2024 (10) TMI 1079 - AT - Income Tax

Determination of tax liability of the assessee trusts - Treatment to appellant as an Association of Person - whether the assessee s income is taxable at slab rates falling under clause (iv) of the first proviso to section 164(1) of the Act, or is taxable u/s 167B of the Act as an AOP at Maximum Marginal Rate? - AR submitted that the assessee trusts have also filed an application u/s 154 of the Act seeking to rectify the impugned intimation, to restrict the tax on the income of the assessee to slab rate HELD THAT - We are of the considered view that whether the assessee s income is taxable at slab rates falling under clause (iv) of the first proviso to section 164(1) of the Act, or is taxable under section 167B of the Act as an AOP at Maximum Marginal Rate is required to be examined in detail by the Jurisdictional Assessing Officer having regard to the all the relevant material. Since the assessee s rectification application in this regard is also pending consideration u/s 154 of the Act, we deem it appropriate to restore the issue on merits to the file of the Jurisdictional Assessing Officer for consideration afresh after examination and verification of all the necessary details/documents. Appeals by the assessee trusts are allowed for statistical purposes.

Issues:
1. Classification of the assessee trusts as an Association of Persons (AOP) for tax purposes.
2. Determination of tax liability of the assessee trusts at Maximum Marginal Rate (MMR).
3. Application of section 167B of the Income Tax Act for computing tax liability.
4. Calculation of tax liability under section 164(1) of the Act at slab rates.
5. Dismissal of appeal by the learned Addl./Joint CIT(A) due to delay in filing.
6. Maintainability of an appeal under Section 246A of the Act.
7. Disposal of appeal without granting the appellant trust an opportunity of being heard.

Analysis:
1. The appeals were filed by the assessee trusts challenging orders passed by the Addl./Joint Commissioner of Income Tax (Appeals) regarding the classification of the trusts as an AOP and the tax liability for the assessment year 2022-23. The trusts, settled by Ion Exchange (India) Ltd., provide benefits to employees and earn income from shares. The trusts claimed to fall under section 164(1) of the Act at slab rates but were assessed as an AOP at MMR under section 167B. The issue was whether the income should be taxed at slab rates or as an AOP. The Tribunal directed the Jurisdictional Assessing Officer to reexamine the matter considering all relevant material and pending rectification application under section 154 of the Act.

2. The assessee trusts contended that they had mistakenly offered income as an AOP at MMR due to a misunderstanding and sought rectification. The delay in filing appeals was attributed to initially believing the tax assessment was correct. The Addl./Joint CIT(A) dismissed the appeals due to the delay, upholding the demand raised under section 143(1) of the Act. The Tribunal allowed the appeals for statistical purposes, emphasizing the need for a detailed examination by the Assessing Officer and affording the trusts a fair hearing.

3. The learned Authorised Representative mentioned that similar trusts had received relief under section 154 of the Act, and the trusts were hopeful of a similar outcome. The Tribunal acknowledged this and directed the trusts to provide necessary details to the Assessing Officer for a fresh examination. The trusts were instructed to furnish all relevant documents and assured a fair opportunity to present their case. The impugned orders were set aside, and the grounds raised by the assessee were allowed for statistical purposes, ultimately allowing the appeals by the trusts.

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