High Court Of Karnataka
Smt. Revathi vs. CIT
Section 86(V)
Asst. Year 1983-84
R. Gururajan & Anand Byrareddy, JJ.
IT Refd. Case No. 820 of 1998
3rd April, 2007
Counsel Appeared :
A. Shankar, for the Petitioner : M.V. Seshachala, for the Respondent
JUDGMENT
R. Gururajan, J. :
Assessee is before us in this reference. According to the facts of the case, the assessee is an individual deriving income from 13 AOPs as a member. For the asst. yr. 1983-84, the appellant derived Rs. 60,853 as share from 13 AOPs. She was having 1/3rd share in all these AOPs. The AOPs were beneficiaries of M/s Chengamma Family Foundations, which is a private specific trust. 99 per cent of the total income of the AOPs was shared equally among the members and the balance 1 per cent remains discretionary. Each of the thirteen AOPs received about Rs. 14,044 as share of beneficiary interest from Chengamma Family Foundations. The assessee claimed rebate under s. 86(v) of the IT Act. The ITO allowed rebate from AOP from which income has (tax was) levied and paid. Aggrieved by the order, an appeal was filed before the CIT(A). The CIT(A) accepted the order of ITO. Matter was taken before the Tribunal. The Tribunal confirmed the order of the AO. It is in these circumstances, the Tribunal has chosen to refer the following question of law in terms of s. 256 of the IT Act : “Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the assessee was not eligible for relief under s. 86(v) as a member of the AOPs in respect of the specific portion of income of the AOPs on the ground that the said portion being below the taxable limit had not suffered tax in the hands of the AOPs ?” Sri Shankar, learned counsel appears for the assessee. He would reiterate the facts and grounds raised in the petition. According to him, s. 167A would provide for charge of tax where shares of members are unknown. He says that s. 167A would provide for a method of calculation. According to Sri Shankar, learned counsel, his client is entitled for rebate on the entire share and not on the share of the assessee as has been held by the authority. He would strongly require us to interfere in the case on hand in the light of the language under s. 86(v) r/w s. 167A of the Act. He relies on CIT vs. Smt. Lalitha M. Bhat (1996) 135 CTR (Bom) 251 : (1996) 221 ITR 257 (Bom). Per contra, Sri Seshachala, learned counsel supports the order.
After hearing, we have carefully perused the material on record. Admittedly, all the three authorities have held against the assessee. Assessee has been provided the partial benefits under s. 86(v) of the Act. The assessee wants s. 86(v) to be considered thereby he gets the entire benefits on the facts of this case. Sec. 167A would deal with AOP—special cases. Sec. 86(v) would read as under : “Income-tax shall not be payable by an assessee if the assessee is a member of an AOP, or a BOI other than an HUF, a company or a firm, any portion of the amount which he is entitled to receive from the association or body on which income-tax has already been paid by the association or body.”
5. The authorities have provided the benefit to the extent which the assessee is entitled in the case on hand. What the assessee wants is that in the event of the AOP making over the tax, the whole sum qualifies for exemption. A careful reading of s. 86(v) would show that two conditions are necessary for claiming exemption or rebate : (1) the rebate will be allowable provided the association has paid the income-tax. (2) the rebate will be allowable only in respect of that portion of the income on which tax was paid by the association.
The wordings “any portion” and the wordings “on which income-tax has already been paid by the association” would evidence that the benefit is available only to that portion which has suffered tax and not for the whole amount. In fact, the Tribunal has chosen to consider this in its order. We are in agreement with the said findings of the Tribunal. Any other interpretation would result in reading much more than what is provided under s. 86(v) of the Act. We are not prepared to read the section the way in which the assessee wants us to read thereby providing more benefit which is not otherwise available to an assessee under the Act. In our view, the question of law has to be answered in favour of the Department and not in favour of the assessee. The judgment on which reliance is placed, if read, would show that the said judgment is not available to the facts of this case. In fact, the Bombay High Court in the case of CIT vs. Smt. Lalitha M. Bhat (supra), the question of law that was referred to the Court of opinion would read as under : “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the share income from the AOP includible in the assessee’s hands as a member thereof is to be determined only after deducting from the AOPs income-tax payable by it ?” It was in the context of that question, the Bombay High Court has considered s. 86. The said judgment is clearly distinguishable on facts.
6. In the result, we answer the question in favour of the Revenue.
[Citation : 294 ITR 117]
