SHRI BEDI SATSANG SABHA,JAIPUR vs. EXEMPTION WARD 1, JAIPUR, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No. 35/JPR/2026 (Assessment Year:2018-19)

Shri Bedi Satsang Sabha Vs. Exemption A 115, Ram Gali No.5, Ward 1 Arjun Lal Sethi Nagar Jaipur S.O. Jaipur, Jaipur 302004, Rajasthan �थायीलेखासं./जीआइआरसं./PAN/GIR No:AABTB 7344 K Appellant .. Respondent Appellant by : Mrs. Suhani Meharwal, CA Respondent by : Mrs. Aarti Rawat, Addl. CIT Date of Hearing 08.07.2026 Date of Pronouncement 29.07.2026 O R D E R Per Annapurna Gupta, AM:- The present appeal has been filed by the assessee against the order passed by the Office of the Commissioner of Income Tax, Appeal Addl./JCIT(A)-03, Bengaluru (hereinafter referred to as “Ld.

P a g e | 2 ITA No.35/JPR/2026 Shri Bedi Satsang Sabha CIT(A)”),dated 12.12.2025 u/s 250 of the Income Tax Act, 1961,(hereinafter referred to as “the Act”). 2. The grounds raised by the assessee are as follows:- 1. Ground 1 On the facts and in the circumstances of the case as well as law, Id. AO erred in levying tax on MMR instead of slab rate and also LD. CIT(A) has erred in sustain the rate of MMR on Charitable trust not registered u/s 12AB of I.T Act, 1961. 2. Ground 2 On the Facts and in the circumstances of the case as well as law Ld. CIT(A) erred in holding the shares of beneficiaries and unknown in the case of charitable trust in which general public are beneficiaries and the shares of members are always zero, which is determinate. 3. Ground 3 Assessee wishes to reserve the right to add, amend, DLEETE any of the ground above. 3. The short issue in the present appeal relates to levy of tax on the assessee at the Maximum Marginal Rate (MMR) instead of slab rate, the assessee being a charitable trust not registered u/s 12AB of the Act. Ld. Counsel for the assessee contended that, this issue has already been adjudicated by various coordinate Benches of the ITAT consistently holding that the MMR was not applicable to such trust, which are not registered u/s 12AB of the Act and the tax rate is to be computed as per normal rates applicable to Association of Persons. She pointed out that, the said decisions took cognizance of CBDT Circular No.320 dated 11.01.1982 in this regard. Our attention was drawn to the decisions of the ITAT Delhi Benches in the case of Pawai Trust Vs. DCIT ITA No.5106/Del/2025 dated 06.02.2026 and Yamuna Trust New Delhi Vs. DCIT in ITA No.6623/Del/2025 dated 29.04.2026. Our attention was drawn to the findings of the ITAT in the case of Pawai Trust (Supra) contained at para 10 of the order as under:-

P a g e | 3 ITA No.35/JPR/2026 Shri Bedi Satsang Sabha 10. Considered the rival submissions and material placed on record, we observed that the issue and grounds of appeal raised by the assessee against the adoption of tax rate in the case of the assessee and the issue is whether the tax should be applied in the case of the assessee by adopting MMR or Regular Tax Slabs. We find that the exactly similar issue was considered by the coordinate Bench in the case of Vindhya Trust & Jasmina Trust (Supra). The issue under consideration is dealt by the coordinate bench as under:- “7. Considered the rival submissions and material placed on record. We observe that in the current assessment year, lower authorities have applied the rate of MMR and also applied surcharge applicable to AOP as applicable to section 167B (1) of the Act. However, it is brought to our notice that the constitution and functions of the assessee are exactly similar and consistently followed by the assessee. In subsequent assessment year ie. 2022-23, Id. CIT (A) has considered the similar facts on record and allowed the same by relying on the CBDT circular. For the sake of brevity, the same is reproduced below :-

7.2.5. Section 167(1) of the Act, makes it very clear that this section would not apply to the company or a co-operative society or a society registered under the Societies Registration Act. 1860 (21 of 1960), or under any law corresponding to that Act in force in any part of India. The appellant is a charitable trust registered under Charitable and Religious Trust Act, 1920 and therefore, appellant can't be subjected to taxa MMR at any cost 7.2.6. The appellant being a public charitable trust, there profit ratio shares can't be allocated among the members and once right is not allocated, the question whether the shares are determinate or indeterminate doesn't arise. Further, this organization was not formed for a benefit of few individuals, like in private trusts and therefore sharing of income and determination of income of each individual does not arise. As per sub-section (2) of section 1678 of the Act which deals with association of persons or body of individuals, not being a case falling under sub- section (1), where individual shares of members are not indeterminate or unknown, in other words, the shares of members is known and fixed is also not applicable to facts of the appellant for the reason mentioned supra. Hence, the rate of MMR under both sub sections (1) and (2) of 1678 is not applicable to appellant case. 72.7. It is pertinent to refer to the Circular of the CSDT in No. 320, dated 11.01.1982. The said circular is reproduced as under.

