V S TRUST,CHENNAI vs. ITO, NCW-3(5), CHENNAI

ITA 2633/CHNY/2025Status: DisposedITAT Chennai28 January 2026AY 2022-23Bench: SHRI ABY T. VARKEY (Judicial Member), SHRI S.R.RAGHUNATHA (Accountant Member)1 pages
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What did the Tribunal hold?

The Tribunal held that the AO erred in adding the value of shares as income. It found that the supplemental deed clarified that beneficiaries were only relatives, making the transfer exempt under Section 56(2)(x). The Tribunal also allowed the appeal regarding an advance tax payment of Rs. 12 crores, holding it was a repayable liability and not income.

What were the facts?

The assessee, a trust, received shares worth Rs. 15,78,40,401/- from its settlor. The Assessing Officer (AO) added this amount as income from other sources under Section 56(2)(x) of the IT Act, as the trust deed allowed for potential beneficiaries other than relatives. The trust argued that a supplemental deed restricted beneficiaries to relatives.

What were the issues?

Whether the shares received by the trust from the settlor were taxable under Section 56(2)(x) given the trust deed provisions, and whether an advance tax payment constituted taxable income.

Which sections of the Income-tax Act were involved?

Section 56(2)(x),Section 250,Section 143(2),Section 234D,Section 270A

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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA

Hearing: 16.12.2025Pronounced: 28.01.2026

PER ABY T. VARKEY, JM:

This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), (hereinafter referred to as 'Ld. CIT(A)'), NFAC, Delhi dated 05.08.2025 for the Assessment Year (hereinafter referred to as 'AY') 2022-23. 2. The grounds raised in this appeal by the assessee are as follows:- “1. On the facts and in the circumstances of the case and in law, appellate order dated 5 August 2025(“Order”

The order continues below.

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