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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
आयकर अपील�य अ�धकरण, कोलकाता पीठ “सी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA �ी राजेश कुमार, लेखा सद�य एबं �ी संजय शमा�, �या�यक सद�य के सम� [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 353/Kol/2023 Assessment Year: 2018-19 Gulab Grandsons Foundation Vs. ITO, Ward-1(1), Kolkata (PAN: AACTG 1687 P)
( अपीलाथ� ) Respondent / ( !यथ�) Appellant /
Date of Hearing / सुनवाई 02.07.2024 क% �त'थ Date of Pronouncement/ 22.07.2024 आदेश उ*घोषणा क% �त'थ For the Appellant/ Shri Sunil Surana, Advocate �नधा�0रती क% ओर से For the Respondent/ Shri Arun Kumar Meena, Addl. CIT Sr. राज�व क% ओर से D.R ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 31.03.2023 for the AY 2018-19.
The issue raised in the appeal by the assessee is against the order of Ld. CIT(A) confirming the action of Ld. AO treating return filed u/s 139 as invalid by alleging that the assessee is an AOP/BOI and hence not an eligible assessee as per Section 44AD of the Act as and is not available to the assessee as it is only a trust created through the will of the deceased and issue raised in ground no. 2 is against the finding of Ld. CIT(A) that the assessee filed return in the status of the AOP/BOI was not correct since there was no option given in the return of income to mention the status of the assessee as individual as 4th alphabet in the PAN of the assessee was not “P” and it was bound to file return in ITR-5.
2 I.T.A. No.353/Kol/2023 Assessment Year: 2018-19 Gulab Grandsons Foundation 3. Facts in brief are that the assessee is private discretionary trust created by Smt Kiran Devi Choraria as per the notarial certificate as per Will dated 01.01.2014 for the benefit of two minor children namely Master Divyaansh Surana and Master Shaurya Surana and was the only trust created by her. It was provided under Para 3 of the trust deed that the income of the trust and whole or part of the corpus of the trust properties shall be used for the maintenance, assistance medical benefits, marriage, sagai, education, travelling and business assistance. The assessee filed return of income in the name of Gulab Grandsons Foundation under PAN AACTG 1687 P for AY 2018- 19. The said return was declared invalid by passing an order u/s 139(9) of the Act dated 12.11.2019 on the ground that the gross turnover of the assessee exceeded 1 crore and audit report was not filed.
The assessee filed an appeal before the Ld. CIT(A) which was also dismissed by the Ld. CIT(A) by holding that the assessee disputed that the assessee is an individual and not AOP/BOI and whereas the return has been filed in the status of AOP/BOI and accordingly the order of AO was confirmed.
The Ld. A.R submitted before us that the assessee has been created as private discretionary trust by the only will of the person declaring such trust which is to be assessed as an individual for the purpose of tax purposes and is entitled to all the benefits which are available to an individual in terms of provision of Section 164(1) of the Act. The Ld. A.R contended that the proviso to section 164(3) clause (ii) also falls under this provision. The Ld. A.R submitted that return has been filed in the status of trust as in case of online filing the PAN has to be quoted in which last letter is ‘B’ and therefore online portal automatically selects the status of the assessee as trust whereas as a matter of fact the assessee is an individual. The Ld. A.R stated that it has been applied for change of PAN however nothing has been done so far. The Ld. A.R argued that though there in no tax involved in this present appeal but the status of the private discretionary trust has to be accepted and assessed as an individual and not an AOP/BOI. In defense of his argument the Ld. A.R relied on a series of decisions namely:
3 I.T.A. No.353/Kol/2023 Assessment Year: 2018-19 Gulab Grandsons Foundation i) Decision of Calcutta High Court in the case of CIT vs. Shri Krishna Bhandar Trust [1993] 201 ITR 989 (Cal) ii) Decision of Madras High Court in the case of CIT vs . Venu Suresh Sanjay Trust in [1996] 221 ITR 649 iii) ITAT, Bangalore Branch in the case of Guru Trust in ITA No. 1250/Bang/1989 and CO No. 54/Bang/1989 iv) Karnataka High Court in the case of CIT vs. K Shyamaraju (Trustees) in [1991] 189 ITR 392. v) Madras High Court in the case of Arihant Trust vs. ITO in [1995] 127 CTR 448 (Mad) vi) Gujarat High Court in the case of M. L. Family Trust vs. State of Gujarat. [1995] 127 CTR 407 (Guj) vii) Gujrat High Court in the case CIT vs. Deepak Family Trust No. 1 [1995] 211 ITR 575. The Ld. A.R submitted that in all the above decisions it has been held that the profit of the discretionary trust so created by will has to be assessed in the status of individual. The Ld. A.R therefore prayed before us that though there is no tax effect involved in the present appeal but the issue needs to be resolved and accordingly the AO may be directed to assess the trustees as individual and not AOP/BOI.
