TMI Blog2022 (11) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 entitled to recover their contributions over a specified period, and are entitled to the income from their contributions, the settlement of the trust should be disregarded for the purpose of tax, and the income thereof taxed as through it had directly arisen to the contributors. In the case of a revocable trust, income shall be chargeable to tax only in the hands of beneficiaries/contributors. Trust was not created for limited time where the trustee is revocable and the funds were to be return back on the termination of the beneficiary. Assessee further produced a few document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... butors/beneficiaries as each of them entered into separate contribution arrangement with the assessee. The AO s findings are baseless and unjustified that the investment was available for free use by the assessee is not correct and the AO s action in the impugned assessment order for the year cannot be sustained in this regard and we uphold the order passed by the ld. CIT(A) where the assessee trust is revocable trust the assessee holding this amount for the benefit of the contributors and beneficiaries only the each distribution to the fund has made the contribution on the condition that the initial contribution along with any income or gain arising on the investment made from his contribution would be return to the contributor upon the sale of investment and the contribution is nothing to a revocable transfer has defined in section 63 of the Act and in the entire asset will be contributed to the contributors and dissolution of the assessee trust after expiry. Appeal of the Revenue is dismissed. - ITA. No. 198/JP/2022 - - - Dated:- 31-10-2022 - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri Anil Goyal (CA) And Shri Anurag Goyal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee is a trust and same is registered as venture capital fund by SEBI vide order dated 25.07.2008 under Venture Capital Funds Regulations, 1996 subject to the conditions specified in the Act and in the regulations made there under. The basic object of the trust is to do venture capital funding under the regulations of the SEBI Regulations, 1996. It is raising resources to make available venture capital assistance to portfolio Companies, so as to achieve long term capital appreciation. During the year under consideration assessee has made investment in the scheme of SME Tech Fund. The fund of assessee RVCF Trust-II is created by a indenture of trust between Rajasthan Asset Management Company Private Limited ( Settlor ) and Rajasthan Trustee Company Private Limited ( Trustee ). The trust is not doing any charitable activity as define u/s 2(15) of the I.T. Act. 6. The Assessing Officer finding that the various income on which tax has been deducted at source is assessable in the hands of assessee as discussed supra and ld. AO has observed that TDS credit claimed by the assessee is allowable, if at any stage of appeal of any proceedings it has been held that the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sharer or the beneficiaries but certainly not in the hands of the Trustees which has already been shown in the present case. Accordingly, AO s action in impugned assessment order passed u/s 143(3) of the Act cannot be justified. Therefore, addition made is hereby deleted as assessee cannot be taxed as AOP and assessee s appeal in Gr. No. 2 and 3 is hereby allowed. 8. Being aggrieved by the order of Ld. NFAC/ CIT (A), the Revenue preferred an appeal before us. The Ld. AR for the assessee has reiterated its arguments in written submission for all the grounds which are as under:- Background RVCF is a close ended fund organised as a Trust established under the Indian Trust Act, 1882. (Copy of registration certificate issued by SEBI at Paper book page No. 1) The Fund has invested in securities of the portfolio companies to achieve long term capital appreciation and receives income from the sale of such investments. For the assessment year 2011-12, RVCF filed its Return of Income ( ROI ) on 29th September 2011, declaring Nil income and claimed a refund of Rs 33,21,210 in respect of Taxes Deducted at Source ( TDS ). (Copy of Income tax return and audited a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oportion to amount of capital contributed by them in the assessee Trust. The Trustees and the Settlers have entered into a tripartite contribution agreement with each of the contributors/beneficiaries. We are enclosing herewith a sample copy of contribution agreement entered into with Rajasthan State Industrial Development and Investment Corporation Limited (RIICO). ( Copy enclosed at Paper book page no 70 to 94) The names and percentage holding of each Contributors is as under: ( As given in paper book page no. 202) Particulars Amount % Contribution a Rajasthan Asset Management Company P. Ltd 10,000 0.0017 b. Rajasthan Asset Management Company P. Ltd [880.31 (P.Y. 1000) Class B Units of Face Value Rs 100 each] 88,931 0.015 c. Union Bank of India [257560.92 )P.Y. 165000) Class A Units of Face Value ofRs 100 each] 2,57,56,092 4.35 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome 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/contributor of the assessee Trust is determinate. The assessee is holding this amount for the benefit of the contributors/beneficiaries only. These contributors/beneficiaries have offered such income for taxation in their hands. By virtu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-resident specified in [***] subsection (1) of section 9, the agent of the non-resident, including a person who is treated as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, the object of which is to produce income, profits or gains. Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout any association with any other beneficiary. We rely on the following decisions in favour of the assessee: A. DCI, Bangalore v. 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 the fact that the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either case. (2) Notwithstanding anything contained in sub-section (1), all 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution: 2.5.1 The contributor shall be entitled to return of its Capital Contribution upon: 2.5.1.1 distributions as per clause 8 2.5.1.2 dissolution of the Fund as per Clause 9 Pape book page no. 77 d. From the above overwhelming documentary evidences, it is clear that: The Trust was created for a limited life period and it was not a perpetual trust. The Trustees were holding the funds for the benefit of contributories/beneficiaries only The trust was to be terminated after winding up of all the schemes of the trust. There was also a clause for premature termination of the Trust The Term 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 contribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Industrial Dev and Investment Corp Ltd for AY 2011-12. b. Confirmation letter of State Bank of Bikaner and Jaipur regarding completion of assessment proceedings for AY 2011-12. c. Assessment order of Technology Development Board for AY 2011-12 d. Assessment order of Andhra Bank Ltd for AY 2011-12 e. Assessment order of General Insurance Corp of India for AY 2011-12 f. Confirmation letter of Bank of Baroda for AY 2011-12 In view of above documentary evidences, it is submitted that all the contributors/beneficiaries have fully discharged their liability under the provisions of income tax act and the same income cannot again be taxed in the hands of the assessee. Reliance is placed on Circular No. 157 dated 26.12.1974: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y entitled but which they have omitted to claim for some reason or other ; - freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. This circular supports the case of the assessee that all the legitimate reliefs and deductions should be given to the assessee while computing his return of income. 9. In addition to the written submission the ld. Sr. DR opened the arguments with the definition of drawdown which is reproduced as under:- (1)the investment manager on behalf of the Trustee, shall make calls for contributions or on an as needed basis on all the contributors of the fund. 2. The contributor shall make the contribution in the manner as detailed below: a) The investment Manager, in the name 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 Inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndenture suspend or terminate the Defaulting Contributor's right to receive any Distribution. However, the Defaulting Contributor shall remain fully liable to the creditors of the Fund , to the extent permitted by law, for the amount payable by the Contributor as if such default had not occurred suspend or terminate the Defaulting Contributor's obligation and right to make future payments towards its Capital Commitment following the date of default, not allocate any items of income or gains to the Defaulting Contributor prohibit the Defaulting Contributor from participating in any subsequent Contributor vote, meeting, consent or decision to be made by the Trustee; recover or set off any cost incurred by the fund as a result of taking any of the actions set out above. In the event the units of a defaulting contributor are forfeited, 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 content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived tax in the hands of the trustee, the trust should be consider in the income earned and taxed in the beneficiaries. The ld. Sr. DR has took us to section 161 of the I.T Act which defines the recoverable transfer of asset. The ld. DR contended that the assessee-trust is recoverable transfer of asset if the default in their commitment and the trust becomes to be seized but the ld. CIT(A) observed that the trust is recoverable trust and where it is not repaid to the beneficiaries. Taking us to section 162 where the ld. Sr. DR contended that it is not the case of the assessee trust according to section 161 and 162 of the Act the taxation of the contributors in India, term of beneficiary and contributors has been used interchangeably where the contributor is an individual, association of persons, body of individuals or a trust and his total income is above Rs. 10,00,000/- then his total 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 63 of the IT. Act, 1961 are also not tenable. In this case, all the investors have transferred sum of money to RVCF Trust-II, assessee for subsequent investment as per RVCF Management. Out of this money all the investment were made by RVCF Trust-II, the assessee in its own name. Whatever profit earned from these investments the assessee has enjoyed the income. The assessee has further incurred administrative expenses and other expenses of Rs.2,94,76,248/-. Thus, the provisions of section 61 to 63 are not applicable as the investment made by the Investor is available for free use by assessee. So far as section 161 to 166 is concerned, these sections deal with the rate of taxes applicable to AOPs. Section 166 of the I.T. Act provides extra powers to the A.O. to assess income in certain circumstance directly in the hands of recipient of income. 