Company Registered under Registration of Companies Act Sikkim is ‘AoP’ for Income Tax Purpose: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Kolkata bench has ruled that an entity registered under the Registration of Companies Act Sikkim, 1961 cannot be treated as a “Company” for the purpose of the Income Tax Act, 1961. The Tribunal clarified that such entities must be treated as “Association of Persons”.

The assessee, registered as a company under the Registration of Companies Act Sikkim 1961, filed income tax return in the status of “An association of Persons”. However, the Assessing Officer rejected the claim and treated the assessee as a Company. Accordingly, assessment was completed against the assessee.

On appeal, the Commissioner of Income Tax (Appeals) dismissed the contentions of the assessee. Aggrieved, the assessee approached the Tribunal for relief.

The Tribunal bench noted that the definition of ‘Company’ under the Income Tax Act, 1961 is given u/s 2(22A) of the Act. “This definition does not include a company registered under the Companies Act of Sikkim, 1961.”

“Reliance placed by the ld. D/R, on the 145th Report of the Parliament of India (Rajya Sabha) Petition praying for Protection of interest of Bona Fide Indian National Residing in Sikkim Prior to its merger with India in 1975, presented on 6th August, 2013, has no relevance as far as this issue is concerned. The Indian Income Tax Act, 1961, has been extended to the State of Sikkim w.e.f.01/04/1989. The revenue has not brought on record any evidence of merger of the Companies Act of Sikkim with the Indian Companies Act, 1956. Hence, the propositions of law laid down by the Tribunal extracted above still holds the field. Hence, we uphold the contention of the assessee that it has to be assessed as an ‘Association of persons’ and not as a ‘Company’,’ the bench said.’

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