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Tax Publishers
Additions under section 68 read with 115BBE due to
alleged illegal offshore investment
Facts:
Assessee a partnership firm with 4 partners were found to
have invested in a Singapore related party entity called Eywa Pharma Pte. for
USD 1 mio. On investigation it was found that the entire USD 1 mio. came as
contribution from one of the partner private discretionary trust called IWell
Trust. This IWell Trust with with 38 identified beneficiaries was funded
by two trusts called Shriram ownership Trust and Envestor trust.
IWell trust did not file any returns as it was a private discretionary
trust with known shared beneficiaries the taxation was in the individual 38
beneficiaries. This did not augur well with AO who sustained additions under
section 68 read with 115BBE in the hands of the assessee firm for not
manifesting source of funding. On appeal CIT(A) dropped the addition. On higher
appeal by the revenue -
Held against the revenue that the addition was uncalled
for.
Ed. Note: The layered
structuring is worth noting.
Case: ITO v. IWell
Investments 2024 TaxPub(DT) 1720 (Chny-Trib)
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