TMI Blog2007 (9) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act, 1961, by the Income-tax Officer, TDS Ward 49(2), New Delhi. 2. That the learned Commissioner of Income-tax has erred in law and on facts in not accepting the proposition that as the status of the Trustees is that of the beneficiaries, the status of the Trust becomes "individual" and accordingly provisions of section 194A are not attracted." 3. Briefly, the facts relating to the issues involved in the grounds of appeals are that the assessee is a PF Trust of Employees created after seeking exemption under section 16 of EPF Act. Consequent to the recognition and exemption by PF Commissioner, the Trust was also recognized under the 4th Schedule of IT Act by the Commissioner of IT Delhi. Survey proceedings were conducted in the premises of the assessee and it was seen that interest being credited in the account of ex-employees after cessation of employment part-took the character of interest and as such according to Assessing Officer the assessee was liable for deduction of tax at source under section 194A of Income-tax Act, 1961. 4. The Assessing Officer further noticed that the Trust did not have any TAN number nor was it filing any TDS returns. Hence, accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax at source under section 194A of the Act in respect of the credits made to the accounts of members of the fund who ceased to be the employees of the trust. Accordingly they held that the assessee was in default under section 201(1)/201(1A) for the financial years under consideration. In view of the above, respectfully following the above decision, I am of the opinion that the Assessing Officer has rightly penalized the assessee for failure to deduct tax under section 201(1) and consequent liability under section 201(1A). Apart from the above I am also of the opinion that if a member of the trust continues his membership after cessation of employment with the trust, any payment due from such a trust would part-take character of interest." 7. Before us ld. AR for the assessee first submitted that in case we go through the order of CIT(A) it would be revealed that while upholding the order of Assessing Officer, wherein the assessee-trust was held in default under section 194A of Income-tax Act, 1961 for non-deduction of tax at source from the interest being credit in the account of ex-employees and raised the impugned demands under section 201(1) and 201(1A), the CIT(A) si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961. However, in support of the contentions the ld. DR has not been able to cite any case law. 10. We have considered the rival submissions of both the parties, perused the record and carefully gone through the order of the tax authorities below as well as the case law relied upon by the ld. AR for the assessee. In section 2( 31 ) the word "person" is defined as under : "person" includes - ( i )an individual ( ii )a hindu undivided family, ( iii )a company ( iv )a firm, ( v )an association of persons or a body of individuals, whether incorporated or not, ( vi )a local authority, and ( vii )every artificial juridical person, not falling within any of the preceding sub-clauses. 11. The relevant portion of section 194A(1) is reproduced as under : "Any person, not being an individual or a Hindu Undivided Family, who is responsible for paying to a resident any income by way of interest other than income [by way of interest on securities], shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than one, could not lead to a conclusion that they constituted an association of persons . Their Lordships further held that "assessee-trust" would be treated as individual. Similarly, in the case of Niti Trust v. CIT [1996] 221 ITR 435 (Guj.) their Lordships held that "the Assessing Officer was required to determine the status of the assessee first and only after determining the status of the assessee the Assessing Officer shall proceed further with the assessment. He cannot proceed ahead without determining the status of an assessee and that is not the scheme of the Act." 14. In this very decision their Lordships further held that the Trust was to be assessed as an individual for all purposes. 15. Similarly, Hon ble Calcutta High Court in the case of CIT v. Shri Krishan Bandar Trust [1993] 201 ITR 989 held that discretionary Trust is assessable as an individual and not as Association of Persons . 16. Hon ble Gujarat High Court in the case of CIT v. Deepak Family Trust [1994] 72 Taxman 406, held that the status of the Trustees of discretionary Trust have to be assessed in the status of individual and not in the status of association of persons . ..... 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