P a g e | 4 ITA No.35/JPR/2026 Shri Bedi Satsang Sabha "Circular: No. 320 [F. No. 131(31)81-TP (PL)), dated 11-1-1982-SECTION 167A ASSESSMENT WHERE SHARES OF MEMBERS UNKNOWN) 911. Whether the section is applicable to income received by trustees on behalf of provident funds created exclusively for the benefit of employees. 1. A reference is invited to paragraph 15. 1 to 15.7 of the Explanatory Notes on the provisions relating to direct taxes in the Finance Act, 1981 [Circular No. 308, dated 29-6-1981) which explain the scope and ambit of section 167 A. as inserted by the Finance Act, 1981 2 A question has been raise whether the provisions of section 167 A of the Income-tax Act which provide for charging of tax at the maximum marginal rate on the total income of an association of persons where the individual shares of members in the income of such association are indeterminate or unknown would also apply to income receivable by trustees on behalf of provident funds, superannuation fonds, gratuity funds, pemsion funds, ete, created bona fide by persons carrying on business or profession exclusively for the benefit of the persons employed in such business The Board have been advised that cases where income received by the trustees on behalf of a recognized provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income-tax Act, the question of their being charged to tax does not arise. So far as cases where income is receivable by the trustees, on behalf of an unrecognized provident fund or an unapproved superannuation fund, gratuity fund, pension fund or any other fund created bona fide by a person carrying on a business or profession exclusively for the benefit of persons employed in such business or profession are concerned, they will continue to be charged to tax in the manner prescribed by section 164(1)(iv) of the Income-tax Act, as hitherto. Similarly, in thẻ cases of registered societies, trade and professional associations, social and sports clubs, charitable or religious trusts, etc., where the members or trustees are not entitled to any share in the income of the association of persons, the provisions of new section 167 A will not be attracted and accordingly, tax will be payable in such cases at the rate ordinarily applicable to the total income of an association of persons and not at the maximum marginal rate". 7.2.8. In view of the above, the appeal of the appellant is allowed and AO is directed to tax the appellant's income at the normal tax rates applicable to AOP or Body of Individuals for the AV 2022-23 8. Similarly, we observe that ITAT, Cochin Bench in the case of MahakaviEdasseriSmarka Trust (supra) considered the similar issue and held as under- 4.6 We again find no reason for application of section 1678 of the Act, prescribing the maximum marginal rate in the instant case, which is one of a charitable trust. Section 1678, as a reading of the provision would show, is only where the shares of the beneficiaries of the trust are not known. The assessee registered as a charitable trust, is a public body and, accordingly, there is no question of it's beneficiaries being individual members, whose shares have therefore to be defined. The application thereof in the instant case is wholly

P a g e | 5 ITA No.35/JPR/2026 Shri Bedi Satsang Sabha misconceived. The matter in fact stands clarified by the Board perit's Circular No. 320, dated 11/01/1982, also binding on the Revenue. The tax rate accordingly is to be computed as per the normal rates as applicable to Association of Persons. The same, in our view, is again an apparent mistake and, where contested, outside the ambit of s. 143(1)((a) in the first instance, so that it could not have been effected there-under. 4.7 We decide accordingly." 9. Respectfully following the above decision and also the decision of the Ld. CIT (A) in subsequent assessment year i.e. 2022-23, we allow the grounds raised by the assessee. 4. Ld. Counsel for the assessee, pointed out that, the Ld. CIT(A) had upheld the application of MMR to the income filed by the assessee relying on the decision of ITAT Ahmedabad Benches in the case of Gujarat Rohit Samaj Trust Vs. DCIT in ITA No.2161/Ahd/2018 dated 27.04.2022, which was distinguishable, since it had not considered the CBDT Circular referred to by the ITAT Delhi Benches in the case of Pawai Trust (Supra). 5. Ld. DR though relied on the order of the Authorities below. 6. We have heard the rival contentions, the short issue for our consideration is the rate at which taxes is to be levied. It is not disputed that, the assessee-Trust is not registered u/s 12AB of the Act. The assessee therefore, is to be assessed in the capacity of AOP. The ITAT Delhi Benches in the case of Pawai Trust (Supra) has taken note of the CBDT Circular No.320 dated 11.01.1982, and held that the MMR of tax would not be applicable to assessee as the present Society. We agree with the ld. Counsel for the assessee, that the said decision of the ITAT Delhi Benches is squarely applicable to the facts of the present case. The decision relied upon by the Ld. CIT(A) of the ITAT

P a g e | 6 ITA No.35/JPR/2026 Shri Bedi Satsang Sabha Ahmedabad Benches in the case of Rohit Samaj Trust (Supra) has been rightly distinguished by the ld. Counsel for the assessee, pointing out that it did not referred and take cognizance of the CBDT Circular referred to by the ITAT Delhi Benches while adjudicating the issue. 7. In view of the same, we hold that, the assessee-Trust assessed in the status of AOP was liable to tax at normal rates and the tax levied at the MMR is therefore set aside. The AO is directed accordingly, to compute tax on the income applying the normal rates. 8. In effect, the appeal of the assessee is allowed in above terms. Order pronounced in the open court on 29.07.2026

Sd/- Sd/- (T.R. Senthil Kumar) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 29.07.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur