Our fund is a SEBI-registered AIF trust that offers the whole of its income as a representative assessee. Part of the year's advance tax and TDS went in under the beneficiaries' PANs and part under the fund's own. The CPC has refused the beneficiary-PAN credits. Can the fund claim them?
Yes, on these facts. The Mumbai Tribunal upheld the appellate finding that because the corresponding income had been offered by the trust in its capacity as representative assessee within the meaning of section 160(1)(iv) read with section 164(1), the trust deserved the credit for the advance tax and the tax deducted at source as claimed in its return, including the advance tax of Rs.2,84,60,753 paid under the beneficiaries' permanent account numbers and the TDS of Rs.65,57,000 that had been disallowed. The Assessing Officer was directed, while allowing those credits, to ensure that no similar credit was availed by the beneficiaries. The assessee's appeal — which was against that anti-duplication direction and against the interest under sections 234B and 234C — was dismissed.
Decided by the ITAT (Shri Narendra Kumar Billaiya (Accountant Member) and Shri Raj Kumar Chauhan (Judicial Member), Income Tax Appellate Tribunal, "C" Bench, Mumbai) on 2024-08-07, reported as I.T.A. No. 4638/Mum/2023, Assessment Year 2015-16 (ITAT Mumbai); date of hearing 24 July 2024; order pronounced 7 August 2024. It bears on section 160(1)(iv), section 164(1), section 143(1), section 234B, section 234C, section 115UB, section Rule 37BA of the Income Tax Act 1961, in Charitable Trusts & Exemption, Assessment & Scrutiny and TDS Defaults matters.
This is the mechanics of trust-level taxation of a fund that is outside the section 115UB pass-through, and it is the route a great many AIF trusts are on: the trustee computes the income of the fund and pays the tax on it as representative assessee of the beneficiaries under section 160(1)(iv) read with section 164(1), rather than the fund being taxed as a distinct entity or the income being taxed directly in the investors' hands. The credit problem this order solves is entirely practical. Where the trustee has given a declaration under rule 37BA(2) so that investee companies deduct under the beneficiaries' PANs, and then withdraws it mid-year so that deduction moves to the fund's own PAN, the year's prepaid taxes end up split across two sets of PANs while the whole of the income is returned in one. Automated processing does not reconcile that, and the credit falls out. The Tribunal's answer is to follow the income: the credit goes where the income has been offered. The corollary is the direction the assessee unsuccessfully challenged — the Assessing Officer must make sure the beneficiaries do not take the same credit — and a practitioner should expect that direction and plan for it rather than resist it. Two limits. First, the assessment year is 2015-16 — the previous year 2014-15 — which is before section 115UB applied, and the order is about a fund taxed through the representative-assessee route; it says nothing about a Category I or Category II AIF inside section 115UB, where section 194LBB and rule 12CB govern instead. Second, the Tribunal recorded the two conditions taken from CBDT Circular No. 13/2014 dated 28 July 2014 — that the beneficiaries of the income arising to the trust are identifiable on the date of the trust deed, and that the share of income of each beneficiary is ascertainable on the date of indenture — and found on the record that the assessee fulfilled both. A fund whose beneficiaries or shares are not so fixed is not on this order's facts at all.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee is a trust established under the Indian Trusts Act, 1882 by trust deed dated 21 November 2013 and registered under the Registration Act, 1908, and is registered as an Alternative Investment Fund under the SEBI (Alternative Investment Funds) Regulations, 2012. It filed its return for the assessment year 2015-16 on 28 August 2015 declaring total income of Rs.47,21,77,219 on which taxes of Rs.16,05,81,079 had been paid, comprising advance tax of Rs.11,07,69,253 and tax deducted at source of Rs.4,98,11,826. As a representative of the beneficiaries under section 160(1)(iv), the trustee computed the fund's taxable income and paid the tax in that capacity. In the first quarter of the financial year 2014-15 the trustee paid tax on each beneficiary's share of income under that beneficiary's permanent account number and gave a declaration under rule 37BA(2) of the Income-tax Rules, 1962 to the investee companies to deduct tax under the beneficiaries' PANs. For the remaining three quarters the fund paid tax on its income in its representative capacity under its own PAN and revoked the rule 37BA(2) declaration, after which the investee companies deducted under the fund's PAN. The return offered the entire income of the fund in the representative capacity and claimed credit for tax paid and deducted under both sets of PANs. While processing the return the Centralised Processing Centre did not consider the advance tax of Rs.2,84,60,753 paid by the trustee. On appeal, the appellate authority held that since the corresponding income had been offered in the representative capacity within section 160(1)(iv) read with section 164(1), the appellant deserved the credit of TDS and advance tax as claimed, allowed advance tax of Rs.2,84,60,753 and TDS of Rs.65,57,000, directed the Assessing Officer to ensure no similar credit was availed by the beneficiaries, and treated the interest under sections 234B and 234C as consequential. The assessee appealed against the anti-duplication direction, against the direction to verify prepaid taxes in each beneficiary's hands, and against the refusal to delete interest under section 234B of Rs.59,38,049 and under section 234C of Rs.12,89,455.
