONVENIENCE THEY ARE CLUB BED AND HEARD COMBINEDLY AND DISPOSED BY THIS CONSOLIDATED ORDER. APPEALWIS E ADJUDICATION IS GIVEN IN FOLLOWING PARAS: 2. IN ALL THESE APPEALS COMMON ISSUES ARE RAISED WH ICH ARE AS UNDER: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF EXEMPT ION IN RESPECT OF INCOME AMOUNTING TO RS.32,83,77,906/- MADE BY ASSESSING OF FICER OVERLOOKING AND WITHOUT CONSIDERING RELEVANT MATERIAL AND EVIDENCES AVAILAB LE BEFORE HIM. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACTS THAT FOR THE EARLIER ASSESSMENT YEAR I.E. A.Y. 2007-08 IN THE ASSESSEE'S OWN CASE, THE CLAIM OF EX EMPTION WITH RESPECT TO THE SIMILAR INCOME WAS REJECTED BY LD. CIT(A). ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 2 (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN ACCEPTING THE ASSESSEE'S CONTENTION THAT IT HAD NOT CLAIMED EXEMPTION U/S. 10(23FB) AND HOLDING THAT ASSESSEE I S ENTITLED FOR EXEMPTION U/S. 61 TO 63 WITHOUT APPRECIATING THE FACT THAT AT THE TIM E OF ASSESSMENT PROCEEDINGS THE APPELLANT HAD MADE ELABORATE SUBMISSION SUPPORTING ITS CLAIM OF EXEMPTION U/S. 10(23FB) OF THE INCOME TAX ACT REPEATEDLY ON SEVERA L OCCASIONS VIDE LETTERS DATED 02.08.2010, 15.11.2010 AND 13.12.2010 WHICH SHOWS T HAT CLAIM OF EXEMPTION U/S. 10(23FB) OF THE INCOME TAX ACT WAS CONSCIOUSLY MADE BY THE ASSESSEE AND NOT MISTAKENLY OR INADVERTENTLY, WHICH WAS SUBSEQUENTLY FOUND TO BE INADMISSIBLE. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE 'S CONTEN TION REGARDING NOT CLAIMING ANY EXEMPTION U/S. 10(23FB) OF THE IT ACT WAS FOUND TO BE CORRECT. (5) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONCLUDING THAT THE EXEMPTION U/S. 10(23FB) WAS NEVER CLAIMED BY THE ASSESSEE AS THE EXPLANATION OF THE ASSESSEE JUS TIFYING THE CLAIM OF EXEMPTION U/S. 10(23FB) WAS IN RESPONSE TO THE A.O'S SHOW CAU SE NOTICE DATED 08.11.2010 ASKING THE APPELLANT AS TO WHY THE CLAIM OF DEDUCTI ON U/S. 10(23FB) AS CLAIMED BY THE APPELLANT SHOULD NOT BE DENIED, OVERLOOKING THE FACT THAT IT WAS APPELLANT ITSELF WHO IN ITS LETTER DATED 02.08.2010 CLAIMED EXEMPTIO N U/S. 10(23FB) OF THE IT ACT, 1961 (PARA 9), WHICH WAS IN RESPONSE TO THE A.O'S N OTICE DATED 01.07.2010 IN WHICH THE A.O. HAD ONLY REQUIRED DETAILS OF TAX FREE INCO ME BUT HAD NOT SPECIFIED THE SECTION OF I. T. ACT UNDER WHICH EXEMPTION WAS CLAI MED. THE CIT(A) THUS GRAVELY MISLEAD HIMSELF BY OVERLOOKING THE FACT THAT THE AS SESSEE HAD MADE THE CLAIM OF EXEMPTION U/S. 10(23FB) ON ITS OWN WITHOUT ANY SUGG ESTION OR INDICATION FROM THE A.O. (6) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED BY NOT APPRECIATING THE FACT THAT WITHOUT FILING THE REVISED RETURN OF INCOME THE ASSESSEE HAS ALTERED THE CLAIM OF EXEMPT ION OF U/S.10(23FB) WHICH WAS CLAIMED IN SUBMISSION AT THE TIME OF ASSESSMENT PRO CEEDINGS ON ITS OWN ON SEVERAL OCCASIONS; THIS VIEW HAS ALSO BEEN UPHELD BY THE HO N'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT [284 ITR 323 (SC)] W HEREIN THE HON'BLE COURT HAS HELD THAT AN ASSESSEE CAN NOT AMEND A RETURN FILED BY HI M FOR MAKING A CLAIM FOR DEDUCTION OTHER THAN BY FILING A REVISED RETURN. (7) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE INCOME OF RS.32,83,77,906 /- WAS NOT TAXABLE IN THE HANDS OF THE ASSESSEE WITHOUT CONSIDERING THE PRINCIPLE T HAT THE STATUS OF PRIVATE TRUST CARRYING THE BUSINESS IN ACCORDANCE WITH TRUST DEED CAN BE TAKEN AS ASSOCIATION OF PERSON ASSESSED AT MAXIMUM MARGINAL RATE AS HELD BY HON 'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. KUMAR PUBLICATION TRUST (262 IT R 173 MAD) AND FURTHER THAT THE INCOME EARNED BY THE TRUST WHICH WAS ASSESSABLE UND ER THE HEAD BUSINESS INCOME WAS TAXABLE AT MAXIMUM MARGINAL RATE U/S 161(1A) OF THE INCOME TAX ACT AS HELD IN THE CASE OF CIT VS. J. K. HOLDINGS 182 CTR 243 (BOM ), AFTER ARRIVING AT A FINDING IN PARA 9.25 OF HIS ORDER THAT THE APPELLANT IS A TRU ST, AND OVERLOOKING THE FACT THAT THE ASSESSEE HAD SHOWN THE INCOME OF RS.32,83,77,90 6/- AS BUSINESS INCOME AS PER PART A (PROFIT & LOSS A/C.) OF THE E-FILED RETURN O F INCOME FILED ON 26.09.2008. ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 3 (8)(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) GROSSLY ERRED IN HOLDING THAT THE APPELLANT TRUST COMPILES WITH THE DEFINITION OF 'REVOCABLE TRANSFER' AS GIVEN UNDER SEC. 61 TO 6 3 OF THE INCOME TAX ACT AND THUS INCOME ARISING TO THE TRUST IS TAXABLE IN THE HANDS OF THE CONTRIBUTORS AND NOT THE APPELLANT, COMPLETELY DISREGARDING THE FACT THAT TH E RIGHT TO RE- TRANSFER OR REASSUME WAS NULLIFIED BY THE PROVISIONS OF CLAUSE 15.1 OF T HE TRUST DEED AS REPRODUCED IN THE IMPUGNED ORDER (PARA 9.5) WHICH BARS THE REVOCATION TO TAKE EFFECT UNLESS CONSENT OF CONTRIBUTORS HOLDING UNITS OF THE SCHEME REPRESENTI NG NOT LESS THAN 75% OF THE TOTAL CONTRIBUTION TO THAT SCHEME HAS BEEN OBTAINED WHICH DEBARS ANY INDIVIDUAL CONTRIBUTOR FROM REVOKING THE