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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 ..... rd. 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. Thus additions confirmed - Decided against assessee. - ITA No. 495 & 496/Bang/2017 - - - Dated:- 26-5-2017 - Shri Sunil Kumar Yadav, Judicial Member Appellant by : Shri K.Y. Ningoji Rao, CA Respondent by : Smt. Swapna Das, Jt. CIT (DR) (ITAT)-2, Bengaluru ORDER These appeals are preferred by the assessee against the order of CIT(Appeals) inter alia on common grounds and therefore these appeals were heard together and are being disposed of through this consolidated order. Though grounds of appeal are common in these appeals, I extract the grounds of appeal raised in the appeal ITA No.495/Bang/2017 hereunder :- That the impugned order of assessment made by the Respondent is liable to set aside in so far as the impugned order made by the Respondent Officer is irregular, incorrect, impro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent u/s 234C of the Act. 2. The facts in brief relating to the impugned issues are that assessee has filed a return of income declaring income of ₹ 1,84,950. During the course of scrutiny, the AO has noted that assessee has constructed a building in 1989 for which fund had been received from a firm called M/s. INJ Enterprises in which the assessee is a partner along with her husband, Mr. Maqsood Ahmed. The children of the partners viz., Master Mohamed Iqbal, Ms. Nadia Ahmed and Master Mohamed Jesim have been admitted to the benefits of partnership. It was also provided in the partnership deed that benefits of partnership shall be distributed among the partners and 3 beneficiaries in equal shares of 1/5th of the profit of the firm. The partnership firm was dissolved on 11.07.1989 and it was provided that all the 5 partners would possess the asset and the liability of the firm as coowners and tenants in common and have equal shares in land building. One of the source of funds used by M/s. INJ Enterprises for construction and development of the aforesaid property was a loan of ₹ 14,28,280 received from Dr. Nayeema Khan Trust formed by assessee and her husband, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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. 7. Accordingly, the matter was remanded back to the AO and he has called for the details of interest claimed in the case of co-owners of the property and the interest reflected in the account of Dr. Nayeema Khan Trust. The AO having examined the details has concluded that interest claimed by the co-owners of the property and deduction on account of interest payable to Dr. Nayeema Khan trust had not been admitted in the hands of Dr. Nayeema Khan trust in AYs 1993-94 1994-95. Accordingly, addition of ₹ 3,65,040 being the interest income relating to minor beneficiaries of Dr. Nayeema Khan trust was added to appellant s income. 8. Thereafter, the appellant has filed appeals before the CIT(Appeals) disputing the additions and the CIT(Appeals) further re-examined the claim of assessee in the light of directions of the Hon ble High Court and confirmed the additions. The relevant observations of the CIT(Appeals) is extracted hereunder for the sake of reference:- The undisputed facts are that two beneficiar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trust fund till the eldest daughter attained majority; in other words, none of the daughters, not even eldest daughter would have any beneficial interest in the income of the trust fund right up to the time she attained majority and during that period the accruing income had to the accumulated and added on to the corpus of the trust fund. The scheme of the trust deeds, therefore, appeared to be that so long as all the three daughters were minors, the income under each of the deeds was accumulated for the benefit of the principal of beneficiary concerned when she attained majority. The Court held that the instant case was a case of a single transfer of interest to minor daughters upon condition of their attaining the age of majority and the case did not come within the exception to section 21 of the Transfer of Property Act, with the result that interest created by the settlor under the three trust deeds in the instant case would have to be regarded as contingent depending upon happening of particular event, viz., attaining the age of majority by the three daughters. If that be so, the item of income which arose during the year of account in instant case could not be included in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds on the claim of expenditure made by the co-owners, the working of assessing officer in the assessment order is fair and reasonable. In view of the forgoing discussion, it is held that the action of assessing officer in clubbing the income of ₹ 3,65,040/- being the interest payable to Dr. Nayeema Khan Trust and relating to the minor beneficiaries was correct in accordance with section 64(1A) of the Act. 11. In ground no.4, it has been contended that the Trust has not received any income which accrued for the benefit of the minors and which in turn could have attracted section 64(lA) of the Act. 12. The issue has already been considered by various authorities up to the High Court in the previous round of proceedings. It was in this context, the Hon'ble High court of Karnataka in order dated 17.03.2010 had directed the assessing officer to compare the interest paid by the appellant with the interest income reflected in the accounts of Dr. Nayeema Khan Trust and complete the assessment accordingly. The present assessment order has been framed in accordance with the directions of the Hon'ble Court as discussed above. The issue raised in the present gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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