TaxTMI 
TaxTMI 
2026 (7) TMI 561
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.... the Learned Assessing Officer ("Ld. AO") observed that KSN Trust had incurred loss under the head "Income from House Property" amounting to Rs.1,73,62,048/- and loss under the head "Income from Other Sources" amounting to Rs.1,66,15,605/-. Since the assessee was entitled to 70% share in the said trust, the assessee claimed loss under the head "Income from House Property" amounting to Rs.1,21,53,433/- and loss under the head "Income from Other Sources" amounting to Rs.81,30,924/- in its individual return of income. The Ld. AO disallowed the aforesaid claim of loss of the assessee and completed the assessment under section 143(3) r.w.s. 143(3A) and 143(3B) of the Act vide order dated 18.03.2021. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) allowed the appeal of the assessee holding that KSN Trust was a determinate trust and the assessee, being entitled to 70% share therein, was eligible to claim the corresponding share of loss in its individual return of income. 5. Aggrieved by the order of the Ld. CIT (A), the Revenue is in appeal before us. At the outset, the Learned Departmental Representative (" Ld. DR") submi....
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....t, "representative assessee" means- (i) in respect of the income of a non-resident specified in sub-section (1) of section 9, the agent of the non-resident, including a person who is treated as an agent under section 163; (ii) in respect of the income of a minor, lunatic or idiot, the guardian or manager who is entitled to receive or is in receipt of such income on behalf of such minor, lunatic or idiot; (iii) in respect of income which the Court of Wards, the Administrator- General, the Official Trustee or any receiver or manager (including any person, whatever his designation, who in fact 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 an....
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....refore, the trustees of KSN Trust are representative assessee's and are deemed to be assessee's for the purposes of the Act. We have also examined the provisions of section 161 of the Act which deal with the liability of a representative assessee, which is to the following effect: "Liability of representative assessee. 161. (1) 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 like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him. (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 i....
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.... alleged loss under the head "Income from House Property" amounting to Rs.1,73,62,048/- and loss under the head "Income from Other Sources" amounting to Rs.1,66,15,605/- have not been subjected to examination, verification or determination in accordance with the provisions of the Act. We find merit in the contention of the Revenue that before any proportionate share of loss is allowed in the hands of a beneficiary, the quantum of such loss in the hands of the trust must first be determined and verified. The impugned order of the Ld. CIT(A) proceeds on the legal proposition that the beneficiaries of a determinate trust can be assessed directly. However, the Ld. CIT(A) has not recorded any finding regarding the correctness, computation or quantification of the losses claimed to have been incurred by KSN Trust. No remand report was called for from the Ld. AO and no independent verification of the trust losses has been brought on record. In our considered view, the entitlement of the assessee to claim any share of loss can arise only after the income or loss of the trust is first computed and determined in accordance with the provisions of the Act. In the absence of such determination,....