TRANSFER. (8)(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) THUS ERRED IN NOT APPRECIATING THAT THE PROV ISIONS OF CLAUSE 15.1 OF THE TRUST DEED NULLIFIED THE ENTITLEMENT OF THE CONTRIBUTORS TO REVOKE CONTRIBUTION TO SCHEME AND THUS THE INDIVIDUAL CONTRIBUTORS ON THEIR OWN N EVER HAD ANY POWER TO REVOKE THE TRANSACTION. (9) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONSIDERING THE ASSESSEE AS A REVOC ABLE TRUST FOR THE BENEFIT OF THE BENEFICIARIES DESPITE THE FACT THAT THE ASSESSEE WA S IN THE BUSINESS OF INVESTING FOR WHICH THE DECISIONS WERE ITS OWN AND IT HAD ITS OWN EXPENSES LIKE ANY NORMAL BUSINESS. (10) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) ERRED IN FIRSTLY TO ALLOW THE ASSESSEE TO TA KE RECOURSE TO A DIFFERENT EXPLANATION OTHER THAN THAT CLAIMED DURING ASSESSME NT PROCEEDING, AND THEN ACCEPTED THE EXPLANATION ON THE BASIS OF CERTAIN PA RAMETERS AND NOT IN ITS ENTIRETY, DISREGARDING OR NOT CONSIDERING CERTAIN RELEVANT FA CTS. (11) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT( A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. (12) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER A NY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE HAS FILED THE RETURN OF INCOME AS NIL ON 20.06.2008. THEREAFTER, THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. ASSESSEE IS A VENTURE CAPITAL FUND WHICH IS REGISTERED WITH SEBI. ASSESSEE TRUST IS PRIVATE TRUST AND THE INCOME EARNED BY IT IS ALLOCATED AMON G THE BENEFICIARIES IN SPECIFIED RATIO. ASSESSEE HAS CLAIMED THAT INCOME IS EXEMPT UNDER SECTION 10(23FB) OF THE I.T. ACT. THE ASSESSEE VENTURE CAP ITAL FUND IS GOVERNED BY SEBI GUIDELINES AS PER SEBI REGULATIONS, 1996. THE CLAUSE 12 OF THE SAID SEBI GUIDELINES LAYS DOWN THE INVESTMENT CONDITIONS AND IMPOSE RESTRICTIONS ON A ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 4 VENTURE CAPITAL FUND. AS PER THE RELEVANT CLAUSE, THE VENTURE CAPITAL FUND SHALL NOT INVEST MORE THAN 25% CORPUS OF THE FUND IN ONE VENTURE CAPITAL UNDERTAKING. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS T HE AO) HAS VERIFIED THE BALANCE SHEET FOR F.Y. 2007-08 AND THE INVESTMENT P ATTERN OF THE FUND OF THE YEAR IS AS UNDER: SN VCU AMOUNT INVESTED % OF AVAILABLE CORPUS FUNDS 1. M/S. HONBLE SUPREME COURT REALITY PVT. LTD. 25,00,00,000 29.30% 2. M/S. PROFICIENT REALITY PVT. LTD. 3,50,97,300 4.11% 3. M/S. APEX REALITY PVT. LTD. 10,63,00,000 12.46% THE AO WAS OF A VIEW THAT THE ASSESSEE HAS INVES TED RS.20.93 CRORES IN M/S. SUPREME REALITY PVT. LTD. ON 31.03.2008 OUT OF TOTAL FUND OF RS.85.3 CRORES. THE AO HAS GIVEN SHOW CAUSE NOTICE THAT WH Y THE AMOUNT SHOULD NOT BE DISALLOWED AS ASSESSEE HAS INVESTED MORE THAN 25% O F CORPUS IN ONE VENTURE CAPITAL FUND. THE ASSESSEE CONTENDED THAT ASSESSEE HAS NOT MADE 25% OF CORPUS IN ONE VENTURE CAPITAL AND FACTUALLY IT IS NOT RIGH T. FACTUALLY ASSESSEES FUND HAS MOBILIZED TOTAL CORPUS FUND OF RS.101.03 CRORES AND THEREAFTER APPLYING CLAUSE 12(B) THE MAXIMUM INVESTABLE CAP OF 25% CORPUS OF F UND WORKED OUT TO BE RS.25.26 CRORES IN ONE VENTURE CAPITAL. ACCORDINGL Y, ON 01.11.2007 AN INVESTMENT OF RS.24.95 CRORES MADE IN OFCD OF ONE V CU I.E. M/S. SUPREME REALTY PVT. LTD. THEREFORE, THE LIMIT OF 25% CORPU S OF FUND STIPULATED IN CLAUSE 12(B) OF THE SAID REGULATION IS NOT VIOLATED. MORE OVER, THE ASSESSEES LAST DATE OF FUND HAS NOT BEEN TAKEN ON 31.03.2008. THE FACT TH AT QUARTERLY RETURN FOR QUARTER OCTOBER 2007 TO DECEMBER 2007 FILED WITH SEBI WHICH STATES THAT ON 31.03.2008 DIVESTMENT OF FUND OF RS.15.72 CRORES MA DE IN ACCORDANCE WITH THE TERMS AND CONDITIONS SPECIFIED IN CONTRIBUTION AGRE EMENT MADE WITH EACH ONE OF THE CONTRIBUTORIES. THE AO WAS NOT CONVINCED WITH THE ARGUMENT OF THE ASSESSEE. THE ASSESSEE HAS ALSO TAKEN THE CONTENTI ON BEFORE THE AO THAT ASSESSEE TRUST DEED CONSTITUTING THE ASSESSEE FUND MORE PART ICULARLY, CLAUSES 15 AND 4.3.3 ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 5 WHICH FULFILLS THE DEFINITION OF REVOCABLE TRANSFER UNDER SECTION 63 OF THE INCOME TAX ACT, 1961. IF THE TRUST IS REVOCABLE THEN THE TAX IS IN HANDS OF CONTRIBUTORY AND THE DEPARTMENT HAS ALREADY TAXED THE CONTRIBUTO RY THEREFORE NO INCOME CAN BE TAXED IN THE HANDS OF THE ASSESSEE. MOREOVER, T HE ASSESSEE HAS ALSO TAKEN THE CONTENTION THAT THE BENEFICIARY OF THE ASSESSEE TRU ST HAS ALREADY OFFERED THE INCOME IN THEIR HANDS. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO WAS OF A VIEW THAT ASSESSEE CAN BE TERMED AS VENTURE CA PITAL FUND WHICH VIOLATES THE CONDITIONS THAT ARE SPECIFIED BY SEBI. THE ASSESSE E HAS VIOLATED CLAUSE 12(B) OF THE SAID CONDITIONS/GUIDELINES. IN VIEW OF THIS, I T IS HELD THAT ASSESSEE IS NOT LIABLE FOR EXEMPTION UNDER SECTION 12(23FB) AS CLAI MED AND AO HAS TREATED THE INCOME OF RS.32,83,77,906/-, WHICH INCLUDES INTERES T ON DEBENTURE, INTEREST ON DEPOSIT WITH BANK AND INTEREST ON SHARE CAPITAL MON EY, AS INCOME FROM OTHER SOURCES AND TAXED ACCORDINGLY. 