9911796707
TMI Blog2022 (2) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 shares were known since inception, it could not be considered as indeterminate Trust. Finally the appeal of the revenue was dismissed. - Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of offer document / trust deed after adjusting the management fees and other expenses incurred by the trust. As per the trust deed, the beneficiaries are the persons who are SR Holders and are identified on the date of the trust deed. In the case of the assessee trust, the share of each SR Holder is determined and is based on the proportionate holding of each SR Holder. Accordingly, it was clarified by the ld AR that the beneficiaries are identifiable and their shares are known. 4.1. The trust has the following partners / members / shareholders:- S. No. Name of Share Holders Percentage of equity shares held 1. Allahabad Bank 5% 2. Asset Reconstruction Company (India) Ltd., 43% 3. Bajaj Allianz Life Insurance Company 5% 4. Bank Muscat 10% 5. HDFC Ltd., 5% 6. HDFC Standard Life Insurance Co. Ltd., 5% 7. Qatar Insurance Company 2% 8. Union Bank of India 25% Total Shareholding 100% 4.2. The assessee derives income from asset reconstruction activity and handling of NPAs of banks and financial institutions. The claim of the assessee was that it is a pass through entity / trust and the income is not taxable in its hands. Based on these primary f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the same persons. in the instant case, the settlor and the beneficiaries are the same and identical. f) A Trust has three constituents 1.e Settlor, Contributor and Beneficiaries and all the three constituents are independent and distinct whereas in the present case contributors are also the beneficiaries themselves. g) This so-Called Trust has been created for the sole motive to the benefit of the Settlor/contributor. Therefore, the plea made by the assessee that it is a trust completely erroneous. h) The assessee is only an AOP as per section 2(31) having 8 QlBs as members. It is not a Trust within meaning of section 61 to 63. The motive behind creation of this Trust is income-earning asset reconstruction activity. After creation, it entered into contribution agreements with QlBs for sole purpose of acquisition of NPAs, transferring those at a profit and earning profit/income out of the same. Hence, it is like coming together of the wo or more persons by way of contribution of sufficient funds into an entity in order to invest in the specified entities with a sole intention to earn profits and the same can only be termed as AOP as per provisions of section 2(31). Hence, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the beneficiaries are not identifiable. Hence assessee would be assessed at maximum marginal rate. r) Beneficiaries are not identified on the dale of the trust deed. s) The case of the assessee falls under CBDT circular No. 13/2014 related to alternative investment funds which are subject to the SEBI Regulations which are not venture capital funds and which are non-charitable Trust where investors name and beneficial interest are not explicitly known on the date of its creation have to be treated as falling within section 164(1). t) The 'substance' of the transactions is that the assessee has carried on from the contributions of various beneficiaries as per common motive to earn income and hence it is an AOP, 5.1. The ld AO based on the above observations treated the assessee as an Association of Persons (AOP) and taxed the income in hands of the assessee. 6. The assessee before the ld. CIT(A), apart from reiterating its submissions made before the ld. AO also placed reliance on the decision of Hon'ble Karnataka High Court in the case of India Advantage Fund -VII wherein it was held that once the beneficiaries were identifiable and their shares were known, section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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