TaxTMI 
TaxTMI 
2018 (5) TMI 1588
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.... valid trust were not fulfilled. Ground II: Holding that the trust was not revocable a. On the facts and in the circumstance of the case and in law, the CIT(A) erred in rejecting the applicability of sections 61 to 63 of the Act to the contribution made by the beneficiary to the Appellant. Ground III: Diversion by overriding title a. On the fads and in the circumstances of the case and in law, the CIT(A) erred in holding that the income of the Appellant is not diverted at source to the beneficiary/ PTC holder on the alleged ground that an overriding title cannot be created by voluntary act of parties and, hence, not chargeable to tax in the hands of the Appellant. Ground IV: Treating the status of the appellant as "AOP" a. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding the status of the Appellant as that of an "Association of Person" constituted by ITSSL Loan Trust, Canara Robeco Mutual Fund (beneficiary / PTC Holder) and IDBI Trusteeship Services Ltd. Ground V: Invalidity of return of income a- On the facts and in the circumstances of the case and in law, the CIT(A) erred in treating of income filed by IL&FS Trust Compan....
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....an and interest from the borrower. The trust was created by putting initial corpus of Rs. 1000/- and as per the trust declaration, the beneficiary of the trust is Canara Robeco Mutual Fund and it had issued Pass Through Certificates (PTCs), a paper instrument against their contribution of approx. Rs. 100 crores. During the course of assessment proceedings, the assessee failed to furnish the details of loan extended by IL&FS Services Ltd. or the exact amount of debt securitised/purchased by the assessee. However, the same was obtained by the AO from IL&FS Services Ltd. by issuing notice u/s 133(6) of the Act. The AO after examining the agreement observed that Soul Space Projects Ltd. had been granted a loan of Rs. 100 crores carrying interest @ 11.50% per annum. The assessee submitted before the AO that it was a private trust and the interest income earned by it, belonged to the beneficiary who contributed money in the trust. It was stated that the income earned by the assessee-trust was taxable in the hands of the beneficiary and the same is governed by the provisions of section 161(1) of the Act, as per which the income arising in the hands of a determinate trust are liable to be....
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....to be taxed at the maximum marginal rate and income is to be assessed as income from business by applying the provisions of section 161(1A), it becomes incumbent to also apply the provisions of section 67A of the Act which lays down the methodology of computing the member's share of income in an AOP or BOI. Thus the Ld. CIT(A) observed that the appellant had paid interest of Rs. 9,43,63,906/- which is exactly the same as the interest earned by it. Therefore, he directed the AO to grant deduction of this amount paid to the member u/s 67A of the Act. 5. Before us, the Ld. counsel of the assessee refers to the decision in Indian Corporate Loan Securitisation Trust v. ITO (2017) 80 taxmann.com 315 (Mumbai-Trib) and submits that the issue in the present appeal is covered in favour of the assessee by the above decision. 6. On the other hand, the Ld. DR submits that the claim that IL&FS Trust Company has erroneously filed the return of income cannot be accepted because if it has filed the return of income erroneously, then the question arises whether a separate return has been filed for the assessee by its trustees i.e. IDBI Trusteeship Services Ltd. If IDBI Trusteeship Services Ltd ha....
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....ributed to the beneficiaries of the assessee-trust i.e. Mutual Funds through the PTCs, in proportion to their interest. The assessee filed its return of income declaring taxable income at Nil, as according to the assessee, the amounts received by the assessee from Yes Bank and in turn paid by it to the beneficiaries in proportion to their investment in PTCs as pay outs in a pre-determined manner were not chargeable to tax in the hands of the assessee. The assessee claimed that it received the interest for and on behalf of the benefit of the beneficiaries and since the income of the beneficiaries was exempt from tax u/s 10(23D), the interest received by it for their benefit was not chargeable to tax in its hands in terms of provisions of section 160(1)(iv) r.w.s. 161(1) of the Act. The AO held that the trustee and seven beneficiaries, all financial institutions, had come together and had subscribed certain amount of money for earning profit, thereby constituting an AOP. The AO further held that the assessee was an AOP of the seven Mutual Funds and the provisions of section 160(1)(iv)/161(1) applicable to a trustee as a representative assessee did not apply to the assessee in the cas....