ITO v. Aam Family Private Trust (ITAT Mumbai)

(ITA No.2829/Mum/2022)
S. 56 : Income from other sources-Relative-Individual-Private discretionary trust-Gift of equity shares to trust-Trust crested for the benefit of self and relatives-Any sum received without consideration, aggregate value of which exceeds fifty thousand rupees-Pass through entity-Provision of section 56(2)(x) is not applicable. [S. 56(2)(x)]
The assessee is a private discretionary trust. Settlor Mrs Archana Miglani settled moveable assets ( Value of equity shares) in favour of the trust. The beneficiaries of the Trust are, self, co-sister in law, Mother in law, children of Mrs Archana & Children of Mr Anuj Miglani, Children of Mrs Priyanka & Mrs Ankit Nephew & Nice of Miglani. The Assessing Officer treated the entire value of moveable assets (Value of equity shares) settled by settlor of the Trust, Smt Archana Miglani in favour of trust by treating the same as income under section 56(2)(x) of the Act . On appeal the CIT(A) deleted the addition. On appeal by Revenue ,dismissing the appeal of the Revenue the Tribunal held that, the discretionary trust created by Smt. Archana Miglani for the benefit of her self, her co -sister in law, mother in law, own children, nephew and niece any sum of money received by the assessee trust is not covered under section 52(2)(x) by virtue of the proviso, which reads as under:-
“Provided that this clause shall not apply to any sum of money or any property received:-
(1) to (ix )—————–
(x) from an individual by a trust created or established solely for the benefit of relative of the individuals;”
Tribunal also held that assessee in this case a pass through entity and it was the settlers money/ property which is given to the private discretionary trust for benefit of herself and her relatives. Order of CIT(A) is affirmed. (ITA No. 2829/Mum/2022 dt. 23-2-2023)(AY. 2018-19)