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Income Tax Appellate Tribunal, “PATNA ” BENCH, VIRTUAL
Before: Shri A. T. Varkey, JM]
This appeal has been preferred by the assessee Trust against the order of the Ld.CIT(A), Hazaribagh dated 24.02.2020 for AY 2013-14.
The assessee's appeal is time barred by 244 days and a petition seeking condoning the delay has been filed stating that the delay in filing of the appeal was attributable to the restrictions imposed due to Covid -19 pandemic. I have heard both the sides and find that there is a reasonable cause for delay in filing of the appeal on time due to Covid -19 pandemic. Hence, I condone the delay and admit the appeal for hearing.
Brief facts of the case are that the assessee is a private benefit AOP trust created for the benefit of deities specified therein. For the relevant AY 2013-14 the assessee had filed return of income of Rs.1,10,530/- and the tax payable thereon was calculated at NIL by taking into account the rates applicable to individuals. While processing the return of income, the CPC assessed the assessee in the status of an AOP taxable at the maximum marginal rate and accordingly raised demand of Rs.21,840/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who confirmed the action of the CPC. Aggrieved, the assessee is in appeal before this Tribunal.
2 ITA No. 04/Pat/2021 Sri Kalika Nandan Niji Kuldevta Trust, AY 2013-14
Assailing the action of the Ld. CIT(A) the Ld. Sr. Advocate Shri Rastogi submitted that the assessee is an AOP Trust formed for the family deities. The family of the declarants of the Trust had from generation to generation and time to time established and consecrated temples as below:
A temple of ShriMahadevJi at Sheohar was built and consecrated by late raja Shri Krishna Singh in there then residential premises which is now popularly known in Seohar as PaschimShivala around 1860.
Temple of Shri Kali JiShriDurgaJi and ShriMahadevJi the kuldevta of declarants of trust was established and consecrated by late Raja Dev Nandan Singh around 1890 within the ancestral residential house of GirijaSadan premises at Sheohar.
A temple of Shri Hanuman Jiat Frazer Road Patna was built and consecrated by late Kamleshwar Nandan Sinha and his wife late Girijeshwari Devi within their Patna residential premises in the year 1969. These temples were built and consecrated for the spiritual benefits of the family members and the public neither had or has nor ever had access to the said deities.
He pointed out that the properties dedicated to the aforesaid deities belonged to and are owned by each of the deities to whom they have been dedicated and the assessee is only required to manage them as per deed of declaration of trust dated 30 April, 1993. Taking us through the said deed of trust, he submitted that the income from property of each deity belongs to that deity to the exclusion of others. According to him, the trust was in the nature of an AOP of the respective deities and had all along been assessed as association of persons. He invited our attention to the return of income filed for AY 2013-14 and showed that the AOP had derived income of Rs.37,800/- from house property, Rs.16,727/- as income from other sources (interest and donation received) and net agricultural income of Rs.56,000/- equal to aggregate income of Rs.1,10,530/-, on which no tax was payable as the threshold limit was Rs. 2 lacs. According to the Ld. Sr. Advocate, Shri Rastogi, the Ld. CIT(A) has not correctly appreciated the facts of the case and had arbitrarily applied section 164 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) to levy tax treating the assessee as AOP at the maximum marginal rate. According to Ld. Sr. Advocate, the Ld. CIT(A) failed to appreciate that that assessee AOP was only managing the deities and it was not a beneficiary of the surplus income. He further submitted that the aggregate income
3 ITA No. 04/Pat/2021 Sri Kalika Nandan Niji Kuldevta Trust, AY 2013-14 derived by the assessee was separately identifiable to each of the deity in terms of the Deed of trust and therefore the provisions of Section 164 of the Act was not applicable. He thus prayed that the impugned order of the Ld. CIT(A) may be cancelled.
Per contra, the Ld. DR Shri Ajay Kumar submitted that the neither the Ld. CIT(A) nor the CPC had examined the trust deed of the assessee, which according to him, needs to be looked into to determine the issue at hand. He thus urged that since factual verification is required to be carried out, he urged that the matters be set aside back to the Ld. CIT(A).
I have heard the rival submissions and perused the material placed on record. From the material before me, it is noted that the assessee trust was declared by late Kamleshwari Nandan Sinha, his wife late Girijeshwari Devi and their son Shri Krishna Nandan Singh on 30/04/1993 for managing and look after the properties and affairs of the deities aforesaid, primacy for the Puja bhog rag and festivals connected with the deities and then to apply the surplus income if any, of the deities after meeting their expenses, if any, to the charitable purposes mentioned in the trust deed, such as to give grants to educational Institution, hospitals and to give scholarship to students. Perusal of the Deed of Trust makes it evidently clear that the members do not have any right over any of the assets of the Trust or income derived from the properties held in Trust. It is noted that the assets were settled with specific directions that the assets and income derived there from would be utilized for performing seva, pooja etc. of the deities and do public welfare, if possible. Other than the foregoing specified purposes, the members were not permitted to apply the assets and the income of the Trust for their own benefit or for any other purpose or object. I therefore find merit in the Ld. Sr. Advocate's submissions that the Ld. CIT(A) proceeded on erroneous assumption that the members of the Trust were also beneficiaries of the assets & income settled of Trust and therefore it was a case where the shares of the beneficiaries in the assets & income of the Trust were indeterminate. Instead, plain reading of the Deed shows that that the assets & income of the Trust were for the sole benefit of the specified deities and none else. Having regard to these facts therefore I have no hesitation in holding that the assessee was an AOP Trust created for the benefit of the specified deities who alone were the beneficiaries.
