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2018 (4) TMI 1062 - ITAT COCHINReopening of assessment - income assessable in the hands of trust - income of the trust liable for tax at the maximum marginal rate OR normal rate applicable to an AOP - apportionment and determination of proportionate tax attributable to the beneficiary - Held that:- The beneficiaries are the owners of the property of the trust and the trustees have only the duty and responsibility to manage the same in accordance with the power granted to the trustees by the Trust deed. When the beneficiaries become the joint owners' section 26 of the Income Tax Act, comes into play and mandates the assessment of the beneficiaries shares in their respective hands. In the instant case, admittedly, the only source of income of the assessee-trust is income of the house property, therefore, section 161(1A) of the I.T.Act and proviso to section 164(1) of the I.T.Act is not applicable. Since the beneficiaries are actual / real owners of the property, the share of the beneficiaries are also determined. There has to be as many assessments on the trustee as there are beneficiaries with determinate and known shares, though for the sake of convenience, there may be only one assessment order specifying separately the tax due in respect of the income of each beneficiary. Tax on the share of each beneficiary will have to be separately calculated as if it formed a part of the beneficiary’s income. Tax payable by the Trust will be the sum total of the tax calculated on the share of each beneficiary. With these directions, we set aside the reassessment order to the file of the Assessing Officer for reframing the assessment. - Decided in favour of assessee for statistical purposes..
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