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2024 Supreme(Online)(MP) 38057

HIGH COURT OF MADHYA PRADESH
Sushrut Arvind Dharmadhikari, Anuradha Shukla, JJ
Principal Commissioner Of Income Tax – Appellant
Versus
Ramesh Chandra Rai – Respondent
INCOME TAX APPEAL No. 272 of 2022 | 237 of 2022 | 238 of 2022 | 239 of 2022 | 240 of 2022 | 241 of 2022 | 242 of 2022 | 243 of 2022 | 244 of 2022 | 245 of 2022 | 246 of 2022 | 247 of 2022 | 248 of 2022 | 249 of 2022 | 250 of 2022 | 251 of 2022 | 252 of 2022 | 253 of 2022 | 255 of 2022 | 256 of 2022 | 257 of 2022 | 258 of 2022 | 259 of 2022 | 260 of 2022 | 262 of 2022 | 264 of 2022 | 265 of 2022 | 266 of 2022 | 269 of 2022 | 17 of 2024 | 24 of 2024 | 26 of 2024 | 27 of 2024 | 28 of 2024 | 29 of 2024 | 30 of 2024 | 31 of 2024 | 46 of 2024 | 47 of 2024 | 48 of 2024

Advocates:
For the Appellants/Petitioners: Siddharth Sharma
For the Respondents: Vashistha Narayan Dubey

Income received by a member from an Association of Persons (AOP) or Body of Individuals (BOI) is excluded from the member's total income under Section 86 of the Income Tax Act, 1961, if the AOP/BOI is already charged to tax at the maximum marginal rate.

Headnote:(A) Income Tax Act, 1961 - Sections 86, 67A, 167B, 260A - Taxation of AOP/BOI - Exclusion of member's share - Whether the share of profit derived from syndicates (AOPs) is taxable in the hands of the member when the syndicate itself is chargeable to tax at the maximum marginal rate. Held - Under Section 86, read with Section 67A, where an association is chargeable at the maximum marginal rate, the member's share of income is excluded from their total income to avoid double taxation.

Facts of the case:
The respondent assessee was a member of various syndicates formed for business purposes. The Assessing Officer sought to include the assessee's share of profits and certain inadmissible expenses of these syndicates in the assessee's personal income, alleging tax evasion through colourable devices. The CIT(A) and the ITAT held that since the syndicates were AOPs/BOIs and were taxable entities, the income should be taxed at the syndicate level, exempting the individual member under Section 86.

Findings of Court:
The High Court affirmed the findings of the ITAT, noting that the syndicates were independent taxable entities and that double taxation on the same income is impermissible under the Act. No substantial question of law was found to justify interference.

Issues: Whether the share of profit from syndicates (AOPs) should be taxed in the hands of the individual member or only in the hands of the syndicate.

Ratio Decidendi: Income of a member arising from an AOP/BOI is exempt in the hands of the member under Section 86 if the AOP is taxed at the maximum marginal rate, ensuring that the 'right income is taxed in the hands of the right person'.

Result: Appeals dismissed.

Table of Content
1. procedural history and factual background of assessment appeals. (Para 1 , 2 , 3 , 4 , 5)
2. issues regarding the taxation of aop/boi income versus individual member income. (Para 6 , 7 , 8 , 9 , 10 , 11)
3. tribunal's decision and provisions of sections 86 and 67a. (Para 12 , 13 , 14 , 15 , 16)
4. high court's interpretation of section 86 regarding double taxation. (Para 17 , 18 , 19 , 20 , 21 , 22)
5. final determination regarding the absence of substantial questions of law. (Para 23 , 24 , 25 , 26 , 27)

INCOME TAX APPEAL No. 272 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMESH CHANDRA RAI

WITH

INCOME TAX APPEAL No. 237 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 238 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 239 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 240 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 241 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 242 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 243 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 244 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 245 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 246 of 2022

PRINCIPAL COMMISSIONER Versus SHRI RAMESH CHANDRA RAI

INCOME TAX APPEAL No. 247 of 2022

PR. COMMISSIONER Versus SHRI HARMINDAR SINGH BHATIA

INCOME TAX APPEAL No. 248 of 2022

PR. COMMISSIONER OF Versus SHRI HARMINDAR SINGH BHATIA

INCOME TAX APPEAL No. 249 of 2022

PR. COMMISSIONER OF Versus SHRI HARMINDAR SINGH BHATIA

INCOME TAX APPEAL No. 250 of 2022

PR. COMMISSIONER OF Versus SHRI HARMINDAR SINGH BHATIA

INCOME TAX APPEAL No. 251 of 2022

PR. COMMISSIONER OF INCOME TAX (CENTRAL) MP AND CG Versus SHRI HARMINDAR SINGH BHATIA

INCOME TAX APPEAL No. 252 of 2022

PR. COMMISSIONER OF Versus SHRI HARMINDAR SINGH BHATIA

INCOME TAX APPEAL No. 253 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

INCOME TAX APPEAL No. 255 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

INCOME TAX APPEAL No. 256 of 2022

PR. COMMISSIONER OF Versus SHRI HARMINDAR SINGH BHATIA

INCOME TAX APPEAL No. 257 of 2022

PR. COMMISSIONER OF INCOME TAX (CENTRAL) MP AND CG Versus SHRI HARMINDAR SINGH BHATIA

INCOME TAX APPEAL No. 258 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

INCOME TAX APPEAL No. 259 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

INCOME TAX APPEAL No. 260 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

INCOME TAX APPEAL No. 262 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

INCOME TAX APPEAL No. 264 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

INCOME TAX APPEAL No. 265 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

INCOME TAX APPEAL No. 266 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

INCOME TAX APPEAL No. 269 of 2022

PRINCIPAL COMMISSIONER OF Versus SHRI RAMSWAROOP SHIVHARE

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INCOME TAX APPEAL No. 24 of 2024

PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) BHOPAL Versus LAXMI NARAYAN SHIVHARE

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PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) BHOPAL Versus LAXMI NARAYAN SHIVHARE

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PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) BHOPAL Versus LAXMI NARAYAN SHIVHARE

INCOME TAX APPEAL No. 30 of 2024

PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) BHOPAL Versus LAXMI NARAYAN SHIVHARE

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PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) BHOPAL V

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