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March 2026

A securitisation trust formed in accordance with the SARFAESI Act and RBI Guidelines is a revocable trust within the meaning of section 61 / 63 and consequently its income is not chargeable to tax in the hands of trust but in the hands of the Security Receipt Holders; accordingly, such trust cannot be assessed as an AOP under section 164.

By Jagdish T Punjabi, Chartered Accountant Devendra Jain & Aditya Bhatt, Advocates
Reading Time 5 mins

89. (2026) 182 taxmann.com 849 (Mum Trib)

ITO vs. Arcil Retail Loan Portfolio -001- A- Trust

A.Y.: 2016-17

Date of Order: 22.01.2026 Section: 61, 63, 164

A securitisation trust formed in accordance with the SARFAESI Act and RBI Guidelines is a revocable trust within the meaning of section 61 / 63 and consequently its income is not chargeable to tax in the hands of trust but in the hands of the Security Receipt Holders; accordingly, such trust cannot be assessed as an AOP under section 164.

FACTS

The assessee was constituted as a trust by Asset Reconstruction Company (India) Ltd. (ARCIL) pursuant to the provisions of the SARFAESI Act, 2002 and RBI Guidelines for the purpose of acquisition and resolution of Non-Performing Assets. Funds were raised by issuance of Security Receipts (SRs) to Qualified Institutional Buyers. ARCIL functioned as settlor, trustee and asset manager of the assessee-trust. The trust filed its return of income for A.Y. 2016-17 declaring total income at Rs. NIL, after claiming exemption on income of ₹27,63,75,223 under section 61 read with section 63. The return was processed under section 143(1) of the A

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