9911796707
TMI Blog2022 (11) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Appellate Tribunal, Jaipur within 30 days i.e. on or before 13.06.2022. In view of the above the physical appeal was filed on 19.05.2022 well before 12.06.2022 as directed in the said mail. However, if there is any delay on our part, kindly condone the delay." 3. We have heard the rival contentions and perused the materials available on record. The prayer as mentioned above by the Revenue for condonation of delay of 3 days has merit and we concur with the submission of the Revenue. Thus the delay of 3 days in filing the appeal by the Revenue is condoned. 4. The Revenue raised the following grounds of appeal:- "1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in treating the assessee as representative assessee while it should be treated as AOP, because it has derived income which is other than the income derived from investments as specified in section 10(23FB) of the Act. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in treating it as recoverable trust." 5. Brief facts of the case are that the return of income for the assessment year 2011-12 was filed by the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as discussed above. The assessee is being as AOP and income of the assessee is assessed as per provisions of section 164 of I.T. Act. at Maximum Marginal Rate. 7. Being aggrieved by the order of the ld. AO the assessee preferred an appeal before the ld. NFAC/ CIT(A) and the findings of the ld. NFAC/CIT(A) are reproduced as under:- " I have also gone through the above judgments including the CBDT Circular No. 14 (supra) and found that they are directly applicable to assessee's case here. I have already prima facie decided in favour of assessee in Gr No. 1 in para 1.2.2 above. Here that assessee is able to demonstrate that the corresponding part of income (particularly interest income earned on FDRs) pass over to beneficiaries/ contributors who incorporated the same in their income for the year in accordance with section 161 to 164 of the Act and as per the provisions of section 60-63 of the Act ( dealing with recoverable transfers) income is required to be taxed in the hands of the beneficiaries. Therefore assessee's status is to treated as "Representative Assessee"because it has derived income other than income as specified in sec 10(23FB) of the Act and the same was passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal undertakings, which supports entrepreneurship and innovations. What is Venture Capital: Venture capital (VC) is risk capital provided to early-stage, high-potential, high risk, growth and start-up companies. The venture capital fund invests money by owning equity/bonds in the companies it invests in, which usually have innovative idea or technology or attractive business model. Venture capital funds helps in promoting innovations and entrepreneurship. Venture capital is also associated with job creation the knowledge economy, and used as a proxy measure of innovation within an economic sector or geography. What is SME Tech fund: SME Tech Fund is a scheme of the assessee trust through which all the investments are made in Venture Capital Undertakings. It is governed by Private Placement Memorandum(PPM) furnished to prospective investors on a confidential basis, for them to consider an investment in SME Tech Fund. (Copy enclosed at paper book page no 35.to 69.) Contributors/Beneficiaries: The assessee trust has total number of 12 contributors/beneficiaries(Details given in schedule to audited Balance Sheet at paper book page no 9) who have contributed different amounts to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Account of the company. Most of the income was distributed to the Contributors/Beneficiaries on pro rata basis in the ratio of their capital contribution. The balance amount was carried forward to the Balance Sheet. Therefore, the assessee filed return of income declaring NIL income. Therefore, the beneficiaries are known and identifiable and the individual share of each beneficiary is also known which is in proportion to their capital contribution. Investment Management Agreement: The assessee has entered in Investment Management Agreement dt. 2.6.2008with Rajasthan Asset Management Company Private Ltd. (Copy enclosed at Paper Book page no. 157 to 182) for the purpose of advising, managing and administering the Trust Fund by providing professional advice and related services to the assessee. The case of the assessee trust is as under: The assessee was a representative assessee, created by a duly executed Trust Deed, within the meaning of Sec. 160(1)(iv) of Income tax Act. The assessee received certain amounts under Revocable Transfer of Assets (Within the meaning of Sec. 63 of the Income tax Act) from the Contributors/ beneficiaries. The share of each beneficiary/contribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from investments as specified in section 10(23FB) of the Act.' Submissions of assessee 1. The assessee is a representative assessee (Sec.160(1) ): a. It is submitted that the assessee trust was a representative assessee within the meaning of Sec. 160(1)(iv) of Income tax Act. b. The