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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 ..... stees decides to dissolve the trust, the funds and properties of the trust can be distributed to any person as the trustees may decide and therefore, it cannot be said that the trust fund cannot be used by the trustees at all. Under these facts, in our considered opinion, the share of the trustees in the trust fund is not known and it is indeterminate and therefore, there is no infirmity in the orders of the lower authorities as per which, they applied provisions of section 164(1) of IT Act. Hence we decline to interfere in the order of CIT (A) on this issue. - Decided against assessee. - ITA No. 2887/Bang/2017 - - - Dated:- 14-9-2018 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER For The Appellant Smt. Pratiksha Pai, CA For The Respondent : Dr. P.V. Pradeep Kumar, Addl. CIT (DR) ORDER Per Shri A.K. Garodia, Accountant Member This appeal is filed by the assessee and the same is directed against the order of ld. CIT (A), Mangalore dated 14.11.2017 for Assessment Year 2011-12. 2. The grounds raised by the assessee are as under. 1. The order of the Learned AO has delivered without adequate considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for rectification u/s. 154 dated 30.07.2012. He submitted that the issue has to be decided against the assessee in view of the provisions of section 167B of IT Act. 4. We have considered the rival submissions. We find that in paras 5.1 to 5.4 of the order of CIT (A), entire facts along with the contents of the assessee s application for rectification u/s. 154, the assessee s written submission dated 13.11.2017 and the finding of CIT (A) are available and hence, for the sake of ready reference, these paras from the order of CIT (A) are reproduced hereinbelow. 5. Decision on the grounds of appeal 5.1 The appellant is a Trust but not registered u/s 12A of the Income Tax Act, 1961. The Trust filed its return of income for AY 2011-12 on 30-03-2012 declaring total income of ₹ 1,95,930/-. The return was processed u/s 143(1) on 22-062012 assessing income at ₹ 1,95,930/-. The assessee filed return of income in ITR-5 claiming the status of AOP. While processing the Return of Income, income of the assessee is charged to tax at Maximum Marginal Rate. The assessee filed application for rectification u/s 154 dated 30-07-2012 for the AY 2011-12 stating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at part prescribes AOP to be taxed as same as on the basis of individual. As per Income Tax Act, Sec-167B is applicable in case of AOP / BOI taxation. So if Trust or Institution are liable to be assessed as AOP then obliviously section 167B does also have applicability in case of charitable trust or institutions. But section 167B will not be applicable in case of charitable trust or institutions because of following two reasons; a. Sec-167B of Income Tax Act, 1961 specifically excludes Companies and societies registered under societies registration Act, 1980 or any other similar legislation. b. The different rates as prescribed in section I67B are based upon knowledge and determined of share of individual members. As far as charitable or religious organizations are concerned there is no scope of share of income or surplus among members concerned. Hence it can be said now that charitable or religious trust or institutions are subject to tax at the rate applicable to individual assessee. AOP-Trust is subject to maximum marginal rate only in the following cases: I. Income for private religious purpose{sec-13(1)(a)} II. Income for the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as relevant income , part of relevant income and beneficiaries , respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate: Provided that in a case where- ( i) none of the beneficiaries has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or ( ii) the relevant income or part of relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or ( iii) the relevant income or part of relevant income is receivable under a trust created before the 1st day of March, 1970, by a nontestamentary instrument and the Assessing Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust was created ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which is higher than the maximum marginal rate, tax shall be charged on the total income of the association or body at such higher rate. ( 2) Where, in the case of an association of persons or body of individuals as aforesaid [not being a case falling under sub-section (1)],- ( i) the total income of any member thereof for the previous year (excluding his share from such association or body) exceeds the maximum amount which is not chargeable to tax in the case of that member under the Finance Act of the relevant year, tax shall be charged on the total income of the association or body at the maximum marginal rate; ( ii) any member or members thereof is or are chargeable to tax at a rate or rates which is or are higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the association or body which is or are relatable to the share or shares of such member or members at such higher rate or rates, as the case may be, and the balance of the total income of the association or body shall be taxed at the maximum marginal rate. Explanation.-For the purposes of this section, the individual shares of the member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) on 13.11.2017 as reproduced by CIT(A) in Para 5.3 of his order. 8. This is the second argument of ld. AR of assessee that section 167B is not applicable in respect of charitable trust/institutions. But we find no merit in this contention of assessee because we do not find any mention in the provisions of section 167B as per which charitable trust, institutions are excluded from its applicability. As per the explanation to section 167B, it is provided that for the purpose of this section, if the individual shares of the members of an association of persons or body of individuals in the whole or any part of the income of such association or body shall be deemed to be indeterminate or unknown and if such shares (in relation to the whole or any part of such income) are indeterminate or unknown on the date of formation of such association or BOI or at any time thereafter, MMR is applicable In the present case, it is stated before us that as per clause 3(h) of the trust deed, the funds and income of the Trust shall be solely utilized for the achievement of the objects of the trust but we find that as per para no. 12 of the same trust deed, the trust shall be irrevocable but the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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