The appeal of the assessee was dismissed. The Tribunal recorded as undisputed that the return had been filed in the capacity of representative assessee, that the assessee had furnished each beneficiary with a statement of income showing his share under each head and his share of the taxes paid by the trustee in that capacity, and that for the first quarter the trustee had paid tax under the beneficiaries' PANs and given the rule 37BA(2) declaration, the investee companies deducting accordingly (para 6). It found that the assessee fulfilled both the conditions in CBDT Circular No. 13/2014 dated 28 July 2014 for pass-through taxation, and that since the corresponding income had been offered in the capacity of representative assessee within the meaning of section 160(1)(iv) read with section 164(1) of the Act, the assessee deserved to be allowed the credit of TDS and advance tax as claimed in the return (para 7.1). Finding no error or infirmity in the Commissioner (Appeals)' findings on those facts, it upheld them (para 8) and dismissed the appeal (para 9).
The Tribunal proceeded from the undisputed character of the return — filed in the representative capacity, supported by beneficiary-wise statements of income and of taxes paid, with the first quarter's deduction routed through the beneficiaries' PANs under a rule 37BA(2) declaration (para 6). It then took up the withdrawal of that declaration, which followed CBDT Circular No. 13/2014 dated 28 July 2014 and applied to the later quarters of the financial year 2014-15. Reading the circular — reproduced at pages 7 and 8 of the Commissioner (Appeals)' order — the Tribunal found it had been issued to clarify the tax position for onshore funds set up as AIFs and identified the two conditions it lays down: that the beneficiaries of the income arising to the trust are identifiable on the date of the trust deed, and that the share of income of each beneficiary is ascertainable on the date of indenture (para 7). It found on the record that both were satisfied, and that the credit therefore had to follow the income to the place where the income had been offered, namely the representative assessee (para 7.1). Since the Commissioner (Appeals) had already so held, there was no error or infirmity to correct, and the appeal — which was directed at the safeguards attached to that relief — failed (paras 8 and 9).
Facts on record show that the assessee fulfills both the conditions to be eligible for passing through taxation.
