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2017 (6) TMI 384

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..... sion of income by the beneficiaries in page Nos. 81 to 83 from the contributors ICICI Bank, IL&FS and the HDFC. - Decided in favour of assessee. - I. T. A. Nos. 2316 and 2317/Mds/2016 - - - Dated:- 23-3-2017 - N. R. S. Ganesan (Judicial Member) And D. S. Sunder Singh (Accountant Member) For the Appellant : Pushya Sitaraman, Senior Advocate, for J. Sree Vidya, Advocate For the Respondent : N. Madhavan, Joint Commissioner of Income-Tax ORDER D. S. Sunder Singh (Accountant Member) 1. These appeals are filed by the assessee against an order dated March 30, 2016 of the Commissioner of Income-tax (Appeals)-2, Chennai, in I. T. A. No. 31/CIT(A)-2/2013-14 for the assessment year 2008-09 and the order dated March 30, 2016 of the Commissioner of Income-tax (Appeals)-2, Chennai, in I. T. A. No. 174/CIT(A)-2/2013-14 for the assessment year 2009-10. 2. All the grounds of appeal are related to exemption of income under sections 61 and 161 of the Income-tax Act in the hands of the assessee. The issues raised in these appeals for the assessment years 2008-09 and 2009- 10 and the grounds of appeal for both the assessment years are common. Hence both the appeals are hea .....

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..... e the welfare of the public and not the profit. The assessee was constituted for the purpose of financial infrastructure projects which include water supply, solid waste management, sanitation, roads, transportation systems, sites and services, area development and other remunerative and non-remunerative urban infrastructure contributing to the improvement of the living standards of the urban populations excluding power and telecom and plays an advisory role as well. As per the contributors agreement entered into with the contributors i.e. ICICI, HDFC and IL FS and the Tamil Nadu Urban Infrastructure Financial Services Pvt. Ltd., a public limited company will function as a fund manager to manage the trust fund. The contribution agreement set out the terms and conditions agreed with regard to the contributions and allied matters under the agreement, the net income received by the trust except the initial settlements will be distributed to the contributors in proportionate to their respective financial assistances in respect of projects of public importance. On the above set of facts, the learned authorised representative for the assessee claimed that the surplus derived by the asses .....

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..... the irrevocable for a specified period and section 63 deals with the definition of transfer and revocable transfer which is extracted as under : 63. 'Transfer' and 'revocable transfer' defined.-For the purposes of sections 60, 61 and 62 and of this section,- (a) a transfer shall be deemed to be revocable if- (i) it contains any provision for the re-transfer directly or indirectly of the whole or any part of the income or assets to the transferor, or (ii) it, in any way, gives the transferor a right to reassume power directly or indirectly over the whole or any part of the income or assets ; (b) 'transfer' includes any settlement, trust, covenant, agreement or arrangement. 8. The learned authorised representative for the assessee referring to the paper book page No. 23 clause No. 6.03 to 6.06 of the contribution agreement between the Tamilnadu Urban Infrastructure Ltd. and the Tamilnadu Urban Infrastructure Financial Services Ltd. (Fund Manager) dated November 18, 1996 argued that the contributors are free to cancel the units held by them. The clauses of contributor's agreement are extracted as under for ready reference : .....

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..... he trust will only invest in infrastructure projects that at the time of the investment comply with all relevant state and central Government legislation regarding environmental and social protection. (ii) To borrow or raise moneys or loans or receive grants or accept contributions for the above purpose in such manner and on such terms, conditions and securities as the trustee in their discretion deem fit from time to time. (iii) To guarantee the performance of any contract or obligations and the payment or money or dividends and interest on any stocks, shares, or securities of any company, corporation, firm or person in any case in which such guarantee may be considered directly or indirectly to further the main objects of the trust. (iv) To subscribe for, underwrite, acquire, hold and dispose of shares, stocks, debentures, debenture stocks, bonds, mortgages, obligations, securities of any kind issued or guaranteed by any company (body corporate or undertaking) of whatever nature and industry, Government, trust, municipal, local authority or body of whatever nature as may be conducive to the objects of the trust. (v) To invest any money of the trust no immediat .....

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