Imp Case laws.

 

CIT vs. Shriram Ownership Trust (Madras High Court)

S. 2(24)(iia)/ 56(2)(vii)/160(1)(iv): (i) A private discretionary Trust has to be assessed in the status of an "individual" as the beneficiaries are individuals. It cannot be assessed as an "AOP" even though there are multiple trustees & beneficiaries. Even a non-human juristic entity can be assessed as an "individual". The fact that in the return filed in Form ITR-5, the status is that of a "trust" is irrelevant. Consequently, the contribution received by the assessee is assessable as "income" us 56.

(ii) U/s 260A, it is only the appellant who is entitled to raise a question of law. The respondent has no right to challenge a point which is decided against him by the Tribunal. The appellant cannot be worse off in its appeal at the instance of the respondent who has not filed an appeal over such finding of the Tribunal. 

 

The authority on examining the factual position found that the assessee has adopted an ingenious method for the purpose of circumventing the provisions of the Act by accepting the gift on behalf of the individuals thereby acting as a conduit. Unfortunately, the Tribunal did not examine this aspect of the matter but proceeded on a different footing which we decline to approve. The Tribunal placed reliance on the decision of the Delhi Tribunal in Mridu Hari Dalmia Parivar Trust. We find that the said decision could not have been applied to the facts of the instant case, more particularly, when the Assessing Officer in the said case held that the assessee is an AoP. Furthermore, the finding rendered by the Tribunal with regard to the effect of insertion of clause (x) in Section 56(2) with effect from 01.04.2007 could not have been rendered in isolation without reference to the factual details where the beneficiaries were identified and therefore, the Tribunal erred in reversing the finding of the CIT(A) that the assessee has to be assessed as an “individual”. Therefore, we hold that the assessee Trust is a representative assessee as it represents the beneficiaries who are identified individuals and therefore to be assessed as an “individual” only. Consequently, the contribution of Rs.25 Crores is to be assessed as income under Section 56(1) under the head ‘income from other sources’.

 

CVO Chartered & Cost Accountants’ Association vs. UOI (Bombay High Court)

Extension of Due Date for filing RoI and TAR: Power exercised by the CBDT u/s 119 is discretionary. On careful consideration of the order passed by the CBDT on 11.01.2021, we are of the considered view that it cannot be said that CBDT had failed to exercise its discretion or that it acted in an arbitrary or unreasonable manner in refusing to grant further extension of the due dates. We therefore do not find any good ground to invoke our writ jurisdiction under Article 226 of the Constitution of India to direct CBDT for further extension of the due dates

 

We find from the order dated 11th January, 2020 passed by the CBDT under section 119 of the Act that across the board three extensions of the due dates have been granted. In so far filing of tax audit report is concerned, the original due date was 30th September, 2020, which was first extended to 31st October, 2020, thereafter to 31st December, 2020 and now to 15th January, 2021. In respect of filing of income tax return in those cases where tax audit report is required to be filed the original due date was 31st October, 2020 which was first extended to 30th November, 2020, thereafter to 31st January, 2021 and finally to 15th February, 2021. Thus, we find that CBDT had considered the evolving situation in the country and thereafter, had extended the due dates on three occasions. Now CBDT says that filing of audit reports and income tax reports cannot be delayed indefinitely. Therefore, a line has been drawn that no further extension of the due dates would be granted.

 

Unnikrishnan V S vs. ITO (ITAT Mumbai)

S. 17(2)(vi): (i) ESOP benefits granted to an assessee when he was resident and in consideration for services rendered in India is taxable even though the assessee is a non-resident in the year of exercise. S. 17(2)(vi) decides the timing of the income to be the year of exercise of the ESOPs but does not dilute or negate the fact that the benefit had arisen at the point of time when the ESOP rights were granted.

(ii) Article 15 of the India-UAE DTAA permits taxation of ESOP benefit, which is included in the scope of the expression "other similar remuneration" appearing immediately after the words "salaries and wages", in the jurisdiction in which the related employment is exercised. Thus, an assessee who gets ESOP benefits in respect of his service in U.A.E. and he exercises these options at a later point of time, say after returning to India and ceasing to be a non-resident, will still have the treaty protection of that income under article 15(1). Conversely, when the assessee gets the ESOP benefit on account of rendering services in India, he cannot have the benefit of article 15 in respect of the said income.

 

We find that so far as the ESOP benefit is concerned, while the income has arisen to the assessee in the current year, admittedly the related rights were granted to the assessee in 2007 and in consideration for the services which were rendered by the assessee prior to the rights being granted- which were rendered in India all along. The character of income may be inchoate at that stage but certainly what is being sought to be taxed now, on account of the specific provision under section 17(2)(vi), is a fruit of services rendered much earlier and the benefit, which has now become a taxable income, accrued to the assessee in 2007. All that section 17(2)(vi) decides is the timing of an income, but it does not dilute or negate the fact that the benefit, in which is being sought to be taxed, had arisen much earlier i.e. at the point of time when the ESOP rights were granted. On these facts, in our considered view, the income, even if it was inchoate at the point of time when the options were granted, has accrued and has arisen in India. The assessee is a non- resident in the current assessment year, but quite clearly, the benefit, in respect of which the income is bring sought to be taxed now, had arisen at an earlier point of time in India. Viewed thus, the income in respect of ESOP grant benefit accrued and had arisen at the point of time when the ESOP rights were granted, even though the taxability in respect of the same, on account of the specific legal provisions under section 17(2)(vi), has arisen in the present in this year.