9911796707
TMI Blog2023 (4) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... shown their share of rental income of the property held under the trust and in such case there is no escapement of income by the assessee trust as the trust was formed as a specific trust for the benefit of the beneficiaries of the family of Late Shri Gyan Chand Khanna. There is a direct live link between the rental income received by the trust and the income shown by the beneficiaries in the respective returns as per their respective share of rental income as specified in the trust deed and, therefore, there is no escapement of income at all. We hold that the reopening of the assessment is bad in law. We set aside the order of theCIT(Appeals) and quash the reassessment made by the Assessing Officer u/s 143(3) r.w.s. 147 - Decide in fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsustainable. (D) That the Ld.CIT(A) has failed to adjudicate the grounds as urged in grounds B and C above. 2.(A) That the Ld.CIT(A) has failed to appreciate that mode of assessment provided under sections 161 and 166 of the I.T. Act is alternative to each other and in the case of specific trust, income of the trust can be taxed either in the hands of trustees (representative assessee) or the beneficiaries. Thus, conclusion of the Ld.CIT(A) holding the assessment of income of the trust in the hands of beneficiaries under section 166 as invalid, is erroneous and liable to be quashed being contrary to the provisions of law. (B) That on the facts and circumstances of the case, the Ld.CIT(A) has failed to appreciate that the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of the trustees as there are beneficiaries and levy the tax appropriate to such income at the rate of tax applicable to the income of each beneficiary. Thus, the premise on which conclusion of income have escaped on account of non declaration of income in the hands of trust was drawn by the first appellate authority, is wholly erroneous, unsustainable and the impugned order is liable to be quashed. 3. That the appellant craves leave to add, alter, modify or delete any ground of appeal at the time of hearing of the appeal and grounds of appeal are without prejudice to each other. 2. Briefly stated the facts are that the assessee is a private specific trust and is in possession of the house property at 70-Janpath, New Delhi whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder consideration. However, the Assessing Officer brought to tax the gross rental income of Rs.87,68,124/- in the hands of the assessee trust observing that the trust is liable to get its income taxed in its own hands for the AY 2010-11 rather than through beneficiaries or trustees. 3. On appeal by the assessee the Ld.CIT(Appeals) sustained the action of the Assessing Officer in bringing to tax the rental income in the hands of the assessee trust observing that the beneficiaries are the individual enjoying the benefit of basic exemption and slab rates and, therefore, it cannot be stated that taxes paid by them are equal to taxes to be paid by the assessee trust and prima facie the taxes chargeable in the case of trust could be more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the authorities below and the materials placed before us. In this case, assessment was reopened for the reason that assessee trust has not filed return of income for the AY 2010-11 and, therefore, there is escapement of income in respect of rental income received by the assessee trust from the property at 70-Janpath, New Delhi. We observe that even before recording of the reasons a letter dated 20/02/2017 was issued to the assessee requiring the assessee to file copy of return for the AY 2010-11 along with the reply to the query raised in the said letter on the transactions. In response the assessee filed several replies contending that the property for which rental income was received owned by the trust but the income was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st for the benefit of the beneficiaries of the family of Late Shri Gyan Chand Khanna. Therefore, we observe that there is a direct live link between the rental income received by the trust and the income shown by the beneficiaries in the respective returns as per their respective share of rental income as specified in the trust deed and, therefore, there is no escapement of income at all. In the circumstances, we hold that the reopening of the assessment is bad in law. Hence, we set aside the order of the Ld.CIT(Appeals) and quash the reassessment made by the Assessing Officer u/s 143(3) r.w.s. 147 of the Act for the AY 2010-11. 8. In the result, appeal of the assessee is partly allowed as indicated above. Order pronounced in the open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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