The Income Tax Appellate Tribunal (ITAT) examined the taxability ...

Tax Tribunal Rules on Discretionary Trust Income: Maximum Rate Taxation, Beneficiaries Get Deductions.

August 21, 2024

Case Laws Income Tax AT

The Income Tax Appellate Tribunal (ITAT) examined the taxability of income from a discretionary trust u/s 164(1) read with clause (ii) of Explanation 1 to Section 164 of the Income Tax Act, 1961. The key points are: Since the trustees have absolute discretion to apply the trust's income and corpus, and the beneficiaries' shares are not determined, the trust is considered a discretionary trust. The income is taxable at the maximum marginal rate as if it were the total income of an association of persons (AOP). However, the beneficiaries, being individuals, cannot be denied deductions u/ss 80C and 80TTA due to the deeming fiction of AOP. The Assessing Officer must consider allowing credit for TDS and deduction u/s 80C after verification. The ITAT emphasized that the correct income must be taxed strictly per the Act, regardless of any deficiencies in the prescribed ITR forms. The assessee's appeal was partly allowed.

View Source

← Previous Next →

The Income Tax Appellate Tribunal (ITAT) examined the taxability ...

Tax Tribunal Rules on Discretionary Trust Income: Maximum Rate Taxation, Beneficiaries Get Deductions.

August 21, 2024

Case Laws Income Tax AT

You may also like:

The appellant trust claimed to be formed for public charitable activities and registered under the Rajasthan Public Trust Act 1959, regularly filing its income tax...

Discretionary trust liable to pay tax at maximum marginal rate, including highest slab rate of income tax and surcharge applicable to individuals. Section 2(29C)...

ITAT determined that a registered charitable trust's income should be taxed at normal rates rather than maximum marginal rates, despite undefined trustee shares. While...

This summary concerns an appeal before the Income Tax Appellate Tribunal regarding violations of Sections 11 to 13 of the Income Tax Act by a trust. The key points are:...

Trust's income tax liability determined based on last will provisions, not maximum marginal rate - assessee's appeal allowed. AO and CIT(A) erred in applying Section...

Insertion of new Chapter XII-EB - Tax on accreted income-Interest payable for non-payment of tax by trust or institution - When trust or institution is deemed to be...

Assessment of trust as Association of Persons (AOP) - family trust - rate of tax - maximum marginal rate or slab rates - Assessee family trust has only income from other...

Assessment of trust/AOP - trust to be assessed in the status of AOP - religious trusts / deity - Levying tax at the maximum marginal rate instead of rates applicable to...

The trust is discretionary trust. Hence, it is liable to be assessed as per the provisions of Sec.164(1) at maximum marginal rate.

Denial of exemption u/s 11 & 12 - Assessment of trust - Taxation at Maximum Marginal Rate (MMR) - charging the assessee as per the provisions of section 164(1) or 164(2)...

Assessment of trust - Rate of Tax - Maximum Marginal Rate (MMR) - The ld. AR of the assessee argued that the trust should be taxed based on the specific provision of...

The assessee, a trust, claimed to be taxed at the same rate applicable to its beneficiary u/s 115BAA. However, this claim was dismissed as the assessee was not treated...

Status of a private discretionary trust - AOP OR Individual - The Ld. CIT(A) has interpreted the meaning of AOP - the subsequent amendment by explanation to section...

ITAT set aside CIT(A)'s orders concerning taxation of rental income earned by an AOP under s.167B. While co-ownership agreement specified determinate shares,...

Reopening of assessment - income arising from the revocable transfer of assets - taxability in the hands of trust or transferor/settler - The Appellate Tribunal observed...

Quick Updates: