Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (8) TMI 1319 - AT - Income TaxReopening of assessment - denial of exemption u/s 11 - account transfer of foreign bequest(gift) made in earlier year to Sri Lanka based bank account to India - taxable on the basis of receipt - HELD THAT:- The impugned sum is lying in the treasury of bank of Ceylon since 09.02.2007. The assessee’s request seeking transfer thereof to India is pending till date as per the Appellate Authority’s order / direction(s). Whether the said sum can be held to be the assessee’s income accrued or receive u/s 5 in these facts and circumstances so as to be held as having escaped assessment giving rise to the re-opening / re-assessment in question - We find no force either in Revenue’s arguments or in lower authorities’ action treating the above bequest as assessee’s taxable income. We wish to emphasise here that the assessee is yet to enjoy a clear legal title on the trust property and therefore, the same could not have been treated as its income received under the provision of the Act. Hon'ble apex court’s landmark decision in Chainrup Sampatram vs. CIT [1953 (10) TMI 2 - SUPREME COURT] settled the law long back that the principle of conservative and prudence in accounting treatment require that no anticipated profits are treated as income till realization. And that the converse is not true regarding anticipated losses which can be deducted from commercial profits at the first sign its reasonable probability. Hon'ble Bombay high court’s decision Mrs.Meherbai N. Sethna [1993 (9) TMI 46 - BOMBAY HIGH COURT] holds that it is the accrual of income and not actual receipt which forms the only relevant factor for assessment of an overseas income de hors any restriction or prohibition on its remittance to India. We apply the very legal principle herein as well to conclude that the learned lower authorities have erred in treating the impugned piquet fund to be assessee’s taxable income having escaped assessment after lapse of twelve years from assessment year 1995-96 when M/s Bouete (supra) had bequested her last. We lastly wish to observe that the Revenue’s stand under challenge also does not satisfy sec. 160(1)(iv) r.w.s. 161 applicable in case of a representative assessee. There can be no dispute about the foregoing facts that Mrs Bousle had expired on 26.06.1994. The assessee is admittedly the ultimate beneficiary of the trust. Hon'ble Madhya Pradesh high court’s judgment in Karelal Kundalal Trust [1983 (7) TMI 39 - MADHYA PRADESH HIGH COURT] holds that these two statutory provision stipulated assessment of a representative assessee to be having same duties, responsibilities and liabilities. We conclude in this factual and legal backdrop that it was the trustee bank who ought to have been assessed u/s 160 r.w.s 161 with regard to the impugned sum way back in assessment year 1995-96. We therefore accept the assessee’s instant last plea as well. The assessee’s twin grounds challenging validity of the impugned reopening / re-assessment as well as correct of the bequest amount addition in question succeed. - Decided in favour of assessee.
|