4. MATTER CARRIED TO LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] AND THE LD. CIT(A) HAS A LLOWED THE CLAIM BY OBSERVING AS UNDER: 9.25 THE ABOVE ISSUES HAVE BEEN CONSIDERED BY ME A ND I DO NOT FIND ANY MERIT IN THE AOS CONTENTIONS. THE RELEVANT DOCUMENTS VIZ. TRUST DEED, CONTRIBUTION AGREEMENTS HAVE BEEN PLACED ON RECORD AND THE ROLES OF ALL THE PARTIES ARE CLEAR FROM THE SAID DOCUMENTS VIZ. THE APPELLANT IS A TRUST FORMED BY THE SETTLER M/S. DEWAN HOUSING FINANCE LIMITED AND THE TRUSTEE COMPANY IS THE DHFL. TRUSTEE COMPANY PRIVATE LIMITED AND THE BENEFICIARIES AS THE CONTR IBUTORIES WHO AGREE TO MAKE A CONTRIBUTION TO THE TRUST FUND. THE DIFFERENCE BETW EEN SETTLOR AND THE BENEFICIARIES IS CLEARLY DEMARCATED AND THERE IS NO SCOPE OF ANY AMB IGUITY. FURTHER, THE APPELLANT HAS UNDERGONE ASSESSMENT IN PAST TWO YEARS AND THE LEGA L STATUS OF THE APPELLANT AS A TRUST HAS NEVER BEEN QUESTIONED. I FIND NO FIRM R EASONS TO NOT CONSIDER THE APPELLANT AS A 'TRUST WHEN AO HAS BEEN ASSESSING T HE APPELLANT AS A 'TRUST' IN THE PAST. 926 NEXT ISSUE RAISED BY THE AO, RELATES TO APPELLA NT BEING CONSIDERED AS AN AOP. IN RESPECT OF THE SAME, I FIND THAT THE JUDICIAL PRECE DENT RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VERSUS MARSONS BENEFI CIARY TRUST AND OTHERS (188 ITR 224) IS SQUARELY APPLICABLE. THE FACTS OF THE SAID CASE ARE FOUND TO BE SIMILAR TO THE PRESENT CASE OF THE APPELLANT. IN THE SAID CASE, TH E SETLLOR HAD APPOINTED TRUSTEE TO OVERSEE BUSINESS FOR THE BENEFIT OF GROUP OF BENEFI CIARIES. THE DEPARTNENT PROCEEDED TO TAX THE GROUP AS AN AOP. HOWEVER, THE BOMBAY HIG H COURT HAS PROCEEDED TO STATE IN UNAMBIGUOUS TERMS THAT THE BENEFICIARIES ARE MER ELY RECEIVERS OF THE INCOME AND THEY HAVE NEITHER SET UP THE TRUST NOR AUTHORIZED T HE TRUSTEE TO CARRY ON THE BUSINESS. ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 6 FURTHER, EVEN IF IT IS ACCEPTED THAT THE APPELLANT IS AN AOP, ONE HAS TO CONSIDER THE APPLICABILITY OF SECTION 61-63. THE AR HAS RIGHTLY SUBMITTED THAT EVEN IF APPELLANT IS TREATED TO BE AOP, PROVISIONS OF SECTION 61 TO 63 A RE APPLICABLE. HENCE THE CONTENTION OF AO FOR A.Y.2009-10 THAT THE APPELLANT IS AN AOP AND PROVISIONS OF SECTION 61 TO 63 ARE NOT APPLICABLE TO THE APPELLAN T IS NOT TENABLE. WITH REFERENCE TO THE SAME, IT IS OBSERVED THAT THE SECTION 61 APPLIE S TO 'ANY PERSON' AND ACCORDINGLY IF ONE ASSUMES THAT THE APPELLANT IS AN AOP, ONE HAS T O CHECK THE APPLICABILITY OF SECTION 61 TO THE FACTS OF THE APPELLANT TRUST. 9 27 IN VIEW OF THE DISCUSSION IN THE ABOVE PARAS A ND SUBMISSION OF THE APPELLANT, I NOW PROCEED TO CONSIDER THE TAXABILITY PROVISIONS O F 'REVOCABLE TRANSFERS' PROVIDED UNDER SECTIONS 61 TO 63 OF THE ACT. THE APPELLANT T RUST CLAMS THAT IT IS A PRIVATE REVOCABLE TRUST UNDER THE TRUST ACT AND TRUST IS A CONTRIBUTED TRUST SET UP UNDER THE TRUST DEED AS A CONTRIBUTORY REVOCABLE TRUST. THOU GH THE TRUSTEES HOLD THE ASSETS FOR THE BENEFITS OF THE BENEFICIARIES, THE CONTRIBUTION TO A TRUST SHOULD CONSTITUTE A REVOCABLE TRANSFER OF ASSETS BY THE CONTRIBUTORS TO THE TRUSTEE. IT IS FURTHER NOTED THAT IN A CASE OF CONTRIBUTORY TRUST SUCH AS THE AP PELLANT TRUST BY INVESTING IN UNITS OF THE TRUST, EACH UNIT HOLDER ACTS AS A SETTLOR OF THE AMOUNT INVESTED AND CONCOMITANTLY BECOMES A BENEFICIARY OF THE TRUST EN TITLED TO DISTRIBUTION FROM THE TRUST. I FIND THAT THE RELEVANT PROVISIONS OF THE TRUST DEED READ WITH THE CONTRIBUTION AGREEMENT AS RELIED UPON BY THE APPELLANT CONSTITU TES INSTRUMENT OF TRUST IN THE EYES OF LAW AND IT IS THIS INSTRUMENTS OF TRUST WHI CH DEFINES ENTIRE RELATIONSHIP BETWEEN THE TRUST AND BENEFICIARIES. I FURTHER FIN D THAT THE CONTRIBUTION AGREEMENT FROM THE UNIT HOLDER INDICATE THAT NOT ONLY ALL THE BENEFICIARIES OF THE TRUST CLEARLY ARE IDENTIFIABLE ON THE DATE OF RESPECTIVE SUBSCRIPTION BY THE UNIT HOLDERS, BUT FURTHER THE SHARES OF EACH UNIT HOLDERS IN THE INCOME OF THE TR UST IS ALSO ASCERTAINABLE AND DETERMINATE THERE FROM ON THE DATE OF SUBSCRIPTION BY THE RESPECTIVE UNIT HOLDER AS WELL AS THEREAFTER. 9.28 LOOKING TO THE FACTS OF THE APPELLANT TRUST, T HE EACH UNIT HOLDER IS A BENEFICIARY OF THE TRUST ENTITLED TO DISTRIBUTION FROM THE TRUS T. THE CONTRIBUTION AGREEMENT IS AN IMPORTANT DOCUMENT WHICH HAS TO BE READ WITH THE TR UST DEED WHICH CLEARLY CLARIFY THAT THE INCOME ACCRUING TO THE TRUST HAS ULTIMATEL Y TO BE TRANSFERRED TO THE BENEFICIARY IN THE RATIO OF THEIR INVESTMENTS. THE TRUST IS THE ENTITY WHICH IS JUXTAPOSED TO ACT AS A COMMONALITY BETWEEN ALL CONT RIBUTORS AND THE SAME DOESN'T IMPAIR THE FACT THAT THE INVESTMENTS MADE TO THE AP PELLANT TRUST WERE REVOCABLE. THE SECTIONS 61 AND 63 UNAMBIGUOUSLY CLARIFY THAT THE W HEN A TRANSFEROR CAN UNILATERALLY RESUME THE POWER OVER ASSETS, THE INCOME IS TO BE T AXED IN ITS HANDS