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TMI Blog2020 (2) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013 & ITA No, 4343/Mum/2013passed on 17.02.2017. 2. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition of Rs. 7,95,15,873/- merely following the decision of the Hon'ble ITAT in the case of Indian Corporate Loan Securitization Trust 2008-Series 14 (Supra) vide order No. ITA 3986/Mum/2013 & ITA No. 4343/Mum/2013 passed on 17.02.2017 without discussing the matter on merits. 3. Without prejudice to the above, on the facts and in the circumstances of the case and in law, even if the trust is held to be valid as claimed by the assessee, whether, still the income liable to be taxed at the maximum marginal rate in view of section 161(1 A) of the I T Act as the captioned income is evidently business income?. 4. "The appellant prays that the order of the Ld. CIT (A) on the above grounds be set aside and that of the A.O. be restored." 5. "The appellant craves leave to add, delete, alter, amend and modify any or all grounds of appeal." 3. The brief facts of this appeal are that the assessee received interest income of Rs. 8,630/- and profit on sale of investments of Rs. 7,95,07,243/- as per books. The assessee di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee trust. It was specifically pleaded that the provisions of Section 164(1) of the Act are not applicable to the facts of the case. The assessee submitted that the three constituents of the assessee trust are as under:- a. Settlor - Infrastructure Leasing and Financial Services Ltd., b. Trustee- IL & FS Trust Co. Ltd. c. Beneficiary - IL & FS Financial Services Ltd., 3.3. The assessee pleaded that it satisfies the test of above three constituents of a trust to be three different entities and hence, it has to be assessed as a trust only. The assessee also submitted that the beneficiary has included the income received for AY.2010-11 in their total income. This is evident from the return of income acknowledgement enclosed by the assessee together with the computation of income. In the said computation, under the head Capital Gains, the beneficiary has offered for tax Rs. 2,56,11,938/-. In the total of Rs. 2,56,11,938/- the long term capital gain received from the assessee trust on sale of the shares of Multi Commodity Exchange Ltd is included and the capital gains after indexation is offered for tax of Rs. 27,38,484/- which is the capital gain distributed by the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings, the ld. CIT(A) had addressed each and every aspect in the light of directions of this Tribunal. The elaborate adjudication of each and every direction of the ld. CIT(A) are reproduced hereunder for the sake of convenience:- "a) Whether the Settlor & Beneficiary are different in present case: The Hon'ble ITAT has pointed out to the confusion arisen due to the similar confusing names of Settler & Beneficiary in the Indenture of Trust. As rightly observed by Hon'ble ITAT, the Settler in this case is "Infrastructure Leasing & Financial Services Ltd.", whereas the Beneficiary under Class "P" in Schedule A of the Indenture of Trust is "IL&FS" which as per the definition clause of indenture of trust means "IL&FS Financial Services Limited". I have gone through the Indenture of Trust and find that the clause 1.1.20 reads as "IL&FS means IL&FS Financial Services Limited", hence naturally the "IL&FS" mentioned in Schedule A thereof is to be read as "IL&FS Financial Services Ltd." only. It is therefore clear that the observation of CIT(A)-30 that the name of said investor & sole beneficiary "IL&FS Financial Services Ltd." was not appearing in the Indenture of Trust seems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objective of appellant trust is to make investments with a view to get long term capital appreciation. Taxability of Trust: The appellant has claimed that it is covered under the provisions of Section 61 to 63 wherein the income of appellant trust would be clubbed with the beneficiary. The appellant has relied upon the decision of Hon'ble ITAT, Bangalore in the case of India Advantage Fund-VII (ITA No. 178/Bang/2012). I have gone through said decision. In that case, the Trust was held to be a "revocable " trust on given facts, and hence it was held that Section 61 read with section 63 which mandates that income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income tax as income of the transferor will apply to the facts and circumstances of the case. I further find that the revenue's appeal in said case has been dismissed by Hon'ble High Court of Karnataka in recent order dated 01.02.2017 reported in [2017] 78 taxmann.com 301 (Karnataka). Now, to examine whether the facts of appellant's case suffice to treat it as a "revocable" trust, the clause 12 of the Indenture of Trust is reproduced below: "12 Term and terminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (after indexation) computed at Rs, 27,38,4847-, and also the Interest income of Rs. 8,6307- is submitted by the appellant on Page 79-87 of the paper book, which is verified. The relevant working of above LTCG is as under: Sale consideration Rs. 97,30,95,600 Indexed Cost Rs. 97,03,57,116 (89,35,88,357 *632/582) ---------------------- LTCG Rs. 27,38,484 ============== e) Treatment of Income on sale of investments as LTCG/Business Income: The appellant has offered to tax the income on sale of investments as LTCG, whereas the assessing officer has treated it as Business Income. The AO in para 12(111) of the assessment order observed that in this case financial institution(s) came together and subscribed certain amount of money in the trust for earning profit is nothing but close y association of two or more persons for earning profit. However, I find that the appellant trust has got contribution only from one institution namely "IL&FS Financial Services Ltd." as Class P Beneficiary, and also there is only one transaction of sale of shares of Multi Commodity Exchange. In my opinion, such investment in a single company held for long term cannot be assessed as busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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