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2007] 294 ITR 117 [2007] 162 TAXMAN 487 (KAR.) HIGH COURT OF KARNATAKA Smt. Revathi* v. Commissioner of Income-tax, Karnataka-I R. GURURAJAN AND ANAND BYRAREDDY, JJ. IT REFERRED CASE NO. 820 OF 1998 APRIL 3, 2007 Section 86 of the Income-tax Act, 1961 - Exemption - Share income, as member of AOP/BOI - Assessment year 1983-84 - Whether assessee is eligible for relief under section 86(v) as a member of AOPs in respect of that portion of income from AOP which has suffered tax in hands of association and not for whole amount - Held, yes FACTS The assessee, an individual, derived income from 13 AOPs as she was having 1/3rd share in all those AOPs. The AOPs were beneficiaries of a private specific trust and received certain sum as a share of beneficiary interest from that trust. The assessee claimed rebate under section 86(v). The ITO held that the assessee was not eligible for relief under section 86(v) as a member of the AOPs in respect of the specific portion of income of the AOPs on the ground that the said portion being below the taxable limit had not suffered tax in the hands of the AOPs and allowed rebate on that portion of income on which income-tax had been levied. On appeal, the Commissioner (Appeals) as well as the Tribunal confirmed the order of the Assessing Officer. On reference : HELD A careful reading of section 86(v ) would show that two conditions are necessary for claiming exemption or rebate : (1) The rebate will be allowable provided the association has paid the income-tax. (2) The rebate will be allowable only in respect of that portion of the income on which tax was paid by the association. The wordings 'any portion' and the wordings 'in which income-tax has already been paid by the association' would show that the benefit is available only to that portion which has suffered tax and not for the whole amount. In fact, the Tribunal had chosen to consider this in its order. Therefore, the said finding of the Tribunal was acceptable. Any other interpretation would result in reading more than what is provided under section 86(v). It was not possible to read the section the way in which the assessee wanted it to be read thereby providing more…

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