9911796707
TMI Blog2024 (9) TMI 1699X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee and the tax should be charged accordingly to Section 164(2) - HELD THAT:-Section 164 is a special provision that prevails over the general provision of Section 167B. The decision of Marsons Beneficiary Trust [1990 (7) TMI 37 - BOMBAY HIGH COURT] has considered the fact in a case of a Trust, where the beneficiaries in the share was determinate and therefore, Hon'ble Court held that the earnings on behalf of such Trust would be taxed as an AOP. As a corollary in the present facts, the share of the beneficiaries are not known though the assessee in the return of income mentioned itself to be an AOP and therefore provisions of Section 167B are not applicable. If we analyze the alternative plea raised that the assessee had not claimed any exemption under Sections 11 and 12 for the year under consideration therefore, there not being a situation of denial of exemption under Sections 13(1)(c) or 13(1)(d) the assessee come within the ambit to subject that portion of income to the maximum marginal rate. Accordingly, assessee cannot be subjected to maximum marginal rate for the year under consideration merely because it filed its return of income in form ITR - 7 as against ITR - 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 700/- that do not exceed the maximum amount of Rs. 2.5 Lakh. The assessee was therefore of the opinion that, it did not get covered under sub Section (4A) of Section 139 of the Act. As a consequence, the assessee was of the bona fide believe that, it was also not covered Rule 12A(g). Thus, the assessee did not file its return of income in Form ITR-7, instead it filed its return of income in Form ITR-5 which was as per Rule 12(e) of Income Tax Rules. 2.1 It is submitted that, the assessee mentioned its status to be AOP and sub-status as Trust in the ITR Form-5. Subsequently, the assessee received intimation order under sub-Section 143(1) of the Act, passed by the CPC on 23.09.2022, wherein the assessee was taxed at maximum marginal rate, thereby raising a demand of Rs. 64,000/-. Aggrieved by the order of the CPC, the assessee preferred appeal before the Ld. CIT(A). 3.1 Before the Ld. CIT(A), the assessee contended that, no prior intimation regarding the proposed adjustment was sent by the CPC to the assessee, being a precondition, as stipulated in the 1st proviso to Section 143(1) of the Act. 3.2 The assessee also contended that, it is wrongly subjected to maximum marginal rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the appellant as an AOP while passing the intimation order u/s 143(1). Now the only point of contention is whether the appellant is liable to be charged at MMR or not? 5.2.3 In this context, it is pertinent to mention here that in "column F(1)" of * Partner's or Member's or Trust Information" where it was specifically asked to furnish "Whether shares of the beneficiary are determinate or known?", it did not opt any option. The relevant part of the ITR is reproduced here as under: (F) To be filled in case of persons referred to in section 160(1)(ii) or (iv) 1. Whether shares of the beneficiary are determinate or known? ☐ Yes ☐ No 2 Whether the person referred in section 160(1)(iv) has Business Income? ☐ Yes ☑ No 3. Whether the person referred in section 160 (1)(iv) is declared by a Will and /or is exclusively for the benefit of any dependent relative of the settlor and/or is the only trust declared by the settlor? ☐ Yes ☐ No 4. Please furnish the following details (as applicable): (i) Whether all the beneficiaries have income below basic exemption limit? ☐ Yes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred appeal before this Tribunal. 4. The Ld. AR submitted that, the provision of Section 167B of the Act is not applicable to the present facts of the case in order to charge the assessee with a maximum marginal rate. 4.1 It is submitted that the authorities below applied the maximum marginal rate merely because, the assessee filed its return of income in Form ITR - 5, which is applicable to AOP and not in Form ITR - 5, which is applicable to charitable trust. It is submitted by the Ld. AR that, the assessee was under a bona fide belief that it was not required to file its return of income under Section 139(4A) of the Act, as it was not covered by Rule 12(1)(g) of the Income Tax Rules, and that assessee's case fell under Rule 12(1)(e). He submitted that these submissions of the assessee were ignored by the authorities below. The Ld. AR also submitted that, there is no estoppels against law and merely because the return was filed in Form ITR - 5, cannot decide the rate of tax to be the maximum marginal rate. Referring to the decision of Hon'ble Bombay High Court in the case of CIT v. Marsons Beneficiary Trust [1991] 188 ITR 224 (Bom). 4.2 The Ld. AR submitted that a Trust ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1993) 199 ITR 765 (Raj). 5.1 It is noted that, Hon'ble Rajasthan High Court in case of JKs Employees Welfare Fund (supra) considered what amounts to a prima facie adjustment by observing as under: "A bare perusal of section 143(1)(a) contemplate that the ITO has to accept the return as it is and in the proviso, three exceptions have been given, which confer the jurisdiction on him for making adjustment. The action under this section cannot be taken beyond the power permitted by these three exceptions. The third exception provides that where any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed. The question is whether the application of rate of tax can be covered by the term 'relief claimed in the return because application of a different rate of tar will not fall under the category of loss carried forward, deduction, allowance. There is another provision in clause (i) regarding arithmetical errors in the return. There may be a case where the rate of tax is not disputed but while calculating the tax there is an err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have a defined share in the income. It is noted that Section 164 is a special provision that prevails over the general provision of Section 167B. The decision of Hon'ble Bombay High Court in case of CIT vs. Marsons Beneficiary Trust (supra) has considered the fact in a case of a Trust, where the beneficiaries in the share was determinate and therefore, Hon'ble Court held that the earnings on behalf of such Trust would be taxed as an AOP. As a corollary in the present facts, the share of the beneficiaries are not known though the assessee in the return of income mentioned itself to be an AOP and therefore provisions of Section 167B are not applicable. If we analyze the alternative plea raised that the assessee had not claimed any exemption under Sections 11 and 12 for the year under consideration therefore, there not being a situation of denial of exemption under Sections 13(1)(c) or 13(1)(d) the assessee come within the ambit to subject that portion of income to the maximum marginal rate. Accordingly, in our view assessee cannot be subjected to maximum marginal rate for the year under consideration merely because it filed its return of income in form ITR - 7 as against ITR - 5. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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