TaxTMI 
TaxTMI 
TaxTMI 
2012 (7) TMI 583
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.... effective from 1.4.1985 and ignoring the fact that the trust is having business income." 3 The assessee has filed its return of income in the status of specific trust wherein the shares of the beneficiaries are determinate. The assessee trust has let out the premises situated at Baldota Bhavan vide lease agreement dt 29.8.1990 to Central Warehousing Corporation. During the financial, the assessee received license fee of Rs.. 15,51,812/- from Central Warehousing Corporation whereas the assessee has paid rent of Rs. 14,244/- to M/s Baldota Brothers, the landlord of the property. The Assessing Officer noted that the income of the beneficiaries of the trust is more than the limit for taxation i.e above Rs. 50,000/-. Therefore, the Assessing O....
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....e us, the ld DR has submitted that the CIT(A) has ignored the provisions of sec 161(1A) while adjudicating the issue. He has further submitted that the Assessing Officer made out a clear case that the business activity on the part of the assessee by taking the property in question lease and then sub let out the same on higher rent. Therefore, as per the provisions of sec. 161(1A), the income is assessable in the hands of the trust as income from business activity. He has further contended that the CIT(A) relied upon the decisions of the Hon'ble jurisdictional High Court whereas in the case of Marsons Beneficiary Trust and Ors (supra) the decision is based on the provisions of sec. 161(1) prior to its amendment. Therefore, the said decision ....
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....evenue has not filed any appeal against the order for the AY 2004-05. The ld AR has filed the copies of the orders of the CIT(A) for the AY 2004-05 and 2005-06. The ld AR has submitted that when the income has been accepted as income from other sources, then the provisions of sec. 161(1A) are not applicable. He has also relied upon the decision of the Hon'ble Gujarat High Court in the case of Harikrishna Family Trust v. Commissioner of Income-tax reported in 306 ITR 303. The has supported the order of the CIT(A). 5 We have considered the rival contention and relevant material on record. The short point of controversy before us is only the applicability of sec 161(1A) of the I T Act in respect of the license fee received by the assessee tru....
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....es any income of the trust consists of or includes profit and gain of business shall be charged to tax at the maximum marginal rate. 5.2 Thus, it is clear that the provisions of sec. 161 (1A) are applicable only when the income of the trust is business income. The CIT(A) has given the finding that the activity of subletting is a single isolated activity and there is no structured, systematic activity with frequency; therefore, the addition is not sustainable. The concluding part of the impugned order of the Commissioner of Income Tax(Appeals) in para 3.3 is reproduced hereunder: "3.3 I have carefully considered the facts of the case, reasoning of the AOI and the submissions of the ld AR of the appellant. The facts of the case are squarely....
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....business activity of taking and sub letting the property on rent/lease. 6 In the case of Harikrishna Family Trust (supra),, the Hon'ble Gujarat High Court recorded an identical facts in para 9 and held in para 12 & 13 as under: 9 The basic facts which are not disputed, are that the assessee-trust is merely a lessee of the property and has sub-let the property after completing the partly constructed building which the assessee-trust had taken on lease. In the circumstances, in the absence of the assessee-trust being the owner of the property, there can be no question of taxing the rental income from the said property in the hands of the assessee-trust under the head "Income from house property". To the aforesaid extent, the findings recorde....