assessee Trust was created by a duly executed document called Indenture of Trust(Copy at Paper Book page no 15 to 34)which has the following parties: Rajasthan Asset Management Company Private Limited - Settler Rajasthan Trustee Company Private Limited -Trustee Initial Contribution by settler Rs. 10,000/-. c. As per aforesaid document, it was envisaged that the Trustee shall call for capital contribution from the Contributors. The Contributors will invest their monies i the respective scheme of the Trust and the Trustee shall in turn make investments in accordance with the objectives of the respective schemes. d. It is submitted that the definition of Representative Assessee is given in Sec. 160(1) of the Income tax Act, which is reproduced below: Representative assessee. 160 (1) For the purposes of this Act, "representative assessee" means- (i) in respect of the income of a non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement between the assessee and each beneficiary: It is submitted per details given in the audited balance sheet of the assessee, (Paper book page no. 9) there were 12 Contributors/beneficiaries- mostly government companies and nationalized banks and financial institutions - who contributed their money to the Assessee and a separate agreement was entered into between the Assessee and each such beneficiary. Copy of one sample agreement executed with RIICO Ltd.- one of the beneficiaries -is given at Paper Book page no 70 to 94. c. There was no inter-se agreement between contributories/beneficiaries - which is sine-quo non for formation of an AOP: between one contributory/ beneficiary and the other contributory/beneficiary as each of them entered into separate contribution arrangement with the Assessee. Therefore, it cannot be said that two or more beneficiaries joined hands for a common purpose or common action and therefore the tests for considering the Assessee as AOP was not satisfied. d. 'Association of persons' as used in section 2(31)(v) means an association in which two or more persons join in a common purpose or common action. The association must be one, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary has independently invested in RVCF-II without any association with any other beneficiary. We rely on the following decisions in favour of the assessee: A. DCI, Bangalorev.India Advantage Fund - VII (2014) (50 taxmann.com 350) (Case law paper book page no 1/34.....) in which Hon'ble Bench has held as under: "It can thus be seen that the beneficiaries contributed their money to the Assessee and a separate agreement was entered into between the Assessee and each beneficiary. There is no inter se arrangement between one contributory/ beneficiary and the other contributory/beneficiary as each of them enter into separate contribution arrangement with the Assessee. Therefore, it cannot be said that two or more beneficiaries joined in a common purpose or common action and therefore the tests for considering the Assessee as AOP was satisfied. The beneficiaries have not set up the Trust. Therefore, it cannot be said that the beneficiaries have come together with the object of carrying on investment in mezzanine funds which is the object of the trust. The beneficiaries are mere recipients of the income earned by the trust. They cannot therefore be regarded as an AOP." Given th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cent of income of trust should be distributed to beneficiaries of trust and balance 90 per cent should be accumulated in corpus fund - Trust deed clearly prescribed beneficiaries and shares they were entitled to and also prescribed other terms relevant to share of interest in corpus on determination or termination of trust - For relevant assessment years, beneficiaries of assessee-trust had filed their returns of income admitting 10 per cent income distributed to them - Assessing Officer, however, treated trustees of assessee-trust as representative assessees in respect of 90 per cent of accumulated income and, accordingly, framed assessments under section 164 - Whether, on facts, it was clear that beneficiaries of assessee-trust and their shares were determinate and, therefore, trustees could not be assessed to tax and provisions of section 164 were not attracted - Held, yes F. Reliance is also placed on the following decisions in favour of the assessee: * CIT Kutch and Saurashtra Vs Indira Balkrishna (39 ITR 546) (SC) Whether an association of persons must be one in which two or more persons join in a common purpose or common action and as words occur in section which im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income arising to any person by virtue of any such transfer shall be chargeable to income-tax as the income of the transferor as and when the power to revoke the transfer arises, and shall then be included in his total income. "Transfer" and "revocable transfer" defined. 63. For the purposes of sections 60, 61 and 62 and of this section,- (a) a transfer shall be deemed to be revocable if- (i) it contains any provision for the re-transfer directly or indirectly of the whole or any part of the income or assets to the transferor, or ii) it, in any way, gives the transferor a right to re-assume power directly or indirectly over the whole or any part of the income or assets ; (b) "transfer"includes any settlement, trust, covenant, agreement or arrangement. 