ONLY AS IF THE TRANSFER NEVER HAPPENED. IT IS TO BE NOTED THAT THE REVOCABLE TRANSFER' NECESSARILY IMPLY POWER TO ASSUME CONTROL OVER THE ASSET AND HE REBY IT IS AMPLY CLEAR THAT NO CONTRIBUTOR WILL PART WITH THEIR MONEY IF THE SAME IS NOT SUBJECTED TO THEIR ULTIMATE CONTROL. AS POINTED OUT BY THE ARS, CLAUSE 15.1 OF THE TRUST DEED CLEARLY MANDATE THAT THE CONTRIBUTORS SHALL BE ENTITLED TO REVOKE T HE CONTRIBUTIONS AT ANY TIME DURING THE TERM OF SCHEME. ON THE BASIS OF ABOVE DISCUSSIO N, I AM OF THE VIEW THAT THE APPELLANT TRUST COMPLIES WITH THE DEFINITION OF 'RE VOCABLE TRANSFER' AS GIVEN UNDER SECTION 61 TO 63 AND THUS THE INCOME ARISING TO THE TRUST IS TAXABLE IN THE HANDS OF THE CONTRIBUTORS AND NOT IN THE HANDS OF THE APPELLANT. ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 7 9.29 AS REGARDS THE APPLICABILITY OF SECTION 61, TH E AO PRIMARILY STATES THAT THE CONTRIBUTORS HAVE PRACTICALLY NO CONTROL OVER THE C APITAL CONTRIBUTIONS AND THEREFORE THE PROVISIONS OF SECTIONS 61 AND 63 ARE NOT APPLIC ABLE. FURTHER, THE AO STATES THAT THE APPELLANT HAD SHOWN THE SUM AS ITS INCOME AND N OW AT THE TIME OF ASSESSMENT, THE APPELLANT IS CHANGING ITS STAND SINCE IT SUITS IT BETTER. BOTH THE AFORESAID CONTENTIONS ARE CONSIDERED AND ARE NOT FOUND RELEVA NT. 9.30 AS REGARDS 'CONTROL' OVER THE FUNDS IS CONCERN ED, IT IS CRYSTAL CLEAR THAT EVEN THOUGH THE CONTROL TO THE MANNER IN WHICH FUNDS ARE INVESTED RESTS WITH THE APPELLANT TRUST, THE CONTRIBUTORS HAVE THE RIGHT TO REASSUME POWER AS WELL AS THE RIGHT TO RE-TRANSFER EITHER WHOLE OR PART OF THE IN COME AND ASSETS OF THE APPELLANT TRUST. THE WORD 'REVOCABLE TRANSFER' ITSELF MEAN TH E TEMPORARY CHANGE IN CONTROL OF THE FUNDS WHICH CAN BE REVOKED AS AND WHEN REQUIRED BY THE TRANSFEROR. THERE CANNOT BE TRANSFER WITHOUT CHANGE IN CONTROL OF FUN DS AND THE WORD REVOCABLE TRANSFER' IMPLIES THAT THE CONTROL OF THE FUNDS MOV ED FROM THE TRANSFEROR AND AFTER A PERIOD OF TIME, THE TRANSFEROR REGAINS THE SAME. FU RTHER, THE WORD INDIRECTLY' USED IN THE DEFINITION OF REVOCABLE TRANSFER SIGNIFIES THE BROAD SCOPE OF THE PROVISION. ACCORDINGLY, THE AO IS NOT JUSTIFIED IN REJECTING T HE APPELLANT'S CONTENTION WHILE STATING THAT THE CONTROL OF THE FUNDS REST WITH THE APPELLANT TRUST AND CONTRIBUTORS WOULD NOT HAVE ANY SAY IN IT. 9.31 FURTHER AS REGARDS AO'S COMMENTS REGARDING CHA NGE IN STAND IS CONCERNED; I DO NOT FIND THAT THE APPELLANT HAS DISCLOSED THE INCOM E AS ITS OWN INCOME IN ROI. THE RETURN FOR AY 2008-09 AS WELL AS AY 2009-10 HAS BEE N FILED AS 'NIL' RETURN. THE NOTE BELOW THE COMPUTATION OF INCOME CLEARLY SPELLS OUT THAT THE APPELLANT CONTENDS THAT THE PROVISIONS OF SECTION 61 AND 63 ARE APPLICABLE TO IT. ACCORDINGLY I DO NOT FIND MERIT IN AO'S CONTENTION THAT THE APPELLANT HAS CLAIMED W HAT IS SUITED TO IT BETTER AND THE CLAIM WAS MADE TO EVADE TAXES. 9.32 IN FACT, ON A SEPARATE NOTE, THE ARS FURTHER V ALIDATE THEIR CLAIM BY SUBMITTING THAT THE BENEFICIARIES OF THE APPELLANT TRUST HAVE ALREADY OFFERED IN THEIR HANDS THE INCOME DISTRIBUTED FROM FUND WHICH HAS BEEN ASSESSE D AS SUCH IN THEIR HANDS BY THE REVENUE AUTHORITIES. IN ORDER TO SUBSTANTIATE THE A BOVE CLAIM BEFORE ME, THE EVIDENCE REGARDING THE SAME IN THE FORM OF CONFIRMA TIONS AND RETURN OF INCOME BY THE MAJOR CONTRIBUTORS WAS SUBMITTED BY THE APPELLA NT DURING THE COURSE OF THE APPELLATE PROCEEDINGS VIDE PAPER BOOK DATED 10.03.2 011 AND THE LETTER DATED 28.03.2011. IT IS SEEN FROM THE SAID DOCUMENTS THAT THE CONTRIBUTORS ARE BEING TAXED ON THE INCOME DISTRIBUTED OUT OF THE APPELLANT TRUS T. 9.33 HEREIN IT IS PERTINENT TO NOTE THE PROVISIONS OF SECTION 160 AND SECTION 161 OF THE INCOME TAX ACT, WHICH ARE ENABLING SECTIONS THA T PROVIDE AN OPTION TO THE AO TO TAX EITHER THE REPRESENTATIVE ASSESSEE OR THE BENEF ICIARY OF THE INCOME. THE COROLLARY OF THE SAID PROVISIONS AS ARISES IS THAT WHEN THE S HARE OF INCOME RECEIVED BY CONTRIBUTORS FROM THE FUND HAS BEEN INCLUDED IN THE TOTAL INCOME OF THE CONTRIBUTORS AND OFFERED TO TAX BY THE CONTRIBUTORS THEN THE DEP ARTMENT CANNOT PROCEED TO TAX THE SAME INCOME AGAIN IN THE HANDS OF FUND. MOREOVE R, WHEN THE FACTS OF THE ISSUE ARE QUITE CLEAR THAT APPELLANT TRUST RECEIVES FUND VIDE REVOCABLE TRANSFER, THE INCOME CANNOT BE TAXED TWICE I.E. BY REJECTING THE CLAIM O F APPLICABILITY OF SECTION 61 IN THE HANDS OF THE APPELLANT TRUST AND AGAIN IN THE HANDS OF THE BENEFICIARIES. ACCORDINGLY, I ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 8 FIND THAT IN THE INSTANT CASE, THE BENEFICIARIES HA VE OFFERED THE INCOME TO TAX AND IN CONJUNCTION WITH MY FINDING IN THE PRECEDING PARES REGARDING 'REVOCABLE TRANSFER', I HOLD THAT THE INCOME ARISING IS TAXABLE IN THE HAND S OF THE BENEFICIARIES ALONE AND NOT IN THE HANDS OF THE APPELLANT TRUST. CONSEQUENTLY, I DIRECT THE A.O TO DELETE THE ADDITION OF RS.32,83,77,906 MADE IN THE HANDS OF TH E APPELLANT TRUST. 