The Ld. D.R on the other hand submitted that the assessee is stated as AOP/BOI and accordingly the PAN was allotted to the assessee when applied by the assessee and now the assessee after taking the support from various judicial pronouncements is contending that the trust is not an AOP/BOI. The Ld. D.R contended that when the PAN is allotted in the status of AOP/BOI how the assessment can be made in the status of individual. The Ld. D.R argued that the assessee should first get the PAN changed and corrected and only then the assessment can be made in the status of individual. In the rebuttal the Ld. A.R submitted that the assessee has already applied to Ld. PCIT for change of PAN however nothing has been done so far to change PAN. The Ld. A.R therefore prayed that the AO may be directed to assess the status of individual and the Ld. PCIT may also be directed to change the PAN of the assessee.
We have heard the rival contentions and perused the facts on records including the decisions cited before us by the assessee. This is undisputed that the assessee is a
4 I.T.A. No.353/Kol/2023 Assessment Year: 2018-19 Gulab Grandsons Foundation private discretionary trust for the benefit of minors as stated hereinabove and has to be assessed under the Act in the status of individual and consequently the appellant is entitled for all the benefits as are available to the individual under the Act. Reference may be made to second proviso to section 164 read with clause (iv) sub-section 1 of section 162 and section 160(2) of the Act which provide that the representative assessee /trustee is to be assessed in the same manner as that of the beneficiary. Therefore the decisions cited before us supra also hold that the all deductions allowable to individual shall be allowed to the discretionary trust. The mere mistake while allotting the PAN which was inadvertently allotted as BOI/AOP as trust. It is also true that in the online portal when the PAN has been allotted as BOI/AOP , then the return would also be uploaded in that status whereas the correct status is as individual as has been held in a series of decisions as referred to above. In our considered opinion the status cannot be decided on the basis of PAN which is apparently wrong and needs to be corrected and rectified in the income tax data base. Therefore we direct the CIT concerned to correct the PAN as the assessee application field to this effect is pending before the him. Simultaneously the appellate order of ld CIT(A) is also wrong and cannot be sustained. We, accordingly set aside the appellate order and direct the AO to assess the appellant in the individual status . Needless to say that assessee is entitled to all the benefits as are available to an individual an the AO is directed to allow the same to the assessee.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 22nd July, 2024
Sd/- Sd/-
(Sonjoy Sarma /संजय शमा�) (Rajesh Kumar/राजेश कुमार) Judicial Member/�या�यक सद�य Accountant Member/लेखा सद�य Dated: 22nd July, 2024 SM, Sr. PS
5 I.T.A. No.353/Kol/2023 Assessment Year: 2018-19 Gulab Grandsons Foundation
Copy of the order forwarded to: 1. Appellant- M/s Gulab Grandsons Foundation, Unit No. 1501, 15th Floor, Diamond Heritage, 16,Strand Road, Kolkata-700001 2. Respondent – ITO, Ward-1(1), Kolkata 3. Ld. CIT(A)- NFAC, Delhi 4. DR, Kolkata Benches, Kolkata (sent through e-mail)