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TMI Blog2017 (6) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Appellant had voluntarily filed the Return of Income on 18.9.1995. 3. The Learned CIT (Appeals) erred in holding that the Dr. Nayeema Khan Trust had income assessable in the A.Y.1993-94 as per the findings made pursuant to the direction of the Hon'ble High Court of Karnataka and that such income is liable to be added to the Total Income of the Appellant u/s 64(1)(a) of the Income Tax Act, 1961. 4. The Learned CIT (Appeals) erred in holding that the Dr. Nayeema Khan Trust had income of Rs. 5,47,561/- which is assessable in the A.Y.1993-94 disregarding the provisions of Section 5 r.w.s. 145 (1) of the Income Tax Act, 1961. 5. The Learned CIT (Appeals) erred in upholding the addition of Rs. 3,65,040/- made by the Respondent Officer to the Total Income of the Appellant u/s 64 (l)(a) of the Income Tax Act, 1961 when in fact the provisions of Section 64 has no application in the instant case. 6. The Learned CIT (Appeals) erred in making a finding that claim of the Appellant that Dr. Nayeema Khanum Trust did not receive the interest from the co-owners seeks to nullify the directions given by the Hon'ble High Court by miss construing the provisions of sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n amount from Dr. Nayeema Khan Trust. The AO further noted that Dr. Nayeema Khan Trust had filed return of income for the AYs 1990-91 & 1991-92 on account of interest received from INJ Enterprises, but return was not filed for subsequent years as no interest income was received by the trust. 4. The AO further noted that the interest amount specifically pertained to different beneficiaries as defined in the trust deed was to be apportioned equally 1/3rd among the 3 beneficiaries. Therefore, income relating to minor beneficiaries was to be added to the income of appellant u/s. 64(1)(a) of the Act. Accordingly, out of interest income of Rs. 5,47,561 deducted from the property income, addition of Rs. 3,65,040 was made towards share of minor children of appellant as two beneficiaries out of 3 were minors during the relevant previous year. 5. The assessee preferred an appeal before the CIT(Appeals) against the assessment order, but did not find favour with him and again appeal was filed before the Tribunal and the Tribunal has held that the arrangement amounted to payment and receipt of amount by the same person in different capacities. It was further held that interest expenses in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention that income of minor children should not have been added to the income of the appellant. In the written submission, the appellant has relied in this regard on several judicial decisions including the following: (a) Manilal Dhanji v. CIT[1962] 44 ITR 876 (SC) (b) Yogindraprasad N. Mafatlal v CIT [1977] 109 ITR 602 (Bom) (c) CIT v D.V. Narasimhan [1992]196 ITR 499 (Kar) In the case of CIT v Manilal Dhanji(supra), the assessee had set up a trust in respect of Rs. 25,000/- of which the trustees included his wife, his brother and himself. The scheme of the trust deed provided that interest on the sum of Rs. 25,000/- should be accumulated and added to the corpus. On attaining the age of 18 years by the assessee's daughter, the corpus as increased by the addition of interest was to be handed over to her. In this case, interpretation of clause (b) of section 16(3) of the Income-tax Act of 1922 was involved. The Hon'ble Apex Court held that section 64 of the Income Tax Act of 1961 could not be taken as declaratory of the previous law and corresponding section 64(v) of the Income Tax Act of 1961 could not be taken as determinative of the scope and effect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the beneficiaries such as education and general welfare of the beneficiaries in the ratio specified under the Trust. In CIT v D.V. Narasimhan [1992] 196 ITR 499 (Kar), the issue of deferred benefit of a beneficiary of a Trust was involved. The Hon'ble Court held that it was not a case of a deferred benefit for a minor child but a case of a deferred benefit for a person who became a major subsequently. Under these circumstances, it was held that section 64(1) was not attracted. As noted above, the present case did not involve compulsory accumulation of the income of a year till the age of majority of the beneficiaries, the ratio does not apply to the present case. 10. The appellant has in written submissions dated 06.12.2016, it has been submitted that she was agreeable to an addition of Rs, 1,99,360/- in assessment years 1993-94 and 1994-95 or buying peace and in consonance with the assessment for assessment years 1995-96 to 2004-05 wherein assessments were made in the case of Dr. Nayeema Khan Trust in respect of the income of beneficiaries, each of whom was assessed at Rs. 99,980/- The assessments have become final as these have not been challenged by the trustees i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st to tax. This issue was thoroughly examined by the Tribunal and the Hon'ble High Court and the Hon'ble High Court has remanded the matter back to the AO with a direction that if the assessee has made provision for payment of interest in the return filed by her and if the interest paid by the assessee is taken into account of the trust in the next assessment year or in subsequent years, it is for the revenue to compare both the accounts and pass appropriate order in order to find out whether the interest shown in the return of income is reflected in the accounts of the trust. 10. Despite clear directions of the Hon'ble High Court, the assessee could not place the relevant evidence in this regard. The scope of enquiry was limited as it has to be done as per the directions of the Hon'ble High Court. Since the assessee could not place any relevant evidence with regard to taking into account the interest received by the trust from the assessee while computing its income, the AO has rightly disallowed the claim of the assessee and the CIT(Appeals) confirmed the same. Since I do not find any infirmity in the order of CIT(Appeals), I confirm the additions. 11. The issue with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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