4 ITA No. 04/Pat/2021 Sri Kalika Nandan Niji Kuldevta Trust, AY 2013-14 8. Now the only issue, which is to be looked into, is whether the assessee Trust is liable to be taxed at the maximum marginal rate as prescribed in Section 164 of the Act. I note that this identical issue has been decided by this Tribunal in the case of BangiyaNimbark Ashram Vs ITO (ITA Nos. 1981 & 1982/Kol/2018) dated 10.04.2019. In the decided case also the assessee trust was settled for the benefit of nine family deities. The Revenue had assessed the assessee in the status of AOP whose share is not determinate and accordingly taxed it u/s 164(2) of the Act. On appeal this Tribunal noted that, none of the members were entitled to or derived any benefit from the property of the assessee trust, and that the assets and income of this Trust were meant to be exclusively used for the benefit of the deities and/or public welfare. Although the share of deities were not specified in the deed of trust, this Tribunal following the decision rendered by the Hon'ble Calcutta High Court in the case of CIT Vs Sri Sri Sridhar Jew (supra) held that the share of each deity was to be considered as equal and therefore determinate, and accordingly the provisions of Section 164(2) were held to be inapplicable. The relevant extracts of the decision is as under:
The issue as to whether such trusts are liable to be taxed the maximum marginal rate as prescribed in Section 164 was considered by the Hon'ble Calcutta High Court in the case of CIT Vs Sri Sri Sridhar Jew (184 ITR 323) involving facts which are analogous to the facts of the present case. In the case decided by the Hon'ble Calcutta High Court the AYs involved were 1958-59 to 1972-73 and the dispute related to the method of assessment of the income derived from properties, which were dedicated to a number of deities. The income derived from the properties were assessed in hands of the shebaiths and on consideration of the ArpanNama it was held that though the assessee as a shebaith might have had the custody of the property and enjoyed the right to manage it, he was not the owner of the property and therefore he was not liable to be assessed to tax under the Act. The Hon'ble High Court held that under the Hindu Law the property settled through ArpanNama vested in the idol, which was a separate jurisdic person, and therefore under the Income-tax Act, 1961 the income had to be assessed as the income of the deity. In the later years the dispute arose as to whether the Tribunal was right in holding that although the share of the deities were not defined in the Deed of Endowment, their shares could be considered as defined in law and therefore tax was not chargeable at the maximum marginal rate. In this regard High Court took note of its earlier judgment of the Division Bench in the case of PulinBehariDey (20 ITR 314) wherein it was held that where the grant & devise to the deities were made without specification of shares, then it would be presumed that they took it in equal shares and therefore when the shares of the deities were certain and it was known that the properties were given to the deities in equal shares, then the proviso to Section 41 was not applicable. Applying the ratio laid down in the case of PulinBehariDey (supra), the Hon'ble Calcutta High Court held that where there was no specification of the shares of deities then they took in equal shares and therefore the assessment should be made separately in the hands of the deities.
5 ITA No. 04/Pat/2021 Sri Kalika Nandan Niji Kuldevta Trust, AY 2013-14 5. I find that the decision of the Hon'ble Calcutta High Court is fully applicable to the facts of the present case. Even though in the Deed of Dedication, the individual shares of each of the nine deities has not been specified yet it is apparent that they took their share in equal measure and there was no intention expressed or otherwise discernible from the Deed of Dedication that the deities were to take the assets settled in an unequal manner. In the circumstances applying the decisions of jurisdictional High Court (supra), it has to be held that the share of each deity was equal and therefore determinate. Accordingly I hold that provisions of Section 164(2) requiring application of maximum marginal rate were not applicable in the given facts of the case. The AO is therefore directed to re-compute the tax liability of the assessee without applying maximum marginal rate.
The above decision is found to be mutatis mutandis applicable in the given facts of the present case. Following the same, we set aside the order of the Ld. CIT(A) and the AO is directed to re-compute the tax liability of the assessee without applying the provisions of Section 164 and/or the maximum marginal rate.
In the result, the appeal of assessee is allowed for statistical purposes.
14th December, 2021. Order is pronounced in the open court on
Sd/- (Aby. T. Varkey) Judicial Member Dated : 14th December,2021 JD(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – Sri Kalika Nandan Niji Kuldevta Trust, 7, Tatliputra Colony, Patna-800013, Bihar
2 Respondent – ITO, Ward-6(3), Patna. 3. CIT(A), Hazaribagh 4. CIT, 5. DR, ITAT, Patna.
/True Copy, By order,
Sr. Pvt. Secretary