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TMI Blog2018 (11) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant is opposed to law, equity, and weight of evidence, probabilities, facts and circumstances. 5. The learned AO is not justified in taxing income of the Trust at Maximum Marginal Rate. The order of the learned CIT (A) in upholding this tax rate may also be quashed. 6. The Learned AO has wrongly made a presumption that the activities of the Trust are commercial in nature without making any study into the day-to-day functioning of the Trust. The Learned AO has not applied his mind in going through the income of the Trust which indicates that there is no income of any commercial nature. The incomes are only in the form of Educational Course fee collected from students. 7. Such other grounds as may be urged at the time of hearing. For the above and other grounds that may be urged at the time of hearing of appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered." 3. It was submitted by ld. AR of assessee that the copy of deed of trust dated 02.12.2008 is available on pages 39 to 55 of paper book along with the supplementary trust deed dated 10.05.2016. In particular, he drawn our attention to clause no. 3(h) of the said deed of trust as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of trustees with their PAN & Income tax details The above details have not been submitted by the assessee so far. Verification of 12A Registration in Office of the Commissioner of Income tax, Mangalore also confirms that the assessee is not registered u/s 12A as on date. Further, verification of the trustee's assessment details, it is seen that the trustees are having PAN and filing their Income tax returns and are also having taxable income. Further verification of the Return of Income of the assessee shows that the assessee has declared the income under the head 'Profits & Gains from Business & Profession' and filed Return of Income in ITR 5 which is meant for assessee declaring income under the head income from 'Business & Profession'. Assessee also claimed status of AOP and not status of 'Trust' in the Return of Income filed for AY 2011-12. It is also seen that the gross receipts are Rs. 1,42,30,600/- and out of this major expenditure incurred is towards Advertisement amounting to Rs. 48,65,536/- & towards Business Promotion amounting to Rs. 5,22,461/-. This also confirms that the assessee activity is more commercial in nature. As the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.4 The submissions of the appellant and rectification order were carefully considered. There is no merit in the arguments of the appellant. The assessee itself declared the income under the head 'Profits & Gains from Business & Profession' and filed Return of Income in ITR 5 which is meant for assessee declaring income under the head income from 'Business & Profession'. Assessee also claimed status of AOP and not status of 'Trust' in the Return of Income filed for AY 2011-12. It is seen that the gross receipts are Rs. 1,42,30,600/- and out of this major expenditure incurred is towards Advertisement amounting to Rs. 48,65,536/- & towards Business Promotion amounting to Rs. 5,22,461/-. This confirms that the activity of assessee is commercial in nature. As the status of the assessee is treated as 'AOP' for tax purpose, the tax rate applicable is as per the provisions of Sec 164(1). Hence, maximum marginal rate of tax is applicable in this case. The AO also discussed the issue clearly and I agree with reasoning given by the AO. There is no reason to interfere with the order of the AO. The grounds are rejected." 5. From the above paras reproduced f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in such business or profession, tax shall be charged on the relevant income or part of relevant income as if it were the total income of an association of persons : Provided further that where any income in respect of which the person mentioned in clause (iv) of sub-section (1) of section 160 is liable as representative assessee consists of, or includes, profits and gains of business, the preceding proviso shall apply only if such profits and gains are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him." 6. From the contents of the assessee's written submissions dated 13.11.2017 reproduced by CIT(A) in Para 5.3 of his order, it has been stated that section 167B is applicable in case of AOP/BOI but as per the assessee, section 167B is not applicable in the case of charitable trust or institutions. Hence we reproduce the provisions of section 167B of IT Act also for ready reference. The same is as under. "Charge of tax where shares of members in association of persons or body of individuals unknown, etc. 167B. (1) Where the ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the order passed by the AO u/s. 154, it is seen that the AO has stated in this order that to rectify as per the assessee's claim, the assessee was requested to furnish the copy of 12A certificate and details of trustees with their PAN and income details and thereafter, the AO has stated in the said order that these details have not been submitted by the assessee till the order was passed by him on 31.10.2012 although the query was raised by him on 10.09.2012. He also noted that on verification of 12A registration in Office of the Commissioner of Income tax, Mangalore, it is confirmed that the assessee is not registered u/s. 12A as on 31.10.2012. He further noted that from the verification of the trustee's assessment details, it is seen that the trustees are having PAN and filing their income tax returns and are also having taxable income. The AO has also stated in his order passed by him u/s. 154 that further verification of the return of income of the assessee shows that the assessee has declared the income under the head "Profits & Gains from Business & Profession" and the return of income was filed in ITR 5 which is meant for assessee declaring income under the head "Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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