TaxTMI 
TaxTMI 
2022 (11) TMI 241
X X X X Extracts X X X X
X X X X Extracts X X X X
....peal as prescribed under rules may be filed before the Income Tax Appellate Tribunal, Jaipur within 30 days i.e. on or before 13.06.2022. In view of the above the physical appeal was filed on 19.05.2022 well before 12.06.2022 as directed in the said mail. However, if there is any delay on our part, kindly condone the delay." 3. We have heard the rival contentions and perused the materials available on record. The prayer as mentioned above by the Revenue for condonation of delay of 3 days has merit and we concur with the submission of the Revenue. Thus the delay of 3 days in filing the appeal by the Revenue is condoned. 4. The Revenue raised the following grounds of appeal:- "1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in treating the assessee as representative assessee while it should be treated as AOP, because it has derived income which is other than the income derived from investments as specified in section 10(23FB) of the Act. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in treating it as recoverable trust." 5. Brief facts of the case are th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere are surplus of income of Rs. 4,14,11,686/-, which is taxable in the hands of assessee as discussed above. The assessee is being as AOP and income of the assessee is assessed as per provisions of section 164 of I.T. Act. at Maximum Marginal Rate. 7. Being aggrieved by the order of the ld. AO the assessee preferred an appeal before the ld. NFAC/ CIT(A) and the findings of the ld. NFAC/CIT(A) are reproduced as under:- " I have also gone through the above judgments including the CBDT Circular No. 14 (supra) and found that they are directly applicable to assessee's case here. I have already prima facie decided in favour of assessee in Gr No. 1 in para 1.2.2 above. Here that assessee is able to demonstrate that the corresponding part of income (particularly interest income earned on FDRs) pass over to beneficiaries/ contributors who incorporated the same in their income for the year in accordance with section 161 to 164 of the Act and as per the provisions of section 60-63 of the Act ( dealing with recoverable transfers) income is required to be taxed in the hands of the beneficiaries. Therefore assessee's status is to treated as "Representative Assessee"because ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ution of the trust is the pooling of resources of various entities with a view to promote investing into venture capital undertakings, which supports entrepreneurship and innovations. What is Venture Capital: Venture capital (VC) is risk capital provided to early-stage, high-potential, high risk, growth and start-up companies. The venture capital fund invests money by owning equity/bonds in the companies it invests in, which usually have innovative idea or technology or attractive business model. Venture capital funds helps in promoting innovations and entrepreneurship. Venture capital is also associated with job creation the knowledge economy, and used as a proxy measure of innovation within an economic sector or geography. What is SME Tech fund: SME Tech Fund is a scheme of the assessee trust through which all the investments are made in Venture Capital Undertakings. It is governed by Private Placement Memorandum(PPM) furnished to prospective investors on a confidential basis, for them to consider an investment in SME Tech Fund. (Copy enclosed at paper book page no 35.to 69.) Contributors/Beneficiaries: The assessee trust has total number of 12 contributors/bene....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss A Units of Face Value of Rs 100 each] 10,29,08,832 17.36 Total 59,26,60,000 100% During the year the assessee had income from various sources as per details given in the Profit & Loss Account of the company. Most of the income was distributed to the Contributors/Beneficiaries on pro rata basis in the ratio of their capital contribution. The balance amount was carried forward to the Balance Sheet. Therefore, the assessee filed return of income 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) o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....round No. 1 of the department: 'Whether on the facts and circumstances of the case and in law, the CIT(A)was justified in treating the assessee as Representative assessee while it should be treated as AOP, because it has derived income which is other than the income derived from investments as specified in section 10(23FB) of the Act.' Submissions of assessee 1. The assessee is a representative assessee (Sec.160(1) ): a. It 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 w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mbers of alleged AOP: On page no. 3 of the assessment order, the learned AO has held that the Fund should be taxed as an AOP on commercial lines, without specifying the basis for forming this opinion. He has also not specified as to who were the members of the alleged AOP and has not specified as to how the conditions relating to formation of an AOP are satisfied in the present case. b. There was a separate agreement between the assessee and each beneficiary: It is submitted per details 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id that the beneficiaries have come together. All that the beneficiaries have done is invested in their individual capacity in the units of the Fund. The investors have not associated, there is no joint action, they have not joined together. h. We rely on findings given by learned CIT(A)/NFAC on this issue, in para no. 1.5.2 on page no. 31 and 32 of their order, holding that the AO has erred in taking status of the assessee as AOP disregarding the fact that each beneficiary has independently invested in RVCF-II without any association with any other beneficiary. We rely on the following decisions in favour of the assessee: A. DCI, Bangalorev.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. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... In the case of Commissioner of Income-tax, Coimbatore v. P. Sekar Trust*[2009] 180 Taxman 277 (Madras) ,(Copy at Case law paper book page no...79 to 90..) the following was held by the Hon'ble Madras High Court: Section 164 of the Income-tax Act, 1961 - Trust/trustees - Charge of tax where share of beneficiaries unknown - Assessment year 1989-99 to 1999-2000 - Whether section 164 gets attracted only when shares of beneficiaries are unknown - Held, yes - Assessee-trust was created for benefit of seven beneficiaries - Trust deed provided, inter alia, that 10 per 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, acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e transferor and shall be included in his total income. Transfer irrevocable for a specified period. 62. (1) The provisions of section 61 shall not apply to any income arising to any person by virtue of a transfer- (i) by way of trust which is not revocable during the lifetime of the beneficiary, and, in the case of any other transfer, which is not revocable during the lifetime of the transferee ; or (ii) made before the 1st day of April, 1961, which is not revocable for a period exceeding six years : Provided that the transferor derives no direct or indirect benefit from such income in 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-transfe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the sample agreement executed with one of the contributors/beneficiaries namely RIICO Ltd ( Copy at Pb page no. 70 to 94) which reads as under: Clause No. Paper book page no. 2.5 2.5 Return of Contribution: 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 ini....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of completion of assessment proceedings(Copy at Paper Book page 125 to 154) before AO/CIT(A)of the following contributors/beneficiaries: a. Copy of assessment order passed u/s143(3) in the case of one of the Contributor namely M/s Rajasthan 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. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re of getting a square deal from the department. d. