9911796707
TMI Blog1995 (9) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to Rs. 60,242 was not declared in the return filed on 31-3-1986. Again in the revised return dated 30-9-1986, beneficial income from three trusts were also revised. In response to notices issued, Sri. K.Y. Shreshty C.A., appeared and the case was discussed. The assessee filed a copy of the assessment order dated 28-3-1985 and 24-10-1986, in the case of M/s. Chengamma Family Foundation, Bangalore, completed by the ITO, Circle 1, Bangalore, under C-146. In accordance to the order dated 24-10-1986, the assessee got Rs. 607 in respect of discretionary portion of 1% and specific portion of 99% amounting to Rs. 60,242 respectively. It is claimed that rebate under section 86(v) is to be allowed on the beneficial interest income as the AOP/Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific income of the trust. Had that been the case, the question here would have been a much simpler one and the assessee would have certainly been held to be liable to tax in respect of such allocated portion of the income of the trust. 4. Actually however, the facts are not so, as will be evident from the detailed discussions of the facts made by the CIT (Appeals) in his appellate order, being extracted below : " The appellant is an 'individual' deriving income from thirteen AOPs as a member. For the assessment year 1983-84, the appellant derived Rs. 60,853 as share from 13 AOPs. In all these Associations, she derives 1/3rd shares. These Associations in turn were beneficiaries of M/s. Chengamma Family Foundations which is a private spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different associations of persons, each of which is again, a beneficiary in the private trust M/s. Chengamma Family Foundations. It appears that the income derived by the aforesaid AOPs out of the income of the trust also stands divided into discretionary and specific portions in the same ratio in which the trust holds such income. The result of all these has become that the assessee has been subjected to income-tax in respect of her share income from each of the AOPs at the maximum marginal rate on the discretionary portion of the income of the AOP's forming 1 per cent of its total income. The amount of tax has been shown by the CIT (Appeals) to be Rs. 92 only in respect of the share of discretionary portion of income from each AOP. So fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire income consisting of the discretionary portion on which tax has actually been levied and also the specific portion which is below the minimum taxable level. He contends that the total income of the AOP is thus to be taken into consideration as a whole and hence so far as the allocation of the said income in the hands of the assessee is concerned, the entire allocated income is to be considered as having suffered tax in the hands of the AOPs. He thus argues that the assessee should be entitled to the rebate under section 86(v) in respect of the entire allocated portion even inclusive of the share income from the specific portion of income of the AOPs. In support of this contention, he has given the example that where the entire income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e; and (ii) the amount of income-tax with which it would have been chargeable had the remaining part of the total income been its total income. " Section 86 again reads as follow : " Income-tax shall not be payable by an assessee in respect of the following------- (v) if the assessee is a member of an association of persons, or a body of individuals other than a Hindu undivided family, a company or a firm, any portion of the amount which he is entitled to receive from the association or body on which income-tax has already been paid by the association or body. " We agree with the views of the learned counsel for the assessee in respect of the first example provided by him. We also feel that the total income of an AOP cannot be div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m taxable level. Hence, we are not in a position to accept the view of the assessee that the entire allocated income in the hands of the assessee has already suffered tax in the hands of the AOP itself. We need not take much account of the other example cited by the learned counsel for the assessee. In accordance with the provisions of section 80HHC, the total income of the AOP itself will get reduced by the amount of export income and hence, the allocable portion out of export income shall not at all form any part of total income of the member of the AOP. The question of allowing any rebate under section 86(v) would not, therefore, arise in that case. Finally therefore, we are of the opinion that on account of the fact that two separate po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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