5. THE LD. D.R. SUBMITTED THAT THE COMPANY WAS SUBJ ECTED TO CBI CHARGE SHEET AND CBI FOUND THAT ASSESSEE COMPANY HAS COMMI TTED FRAUD OF RS.400 CRORES. THE ASSESSEE HAS RECEIVED RS.400 CRORES FR OM VARIOUS PARTIES AND OUT OF THAT FUND RS.100 CRORES WERE INVESTED IN EXISTIN G FUND AT ONE POINT OF TIME. THE ENQUIRY IS GOING ON AND THEY WILL TAKE THE ACTI ON AS PER THE ACT. NOW COMING TO THE FACTS OF THIS CASE, LD. A.R. SUBMITTE D THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KANPUR COAL SYNDICATE WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT THE APPELLATE TRIBUNAL HAS AMPLE POWER TO SET ASIDE AN ASSESSMENT ORDER MADE ON AN ASSOCIATION OF PERSONS AND DIRECT THE INCOME TAX OFFICER TO ASSESS THE MEMBERS INDIVIDUAL LY OR TO DIRECT AMENDMENT OF THE ASSESSMENT ALREADY MADE ON THE MEMBERS. IN THIS CASE, THE ASSESSEE HAD RECEIVED THE FUND AND WITHIN A SHORT TIME RETURNED THE SAME IN THE SAME YEAR BY THE ASSESSEE TO CREATE A FALSE IMPRESSION THAT SEBI GUIDELINES ARE BEING FOLLOWED. THE EXEMPTION UNDER SECTION 10(23FB) IS TO BE ALLOWED AS PER THE PROVISIONS OF INCOME TAX ACT AND THE SAME IS ALLOWA BLE ONLY WHEN THE REQUISITE SEBI GUIDELINES ARE STRICTLY FOLLOWED. T HE CAP OF INVESTMENT IN A SINGLE VCU AT 25% IS MADE BY THE STATUTE TO PREVENT MONEY LAUNDERING. THE ASSESSEE DID NOT FOLLOW THESE GUIDELINES OF SEBI, T HEREFORE ASSESSEE IS NOT ALLOWABLE EXEMPTION UNDER SECTION 10(23FB) OF THE A CT. 6. THE LD. D.R. SUBMITTED THAT THE CAPITAL CONTRIBU TION IS REVOCABLE TRANSFER BY TRANSFERORS BUT THE INCOME ARISING OUT OF ACTIVI TIES OF FUND IS AN UNCERTAIN INCOME. THE CONTRIBUTORS HAVE PRACTICALLY NO CONTR OL ON IT. THEREFORE, PROVISIONS OF SECTION 61 & 63 ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THEREFORE, MATTER MAY BE RESTORED TO AO TO MAKE ASS ESSMENT AS ASSOCIATION OF PERSONS AND INCOME MAY BE CHARGED ACCORDINGLY. ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 9 7. THE LD. D.R. SUBMITTED THAT ASSESSEE HAS TAKEN T HE CONTENTION THAT INCOME ARISING FROM A RECOVERABLE TRANSFER OF ASSET S SHALL BE ASSESSABLE IN THE HANDS OF TRANSFEROR. THE ASSESSEE FUND IS REVOCABL E, THEREFORE SAID INCOME ARISING IN ITS HANDS SHOULD BE TAXED IN THE HANDS O F CONTRIBUTORS. THE CAPITAL CONTRIBUTION IS REVOCABLE TRANSFER BY TRANSFERORS B UT THE INCOME ARISING OUT OF ACTIVITIES OF THE FUNDS IS AN ASCERTAINED INCOME. THEREFORE, SECTIONS 61 & 63 ARE NOT APPLICABLE. THE ASSESSEE HAS TAKEN THE PLE A AT ASSESSMENT STAGE THAT INCOME DISTRIBUTED TO VARIOUS CONTRIBUTORS HAS BEEN TAXED IN THEIR HANDS AND WITHDRAWING THE EXEMPTION UNDER SECTION 10(23FB) WI LL BE TAXING THE SAME AMOUNT TWICE IS TOTALLY BASELESS. THE ASSESSEE HAS COMMITTED FRAUD AND COLLECTED THE FUNDS FROM THE PUBLIC AND THEREAFTER CREATED A FALSE IMPRESSION THAT SEBI GUIDELINES ARE FOLLOWED IN A RIGHT MANNER . THE SAID EXEMPTION UNDER SECTION 10(23FB) IS ONLY ALLOWABLE WHEN THE R EQUISITE SEBI GUIDELINES ARE STRICTLY FOLLOWED. THE 25% OF INVESTMENT IS TO PREVENT MONEY LAUNDERING. THE ASSESSEE HAS RECEIVED THE MONEY ILLEGALLY AND T RIED TO SHOW THAT HE HAS FOLLOWED THE SEBI GUIDELINES, THEREFORE CLAIMING TH E EXEMPTION UNDER SECTION 10(23FB) IS NOT ALLOWABLE. LD. A.R. SUBMITTED THAT AS PER THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. KANPUR COAL SYNDICATE, THE TRIB UNAL HAS POWER TO SET ASIDE AN ASSESSMENT MADE ON ASSOCIATION OF PERSONS AND DI RECT THE INCOME TAX OFFICER TO ASSESS THE MEMBERS INDIVIDUALLY OR TO DI RECT AMENDMENT OF THE ASSESSMENT ALREADY MADE ON THE MEMBERS. THE LD. A. R. SUBMITTED THAT IF THE ASSESSEE TRUST IS NOT ALLOWED THE EXEMPTION UNDER S ECTION 10(23FB), THEN THE MATTER SHOULD BE RESTORED TO ASSESS ALL THE ASSOCIA TION OF PERSONS AND THE SUITABLE AMENDMENT SHOULD BE MADE ACCORDINGLY AND A SSESSEE COMPANY IS NOT LISTED IN STOCK EXCHANGE, THEREFORE, THE ASSESSEE C OMPANY IS NOT ENTITLED AS VENTURE CAPITAL UNDERTAKING. THE LD. A.R. HAS TAKE N THE CONTENTION THAT ASSESSEES VENTURE CAPITAL IS A VENTURE CAPITAL FUN D ESTABLISHED AS TRUST UNDER TRUST DEED DATED 19.08.2005 REGISTERED UNDER PROVIS IONS OF REGISTRATION ACT, ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 10 1908. THE FUND HAS BEEN REGISTERED UNDER SEBI ON 0 3.10.05. THE CONTRIBUTIONS MADE BY INVESTORS IN TERMS OF TRUST D EED AND CONTRIBUTION AGREEMENTS ARE REGARDED AS REVOCABLE TRANSFER UNDER THE PROVISIONS OF INCOME TAX ACT, HENCE THE INCOME ACCRUING TO THE FUND IS N OT LIABLE TO BE TAXED IN THE HANDS OF ASSESSEE BUT IS LIABLE TO BE TAXED IN THE HANDS OF INVESTORS/CONTRIBUTORS IN PROPORTION OF THEIR RESPECTIVE CONTRIBUTIONS. T HE ASSESSEE HAS NOT CLAIMED EXEMPTION UNDER SECTION 10(23FB) DURING THE YEAR UN DER CONSIDERATION. THE AO HAS NOT VERIFIED THE CLAIM. THE ASSESSEE TRUST IS A PRIVATE REVOCABLE TRUST UNDER THE TRUST ACT AND AS PER SECTION 61 TO 63 OF THE ACT THE INCOME IS TAXABLE IN THE HANDS OF THE UNIT HOLDERS AND SHOULD NOT BE HELD TAXABLE IN THE HANDS OF THE TRUST. 