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2016 (6) TMI 294 - AT - Income TaxAddition as income falling within the purview of Section 56 (2)(vi) - income from other sources - amount received by the assessee from the discretionary trust - Held that:- What was received by the assessee as a beneficiary from the thirteen trusts were nothing but his own income in his status as a beneficiary of the said trust. What has flown from the trustee to the beneficiary is the income the trustee collected on behalf of the beneficiaries. That the character of income in the hands of the beneficiary remains the very same, is clear from the judgment of Hon’ble Apex Court in the case of Managing Trustees, Nagore Durgha (1965 (4) TMI 13 - SUPREME Court ). Character of the income in the hands of the thirteen trusts were under the heads capital gains and / income from other sources. The nature of ‘income from other sources’ was dividends and interest and not the type of income falling u/s.56(2)(vi) of the Act. Once the character of the income in the hands of the beneficiary takes the same colour as that of the income in the hands of the trust, and once it is accepted that trust as such is not having a persona different or distinct from that of the beneficiary, it naturally flows that such income or receipt is not received without consideration. What is taxable u/s.56(2)(vi) of the Act, is receipt of money without consideration. We are therefore of the opinion that money received by the assessee from various trusts could not have been taxed u/s.56(2)(vi) of the Act. At best it could have been considered under the same heads in which the concerned trusts had received the income. Accordingly we set aside the orders of the CIT (A) and remit the issue regarding appropriate classification of the income in the hands of the assessee and apportioning it in the same ratio as such income bears to the income of the various trusts under different heads, to the file of the AO. AO shall proceed after giving a due opportunity to the assessee. What we find is that the thirteen trusts had filed its return of income voluntarily after paying tax. What was done was only a processing of such return u/s.143(1) of the Act. It is true that the amounts paid to the assessee by various trusts were out of the balances which remained after paying taxes. However, if the assessee feels that taxes paid by the trust were refundable since the taxes were assessed in the hands of the beneficiary, it can move the appropriate authority for getting the relief. - Decided partly in favour of assessee for statistical purpose.
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