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Handle my notice → Ask a CA on WhatsAppYes, on these facts. The Mumbai Tribunal upheld the appellate finding that because the corresponding income had been offered by the trust in its capacity as representative assessee within the meaning of section 160(1)(iv) read with section 164(1), the trust deserved the credit for the advance tax and the tax deducted at source as claimed in its return, including the advance tax of Rs.2,84,60,753 paid under the beneficiaries' permanent account numbers and the TDS of Rs.65,57,000 that had been disallowed. The Assessing Officer was directed, while allowing those credits, to ensure that no similar credit was availed by the beneficiaries. The assessee's appeal — which was against that anti-duplication direction and against the interest under sections 234B and 234C — was dismissed. This was decided by the ITAT (Shri Narendra Kumar Billaiya (Accountant Member) and Shri Raj Kumar Chauhan (Judicial Member), Income Tax Appellate Tribunal, "C" Bench, Mumbai) and bears on section 160(1)(iv), section 164(1), section 143(1), section 234B, section 234C, section 115UB, section Rule 37BA of the Income Tax Act 1961. It is reported as I.T.A. No. 4638/Mum/2023, Assessment Year 2015-16 (ITAT Mumbai); date of hearing 24 July 2024; order pronounced 7 August 2024. This is the mechanics of trust-level taxation of a fund that is outside the section 115UB pass-through, and it is the route a great many AIF trusts are on: the trustee computes the income of the fund and pays the tax on it as representative assessee of the beneficiaries under section 160(1)(iv) read with section 164(1), rather than the fund being taxed as a distinct entity or the income being taxed directly in the investors' hands. The credit problem this order solves is entirely practical. Where the trustee has given a declaration under rule 37BA(2) so that investee companies deduct under the beneficiaries' PANs, and then withdraws it mid-year so that deduction moves to the fund's own PAN, the year's prepaid taxes end up split across two sets of PANs while the whole of the income is returned in one. Automated processing does not reconcile that, and the credit falls out. The Tribunal's answer is to follow the income: the credit goes where the income has been offered. The corollary is the direction the assessee unsuccessfully challenged — the Assessing Officer must make sure the beneficiaries do not take the same credit — and a practitioner should expect that direction and plan for it rather than resist it. Two limits. First, the assessment year is 2015-16 — the previous year 2014-15 — which is before section 115UB applied, and the order is about a fund taxed through the representative-assessee route; it says nothing about a Category I or Category II AIF inside section 115UB, where section 194LBB and rule 12CB govern instead. Second, the Tribunal recorded the two conditions taken from CBDT Circular No. 13/2014 dated 28 July 2014 — that the beneficiaries of the income arising to the trust are identifiable on the date of the trust deed, and that the share of income of each beneficiary is ascertainable on the date of indenture — and found on the record that the assessee fulfilled both. A fund whose beneficiaries or shares are not so fixed is not on this order's facts at all. If it applies to you, the first step is this: Establish, and be able to document, that the beneficiaries are identifiable on the date of the trust deed and that each beneficiary's share of income is ascertainable on the date of indenture. Those are the two conditions the Tribunal recorded and found satisfied; everything else in the order follows from them.
The assessee is a trust established under the Indian Trusts Act, 1882 by trust deed dated 21 November 2013 and registered under the Registration Act, 1908, and is registered as an Alternative Investment Fund under the SEBI (Alternative Investment Funds) Regulations, 2012. It filed its return for the assessment year 2015-16 on 28 August 2015 declaring total income of Rs.47,21,77,219 on which taxes of Rs.16,05,81,079 had been paid, comprising advance tax of Rs.11,07,69,253 and tax deducted at source of Rs.4,98,11,826. As a representative of the beneficiaries under section 160(1)(iv), the trustee computed the fund's taxable income and paid the tax in that capacity. In the first quarter of the financial year 2014-15 the trustee paid tax on each beneficiary's share of income under that beneficiary's permanent account number and gave a declaration under rule 37BA(2) of the Income-tax Rules, 1962 to the investee companies to deduct tax under the beneficiaries' PANs. For the remaining three quarters the fund paid tax on its income in its representative capacity under its own PAN and revoked the rule 37BA(2) declaration, after which the investee companies deducted under the fund's PAN. The return offered the entire income of the fund in the representative capacity and claimed credit for tax paid and deducted under both sets of PANs. While processing the return the Centralised Processing Centre did not consider the advance tax of Rs.2,84,60,753 paid by the trustee. On appeal, the appellate authority held that since the corresponding income had been offered in the representative capacity within section 160(1)(iv) read with section 164(1), the appellant deserved the credit of TDS and advance tax as claimed, allowed advance tax of Rs.2,84,60,753 and TDS of Rs.65,57,000, directed the Assessing Officer to ensure no similar credit was availed by the beneficiaries, and treated the interest under sections 234B and 234C as consequential. The assessee appealed against the anti-duplication direction, against the direction to verify prepaid taxes in each beneficiary's hands, and against the refusal to delete interest under section 234B of Rs.59,38,049 and under section 234C of Rs.12,89,455. The matter was decided on 2024-08-07 by the ITAT (Shri Narendra Kumar Billaiya (Accountant Member) and Shri Raj Kumar Chauhan (Judicial Member), Income Tax Appellate Tribunal, "C" Bench, Mumbai). On those facts the ITAT held as follows. The appeal of the assessee was dismissed. The Tribunal recorded as undisputed that the return had been filed in the capacity of representative assessee, that the assessee had furnished each beneficiary with a statement of income showing his share under each head and his share of the taxes paid by the trustee in that capacity, and that for the first quarter the trustee had paid tax under the beneficiaries' PANs and given the rule 37BA(2) declaration, the investee companies deducting accordingly (para 6). It found that the assessee fulfilled both the conditions in CBDT Circular No. 13/2014 dated 28 July 2014 for pass-through taxation, and that since the corresponding income had been offered in the capacity of representative assessee within the meaning of section 160(1)(iv) read with section 164(1) of the Act, the assessee deserved to be allowed the credit of TDS and advance tax as claimed in the return (para 7.1). Finding no error or infirmity in the Commissioner (Appeals)' findings on those facts, it upheld them (para 8) and dismissed the appeal (para 9).
