TaxTMI 
TaxTMI 
2025 (1) TMI 1708
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....med by Id. CIT(A). 2. In the facts and circumstances of the case and in law, the Id. CIT(A) has erred in confirming the action of the Id. AO/CPC in calculating surcharge amounting to Rs. 91,500/-, on the total income of the assessee trust, for the year under consideration. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the Surcharge of Rs. 91,500/- imposed by Id.AO/CPC and confirmed by Id. CIT (A). 3. The assessee trust craves its rights to add, amend or alter any of the grounds on or before the hearing. 2. The brief facts of the case are that the assessee is a private trust with Ms. Mantika Singhal as sole beneficiary filed its return of income at Rs. 7, 68,240/- on 27.07.2022. The return of the assessee trust was processed vide intimation u/s. 143(1) of the Act vide dated: 24.05.2023, wherein a surcharge @ 37% was charged amounting to Rs. 91,500/- and interest thereon amounting to Rs. 7,012/-. Against this intimation, the assessee filed an application u/s. 154 of the Act before the CPC, Bengaluru, but the same was also dismissed. The assessee being aggrieved with the....
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....ct manages property on behalf of another) appointed by or under any order of a court, receives or is entitled to receive, on behalf or for the benefit of any person, such Court of Wards, Administrator-General, Official Trustee, receiver or manager; (iv) in respect of income which a trustee appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise [including any Wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913),] receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees; (v) in respect of income which a trustee appointed under an oral trust receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees. Explanation 1.-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),] shall be deemed, for the purposes of clause (iv), to be a trust declared by a duly executed instrument in writing if a statement in writing, signed by the trustee or trustees, setting out the purpose or purp....
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....on 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 benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him. (2) Where any person is, in respect of any income, assessable under this Chapter in the capacity of a representative assessee, he shall not, in respect of that income, be assessed under any other provision of this Act. 6. In view of the provisions of section 161(1) of the Act, Every representative assessee, as regards the income in respect 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....
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.... for the benefit of the children of his sister. The shares of beneficiaries were specific and determined and trustees were only the representatives of the assessee-beneficiaries. The Assessing Officer, invoking the provisions of section 161(1A), assessed the trustees in the status of AOP and taxed the total income for the assessment year 1997-98 at the maximum rate. On appeal, the Commissioner (Appeals) relying on the judgment of the Supreme Court in CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555, held that the tax was leviable at marginal rate and not at maximum rate. The Tribunal concurred with the finding of the appellate authority. [1994] 74 TAXMAN 392 (SC) CIT vs. Smt. Kamalini Khatau Section 166, read with sections 5,161 and 164, of the Income-tax Act, 1961 - Trustees - Direct assessment or recovery not barred - Assessment year 1969-70 - Whether revenue has option to assess and recover tax from either trustees or beneficiaries of a discretionary trust in respect of such income thereof as has been distributed and received by beneficiaries in course of accounting year - Held, yes - Whether section 166 is merely clarificato....
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.... tax shall be levied upon the income of a discretionary trust as if it were the total income of an AOP except that if it or part of it is actually received by a beneficiary, it or that part of it becomes chargeable to tax at the rate applicable to the total income of the beneficiary if that course is beneficial to the revenue. Section 164 does not create a charge on the income of a discretionary trust. The word 'charged' in the context in which it is used in section 164 means only 'levied'. Section 164 does not make the trustee of a discretionary trust liable to assessment or the recovery of tax on the income of the trust. It is section 161, therefore, which has to be read to make the trustee even of a discretionary trust liable to assessment and recovery of tax on income received by him as a trustee. Further, section 161 protects the representative-assessee by stating that assessment upon him shall be deemed to be only in his representative capacity, by mandating that tax can be levied upon and recovered from him only in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him and by stating that he may not ....
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....overable from him. Such income would squarely fall within the broad sweep of total income under section 5 and the beneficiary would be liable to assessment and recovery of tax thereof under section 4. In the absence of an express provision it is difficult to hold that the beneficiaries of a discretionary trust are not liable to be assessed in respect of their interest in the trust properties even when such interest is identified in the accounting year and that the trustees who represented them alone are so liable so that tax can be recovered only from them. Thus, the revenue has the option to assess and recover tax from either the trustees or the beneficiaries of a discretionary trust in respect of such income thereof as has been distributed and received by the beneficiaries in the course of the accounting year. 9. In view of the above, order of the Ld. Addl./JCIT (A)-11, Mumbai is set aside and intimation issued by the CPC, Bengaluru issued u/s. 143(1) of the Act found to be erroneous and without following the procedure laid down by the statute. Moreover, the amount of tax even suo-moto offered by the assessee found to be on higher side considering the provisi....