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2014 (7) TMI 1219 - AT - Income TaxIncome of assessee trust - Assessee indulging in the business carried on by the beneficiary unit - heavy expenditure incurred in connection with setting up of various functional units - Held that:- As rightly held by the Commissioner of Income-tax(Appeals), the entire income was earned by the assessee by way of interest and other incidental charges. Those interest income did not arise to the assessee trust, as a partner of the subsidiary units or as an investor in the subsidiary units. It is neither a partner nor an investor with reference to the newly set up micro units. It is already mentioned above that it is a provider, a facilitator and an organizer. Therefore, the heavy expenditure incurred in connection with setting up of various functional units cannot be claimed as expenditure of the assessee trust. Those expenses could be, perhaps, if law permits, claimed as deductions in the hands of those respective units. In view of the matter, we agree with the Commissioner of Income-tax(Appeals) that various items of expenditure incurred by the assessee and claimed as deductions are in fact not allowable. We also agree with the Commissioner of Income-tax(Appeals) that the income of the assessee has to be necessarily assessed under the head “income from other sources”. At the maximum, the assessee may be characterized as a “private charity”. It is not possible to hold that the assessee is carrying on any business and the income reported by the assessee is income from business. As it is necessary for every institution to incur expenditure for its sustenance and operation. For that purpose, the Commissioner of Income-tax(Appeals) has allowed an over-all deduction of expenditure at 2% of the gross collection of income reported by the assessee trust. We find that the said amount of expenditure is reasonable. Accordingly, we uphold the order of the Commissioner of Income-tax(Appeals). - Decided against assessee.
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