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TMI Blog2024 (10) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... s. For the reasons stated in these appeals, the aforesaid I.As are allowed and the delay caused in filing the appeals are hereby condoned. With the consent of learned counsel for the parties, the appeals are finally heard. 2. Learned counsel for the appellants has submitted that some of the appeals have been admitted on the substantial questions of law and some of the appeals have not been admitted, though the issue involved in all the appeals is similar and identical. Learned counsel for the respondent who is on caveat in ITA No.272/2022, therefore, the same is taken up as lead case for the purpose of decision of these appeals analogously. 3. Since similar issue is involved in the aforesaid appeals, therefore, these appeals are heard analogously and are being decided by a common judgment. For the sake of convenience the facts and grounds mentioned in ITA No.272/2022 are taken up. 4. These appeals have been filed by the appellants under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act of 1961) being aggrieved by the order dated 18.04.2022 passed in IT(SS)A No. 121/IND/2020 by the learned Income Tax Appellate Tribunal, Indore. The following substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connected appeals) made by the Assessing Officer on the ground of appellant's share in profit derived by various syndicates maintaining that share of profit is taxable in the hands of syndicate and not in the hands of the assessee as per the extant provisions of the Income Tax Act, 1961. 7. Heard learned counsel for the parties. In short, the question that arises for consideration in these appeals are whether these appeals involve any substantial question of law, as is required to be made out under Section 260-A of the Act of 1961, that being the prerequisite of admission of the appeal. 8. In the case of the assessee, a reference was made for special audit under Section 142 (2A) of the Act and accordingly, the special auditors submitted their report on 18.06.2018. The report of the special auditors, as produced by the assessee, was duly perused and considered by the AO and as also by the CIT (A). 9. Finally, the Assessing Officer made additions of Rs. 69,98,079/- in A.Y. 2010-11, Rs. 2,31,19,457/- in A.Y. 2011-12, Rs. 6,26,53,801/- in A.Y. 2012-13, Rs .5,89,58,701/- in A.Y. 2013-14, Rs. 5,81,39,858/- in A.Y. 2014-15, Rs. 8,48,67,951/- in A.Y. 2015-16 and Rs. 1,32,43,450/- in A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessments of syndicates. The CIT (A) further held that the assessee could have, at the best, been assessed in respect of his share in income of such syndicates but even that could not be taxed due to the specific provision of section 86 of the Act, which provides that Income-Tax shall not be payable by the assessee in respect of his share in the income of "Association of Persons" or "Body of Individuals" for the reason that, making any addition on account of income earned by syndicate in the hands of assessee is nothing but double taxation of the same income. The settled law is that right income should be added in the hands of the right person and in the right year. Finally, relying upon the decision of Hon'ble Supreme Court in the case of ITO Vs. CH. Atchaiah - (1996) 218 ITR 239 (SC) = (1996) 1 SCC 417, the CIT (A) deleted the additions made by the AO in the assessee's hands, for various assessment years, on account of (i) assessee's share in profit of syndicates and (ii) assessee's share in the inadmissible expenses incurred by such syndicates. 12. Aggrieved by the relief granted by CIT (A) to the assessee, Revenue preferred Appeal before the ITAT for the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rminate and therefore, the assessee's case would not fall under the provisions of sub-section (1) to section 167B of the Act. On the other hand, the case of the assessee would fall under the provisions of sub-section (2) to section 167B of the Act. In such a situation, the entire income of the syndicates, of which the assessee was found to be a member, would be chargeable to maximum marginal rate in accordance with clause (i) of subsection (2) to section 167B of the Act in the hands of such syndicates only. 8.3.4 We find that since all the subject syndicates are liable for charge of tax at the maximum marginal rate and therefore, the first exclusion as contemplated in clause (b) of the first proviso to the section 86 read with clause (a) of the first proviso thereof would have no application. For the second proviso to section 86, we find that the income of the syndicates are, undisputedly, chargeable to tax under section 167B of the Act and therefore, such proviso would also not apply in the instant case. In other words, by having a combined reading of section 167B, section 86 and section 67A, it can be safely concluded that the share of profit of the assessee in various syndica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be added under section 67A of the Act, but again, after making such addition, the necessary relief in accordance with the provisions of section 86 ought to have been granted by the AO to the assessee which has not been so done in the instant case. 8.3.7 In our view, even if for any reason the Revenue failed to make any assessment in the hands of the syndicates, then also the income, which is otherwise chargeable to tax in a different tax entity i.e. the syndicate, cannot be added to the income of the assessee. We find that unlike under section 3 of the Income-Tax Act, 1922, in the present Income Tax Act, 1961 there is no such discretion or option available to an assessing officer as regard to taxing of any income earned by an AOP either in the hands of AOP or its members. Now, the assessing officer, subject to the provisions contained in ss. 67A, 86 and 167B is statutorily bound to make the assessment only in the hands of AOP and no addition, on the count of share of profit of a member in the AOP, can be made in the hands of such member. For such proposition, we rely on the decision of the Hon'ble Apex Court in the case of ITO vs. Ch. Atchaiah - (1996) 218 ITR 0239 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate and known [other than a company or a cooperative society or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India], whether the net result of the computation of the total income of such association or body is a profit or a loss, his share (whether a net profit or net loss) shall be computed as follows, namely :- (a) any interest, salary, bonus, commission or remuneration by whatever name called, paid to any member in respect of the previous year shall be deducted from the total income of the association or body and the balance ascertained and apportioned among the members in the proportions in which they are entitled to share in the income of the association or body ; (b) where the amount apportioned to a member under clause (a) is a profit, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be added to that amount, and the result shall be treated as the member's share in the income of the association or body ; (c) where the amount apportioned to a member under clause (a) is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroverted by the Revenue, even in respect of some of the syndicates, separate assessments have already been framed by the various assessing officers u/s. 144/153C r.w.s. 153A of the Act and while making assessments in the hands of such syndicates, the amount of undisclosed income earned by these syndicates, have already been determined. 18. Besides the above findings, it is also pertinent to mention that it is a well settled legal position that as per clause (a) of proviso to section 86 of the Act r.w.s 67A of the Act, if the assessee is a member in AOP/BOI and income earned from such AOP/BOI have been offered to tax, then, the share received by the assessee from such AOP/BOI after payment of due taxes cannot be taxed again in the hands of the recipient assessee. 19. The CIT (A) as well as the ITAT referred to the legal position rendered by the Hon'ble Supreme Court in the case of ITO vs. Ch. Achatalya (supra) and took the view that the income derived by various syndicates in which the assessee was found one of the members, was required to be assessed in the hands of such syndicates only and a direct assessment in the hands of the assessee could not have been made in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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