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TMI Blog2021 (9) TMI 1334X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Sec. 61 to 63 of the Act. The assessee could not be called an AOP since there was no agreement amongst beneficiaries inter-se. The beneficiaries were mere recipients of income earned by the trust. Therefore, the income was not taxable in hands of the assessee but it was taxable in the hands of the contributors. The coordinate bench, in revenue s appeal titled as CIT V/s Scheme A1 of ARCIL CPS 002 XI Trust [ 2020 (9) TMI 465 - ITAT MUMBAI ] dismissed the appeal with the findings that the assessee was a valid trust. Since it was revocable Trust, the provisions of Sec. 61 to 63 were applicable and the assessee could not be assessed as AOP. The income was to be taxed in the hands of the SR holders. Since the respective s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e SARFAESI Act, 2002 and under guidance of RBI whereas it is clear that trust is a smoke screen and colourable device to evade taxes. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in considering that assessed has carried on business from the contribution of various beneficiaries as per common motive to earn income and hence, it is an AOP. The Ld. AR, at the outset, submitted that the issue is squarely covered by various judicial pronouncements. The copies of the same have been placed on record. The attention has been drawn to the fact that Ld. CIT(A) has merely followed these decisions. The Ld. DR relied on the order of Ld. AO. However, the legal position as put forward by Ld. AR, remain uncontrover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of Baroda 4.07% 3 Bank of Maharashtra 0.10% 4 Exim Bank 39.55% 5 HDFC Bank 16.54% 6 HDFC Standard Life Insurance Co. Ltd 0.81% 7 ICICI Bank Ltd, 8.14% 8 ICICI Lombard General Insurance co. Ltd. 1.63% Total Shareholding 100% 2.2 During assessment proceedings, Ld. AO called upon the assessee to explain as to on what basis it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Banking Finance Companies (pursuant to RBI Guidelines in this regard) and Foreign Institutional Investors. SRs represent contribution of such QIBs in the trust and are in the nature of undivided right, title and interest in the trust fund (essentially financial assets held in trust) evidenced by the SRs issued to it. Subscription to SRs are governed by the terms and conditions mentioned in the transaction document (trust deed etc.). The contributions of the SR holders are revocable. Therefore the income arising from revocable transfer shall be assessed in the hands of the contributors pursuant to section 61 of the Act. As per Section 61, all income arising to any person by virtue of a revocable transfer of assets shall be chargeable to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the transferor i.e. in the hands of SR Holders. Further, the assessee was not to be considered as an Association of Persons (AOP). 2.4 However, rejecting the same, Ld. AO opined that the assessee was to be assessed as AOP and not as a Trust. Alternatively, even if the status of the assessee was to be accepted as that of a trust, the same being in the nature of a non-revocable trust would thus not be eligible to avail the benefit of Sec. 61 to 63 of the Income Tax Act, 1961. As regards the claim of the assessee that since the income distributed to the various contributors had been taxed in their hands, taxing the same in the hands of the assessee would lead to double taxation, was rejected by the A.O as being totally ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust Act on the settler becoming beneficiary. The assessee was established under SARFAESI Act following guidelines of RBI and therefore, its validly was beyond doubt. Further. Sec. 61 to 63 does not imply that the right of revocation should be without any conditions. The terms of trust deed made it clear that the contributions was revocable and therefore, the income was to taxed in the hands of SR holders as per the provisions of Sec. 61 to 63 of the Act. The assessee could not be called an AOP since there was no agreement amongst beneficiaries inter-se. The beneficiaries were mere recipients of income earned by the trust. Therefore, the income was not taxable in hands of the assessee but it was taxable in the hands of the contributors. Aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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