The Tribunal proceeded from the undisputed character of the return — filed in the representative capacity, supported by beneficiary-wise statements of income and of taxes paid, with the first quarter's deduction routed through the beneficiaries' PANs under a rule 37BA(2) declaration (para 6). It then took up the withdrawal of that declaration, which followed CBDT Circular No. 13/2014 dated 28 July 2014 and applied to the later quarters of the financial year 2014-15. Reading the circular — reproduced at pages 7 and 8 of the Commissioner (Appeals)' order — the Tribunal found it had been issued to clarify the tax position for onshore funds set up as AIFs and identified the two conditions it lays down: that the beneficiaries of the income arising to the trust are identifiable on the date of the trust deed, and that the share of income of each beneficiary is ascertainable on the date of indenture (para 7). It found on the record that both were satisfied, and that the credit therefore had to follow the income to the place where the income had been offered, namely the representative assessee (para 7.1). Since the Commissioner (Appeals) had already so held, there was no error or infirmity to correct, and the appeal — which was directed at the safeguards attached to that relief — failed (paras 8 and 9). In the words reproduced by the source cited on this page: "Facts on record show that the assessee fulfills both the conditions to be eligible for passing through taxation."
It was decided by the ITAT on 2024-08-07 and is reported as I.T.A. No. 4638/Mum/2023, Assessment Year 2015-16 (ITAT Mumbai); date of hearing 24 July 2024; order pronounced 7 August 2024. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 160(1)(iv), section 164(1), section 143(1), section 234B, section 234C, section 115UB, section Rule 37BA, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The appeal of the assessee was dismissed. The Tribunal recorded as undisputed that the return had been filed in the capacity of representative assessee, that the assessee had furnished each beneficiary with a statement of income showing his share under each head and his share of the taxes paid by the trustee in that capacity, and that for the first quarter the trustee had paid tax under the beneficiaries' PANs and given the rule 37BA(2) declaration, the investee companies deducting accordingly (para 6). It found that the assessee fulfilled both the conditions in CBDT Circular No. 13/2014 dated 28 July 2014 for pass-through taxation, and that since the corresponding income had been offered in the capacity of representative assessee within the meaning of section 160(1)(iv) read with section 164(1) of the Act, the assessee deserved to be allowed the credit of TDS and advance tax as claimed in the return (para 7.1). Finding no error or infirmity in the Commissioner (Appeals)' findings on those facts, it upheld them (para 8) and dismissed the appeal (para 9). It arises in Charitable Trusts & Exemption, Assessment & Scrutiny and TDS Defaults matters, on section 160(1)(iv), section 164(1), section 143(1), section 234B, section 234C, section 115UB, section Rule 37BA of the Income Tax Act 1961, and was decided by Shri Narendra Kumar Billaiya (Accountant Member) and Shri Raj Kumar Chauhan (Judicial Member), Income Tax Appellate Tribunal, "C" Bench, Mumbai. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Offer the income in one place and claim the credit in the same place. The finding upheld here is that because the income was offered in the representative capacity under section 160(1)(iv) read with section 164(1), the credit for the prepaid taxes belongs there too. Keep the rule 37BA(2) declarations and the withdrawals with dates, quarter by quarter, together with the Form 26AS extracts under each PAN. That is the reconciliation the Assessing Officer needs to allow the credit, and it is what the CPC does not have. Furnish the beneficiaries with a statement of income showing each one's share under each head and the share of taxes paid by the trustee, as this fund did; without it the anti-duplication direction cannot be complied with and the credit will be held up. Expect and accept the direction that beneficiaries must not take the same credit. The assessee's challenge to that direction, and to the consequential interest under sections 234B and 234C, is what caused this appeal to be dismissed.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator returns nothing. A name search returns a single document, this order itself, and no High Court or Supreme Court record. Nothing was found applying or doubting the holding that an AIF assessed as a representative assessee is entitled to credit for tax paid under the beneficiaries' PANs, and no appeal against this order. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs through numbered paragraphs 1 to 9, with a paragraph 5.1 and a paragraph 7.1, and ends with 'Order pronounced in the Court on 7th August, 2024 at Mumbai.' It was passed by the 'C' Bench, Mumbai, Shri Narendra Kumar Billaiya, Accountant Member, and Shri Raj Kumar Chauhan, Judicial Member. One warning about the text. Paragraph 7.1 quotes the Commissioner (Appeals)' findings at length. Those are that officer's words and not the Tribunal's, and none of them is used in this entry as the Tribunal's holding. If you intend to quote from paragraph 7.1, check first whether the sentence you want is inside the quoted block, because the Tribunal's own contribution in that paragraph is the conclusion that the assessee, having offered the corresponding income in the capacity of representative assessee within the meaning of section 160(1)(iv) read with section 164(1), deserved the credit claimed in the return. There is also an inconsistency on the face of the report: the opening paragraph describes the order appealed against as an order of 'the ld. CIT(A)- Mysore', while the grounds refer throughout to the Additional/Joint Commissioner of Income-tax (Appeals), Mysore. Nothing turns on it for the point decided, but it should be noticed before the order is described in a submission. And the appellant's name is printed in the order as 'Investcorp Real Estate Yeild Fund' — the misspelling is on the face of the record and is not reproduced in the title of this entry. One point on what the order does and does not settle. The appeal before the Tribunal was the assessee's, and it was dismissed. What the assessee lost was the challenge to the anti-duplication direction — that the Assessing Officer, while allowing the credits, must ensure the beneficiaries do not take the same credit — and the challenge to interest under sections 234B and 234C. The finding the entry is cited for, that the trust gets credit for advance tax and tax deducted under the beneficiaries' permanent account numbers, is the Commissioner (Appeals)' finding which the Tribunal upheld at paragraph 8. It rests on the rule 37BA(2) declaration having been given and on both conditions in CBDT Circular No. 13/2014 dated 28 July 2014 being satisfied, and a fund that has not done those things is not covered by it. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal of the assessee was dismissed. The Tribunal recorded as undisputed that the return had been filed in the capacity of representative assessee, that the assessee had furnished each beneficiary with a statement of income showing his share under each head and his share of the taxes paid by the trustee in that capacity, and that for the first quarter the trustee had paid tax under the beneficiaries' PANs and given the rule 37BA(2) declaration, the investee companies deducting accordingly (para 6). It found that the assessee fulfilled both the conditions in CBDT Circular No. 13/2014 dated 28 July 2014 for pass-through taxation, and that since the corresponding income had been offered in the capacity of representative assessee within the meaning of section 160(1)(iv) read with section 164(1) of the Act, the assessee deserved to be allowed the credit of TDS and advance tax as claimed in the return (para 7.1). Finding no error or infirmity in the Commissioner (Appeals)' findings on those facts, it upheld them (para 8) and dismissed the appeal (para 9).
TaxSphere, “Investcorp Real Estate Yield Fund v ITO — an AIF assessed as a representative assessee under s.160(1)(iv) read with s.164(1) gets credit for advance tax and TDS paid under its beneficiaries' PANs”, https://taxnotice.vittsphere.com/caselaw/case/investcorp-real-estate-yield-fund-an-aif-taxed-as-representative-assessee-and-credit-for-tax-paid-under-the-beneficiaries-pans/ (validity last checked 2026-09-09)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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