4. It is submitted that the transfer of funds to the assessee trust was a revocable transfer of asset, within the meaning of Sec. 63 of Income tax Act, where the transferor had retained power to re-transfer the assets in its name. For this purpose, we want to draw your kind attention to the following documents: a. Kindly see the following clauses of The Trust Deed ( Copy at Paper book page no. 15 to 34) Clause No. Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of the Trust Fund was 8 years from first closing. * The contributors/beneficiaries were entitled for the return of their capital contribution. 5. In the present case, we can deduce from the documents filed that each contributor to the Fund has made a contribution on the condition that the initial contribution along with any income or gains arising on the investments made from his contribution would be returned to the contributor upon the sale of the investments. In such a scenario, the contribution is nothing but a 'revocable transfer' as defined in section 63 of the Income Tax Act The entire assets will be distributed to the contributors on dissolution of the assessee trust after the expiry of pre-determined period. 6. As discussed above, as per section 63 of the Income tax Act, a transfer shall be deemed to be revocable if it contains any provision for the re-transfer directly or indirectly of the whole or any part of the income or assets to the transferor, or it in any way gives the transferor a right to re-assume power directly or indirectly over the whole or any part of the income or assets. Thus, where a contribution is made in a manner that the contributors are entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating that Sec. 166 of Income tax Act give an option to the department to tax either the representative assessee or the beneficial owner of the income. Once the choice is made by the department to tax either the trustee or the beneficiary, it is no more open to the department to go behind it and assessee the other at the same time. 8. As mentioned in the foregoing paragraphs, the issue at hand is squarely covered by the decision of the Bangalore ITAT in the case of DCI v India Advantage Fund VII (50 taxmann.com 350) Ruling on the taxability of revocable trust, (Copy at Case Law Paper book page no..1/31..) "For the reasons given above we hold that Sec.61 read with Sec.63 of the Act which mandates that income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income tax as income of the transferor will apply to the facts and circumstances of the present case and therefore the assessment in the hands of the transferee/representative assessee was not proper". 9. The above decision of Banglore ITAT has been confirmed by Karnataka HC in (2017) 78taxmann.com 301 (Karnataka) (Case Law Paper book Page no...54...) 10. We rely on the findings given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of and on behalf of the Trustee, will issue a Drawdown Notice 30 (thirty) calendar days in advance to the contributors. b) On or before the date notified in clause (1) above, the contributor shall pay the amount to the Investment Manager, If the contributor fails to pay such portion of its Capital Commitment on the date as notified by the by the Investment Manager in the Drawdown notice, the contributor shall then be required to pay a late payment fee to the trustee. The late fee shall equal the amount which would accrue on such contribution for the delay period at a rate of @ 18% PER ANNUM. The subscriber shall pay the late payment fee on the date it finally pays the late contribution amount. c) The Commitment period for drawdown shall be 4 years from the date of final closing of the fund. d) The commitment period may be further extended by 6 months at the discretion of the investment manager with the prior approval of the Trustee." 10. The ld. Sr. DR took us to the explanation of SME Tech Fund which is a confidential Private placement memorandum explained the definition of drawdown and the meaning of defaulting contributors where any contributor failing to contribute an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orfeited, such forfeiture shall include all gains and distributions declared but unpaid and all payments made by the defaulting contributor in respect of such units. Any units so forfeited may be disposed off by the trust as it deems fit and the proceeds of disposal (if any) shall accrue to the fund. The contentions on the interpretation given by the ld. Sr. DR regarding drawdown and defaulting contributor where they cannot go out at their own will that they have to incur cost and the consequence of their act any units so forfeited may be disposed off by the trustee it deem fit and the proceeds of disposal if any shall accrue to the fund. The explanation given by the ld. Sr. DR that the trust is claiming whenever they can go and the trust is only managing funds. The defaulting contributor will not have in the case of suspend or terminate the defaulting