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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Mahavir Singh & Shri Rajesh Kumar
O R D E R Per Mahavir Singh, Judicial Member
This appeal by revenue is arising out of the order of the CIT(A) – 27, Mumbai, in appeal No.CIT(A)-27/AC-16(2)/9/13-14 dated 28.08.2014. The assessment was framed by the ACIT 16(2), Mumbai, for A.Y. 2010-11 vide his order dated 15.2.2013 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). The only issue in this appeal of the revenue is against the order of the CIT(A) deleting the disallowance of interest paid to beneficiaries as well as its deductibility. For this the revenue has raised the following ground:
“Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in restoring the matter to the file of the A.O. to determine the assessee’s liability to pay interest to its beneficiaries as well as its deductibility, as this tantamount to setting aside the assessment in violation of the provision of section 251(1)(a) of the Act, 1961?. The Ld. CIT(A) cannot set aside a case under I.T.Act.”
Brief facts leading to the above issue are that the assessee is a discretionary trust and is being assessed in the status of AOP. The AO during the course of assessment proceedings noted that it is not entitled for the claim of interest paid to 100 beneficiaries of the trust amounting to Rs.53.30 lacs and he assessed the same as “income from other sources”. The CIT(A) deleted the addition and directed the AO to examine the necessary details in view of the decision of the Tribunal in the assessee’s own case for A.Y. 2008-09 in dated 31.10.2013, The CIT(A) reproduced the relevant finding of the Tribunal. Aggrieved, against setting aside the matter back to the file of the AO and stating that the CIT(A) has violated the provisions of section 251(1)(a) of the Act, the revenue is in appeal before us.
According to the learned senior DR, the powers of the CIT(A) in respect of setting aside the assessment or remanding the matter back is now withdrawn. The learned counsel for the assessee stated that the Tribunal in assessee’s own case for A.Y. 1989-90 in order dated 29.03.1995 has allowed the claim of the assessee. He referred to page 3 of the Tribunal order and the relevant findings of the Tribunal reads as under:
“4. ...In this view of the matter, we are of the opinion that the interest payable to the beneficiaries is deductible for the asstt. yrs. under appeal. We may further point out that there was no dispute in earlier years (which were subject matter of appeals before the Tribunal) where interests were assessed in the hands of the beneficiaries on their determinate share and the Tribunal had given relief to the assessee on the basis, inter alia, that it would be a double taxation if that interest income has been added again the hands of the assessee. We, therefore, allow the contention of the assessee in these years and allow the appeals on this ground.”
The learned counsel for the assessee also stated that in A.Ys. 1986-87 and 1987-88, the Tribunal in & 4144/Mum/1991 has also allowed the claim of the assessee and he referred to the relevant para 4 of the order, which reads as under:
“4. .... We may further point out that there was no dispute in earlier years (which were subject matter of appeals before the tribunal) where interests were assessed in the hands of the beneficiaries on their determinate shares and teh Tribunal had given relief to the assessee on the basis, inter-alia, that it would be a double taxation if that interest income has been added again in the hands of the assessee. We, therefore, allow the contention of the assessee in these years and allow the appeals on this ground.” In view of the above, the learned counsel for the assessee stated that exactly identical claim on identical facts has consistently been allowed by the Tribunal and there is no issue of restoring back the same.
We have heard the rival contentions and gone through the facts and circumstances of the case. As regards the facts there is no dispute. There is no dispute that the Tribunal in A.Ys. 1986-87 and 1987-88 vide order dated 29.03.1995 and also in A.Y. 1989-90 vide order dated 29.03.1995 has allowed the claim of the assessee in respect of interest distributed among the beneficiaries and allowed deduction to the Trust. But now in the latest decision of the Tribunal for A.Y. 2008- 09, the Tribunal has remanded the matter back to the file of the AO to decide The issue regarding deductibility of interest paid to beneficiaries in terms of the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Tanvi Sajani Family Trust (1994) 209 ITR 497 (guj). The learned counsel for the assessee fairly agreed on the proposition of remanding the matter back to the file of the AO. In terms of the above, we restore the matter back to the file of the AO and direct him to decide the issue of payment of interest to assessee’s beneficiaries as well as deductibility in terms of the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Tanvi Sajani Family Trust (supra).
In the result, the revenue’s appeal is allowed for statistical purposes.
Order pronounced in the open court on this day of 8th June 2016.