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2017 (8) TMI 231 - AT - Income TaxNature of receipt from the trust - distribution of surplus by the trust - reward for employment - Addition on account of 'profit in lieu of salary u/s 17(3)(ii)' - assessee is a beneficiary of private discretionary trust - assessment of income - Held that:- The fact that distribution is not denied by Ld. DR or authorities below. Also from computation of income and returns filed by the trust placed in the paper book, it eminates clear that trust has already been assessed to tax, in terms of section 161 to 166 of the Act. Assessee’s stand is correct that as per scheme of assessment of private discretionary trust, the Department has to opt whether to assess the income in the hands of trust or beneficiaries. In the present case, option has been clearly exercised in the hands of the trust as demonstrated from computation of income and income and expenditure account placed in the paper book in the case of trust. The action of Ld. AO is again contrary to settled scheme and interpretation of section 161 to 164 lead in consonance with the CBDT circular No. 157-F. No. 228/8/73-IT (A-II), dated 26.12.1974 and CBDT instruction F Nos. 45/78/66-IT J(5), dated 24.02.1967. See CIT vs. Kamalini Khatau [1994 (5) TMI 1 - SUPREME Court] - Decided against revenue
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