contributor's right to receive any distribution where the defaulting contributor shall remain fully liable to the creditors of the fund. The ld. Sr. DR submits from the above definitions and explanations from the some of the trust also it is not passed through entity. The ld. DR took us to paper books at page 67 for explaining that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l tax liability would be subject to a surcharge of 10%, otherwise no surcharge is applicable. The ld. Sr. DR submits that upholding the findings of the Assessing Officer that page 3 of the assessment order where the AO on examination of the details and reply submitted by ld. AR it is found that you derives income from investment other than venture capital undertaking as specified in section 10(23FB) of the IT act that the trust is not a charitable trust within the definition of section 2(15) of the I.T. Act . It is claimed that the income was passed through to the beneficiaries in accordance with the provisions of Section 161 to 164 of the I.T. Act, such income has been offered for taxation by the beneficiaries in their respective return of income and they have paid the due taxes on such income. The Sr. DR observed that reply filed by the ld. AR dated 18.03.2014 whatsoever proceedings was not acceptable in view of the following facts:- "A) Section 10 (23FB) provides specific exemption to the income of venture capital fund. Thus, venture capital fund is taxable entity and liable for tax under the provision of I.T. Act. Section 10 (23FB) which provides exemption in respect of inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st is a representative assessee of beneficiaries and the assessee has not furnished for the purpose of the Act where under the provisions of Section 160 of the I.T. Act, 1961 which provides the definition of Representative assessee:- `"160. (1) For the purposes of this Act, "representative assessee" means- (i) in respect of the income a non-resident specified in [***1 sub-section (1) of section 9, the agent of the non- resident, including a person who is treated as an agent under section 163; (ii) in respect of the income of a minor, lunatic or idiot, the guardian or manager who is entitled to receive or is in receipt or such income on behalf of such minor, lunatic or idiot; (iii) in respect of income which the Court of Wards, the Administrator- General, the Official Trustee or any receiver or manager (including any person, whatever his designation, who in fact manages property on behalf of another) appointed by or under any order of a court, receives or is entitled to receive, on behalf or for the benefit of any person, such Court of Wards, Administrator-General, Official Trustee, receiver or manager; (iv) in respect of income which a trustee appointed under a trust decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long term capital appreciation and receives income from the sale of such investments. Going through the SME Tech Fund a trust organized of India and to be registered with Securities and Exchange Board of India as venture capital fund which is reproduced as under:- "This Confidential Private Placement Memorandum (this "Memorandum") is being furnished to prospective investors on 16-6- nliffeararbasis, for them to consider an investment in SME Tech Fund (the "Fund"), a scheme of RVCF Trust- II ("Trust" or "RVCFT-II"), a contributory trust organized under the Indian Trusts Act, 1882 which shall apply to be registered with Securities and Exchange Board of India ("SEBI") as a Venture Capital Fund ("VCF") under the SEBI (Venture Capital Funds) Regulations, 1996 ("Regulations"), and may not be used for any other purpose. This Memorandum may not be reproduced or provided to others without the prior written permission of the RVCFT - II. The directors of the Investment Manager accept responsibility for the information contained in this Memorandum. To the best of the knowledge and belief of the directors of the Investment Manager (who have taken all reasonable care to ensure that such is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While the existing Trust will seek to register with the SEBI under the Regulations, the Units of the Fund will not be registered with any regulatory authority. Furthermore, the regulatory authorities have not confirmed the accuracy or determined the adequacy of this Memorandum. Contributors may request additional information by writing to RVCF TRUST - II, Attention: Girish Gupta, at 7th Floor, Ganga Heights, Bapu Nagar, Tonk Road, Jaipur-302 015 India by calling 91-141-4071680, 4071681 during normal business hours, faxing at 91-141-5101226 or emailing at [email protected]." Amendment of section 160. In section 160 of the Income-tax Act, in sub-section (2), after clause (iv), the following clause and Explanations shall be inserted, namely:- '(v) in respect of income which a trustee appointed under an oral trust receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees. Explanation 1.