8. THE AO HAS NOT VERIFIED WHETHER THE CONTRIBUTION S MADE BY THE CONTRIBUTORS ARE REVOCABLE OR NOT. AS PER THE TRUS T DEED AND THE RELEVANT CLAUSES OF CONTRIBUTION AGREEMENT WHICH EMPOWERS TO REVOKE THE CONTRIBUTION TO SUCH SCHEME AND CLAUSE 15.1 HAS SPECIFIED THAT I T IS A REVOCABLE TRUST. MOREOVER, THE ASSESSEE HAS ALSO SUBMITTED THAT THE CONTRIBUTION AGREEMENT WITH UNITED INDIA INSURANCE COMPANY SPECIFIES THE RIGHTS OF UNIT HOLDER IN RESPECT OF MONIES AND FROM THE ANALYSIS OF THE CLAUSES OF T RUST DEED AS WELL AS CONTRIBUTION AGREEMENT THE CONTRIBUTORS OR INVESTOR S IS ENTITLED TO REVOKE THEIR CONTRIBUTIONS AT ANY TIME DURING THE TERM OF SCHEME AS PER CLAUSE 4.3.3. OF THE CONTRIBUTION AGREEMENT. THE ASSESSEE TRUST HELD TH E ASSETS FOR THE BENEFIT OF THE BENEFICIARIES. THE LD. A.R. SUBMITTED THAT TRU ST UNIT HOLDER HAD RIGHT TO REASSUME THE POWER DIRECTLY OR INDIRECTLY WHOLLY OR ANY PART OF INCOME BY TWO REASONS THAT THE SPECIFIC PROVISION OF CLAUSE 4.3.3 OF THE CONTRIBUTION AGREEMENT ENTITLES THE UNIT HOLDERS TO RECEIVE DISTRIBUTIONS FROM THE SCHEME. THE UNIT HOLDERS HAVE RIGHT TO RETRANSFER EITHER WHOLLY OR A NY PART OF INCOME. MOREOVER, BY READING THE TRUST DEED AND CONTRIBUTION AGREEMEN T IT IS A REVOCABLE TRUST AND AS PER SECTION 61 TO 63 OF THE ACT IT CAN NOT BE TA XED IN THE HAND OF TRUST. THE LD. A.R. HAS SUBMITTED THAT HONBLE KARNATAKA HIGH COURT IN THE CASE OF GADI ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 11 CHELUVARAYA CHETTY VS. CIT 150 ITR 60 WHEREIN IT IS HELD THAT A TRANSFER IS DEEMED REVOCABLE UNDER SECTION 63 IF IT CONTAINS AN Y PROVISION FOR RETRANSFER OF WHOLE OR ANY PART OF INCOME OR ASSET TO THE TRANSFE ROR. AS PER SECTION 160/161 OF THE ACT IT IS RELATING TO THE LIABILITY OF REPRE SENTATIVE ASSESSEE AND AS PER THIS SECTION THE TRUSTEE OF A TRUST MAY BE TREATED AS RE PRESENTATIVE ASSESSEE ON BEHALF OF THE BENEFICIARY UNDER A TRUST AND THE TAXES CAN BE RECOVERED FROM TRUSTEE IN THE MANNER SIMILAR TO TAXING THE BENEFICIARY, BUT T HE SAID PROVISIONS ARE PRECAUTIONARY MEASURE TO COLLECT TAXES FROM TRUSTEE , IF IT IS NOT TAXED IN THE HANDS OF BENEFICIARIES. THE LD. A.R. HAS RELIED UP ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE FOLLOWING CASES: 1. CIT VS. INDIA ADVANTAGE FUND IN ITA NO.191/2015 2. CIT VS. ICICI EMERGING SECTORS FUND IN ITA NO.44 6/2015 3. CIT VS. ICICI ECONET INTERNET & TECHNOLOGY FUND IN ITA NO.449/2015 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. THE ASSESSEE HAS FILED THE RETURN OF INCOME IN THE YEAR UNDER CO NSIDERATION AND CLAIMED THAT ASSESSEE TRUST IS A REVOCABLE TRUST IN VIEW OF THE PROVISIONS OF SECTION 61 TO 63 OF THE ACT. WE REPRODUCE SECTION 61 TO 63 OF THE I NCOME TAX ACT WHICH READ AS UNDER: REVOCABLE TRANSFER OF ASSETS. 61. ALL INCOME ARISING TO ANY PERSON BY VIRTUE OF A RE VOCABLE TRANSFER 13 OF ASSETS SHALL BE CHARGEABLE TO INCOME-TAX AS THE INCOME OF THE TRANSFEROR AND SHALL BE INCLUDED IN HIS TOTAL INCOME. TRANSFER IRREVOCABLE FOR A SPECIFIED PERIOD. 62. (1) THE PROVISIONS OF SECTION 61 SHALL NOT APPLY T O ANY INCOME ARISING TO ANY PERSON BY VIRTUE OF A TRANSFER ( I ) BY WAY OF TRUST WHICH IS NOT REVOCABLE DURING THE L IFETIME OF THE BENEFICIARY, AND, IN THE CASE OF ANY OTHER TRANSFER, WHICH IS NOT REVOCA BLE DURING THE LIFETIME OF THE TRANSFEREE ; OR ( II ) MADE BEFORE THE 1ST DAY OF APRIL, 1961, WHICH IS NO T REVOCABLE FOR A PERIOD EXCEEDING SIX YEARS : PROVIDED THAT THE TRANSFEROR DERIVES NO DIRECT OR INDIRECT BENEFIT FROM SUCH INCOME IN EITHER CASE. (2) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (1), ALL INCOME ARISING TO ANY PERSON BY VIRTUE OF ANY SUCH TRANSFER SHALL BE CHAR GEABLE TO INCOME-TAX AS THE ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 12 INCOME OF THE TRANSFEROR AS AND WHEN THE POWER TO R EVOKE THE TRANSFER ARISES, AND SHALL THEN BE INCLUDED IN HIS TOTAL INCOME. 'TRANSFER' AND 'REVOCABLE TRANSFER' DEFINED. 63. FOR THE PURPOSES OF SECTIONS 60, 61 AND 62 AND OF THIS SECTION, ( A ) A TRANSFER 15 SHALL BE DEEMED TO BE REVOCABLE IF ( I ) IT CONTAINS ANY PROVISION FOR THE RE-TRANSFER DIREC TLY OR INDIRECTLY 16 OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS TO THE TR ANSFEROR, OR ( II ) IT, IN ANY WAY, GIVES THE TRANSFEROR A RIGHT TO RE- ASSUME POWER DIRECTLY OR INDIRECTLY OVER THE WHOLE OR ANY PART OF THE INCOME OR A SSETS ; ( B ) 'TRANSFER' 15 INCLUDES ANY SETTLEMENT, TRUST, COVENANT, AGREEMEN T OR ARRANGEMENT 15 . 