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TMI Blog2019 (3) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Years 2008-2009 and 2009- 2010:- "i) Whether the Tribunal was right in conceding that the Assessee Trust was a revocable one entitled to claim status under section 61 when the Trust Deed itself clearly state that as per clause 29 it was an irrevocable Trust which would come to an end only when all the contributors as a whole decide to put an end to it? ii) Whether the Tribunal was right in treating the Assessee is not a commercial in nature especially when the Assessee has submitted Form 3CB and 3CD complying with the provisions of Section 44AB which would imply that the Assessee is a commercial enterprise? iii) Whether the finding of the Tribunal is correct especially when the Assessee Trust is an indeterminate one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act, 1961 and held that the income arising by virtue of a revocable transfer of assets shall be chargeable to the income of the transferor and shall be included in his total income. The relevant paragraph of the order passed by the Income Tax Appellate Tribunal is quoted below for ready reference:- "From the above extracts of the Paper Book, which are extracted from the Trust Deed and the contributor's agreement, it is evident that the assessee is not carrying on any business with commercial motive. The beneficiaries of the trust are identifiable and the shares are determined by contributor's agreement and the contributors are free to call upon the Trust to cancel any units held by them and return the value. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, relying upon the basic documents in question, which were on record of the Revenue viz., Contribution Agreement dated 18.11.1996 and Trust Deed dated 29.11.1996, submitted that even though the Trust was irrevocable by the Settlor i.e., the Government of Tamil Nadu, but, section 61 and 62 in Chapter V of the Income Tax Act, talks about the 'Transfer' of assets. Section 61 of the Act deals with revocable transfer of assets and Section 62 of the Act deals with Transfer Irrevocable for a specified period. She has urged that the contributions of the 3 Companies viz., HDFC, ICICI and IL&FS are not revocable only for a fixed period of three years, whereafter, they can revoke the transfer and recall the said contributions from the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nominal value thereof of such cancelled Units. Therefore, she submitted that the contributions by these 3 companies, was, undoubtedly, a Revocable Transfer of assets/funds to the Trust and by virtue of Section 61 and 62(2) of the Act, the income arising to the Trust could not be taxed in the hands of the Trust and because as per the provision, the same was taxable in the hands of the beneficiaries alone and the fact remains that the said income had been taxed in the hands of the beneficiaries. 7. We have heard the learned counsels appearing for the parties at length and perused the record. 8. The relevant provisions of the Act touching the controversy in hand are quoted below for ready reference:- "CHAPTER V INCOME OF OTHER PERSONS, IN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. ... " 164.Charge of tax where share of beneficiaries unknown--(1) Subject to the provisions of subsections (2) and (3), where any income in respect of which the persons mentioned in clauses (iii) and(iv) of sub-section (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as "relevant income", "part of relevant income" and "beneficiaries", respectively), tax shall be charged o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from time to time in the said Trust Fund created in the Trust Deed. Both of them were entitled to revoke the same after a period of 3 years. The number of shares, their extent of benefits and their identity have not been found in dispute. Therefore, the question of applying Section 164 of the Act to the facts of the present case does not simply arise. 11. Therefore, we are satisfied that the Tribunal was perfectly justified in invoking Section 62(2) of the Act read with Section 61(1) of the Act which would apply only to the Revocable Transfer of the funds made for a period which is not specified and these above circumstances, it would be taxable in the hands of the Transferor/beneficiaries and not in the hands of the Trust. As a matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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