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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: Shri Saktijit Dey, & Shri Ashwani Taneja
19/01/2016 सुनवाई क� तार�ख / Date of Hearing : 12/02/2016 आदेश क� तार�ख /Date of Order: आदेश / O R D E R Per Ashwani Taneja (Accountant Member): This appeal has been filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals)-38, Mumbai {(in short ‘CIT(A)’}, dated 24.02.14 for the assessment year 2009-10, passed against the assessment order passed by the Assessing Officer (in short ‘AO’) u/s 143(3) of the Act.
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During the course of hearing, arguments were made by Shri J. Prabhakar, Authorised Representative (AR) on behalf of the Assessee and by Shri Nitin Waghmode, Departmental Representative (DR) on behalf of the Revenue.
In this appeal, the assessee has raised as many as 13 grounds, but effectively only two issues have been raised. The first issue raised by the assessee is that assessment was made upon the assessee u/s 161 as Representative Assessee, wherein status was mentioned in the assessment order as ‘Trust’. The assessee contended before the Ld. CIT(A) that the assessee is a private trust in which shares of each of the beneficiaries is determinate and therefore, separate assessment should have been made with respect to each of the beneficiaries. The Ld. CIT(A) accepted the contention of the assessee in principle but while adjudicating the appeal, the grounds raised by the assessee was erroneously dismissed. It was pointed out that there was an inherent contradiction in the order of the Ld. CIT(A).
3.1. The other issue raised by the Ld. Counsel during the course of hearing is that disallowance was made u/s 40(A)(2)(b) by the AO on ad-hoc basis for an amount of Rs.48,66,218/- out of total amount of Rs.73,66,218/- being advisory fees paid to M/s. Synergy Arts Foundation Ltd. in which trustees of the assessee were directors. The assessee submitted documentary evidences before the Ld. CIT(A). The Ld. CIT(A) called for remand report of the AO but while
3 Yatra Art Fund adjudicating the appeal instead of considering the evidences of the assessee, Ld. CIT(A) ignored the evidences and enhanced the disallowance by disallowing the entire payment of Rs.73,66,218/- being the total amount paid to the aforesaid company. It was submitted that there was gross violation of principles of natural justice and grave injustice was done with the assessee.
3.2. During the course of hearing, Ld. DR initially opposed the submissions of the Ld. Counsel but subsequently he was fair enough to express his no objection for sending this matter back to the file of the Ld. CIT(A) for deciding these issues afresh after considering all the evidences properly.
3.3. We have gone through the orders of the lower authorities very carefully. As far as, first issue is concerned, we find that there is apparently a self-contradiction in the order of Ld. CIT(A). The relevant para of his order is reproduced below:
“In the case of a specific Trust, the assessment has to be made in the hands of the trustee representing the beneficiaries. The assessment of the trustee would have to be made in the same status of the beneficiary, whose interest is sought to be taxed in the hands of the trustee. The Supreme Court in the case of H.E.H Nizam's Family (Remainder Wealth) Trust [108 ITR 555] permitted one consolidated assessment order and in such order, the tax due in respect of each beneficiary will have to be specified
4 Yatra Art Fund separately. In this case, the beneficiaries are individuals and companies and if one consolidated assessment has to be made, then the status will have to change according to the beneficiary and in these circumstances, the A.O merely mentioning its status as Trust cannot be faulted with. Further, though the A.O has not allocated the share of profit to each beneficiary since the profit sharing ratios were not known, however, the A.O inherently mean to allocate the profit in their profit sharing ratios. In view of the above, I am of the opinion that the reference to "trust" as status of the appellant is a curable defect and the share of profit is deemed to have been allocated. Therefore, this ground of appeal is not entertained.”
3.4. It is noted from the perusal of the aforesaid para that Ld. CIT(A) has principally accepted the contention of the assessee that in view of judgment of Hon’ble Supreme Court in the case of H.E.H. Nizam’s Family Trust, (Supra) that tax due in respect of each beneficiary was to be computed separately, keeping in view the status of each beneficiary separately. But while adjudicating the ground, the order of Ld. AO was upheld and ground raised by the assessee was dismissed, inspite of the fact that neither the tax due with respect to each beneficiary was computed separately, nor relevant status of each beneficiary was taken into consideration. It has been contended by the Ld. Counsel that for this purpose separate assessment order may be required to be passed with respect to each beneficiary. We find that the reasoning given by Ld.
5 Yatra Art Fund CIT(A) and the conclusion drawn on the basis of the same are at variance with each other.
3.5. Similarly with regard to the second issue of disallowance made by the AO u/s 40A(2)(b), it is noted by us that justice has not been done with this case. During the course of hearing, it was submitted by the Ld. Counsel appearing on behalf of the assessee that whatever was required by the AO or by Ld. CIT(A), the same was provided, however, remand report was submitted by the AO without giving any opportunity. In case anything more is required, the same can be very well submitted. The only prayer of the assessee is that adequate opportunity of hearing should be given and all the doubts and requirements should be put to the assessee and adequate time should be given to comply with the requirements.
3.6. Keeping in view all the facts and circumstances of the case and submissions made by both the parties before us, we find it appropriate to send both the issues back to the file of the Ld. CIT(A) for proper adjudication of the same. It is directed that Ld. CIT(A) shall consider all the evidences as may be placed by the assessee or as may be required by the Ld. CIT(A), as per law and facts. The Ld. CIT(A) may call for remand report from the AO, if so desired. The AO shall give adequate opportunity of hearing to the assessee before sending remand report to the Ld. CIT(A). The assessee shall extend requisite cooperation to both the authorities by submitting required details and documents, for which 6 Yatra Art Fund adequate opportunity shall be granted to it. The assessee is permitted to raise any legal and factual issue before the lower authorities with respect all the grounds raised before us. Thus, with these directions, grounds raised before us are send back to the file of the Ld. CIT(A).
In the result, appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 12.02.2016.