12. The ld. AR for the assessee explained that the trust 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Mussalman Wakf Validating Act, 1913 (6 of 1913),] and which is not deemed under Explanation I to be a trust declared by a duly executed instrument in writing.] In no clause of section 160, it is mentioned that the assessee is a representative assessee i.e. the assessee does not fall under any clause of section 160. Further, the ld AR also just mentioned that the assessee is a representative assessee but would not substantiate has to under which clause the assessee is representative assessee as a result, I am the considered view that assessee's contention that it is a representative assessee is not tenable. Taking into consideration of the facts and circumstances of the present case and the submissions made by the ld. Sr. DR and the ld. AR for the assessee, we are of the view that the RVCF is a close ended fund organized as a trust established under the Indian Trust act, 1882 where the fund is invested in securities of the portfolio companies to achieve 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state or other jurisdiction where, or to any person or entity to whom, it is unlawful to make such offer or solicitation. Investments in the Units of the Fund are being offered to Indian residents, which shall pool in monies from high net worth individuals, corporate and financial institutions in India. Investment in the Units will involve significant risks due, among other things, to the nature of Fund investments. See Risk Factors for a discussion of certain risk factors that should be considered by prospective investors. Investors should have the financial ability and willingness to accept the risks and lack of liquidity which are characteristic of the investments described herein. There will be no public market for the Units and they will not, subject to certain limited exceptions, be transferable. In making an investment decision, investors must rely on their own examination of the Fund Documents (as defined hereinafter) and the terms of the offering, including the merits and risks involved. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon him in his representative capacity only, and the tax shall, subject to the other provisions contained in this Chapter, 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. 53 [(1A) Notwithstanding anything contained in sub-section (1), where any income in respect of which the person mentioned in clause (iv) of sub-section (1) of section 160 is liable as representative assessee consists of, or includes, profits and gains of business, tax shall be charged on the whole of the income in respect of which such person is so liable at the maximum marginal rate : Provided that the provisions of this sub-section shall not apply where such profits and gains are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him. Right of representative assessee to recover tax paid. Section 162. ( 1) Every representative assessee who, as such, pays any sum under this Act, shall be entitled to recover the sum so paid from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his business and not as a principal. Explanation.-For the purposes of this sub-section, the expression business connection shall have the meaning assigned to it in Explanation 2 to clause (i) of sub-section (1) of section 9 of this Act. (2) No person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the Assessing Officer as to his liability to be treated as such. Section 164 of Income Tax Act Charge of tax where share of beneficiaries unknown 164. (1) Subject to the provisions of sub-sections (2) and (3), where any income in respect of which the persons mentioned in clauses (iii) and (iv) of subsection (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as relevant income , part of relevant income and beneficiaries , respectively), tax shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant income as is not exempt under section 11 or section 12, as if the relevant income not so exempt were the income of an association of persons : Provided that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. (3) In a case where the relevant income is derived from property held under trust in part only for charitable or religious purposes or is of the nature referred to in sub-clause (iia) of clause (24) of section 2 or is of the nature referred to in sub-section (4A) of section 11, and either the relevant income applicable to purposes other than charitable or religious purposes (or any part thereof) is not specifically receivable on behalf or for the benefit of any one person or the individual shares of the beneficiaries in the income so applicable are indeterminate or unknown, the tax chargeable on the relevant income shall be the aggregate of- (a) the tax which would be chargeable on that part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 11 or section 12 by virtue of the provisions contained in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. Explanation1.