Madras HC ruling on contribution of funds received by trust
The assessee is a discretionary trust ('Trust') settled for the benefit of owners and top-level executives of Shriram Group of Companies. The Trust was established for distribution of retirement benefits to the executives when they attain sixty years of age.
The Trust had received INR 25 crores during Financial Year 2014-15 from six companies of Shriram Group and the said amount was shown in the balance sheet of the Trust under the nomenclature 'addition to the corpus'. This corpus was not distributed to the beneficiaries during the year.
The Joint Commissioner of Income Tax ('JCIT') had passed an order under section 144A of the Incometax Act, 1961 ('the Act') directing the Assessing Officer ('AO') to treat the receipt of INR 25 crores by the Trust as 'income from other sources' under section 56(2)(vii) of the Act and tax the same accordingly.