10. THE ASSESSEE CLAIMED THAT THE CONTRIBUTIONS MAD E BY INVESTORS IN TERMS OF TRUST DEED AND CONTRIBUTION AGREEMENTS ARE REGAR DED AS REVOCABLE TRANSFER UNDER THE PROVISIONS OF INCOME TAX ACT, 1961. THER EFORE, AS PER ABOVE SECTIONS IT MAKES CLEAR THAT THE ASSESSEE TRUST IS A REVOCABLE TRUST. WE REPRODUCE THE SAID AGREEMENT WHICH SHOWS THE SAMPLE OF CONTRIBUTION AGREEMENT WHICH READS AS UNDER: 'DISTRIBUTION OF DISTRIBUTABLE PROCEEDS' THE MANNER OF DISTRIBUTION SHALL BE AS FOLLOWS: (A) FIRST, 100% TO ALL HOLDERS OF CLASS A UNITS IN PROPORTION TO THEIR CONTRIBUTION UNTIL THE CUMULATIVE AMOUNT DISTRIBUTE D PURSUANT TO THIS CLAUSE (A) IS EQUAL TO THEIR RESPECTIVE CONTRIBUTIO N. (B) SECOND, 100% TO ALL HOLDERS OF CLASS B UNITS IN PROPORTION TO THEIR CONTRIBUTION UNTIL THE CUMULATIVE AMOUNT DISTRIBUTE D PURSUANT TO THIS CLAUSE (B) IS EQUAL RESPECTIVE CONTRIBUTION. (C) THIRD, 100% TO ALL HOLDERS OF CLASS A UNITS IN PROPORTION TO THEIR CONTRIBUTION UNTIL THE CUMULATIVE AMOUNT DISTRIBUTE D PURSUANT TO THIS CLAUSE (C) IS EQUAL TO PREFERRED RETURN ON AMOUNT I NCLUDED IN CLAUSE (A) ABOVE AT THE PREFERRED RATE OF RETURN. (D) FORTH, 100% TO ALL HOLDERS OF CLASS B UNITS IN PROPORTION TO THEIR CONTRIBUTION UNTIL THE CUMULATIVE AMOUNT DISTRIBUTE D PURSUANT TO THIS CLAUSE (D) IS EQUAL TO A PREFERRED RETURN ON AMOUNT S INCLUDED IN CLAUSE (B) ABOVE AT THE PREFERRED RATE OF RETURN. (E) FIFTH, 100% TO THE HOLDERS CLASS B UNITS UNTIL THE CUMULATIVE AMOUNT DISTRIBUTED PURSUANT TO THIS CLAUSE (E) IS EQUAL TO 20% (CATCH UP) OF THAT SUM OF DISTRIBUTIONS MADE PURSUANT TO CLAUSE (C) AN D THIS CLAUSE (E); AND ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 13 (F) SIXTH, 80% TO THE HOLDERS CLASS A UNITS IN PROP ORTION TO CONTRIBUTION AND THE BALANCE 20% ('CARRIED INTEREST') TO HOLDERS OF CLASS B UNITS. THE INVESTMENT MANAGEMENT WILL MAKE BEST EFFORTS TO LIQUIDATE THE PORTFOLIO INVESTMENTS UPON TERMINATION OF THE FUND. IF THE INVESTMENT MANAGER IS UNABLE TO LIQUIDATE ALL PORTFOLIO INVEST MENTS AND REALIZE CASE PROCEEDS OUT OF SUCH DISPOSITION, ALL UN-LIQUIDATED PORTFOLIO INVESTMENTS SHALL BE DISTRIBUTED AMONGST THE INVESTORS IN PROPO RTION TO THEIR CAPITAL CONTRIBUTION IN THE MANNER AS LAID DOWN HEREINABOVE '. 11. THE ASSESSEE HAS FILED THE COMPUTATION INCOME I N WHICH HE HAS FILED THE TOTAL INCOME BY SHOWING AS UNDER: DHFL VENTURE CAPITAL FUND IS A VENTURE CAPITAL FUN D ESTABLISHED AS TRUST UNDER THE TRUST DEED DTD. 19.08.2005 REGISTERED UNDER THE PRO VISIONS OF REGISTRATION ACT, 1908. THE FUND HAS BEEN REGISTERED UNDER SEBI (VEN TURE CAPITAL FUND) REGULATION 1996 AS ON 03.10.2005. THE CONTRIBUTIONS MADE BY T HE INVESTORS IN TERMS OF THE TRUST DEED AND CONTRIBUTION AGREEMENTS ARE REGARDED AS REVOCABLE TRANSFER UNDER THE PROVISIONS OF INCOME TAX ACT, 1961 AND HE NCE INCOME ACCRUING TO THE FUND IS NOT LIABLE TO BE TAXED IN ITS HANDS BUT IS LIABLE TO BE TAXED IN THE HANDS OF THE INVESTORS/CONTRIBUTORS IN PROPORTION OF THEIR RESPE CTIVE CONTRIBUTIONS. 12. WE HAVE GONE THROUGH THE ABOVE TWO AGREEMENTS A ND FROM THE ABOVE AGREEMENTS, WE FIND THAT ASSESSEE TRUST IS FORMED B Y THE SETTLER M/S. DEWAN HOUSING FINANCE LTD. AND THE BENEFICIARIES ARE THE CONTRIBUTORIES WHO AGREE TO MAKE A CONTRIBUTION TO THE FUND. THE TRUST DEED SP ECIFICALLY EMPOWERS THE UNIT HOLDERS OF ANY SCHEME TO REVOKE THEIR CONTRIBUTIONS TO SUCH SCHEME. CLAUSE 15.1 OF THE TRUST DEED SAYS THAT IN THE CONTRIBUTIO N AGREEMENT OF THE RESPECTIVE SCHEME, THE CONTRIBUTORS SHALL BE ENTITLED TO REVOK E THE CONTRIBUTIONS TO AS SCHEME, AT ANY TIME DURING THE TERM OF THAT SCHEME. IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET OUT IN THE SCHEME DOCUMENT S OF THAT SCHEME, FOR ANY REASON, INCLUDING BUT NOT LIMITED TO THE CIRCUMSTAN CES RESULTING FROM ANY ADVERSE TAX CONSEQUENCES OR ANY DIRECTION OF ANY ST ATUTORY AUTHORITY, PROVIDED THAT NO SUCH REVOCATION SHALL TAKE EFFECT UNLESS TH E CONSENT OF CONTRIBUTORS HOLDING UNITS OF THAT SCHEME REPRESENTING NOT LESS THAN 75% OF THE TOTAL CONTRIBUTIONS TO THAT SCHEME, HAS BEEN OBTAINED, IN THIS BEHALF PURSUANT TO THE OTHER SCHEME DOCUMENT OF THAT SCHEME READ WITH THIS TRUST DEED. THE CLAUSES OF THE TRUST DEED AND DISTRIBUTION OF DISTRIBUTABLE PROCEEDS AS STATED IN THE ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 14 ABOVE AGREEMENT, WE ARE OF THE VIEW CONTRIBUTORS/IN VESTORS SHALL BE ENTITLED TO REVOKE THEIR CONTRIBUTION TO THE SCHEME AT ANY TIME DURING THE TERM OF THE SCHEME AND ALSO ENTITLED TO DETERMINE DISTRIBUTION IN ACCORDANCE WITH THE CLAUSE OF THE CONTRIBUTION AGREEMENT. THE CONTRIBU TORY TRUST, THOUGH THE TRUSTEES HOLD THE ASSETS FOR THE BENEFIT OF THE BEN EFICIARIES, THE CONTRIBUTIONS TO TRUST CONSTITUTE A REVOCABLE TRANSFER OF ASSETS BY CONTRIBUTORS TO THE TRUST AS PER THE SECTION 61 & 63 OF THE INCOME TAX ACT. WE FIND THAT CONTRIBUTORY TRUST IN LAW BY INVESTING IN THE UNITS OF THE TRUST, EACH UN IT HOLDER BECOMES BENEFICIARY OF THE TRUST ENTITLED TO DISTRIBUTION FROM THE TRUS T. AS WE HAVE HELD THAT ASSESSEE TRUST IS REVOCABLE TRUST, THE CONTRIBUTION MADE BY INVESTOR IN TERMS OF TRUST DEED AND CONTRIBUTION AGREEMENT IS REGARDED A S REVOCABLE TRANSFER UNDER THE PROVISIONS OF INCOME TAX ACT, 1961. THEREFORE, ACCRUING TO THE FUND IS NOT LIABLE TO BE TAXED IN ITS HANDS BUT IT IS