AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 328
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.... u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 22/12/2016 & 18/12/2017 respectively by the ld. Income Tax Officer-21(1)(2) / 21(1)(4), Mumbai (hereinafter referred to as ld. AO). Identical issues are involved in both these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. 2. With the consent of both the parties, the appeal for Asst Year 2015-16 in ITA No. 887/Mum/2020 is taken up for adjudication first. 3. The revenue has raised the following grounds of appeal before us :- 1."On the facts and circumstances of the case and in law , the Ld CIT (A) erred in changing the status of assessee as 'TRUST and not an AOP and allowing expense of 7,74,25....
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....ecurity Receipt Holders (SR Holders) as per the offer document issued. The contributory SR Holders do not have any inter se agreement between them but only with the Trust. These contributions are revocable within the meaning of section 61 read with section 63 of the Income Tax Act, 1961. These contributions are utilised for acquiring financial assets. These financial assets are realised over a period of time and distributed among the SR Holders as per the provisions of offer document / trust deed after adjusting the management fees and other expenses incurred by the trust. As per the trust deed, the beneficiaries are the persons who are SR Holders and are identified on the date of the trust deed. In the case of the assessee trust, the share....
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....by the ld. AO. 5. The ld AO rejected the contentions of the assessee on the following grounds :- a) The assessee has declared itself as a private trust created through a trust deed dated 26.04.2010 by its trustee ARCIL. Subsequently by a contribution agreement dated 26.04.2010, it has entered into the activity of asset reconstruction and handling of NPAs of banks/Financial Institutions by Issuing SRs only to QIBs. b) During the year under consideration, the assessee has received income/(Loss) of Rs. 4,67,65,656/- after claiming a total expenses of Rs. 4,68,11,986/- on account of protection, preservation & insurance expenses and management fees from Such investment activity upon redemption of the principal amount of Security Receipts(SR....
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....e plea made by the assessee that it is a trust completely erroneous. h) The assessee is only an AOP as per section 2(31) having 8 QlBs as members. It is not a Trust within meaning of section 61 to 63. The motive behind creation of this Trust is income-earning asset reconstruction activity. After creation, it entered into contribution agreements with QlBs for sole purpose of acquisition of NPAs, transferring those at a profit and earning profit/income out of the same. Hence, it is like coming together of the wo or more persons by way of contribution of sufficient funds into an entity in order to invest in the specified entities with a sole intention to earn profits and the same can only be termed as AOP as per provisions of section 2(31). ....
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....he right hands, at the right rates of the taxation. The sums earned by the assessee on account of various investment/activities has been shown as its income, hence is rightly and appropriately taxable in its own hands and the trust is legally bound to include the same in the computation of income. o) The assessee has not established that the income earned by the have been offered for taxation by each of the beneficiaries in their respective return of income at the correct rates. p) Even if it is presumed that the assessee is a representative assessee not liable to be taxed in view of the provisions of section 161(1). However, in view of provisions of section 161(1A), the same is liable to be taxed in the hands of the assessee at maximum....
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....ubmitted that the assessee trust was set up pursuant to section 7 of SARFAESI Act and RBI guidelines issued thereon. It was specifically submitted that the trust was not created as a smokescreen to evade tax. Hence the assessee trust cannot be construed as an AOP as there is no inter se agreement between the names of the beneficiaries and their shares were known and have remained unchanged. Beneficiaries and each of them enter into separate contribution agreement with the assessee. It was also submitted that Circular No. 13/2014 issued by CBDT applies to Alternate Investment Funds only. 7. The ld. CIT(A) by placing reliance on the order of his predecessor in the case of Scheme A1 of ARCIL CPS 002 XI Trust for Asst Year 2013-14 dated 03.01.....