9911796707
TMI Blog2016 (1) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... ee seeks the payment by applying for redemption of the units. In the circumstances, the first petitioner is under no obligation, till such time that the first petitioner is instructed by the proforma respondent assessee to redeem the units, to make over any money to the Income Tax Officer who has issued the notice to the first petitioner. The first petitioner has, as noticed above, done the next best thing possible. The first petitioner has undertaken not to allow the proforma respondent assessee to transact in the units. There is, thus, an effective order of attachment though the ITO may not be satisfied with the same to the extent the present money equivalent of the units covered by the order of attachment is left open to the vagaries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roforma respondent to trade such units. The first petitioner has, however, in its letter of August 6, 2015 informed the income tax officer that no money is at present due from the first petitioner to the proforma respondent for such amount to be made over to the ITO. An affidavit in terms of clause (vi) of Section 226(3) of the said Act has apparently been filed by the first petitioner. According to the petitioners, when any person subscribes to any mutual fund, certain units are allotted to the subscriber based on the quantum of the investment and the price of the units as at the date of the investment. In case of a mutual fund, which is an open-ended scheme, the units may be redeemed for money on any given date, whereupon the money equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia vs. B. M. Malani) , where, according to the petitioners, in similar circumstances involving units in the Unit Trust of India, the UTI was held liable for the premature encashment of the units upon the receipt of an order under Section 226(3) of the Act of 1961 on a complaint of the unit-holder assessee. The assessee in that case had invested in a close-ended scheme of the UTI and had opted for the cumulative option. Upon the UTI receiving a notice from the Income Tax authorities under Section 226(3) of the Act of 1961, the UTI caused the units to be encashed and made over the money equivalent thereof to the Income Tax authorities. In holding that the UTI had acted illegally, the Supreme Court observed at paragraph 12 of the report as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation fastens under such provision and, thereupon, ascertaining the extent of the obligation of such person to comply with the demand contained in the notice. As to who may be liable to comply with the demand contained in a notice issued under Section 226(3) of the Act, the words any person from whom money is due or may become due to the assessee are relevant in the present context. Though the respondents insist that money is due from the first petitioner to the proforma respondent and money was due from the first petitioner to the proforma respondent at the time that the relevant notice was received by the first petitioner, such argument cannot be accepted. The first petitioner holds the units which amount to a notional interest in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act does not stop only upon identifying the person. The extent of the obligation of such person has also to be discerned from the provision. The second limb of the clause obliges such person as has been identified in the earlier limb to pay to the Assessing Officer or Tax Recovery Officer either forthwith upon the money becoming due or being held so much of the money as is sufficient to pay the amount due by the assessee The first petitioner in this case may be a person from whom money may become due to the proforma respondent assessee, but the event is not triggered off till such time that the first petitioner receives the notice of redemption from the assessee. In other words, the first petitioner is identified as a person from who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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