2018 (11) TMI 1806 - AT - Income Tax

Assessment of trust - Determinate Trust or indeterminate Trust - Assessment in hands of the beneficiaries - HELD THAT - Tribunal in the assessee's own case for assessment years 2009-10 and 201011, found that the assessee-trust is a determinate one and beneficiaries are identifiable, therefore, the income of the assesseeFund has to be assessed only in the hands of the beneficiaries. This finding of the Tribunal in the assessee's own case for assessment years 2009-10 and 2010-11 attains finality 2018 (4) TMI 1831 - ITAT CHENNAI . Assessee has created a trust which was registered and the beneficiaries have been identified by the contribution agreement (PPM) and their shares are also ascertainable with respect to contributions and the units. Assessee s Trust is a determinate trust and the appeal of the assessee is on this issue is allowed. In respect of interest income irrespective of the fact it was admitted by the beneficiaries or not, a pass through status was given to the assessee. Hence, the entire income 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.

Summary

Issues:
Appeals against common order for assessment years 2011-12 to 2014-15.

Analysis:
The appellant contended that the Tribunal previously found the assessee-Fund to be a determinate trust, with income assessed only in the hands of beneficiaries, citing the Karnataka High Court judgment. A confusion arose regarding interest income treatment, leading to a Miscellaneous Petition. The Tribunal clarified the pass-through status for the Fund, directing assessment in beneficiaries' hands. The Departmental Representative argued against extending representative assessee status to interest income, relying on the remand report. The Tribunal reaffirmed the determinate trust status for the assessee-Fund based on previous findings, emphasizing the identification of beneficiaries. The Tribunal corrected the Assessing Officer's misunderstanding on pass-through status, directing assessment in beneficiaries' hands. Consequently, the Tribunal set aside the lower authorities' orders and deleted the addition made in the assessee's hands.

This detailed analysis covers the issues raised in the judgment comprehensively, addressing the arguments presented by both parties and the Tribunal's reasoning leading to the final decision.