-For the purposes of this section,- (i) any income in respect of which the persons mentioned in clause (iii) and clause (iv) of sub-section (1) of section 160 are liable as representative assessee or any part thereof shall be deemed as being not specifically receivable on behalf or for the benefit of any one person unless the person on whose behalf or for whose benefit such income or such part thereof is receivable during the previous year is expressly stated in the order of the court or the instrument of trust or wakf deed, as the case may be, and is identifiable as such on the date of such order, instrument or deed; (ii) the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is received shall be deemed to be indeterminate or unknown unless the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable, are expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king. The ld. AR for the assessee submitted that the assessee is only managing fund, the above 12 contributors who gave the funds to the assessee are beneficiaries the assessee has produced documentary proof in paper book at page 200 to 203 where it is clearly explain that the accumulated fund is listed and unlisted shares this more or less like MU of trust which is reproduced as under:- Particulars Amount % Contribution a Rajasthan Asset Management Company P. Ltd 10,000 0.0017 b. Rajasthan Asset Management Company P. Ltd [880.31 (P.Y. 1000) Class B Units of Face Value Rs 100 each] 88,931 0.015 c. Union Bank of India [257560.92 )P.Y. 165000) Class A Units of Face Value ofRs 100 each] 2,57,56,092 4.35 d State Bank of Mysore [257901.15 (P.Y. Nil )Class A Units of Face Value Rs 100 each] 2,57,90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee further explain that as per section 63 of the Act the asset which are in the nature of revocable of the asset where the assessee is only transferor. The ld. AO during the assessment proceedings failed to consider the submissions made by the assessee u/s 10(23FB) of the I.T. Act. The ld. DR relied upon the findings of the AO and does not agree with the assessee trust is a representative trust of beneficiaries according to section 160 of the I.T. Act. The ld. CIT(A) has recorded the findings in page 24 of his order where the ld. CIT(A) has considered the assessee s case taking into consideration of the case laws and circulars which is directly applicable to the assessee s case, the main issue is whether the assessee s status to be treated as representative assessee or AOP. Taking into consideration the facts, circumstances, documents and orders of the lower authorities, the AO has wrongly given interpretation as AOP but section 160(1)(4) of the Act it is clearly covered that the assessee stated as representative. The Assessing Officer has failed to consider the submission where the definition of section 2(31) clause 4 where the association of persons have been defined. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 information. Unless otherwise indicated herein, the opinions expressed in this document are those of the directors of the Investment Manager. By accepting delivery of this Memorandum, each prospective investor agrees to the foregoing. 15. The ld. AR for the assessee has relied upon the case laws which has been produced during the appellate proceedings where the assessee is AOP or representative of the assessee. The ld. CIT(A) has relied upon the following order:- DCIT vs. India Advantage Fund-VII (50 taxmann.com 350)] ITO vs. India Advantage Fund-I 62 taxmann.com 86 CIT vs. P. Sekar Trust (2009) 180 Taxman 277 (Madras) CIT vs. TVS Shri Ram Growth Fund (2020) 121 taxmann.com 238 ( Madras and CBDT Circular No. 14(XL)- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 assessee trust is revocable trust which are supported and the definition of section 62 and 63 of the case, the case laws and paper book at page 20 which is clearly explain that the trust funds which is reproduced as under:- 4.1 Vesting: The trust fund shall vest in the trustee and the trustee shall hold the same upon trust for the benefits of the contributors subject to the powers, provisions, agreement and declarations here contained. 4.2 Investment restrictions all investments made or to be made by the trustee or the investment manager on behalf of the trust or its schemes shall be subject to the restrictions specified in the memorandum a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be chargeable to 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 justified. In this regard, our reference was drawn to the decision of the case of DCIT vs. India Advantage Fund-VII reported in (2014) 50 taxmann.com 350 (Bangalore- Trib.) wherein the Bench has held in para 68 73 which are reproduced as under:- 68. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 present case. Taking into consideration of orders of lower authorities documentary evidence assessee trust is revocable trust. Hence, ground No. 2 of the Revenue appeal is dismissed and uphold the order of the ld. CIT(A) that the RVCF Trust is revocable trust. The trust was created for a definite time and the trust was created for the last end of the final scheme of the trust. Taking into consideration of clause-4, the trust fund of the indenture of trust the assessee RVCF is just holding the fund of the beneficiaries and contributors of the private placement memorandum. Taking into consideration the memorandum in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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