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should- - draw their attention to any refunds or reliefs to which they appear to be clearly 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Default Amount * enforce the Defaulting Contributor's obligations through pursuing any rights and remedies the Fund may have against the Defaulting Contributor, including by taking legal or other action against the Defaulting Contributor as more fully set out in the Contribution Agreement and the Indenture * 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 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ale shares may be characterized as business income of considered as proceeds from a business activity." 11. If the trustee earned profit and the entire income of the trust will be taxed in the hands of the trust. The ld. Sr. DR wants to explain that any business activity or any proceeds from the business activity which has been received 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....venture capital undertaking is taxable in the hand of VCF. Thus, this amendment also support that all the income of the assessee is liable for tax. B) The assessee's submission that the income which is not arising out of specified sector is also not liable for tax due to the provision of section 161 to 166 read with section 61 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." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,1981, within a period of three months from that day; and (ii) in any other case, within three months from the date of declaration of the trust. Explanation 2. - For the purposes of clause (v), "oral trust" means a trust which is not declared by a duly executed instrument in writing [including any wakf deed which is valid under 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....with this offering to give any information or make any representations other than as contained in this Memorandum. If given or made, such additional information or representations must not be relied upon as having been authorized. This Memorandum does not constitute an offer to sell or a solicitation of an offer to purchase the Units described herein in any 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 mak....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct of which he is a representative assessee, shall be subject to the same duties, responsibilities and liabilities as if the income were income received by or accruing to or in favour of him beneficially, and shall be liable to assessment in his own name in respect of that income; but any such assessment shall be deemed to be made 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 benef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hall not be deemed to be an agent under this section in respect of such transactions, if the following conditions are fulfilled, namely:- (i) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and (ii) the non-resident broker is carrying on such transactions in the ordinary course of 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ust is the only trust so declared by him. (2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or which is of the nature referred to in sub-clause (iia) of clause (24) of section 2, or which is of the nature referred to in sub-section (4A) of section 11, tax shall be charged on so much of the 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 purpose....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ludes, profits and gains of business, the preceding proviso shall apply only if the income is 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: Provided also 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. 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 cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ciation and receives income from the sale of such investments. The ld. AR for the assessee submitted that the list of contributors where there are total number of 12 contributors / beneficiaries and details given in schedule, audited balance sheet before the ld. AO where these contributors have contributed different amounts to the assessee for the purpose of investing indenture of trust undertaking. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able 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. AR further submitted that the assessee has produced the contributors agreement of SME tech fund where there was no inter se agreement between the contribution and the assessee has individual agreement between trust and the contributor agreement SME tech fund in paper book at page 70 which is example shown by the assessee it is to be noted that looking into the scheme of beneficiaries that initial at the time of first closing of SME tech fund there were 6 beneficiaries, at the present it has under 12 beneficiaries the assessee has produced the scheme of beneficiaries in page 34 and 35 which is reproduced as under:- Scheme Beneficiaries: SME Tech Fun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0)] * 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)-35), dated 11-4-1955 Taking into consideration, the Assessing Officer has not given any justification for treating the assessee-AOP has not found or satisfaction investing in this regard given of the assessee and the ld AO failed to observe that the assesee is a Representative Assessee within the meaning of Clause(IV) of sec 160(1) of IT Act. The Ld CIT(A) taking into consideration that the each beneficiary is an independently invested in RVCF-II without any association with any other beneficiary trust. Hence, ground No. 4 of the Revenue appeal is dismissed. 16. Regarding Ground No. 2, whether the assessee trust is revocable. Considering the facts and circumstances of the case, the ld. CIT(A) has rightly observed that the assessee trust is a revocable trust stood in section 63 of the I.T. Act. The ld. AR for the assessee submitted that the assessee filed number of documentary evidence before the ld. CIT(A) and before us it is to be noted that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent 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 and in accordance with the regulations and the provisions of the Investment Management Agreement. Provided further, no investment shall be made in portfolio companies and securities, which could subject the trust or its schemes to incur any unlimited liability. 4.3 Investments in the name of the Trustee: All investment of the trust or its schemes shall be registered in the name of the trustee or the trust or the scheme, if permissible, as soon as reasonably practicable. The voting powers under the investments shall vest with the trustee." On perusing this memorandum of appreciation which is already been discussed from this documents, it is noted the 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. The ld. AR for the assessee further produced a few documents which show that the amount has been return to the assessee and where ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 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. Ground No. 8 raised by the Revenue is therefore held to be without any merit. 73. The reliance placed on the aforesaid circular, in our view, will not be of any use for the reason that the said Circular was not in force at the relevant AY w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 paper book at page- 35 and 44 which clearly explain the term of the fund and investment period and commitment period from the term of the fund shall be 8 years from the date of the first closing. Term may be extended for two additional lone year period upon the recommendation of the investment manager. The fund may be return back to the beneficiaries and taking into consideration of the contribution agreement where the assessee has been entered the agreement of RVCF trustee company limited. It is an example given by the ld. AR for the assessee where the trust is revocable trust and taking into consideration the contribution agreement in paper book at page 71 to 77 where in 2.4 the return of contribution clearly explains the dissolution of the funds where the contributor shall be entitled to return of its capital contribution upon the distributions or dissolution of the fund as per clause -9. The trust was created in the limited p....