ITAT ruling gives a boost to black money fight

MUMBAI: In the first ever ruling relating to taxation of black money stashed in overseas tax havens, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has given the taxman a lot to cheer.

Funds aggregating $2.4 million (Rs 11.73 crore approximately) as of December 31, 2001, held in a Liechtenstein bank account of Ambrunova Trust (a discretionary trust), were held to be undisclosed income of beneficiaries, who are Indian residents. The ITAT held that the funds were taxable in India in the hands of the beneficiaries.

The ITAT observed, “Discretionary trusts are created for the benefit of specific persons and those persons need not necessarily control the affairs of the trust. However, they remain the sole beneficiaries of the trust. As the beneficiaries had not disclosed the Liechtenstein bank account in their income-tax (I-T) returns, it was their undisclosed or unaccounted income.”