-A trust which is not declared by a duly executed instrument in writing (including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913")(6 of 1913.) shall be deemed, for the purposes of clause (iv), to be a trust declared by a dul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s any sum under this Act, shall be entitled to recover the sum so paid from the person on whose behalf it is paid, or to retain out of any moneys that may be in his possession or may come to him in his representative capacity, an amount equal to the sum so paid. (2) Any representative assessee, or any person who apprehends that he may be assessed as a representative assessee, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the principal), a sum equal to his estimated liability under this Chapter, and in the event of any disagreement between the principal and such representative assessee or person as to the amount to be so retained, such representative assesses or person may secure from the Income-tax Officer a certificate stating the amount to be so retained pending final settlement of the liability, and the certificate so obtained shall be his warrant for retaining that amount. (3) The amount recoverable from such representative assessee or person at the time of final settlement shall not exceed the amount specified in such certificate, except to the extent to which such representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged on the relevant income or part of relevant income at the maximum marginal rate : Provided that in a case where- (i) none of the beneficiaries has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or (ii) the relevant income or part of relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or (iii) the relevant income or part of relevant income is receivable under a trust created before the 1st day of March, 1970, by a non-testamentary instrument and the Assessing Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust was created bona fide exclusively for the benefit of the relatives of the settlor, or where the settlor is a Hindu undivided family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly dependent on the settler for their support and maintenance; or (iv) the relevant income is receivable by the trustees on behalf of a provident fund, super ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or religious purposes (as reduced by the income, if any, which is exempt under section 11) as if such part (or such part as so reduced) were the total income of an association of persons; and (b) the tax on that part of the relevant income which is applicable to purposes other than charitable or religious purposes, and which is either not specifically receivable on behalf or for the benefit of any one person or in respect of which the shares of the beneficiaries are indeterminate or unknown, at the maximum marginal rate : Provided that in a case where- (i) none of the beneficiaries in respect of the part of the relevant income which is not applicable to charitable or religious purposes has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or (ii) the relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or (iii) the relevant income is receivable under a trust created before the 1st day of March, 1970, by a non-testamentary instrument and the Assessing Officer is satisfied, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are ascertainable as such on the date of such order, instrument or deed. 13. The ld. Sr. DR observed that the assessee trust is not a charitable trust since claiming of section 160 of the Income Tax Act, which is not the income according to the trust deed and the kind of the activity is not in the nature of trust where the entire fund is not eligible and the income is taxable in the hands of the uncertain income whether it is generated, but going through the organized and averment made by the ld. AR for the assessee trust is SEBI registered venture capital gain governed by the SEBI Venture Capital Regulations, 1996. The corpus fund is held by various central and state government undertaking and PSU banks for the purpose of financing venture capital undertakings. The whole idea of constitution of the trust is the pooling of resources of various entities with a view to promote investing into venture capital undertakings, which supports entrepreneurship and innovations. 14. From the argument of the ld. AR for the assessee we observed that the assessee trust was constituted vide trust deed dated 2nd June, 2008. The settlers of the trust are Rajasthan Asset Management Company Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A Units of Face Value of Rs 100 each] 5,14,54,416 8.68 i State Bank of Patiala [515121.84 (P.Y.3300000)Class A Units of Face Value of Rs 100/- each] 5,15,12,184 8.69 j Andhra Bank [515121.84 (P.Y.3300000)Class A Units of Face Value of Rs 100/- each] 5,15,12,184 8.69 k Bank of Baroda [515508.42 (P.Y. 330000) Class A Units of Face Value of Rs 100 each 5,15,50,842 8.70 l Technology Development Board [771816.24(P.Y.495000 ) Class A Units of Face Value of Rs 100 each] 7,71,81,624 13.02 m Rajasthan State Industrial Development& Investment Corp. [1029088.32 (P.Y.6600000) Class A Units of Face Value of Rs 100 each] 10,29,08,832 17.36 Total 59,26,60,000 100% The fund of assessee RVCF trust-II is created by a indenture of trust between Rajasthan Asset Management Company Private Limited ("Settler") and Rajasthan Trustee company private Limited ("Trustee"). The trust is not doing any charitable activity define u/s 2(15) of the I.T. Act. The assessee has filed a detailed reply before the AO during the assessment proceedings dated 18.03.2014 .The ld. AR for the assessee further explain that as per section 63 of the Act the asset which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a venture capital fund) Investment Manager: Rajasthan Asset Management Company Private Limited Note "This Confidential Private Placement Memorandum (this "Memorandum") is being furnished to prospective investors on 16-6- nliffeararbasis, for them to consider an investment in SME Tech Fund (the "Fund"), a scheme of RVCF Trust- II ("Trust" or "RVCFT-II"), a contributory trust organized under the Indian Trusts Act, 1882 which shall apply to be registered with Securities and Exchange Board of India ("SEBI") as a Venture Capital Fund ("VCF") under the SEBI (Venture Capital Funds) Regulations, 1996 ("Regulations"), and may not be used for any other purpose. This Memorandum may not be reproduced or provided to others without the prior written permission of the RVCFT - II. The directors of the Investment Manager accept responsibility for the information contained in this Memorandum. To the best of the knowledge and belief of the directors of the Investment Manager (who have taken all reasonable care to ensure that such is the case) the information contained in this Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e winding up of the Trustee, as contemplated in Clause 5.5.2.2. above. 12.2.3 The Trustee may at any time prior to the term of the Scheme, wind up the Scheme upon such terms and conditions ass may be specified in the Memorandum. 12.3 Procedure on termination: in the event of the Trust/scheme being terminated under clauses 12 and 12.2 above mentioned the trustee shall: 12.3.1 take all practical steps to sell all the non-cash assets of the Trust Fund in the manner the Trustee deems fit or advisable; 12.3.2 Shall commence arrangements to pay all the liabilities of the Trust/Scheme(s); 12.3.3 return to the extent of the available cash in the Contribution Fund, all outstanding interest in the Scheme in proportion to the percentage of the Capital Contribution held by the respect Contributors immediately prior to the date of termination of the Trust/Scheme; and 12.3.4 distribute Initial settlement, Accretions thereto to the Settlor or their respective nominees and assigns. 12.3.5 distribute the residual Fund Investments in specie as determined by the Trustee in consultation with the Investment Manager of the Trust." The ld. CIT(A) is justified in taking into view that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year in the hands of the other person i.e. the beneficiary or the trustee. The ld. CIT(A) has rightly taken view that the assessee trust is received some amounts under revocable transfer of asset where the AO failed to note that no income is charitable to tax in the hands of the assessee but it is charitable to tax in the hands of the beneficiaries and any income arising to any other in such revocable transfer of AOP which charitable to income tax as the income of the transferor and not in the income transferee where the income received by the assessee trust was charitable to tax in the hands of contributors/beneficiaries and not in the hands of the assessee. The AO contentions that the investment was available for free use by the assessee is not correct. The ld. AR for the assessee pointed that the interest of the other beneficiary is the evident of default clause where the circular is to be considered. In support, reliance was placed in the following decision in the case of CIT vs. SAE Head Office Monthly Paid Employees Welfare Trust (2004) 141 taxman 364 ( Delhi Trib.). It is a clear definition that the income arising to any person by virtue of revocable transfer of assets shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers thereof. If the ITO has assessed a wrong person, say individual instead of AOP, he is not precluded, in contradistinction to the 1922 Act, to seek to assess the right person under the 1961 Act. The Hon'ble Court made it clear that wherever such on option is given under the 1961 Act, it has been specifically provided, as in s.183 and that under the 1961 Act, tax has to be levied on the right person, irrespective of benefit to Revenue. In the present case, however, we are concerned with a case of assessment of representative assessee or the person in respect of whom some other person is considered as representative assessee. Sec.161(1) by implication permits assessment of either the beneficiary or the Trustee. When the Trustee is assessed as representative assessee in respect of income received on behalf of the beneficiary, the section provides that tax shall be levied upon and recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him. In our view, therefore, the decision of the Hon'ble Supreme Court in the case of Ch. Atchaiah (supra) will not be of any assistance to the plea of the revenue in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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