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TMI Blog2024 (11) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant trust issue of application of tax rate on the return income in absence of Registration u/s 12AA is covered by the decision of Gurjar Pushkarana Vidyotejak Mandal [ 1987 (12) TMI 60 - ITAT AHMEDABAD-A ] wherein held where assessee-trust is not entitled to exemption under section 11 or 12 by virtue of provisions to section 13(1)(b), its income cannot be charged at maximum marginal rate but has to be charged at rates specified for an AOP u/s 164(2). If the provisions of clause (c) or (d) of sub-section (1) of section 13 are attracted, then, the relevant income of the trust has to be taxed at maximum marginal rate. The provision of Section 164(2) lays down that where relevant income or part of the income is not exempt u/s 11 due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as the JCIT(A) dated 24.07.2024 which is arising out of the Assessment Order dated 16.12.2019 passed u/s 143(1) of the Income Tax Act, 1961 (in short the Act ) by the DCIT, CPC, Bengaluru (in short The AO, CPC ) in respect of Assessment Year: 2018-19. 2. The assessee has raised the following grounds of appeal: 1.1. The impugned assessment order u/s 143(1) dt. 16.12.2019 is, are bad in law, illegal, invalid, void ab-initio on facts of the case, for want of jurisdiction, and also barred by limitation and various other reasons and hence the same may kindly be quashed. 1.2 The Id. AO has grossly erred in law as well as on the facts of the case in passing the ex-parte order without providing adequate and reasonable opport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processed u/s 143(1) of the Act, accepting the returned income at Rs. 3,59,064/-. However, the AO/CPC has computed tax liability at Rs. 1,13,486/- by taxing the income based on Maximum Marginal Rate and consequently, levied interest U/s 234 A, B, and C of the Act. 5. Aggrieved by the said order, the appellant has filed appeal u/s 246 of the Act before the Ld. CIT(A) who has rejected the appeal by observing as under: 6.1. It is seen from the grounds of appeal filed by the appellant that the sole ground for dispute is regarding taxing under Maximum Marginal Rate in place of normal rate as well as levy of interest U/s 234 A, B, C D of the Act. 6.2. It is seen the case of the appellant that it is claiming the status of trust by virtue of its re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, the appellant has claimed the the status of trust by virtue of its registration under Rajasthan Public Trust Act, 1959. However, no details were provided either with the Return of Income before AO/CPC or in appellate proceedings before the Ld. JCIT(A), whether the appellant was granted registration U/s 12 AA of the Income Tax act, 1961. 7. The Ld. AR submitted that the impugned order u/s 143(1) dated 16.12. 2019 as well as the decision taken by the Id. CIT(A) is bad in law, invalid, illegal. The AR explained that the ld. AO and ld. CIT(A) has erred in applying Maximum Marginal Rate (MMR), by ignoring the proviso to section 164(2). The Ld. AR has pleaded that tax rates would be applicable at normal rate on the line of AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at maximum marginal rate. However, where the assessee is not entitled to exemption under section 11 or 12, by virtue of the provisions contained in clause (b) of sub-section (1) of section 13, its income cannot be charged at the maximum marginal rate but its income has to be taxed at rates specified for an AOP as provided under section 164(2). 9. The provision of Section 164(2) lays down that where relevant income or part of the income is not exempt u/s 11 due to violation of Section 13(1)(c ) or 13(1)(d) of the Act, then in that eventuality tax shall be charged on the relevant income or part of the relevant income at MMR and not that entire income of the trust would be charged to tax at MMR. In the present case, the entire income declar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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