2022 (6) TMI 1080 - AT - Income Tax

Assessment of trust - Application of maximum marginal rate of tax on the income which was below the taxable limit - as per AR assessee should be made subject to tax at the rate applicable to an individual after allowing the basic exemption limit and that too at slab rate of tax - HELD THAT - We have heard the rival contention of both the parties and perused the materials available on record. At the outset we note that this tribunal in the case of Jain Sangh parabdi Khayu Trustee 2022 (6) TMI 1027 - ITAT AHMEDABAD held that the members of the trustees are not entitled to any share in the income of the Association of persons and rate applicable as to an individual for charging the income tax after a lowing the basic exemption limit, shall be applicable to the assessee on hand. Hence the ground of appeal of the assessee is allowed. thus involving the identical facts and circumstances have decided the issue in favour of the assessee.

Summary

Issues:
Appeals against orders of CIT(A) under s. 143(1) for AYs 2016-17 & 2017-18; Delay in filing appeals; Application of maximum marginal rate of tax on income below taxable limit.

Analysis:
The appeals were filed by the Assessee against the orders of the CIT(A) for AYs 2016-17 & 2017-18 under s. 143(1) of the Income Tax Act, 1961. The appeals were presented with a delay of 426 and 423 days respectively, but the Assessee relied on a Supreme Court ruling for extension of limitation. The Tribunal, considering the Supreme Court's directions, condoned the delay and proceeded to adjudicate the issues on merit.

Issue 1: Application of Maximum Marginal Rate of Tax
For AY 2016-17, the Assessee challenged the intimation issued by CPC, Bangalore, applying the maximum marginal rate of tax on income below the taxable limit. The AO treated the Assessee as an Association of Person, denying exemption under section 10(23C). The CIT(A) upheld the intimation. The Assessee argued for tax application at individual rates after allowing basic exemption, citing a Tribunal decision in a similar case. The Tribunal, following precedent, held that the rate applicable to an individual should apply, as the trust was a public trust not entitled to share income, in line with CBDT circular No. 320. The appeal was allowed, and no contrary binding decision was presented by the Revenue.

Issue 2: Application of Previous Decision
The same issue arose for AY 2017-18, and the Tribunal applied the decision made for AY 2016-17, allowing the appeal. The findings for AY 2016-17 were deemed applicable for AY 2017-18. Both appeals were allowed in favor of the Assessee.

In conclusion, the Tribunal allowed both appeals, finding in favor of the Assessee regarding the application of the maximum marginal rate of tax on income below the taxable limit. The orders were pronounced on 15/06/2022 in Ahmedabad.