LIABLE TO BE TAXED IN HANDS OF CONTRIBUTORS. WE FIND THAT THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MARSONS BENEFICIARY TRUST AND OTHER S 188 ITR 224 IS APPLICABLE TO THE CASE OF THE ASSESSEE. THE FACTS OF THE SAID CASE ARE FOUND TO BE SIMILAR TO THE PRESENT CASE OF THE ASSESSEE. IN THE SAID CASE THE SETTLER HAD APPOINTED TRUSTEE TO OVERSEE BUSINESS FOR THE BENEF IT OF GROUP OF BENEFICIARIES. THE DEPARTMENT WANTED TO TAX THE GROUP AS AOP. THE HONBLE BOMBAY HIGH COURT HELD THAT IF IT IS ACCEPTED THAT ASSESSEE IS AOP STILL ONE HAS TO CONSIDER THE APPLICABILITY OF SECTION 61 TO 63. RESPECTFULL Y FOLLOWING THE JUDGMENT OF HONBLE BOMBAY HIGH COURT, WE HOLD THAT THE TAXABIL ITY OF PROVISIONS OF SECTION 61 TO 63 APPLY TO THE ASSESSEE TRUST. WE F IND THAT ASSESSEE TRUST IS A PRIVATE REVOCABLE TRUST AND TRUST IS CONTRIBUTED TR UST SET UP UNDER THE TRUST DEED AS CONTRIBUTORY REVOCABLE TRUST. THOUGH THE TRUSTE ES HOLD THE ASSETS FOR THE BENEFITS OF BENEFICIARIES, THE CONTRIBUTION TO A TR UST SHOULD CONSTITUTE A REVOCABLE TRANSFER OF ASSETS BY THE CONTRIBUTORS TO THE TRUSTEE. THE CONTRIBUTORY TRUST BY INVESTING IN UNITS OF TRUST EACH UNIT HOLD ER AS A SETTLOR OF THE AMOUNT INVESTED AND CONCOMITANTLY BECOMES A BENEFICIARY OF THE TRUST ENTITLED TO THE DISTRIBUTION FROM THE TRUST. WE THEREFORE HOLD THA T ASSESSEE INSTRUMENT OF TRUST ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 15 IS A TRUST DEED AND THE RELATION BETWEEN ASSESSEE A ND CONTRIBUTIONS ARE AS TRUST AND BENEFICIARIES. MOREOVER, ALL THE UNIT HOLDERS OF THE TRUST ARE ENTITLED TO DISTRIBUTION FROM THE TRUST. THE CONTRIBUTION AGRE EMENT IS AN IMPORTANT DOCUMENT AND TRUST DEED WHICH CLEARLY ACCRUING TO T HE TRUST HAS ULTIMATELY TO BE TRANSFERRED TO THE BENEFICIARY IN RATIO OF THEIR IN VESTMENTS. SECTIONS 61 TO 63 CLARIFY THAT WHEN A TRANSFEROR CAN UNILATERALLY RES UME THE POWER OF OVER ASSETS, THE INCOME IS TO BE TAXED IN ITS HANDS ONLY AS IF T HE TRANSFER NEVER HAPPENED. THE CLAUSE 15.1 OF THE TRUST DEED CLEARLY MANDATES THE CONTRIBUTION MADE BY CONTRIBUTOR CAN BE REVOKED ANY TIME DURING THE TERM OF SCHEME. THEREFORE, WE ARE OF THE VIEW THAT LD. CIT(A) IS JUSTIFIED IN HIS ACTION. WE ALSO FIND SIMILAR CAPITAL VENTURE FOUND IN BANGALORE IN THE CASE OF C IT VS. INDIA ADVANTAGE FUND WHEREIN THE HONBLE KARNATAKA HIGH COURT HAS C ONSIDERED THE APPLICABILITY OF SECTION 164(1) OF THE INCOME TAX A CT AND HELD THAT SECTION 164(1) APPLIES SHALL BE DEEMED AS BEING NOT SPECIFI CALLY RECEIVABLE ON BEHALF OR FOR THE BENEFIT OF ANY ONE PERSON UNLESS THE PER SON ON WHOSE BEHALF OR FOR WHOSE BENEFIT SUCH INCOME OR SUCH PART THEREOF IS R ECEIVABLE DURING THE PREVIOUS YEAR IS EXPRESSLY STATED IN THE ORDER OF T HE COURT OR THE INSTRUMENT OF TRUST OR WAKF DEED AS THE CASE MAY BE AND IS IDENTI FIABLE AS SUCH ORDER, INSTRUMENT OR DEED. THE INDIVIDUAL SHARES OF THE P ERSONS ON WHOSE BEHALF OR FOR WHOSE BENEFIT SUCH INCOME RECEIVED SHALL BE DEE MED TO BE INDETERMINATE UNLESS THE INDIVIDUAL SHARES OF THE PERSONS ON WHOS E BEHALF OR FOR WHOSE BENEFIT SUCH INCOME STATED IN THE ORDER OF THE COUR T. SECTION 161(1) APPLIES IN THE CASE OF THE TRUST RECEIVED THE INCOME FROM REPR ESENTATIVE ASSESSEE AND THE HIGH COURT HAS GONE TO THE EXTENT THAT REAL TEST IS WHETHER SHARES ARE DETERMINABLE EVEN WHEN AFTER THE TRUST IS FORMED OR MAY BE IN FUTURE WHEN THE TRUST IS IN EXISTENCE. THEREFORE, IN THIS CASE THE BENEFICIARIES AGREEMENT HAS BEEN MADE AND TRUST DEED HAS BEEN EXECUTED IN THE S HARES ARE DETERMINED. THEREFORE, ASSESSEE CANNOT BE TAXED. ITA NOS.3264/M/2012, 3179/M/2014 & 734/M/2015 M/S. DHFL VENTURE CAPITAL FUND 16 13. WE FIND THAT THE SIMILAR FINANCIAL COMPANY HAD BEEN REGISTERED UNDER COMPANIES ACT AND THE TRUST OF THE COMPANY WAS FORM ED BY TRUST DEED AND THEY WERE TREATED AS PRIVATE SPECIFIC TRUST. THE S IMILAR TRUST HAS ALSO BEEN FORMED BY A GOVERNMENT COMPANY AND THEY WERE TREATE D AS PRIVATE SPECIFIC TRUST. THE SIMILAR TRUST WAS FORMED IN BANGALORE. IN THE DECISION OF ITAT IN ITA NO.178/BANG/2012 WHEREIN THE SIMILAR TRUST WAS EXECUTED BY THE LIMITED COMPANY AND THEIR BENEFICIARIES WERE GOVERNMENT AND SEMI GOVERNMENT COMPANIES AND THEY WERE TREATED AS THE PRIVATE SPEC IFIC TRUST BY THE TRIBUNAL. HONBLE KARNATAKA HIGH COURT HAS ALSO UPHELD THE OR DER OF TRIBUNAL IN THE CASE OF CIT VS. INDIAN ADVANTAGE FUND. 14. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF T HE HONBLE KARNATAKA HIGH COURT AND THE TRIBUNAL, WE ARE OF THE VIEW THA T THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT ASSESSEE TRUST IS PRIVATE SPECIFIC TRUST AND OUR INTERFERENCE IS NOT REQUIRED. THE ASSESSEE HAS NOT CLAIMED THE DEDUCTI ON UNDER SECTION 10(23F) OF THE ACT. 15. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.04.2017. SD/- SD/- (RAJESH KUMAR) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 28.04.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.