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2022 (6) TMI 1098 - AT - Income TaxAssessment of trust - Intimation of the CPC by applying the maximum marginal rate of tax on the income which was below the taxable limit - HELD THAT - This tribunal in the case of Jain Sangh Parabdi Khayu Trustee 2022 (6) TMI 1027 - ITAT AHMEDABAD involving the identical facts and circumstances held that It is the admitted position that the members of the trustees are not entitled to any share in the income of the Association of persons. Accordingly, we are of the view that the circular issued by the CBDT as discussed above is squarely applicable in the given facts and circumstances. Thus we hold that the 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 - Decided in favour of the assessee
Issues:
- Appeal against orders of Commissioner of Income Tax (Appeals) under section 143(1) of the Income Tax Act, 1961 for Assessment Years 2016-17 & 2017-18. - Delay in filing appeals and applicability of extended limitation period. - Application of maximum marginal rate of tax on income below taxable limit for a trust. - Interpretation of provisions regarding tax rates for trusts. Analysis: Issue 1: Appeal against CIT(A) orders The appeals were filed by the Assessee against separate orders of the Commissioner of Income Tax (Appeals) for the Assessment Years 2016-17 & 2017-18 concerning the processing of income tax returns under section 143(1) of the Income Tax Act, 1961. Issue 2: Delay in filing appeals The appeals were presented before the Tribunal with a delay of 432 days. The Assessee explained that the appeals were filed within the extended time as provided by the Supreme Court in a specific case. The Tribunal, considering the extended limitation period, condoned the delay and proceeded to adjudicate the issues on merit. Issue 3: Application of maximum marginal rate of tax In the case of Assessment Year 2016-17, the Assessee, a trust, contested the application of the maximum marginal rate of tax on its income below the taxable limit. The Assessing Officer had denied the exemption claimed by the Assessee and treated it as an Association of Person, applying the maximum marginal rate of tax without allowing any exemption. The Commissioner of Income Tax (Appeals) upheld this decision. Issue 4: Interpretation of tax rates for trusts The Tribunal analyzed the case in light of a similar precedent involving a trust and held that the rate applicable to an individual, after allowing the basic exemption limit and at slab rate of tax, should be applied to the Assessee trust. Referring to a CBDT circular, the Tribunal concluded that the trust, being a public charitable trust, should not be subject to the maximum marginal rate of tax but to the rate ordinarily applicable to the total income of an association of persons. The Tribunal allowed the appeal of the Assessee for Assessment Year 2016-17. Issue 5: Application of decision to subsequent year For the Assessment Year 2017-18, the Tribunal applied the findings of the earlier year's appeal, as the issues raised by the Assessee were identical. The Tribunal decided in favor of the Assessee for the year 2017-18 based on the decision made for the previous year. In conclusion, both appeals by the Assessee were allowed, emphasizing the correct application of tax rates for trusts below the taxable limit. The Tribunal's decision provided clarity on the interpretation of tax provisions for trusts and upheld the Assessee's contentions in both cases.
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