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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: HON’BLE SHRI V. DURGA RAO, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 24-01-2023 in the matter of rectification intimation u/s 154 issued by Centralized Processing Centre, Bengaluru (CPC) on 10-07-2019.The assessee is assessed as an Association of Person (AOP). The return of the estate was filed considering the provisions of Sec. 161 of the Act.
The trust earns income primarily under the head ‘income from house property’.
The grievance of the assessee is application of correct rates of taxes. The assessee has computed tax at rates which are applicable to an individual assessee whereas CPC has taxed the returned income at Maximum margin rate of 30%. The assessee’s reasoning was that the assessee is a specified trust wherein the names of the beneficiaries are known and their shares are determinate. It was pointed out that similar rate was charged for AYs 2017-18 and 2018-19 against which the rectification of the assessee was allowed. Therefore, rejection of similar rectification in this year was not justified. In AYs 2011-12 to 2013-14 also, the rates adopted by the assessee were accepted. Reliance was also placed on the decision of Hon’ble Supreme Court in the case of CWT vs. Trustees of E.H. Nizam family (Remianidner Wealth) trust (108 ITR 555) in support of application of Sec.
It was held that though Trust had filed single return, the department has to pass order in the hands of the Trustees representing each beneficiary trust separately in respect of his share of income treating the status as an individual. In other words, the department has to pass that many number of assessments as there are beneficiaries. However, Ld. CIT(A) confirmed the intimation issued by CPC by relying on the provisions of Sec.166. Aggrieved, the assessee is in further appeal before us.
We find that the trust earns income primarily under the head ‘income from house property’. Therefore, the provisions of Sec.161 (1A) would have no applicability. Secondly, the option of direct assessment as envisaged by Sec.166 could not be applied while processing the return of income since only prima-facie adjustments could be made u/s 143(1). Thirdly, in all the preceding as well as in subsequent years, the rates as adopted by the assessee has been accepted by the revenue which is evident from following tabulation as made by Ld. AR before us: - STATEMENT SHOWING THE RETURNS FILED AND REFUND GRANTED TREATING AS INDIVIDUAL S.No. Assessment Date of filing Ack No. Income from Refund Recd. taxing at normal Year house property rates 1 2007-08 03/10/2007 622163 114,858 Yes 2 2008-09 25/07/2008 620923 214,549 Yes 3 2009-10 28/07/2009 620975 149,836 Yes 4 2010-11 03/08/2010 621247 89,188 Yes 5 2011-12 27/07/2011 620460 97,729 Yes 6 2012-13 15/03/2013 1150313176943 104,373 Yes 7 2013-14 02/08/2023 1020813085359 90,666 Yes 8 2014-15 Subject matter of appeal before Hon’ble Tribunal 9 2015-16 31/08/2015 755113510310815 119,675 Yes 10 2016-17 26/07/2016 308760920260716 89,188 Yes 11 2017-18 04/08/2017 132535930040817 328,640 Demand raised on 21/11/2018 as AOP. Rectification filed on 11/3/2019 6/11/2019 Rectification passed and refund granted. 12 2018-19 24/07/2018 886706480240718 89,799 Demand raised on 11/01/2019 as AOP Rectification filed on 11/3/2019 6/11/2019 Rectification passed and refund granted. 13 2019-20 10/08/2019 787572220100819 99,604 Refund granted 14 2020-21 07/11/2020 706173790071120 15,028 Refund granted For all the aforesaid reasons, the computations made by CPC could not be accepted. The Ld. AO is directed to accept the rates of taxes as applied by the assessee.
The appeal stand allowed.
Order pronounced on 9th August, 2023.