Excel for
Circular No. 13/2014
Government of India
North Block,New Delhi
Subject:-Clarification regarding taxation of 'Alternate Investment Funds' having status of non-charitable trusts under the Income-tax Act, 1961- regarding. 3. Board has been requested to clarify whether the income of such funds would b" taxable in the hands of the Trustees of the AIF in the capacity of a 'Representative Assessee ' (as defined u/s 160(i)(iv) of the Act) or in the hands of investors (i.e. contributors of funds). 4.The matter has been examined. In the situation where the trust deed either does not name the investors or does not specify their beneficial interests, provisions of sub-section (1) of section 164 would come into play and the entire income of the Fund shall become liable to be taxed at the Maximum Marginal Rate of income-tax in the hands of the trustees of such AIFs in their capacity as 'Representative Assessee'. It is also clarified that in such cases, provisions of section 166 of the Act need not be invoked in the hands of the investors, as corresponding income has already been taxed in the hands of the 'Representative Assessee' in accordance with sub-section (1) of section 164 of the Act. 5.However, in case of funds where names of the beneficiaries and their interests in the Fund are determined i.e. stated in the trust deed, the tax on whole of the income of the Fund - consisting of or including profits and gains of business, would be leviable upon the Trustees of such AIF, being 'Representative Assessee' at the Maximum Marginal Rate in accordance with sub-section (1A) of section 161 of the Act. 6.The clarification given above shall not be operative in the area falling in the jurisdiction of a High Court which has taken or takes a contrary decision on the issue. 7. The contents of this Circular may be brought to the notice of all concerned.
(Rohit Garg) |