FAJLE RABBI CHAND CHARITABLE TRUST,SANGLI vs. INCOME TAX OFFICER WARD 5, SANGLI
What did the Tribunal hold?
The Tribunal held that the assessee, being a charitable trust, is not liable to be taxed at the Maximum Marginal Rate (MMR) under Section 167B of the Act. The income is chargeable to tax at normal rates applicable to Association of Persons.
What were the facts?
The assessee, a charitable trust, filed its return declaring income below the taxable limit. However, the CPC processed the return by applying the Maximum Marginal Rate (MMR) of tax, which was upheld by the CIT(A). The assessee appealed this decision.
What were the issues?
Whether a charitable trust is liable to be taxed at Maximum Marginal Rate (MMR) or normal tax rates when its income is below the taxable limit.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE
Before: HON’BLE MANISH BORAD & HON’BLE PAVAN KUMAR GADALE
आदेश / ORDER
PER MANISH BORAD, ACCOUNTANT MEMBER: The captioned appeal at the instance of assessee directed against the order Ld. Commissioner of Income Tax (Appeals) / National faceless Appeal Centre (NFAC) dated 21.11.2025 pertain to A.Y 2024-25 arising out of the rectification order framed u/s 154 of the Income Tax Act, 1961 (in short “the Act”) dated 02.01.2025.
The only grievance of the assessee is that ld. CIT(A) erred in confirming the action of the AO applying the maximum marginal rate (MMR) of tax on the income of the
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST assessee which is the charitable trust and which is subject to assessee which is the charitable trust and which is subject to assessee which is the charitable trust and which is subject to assessee which is the charitable trust and which is subject to normal tax rates. normal tax rates.
At the outset, ld. Counsel for the assessee submitted At the outset, ld. Counsel for the assessee submitted At the outset, ld. Counsel for the assessee submitted At the outset, ld. Counsel for the assessee submitted that the issue is squarely covered by the decision of t the issue is squarely covered by the decision of t the issue is squarely covered by the decision of this this Hon’ble Tribunal in the case of National Association of Hon’ble Tribunal in the case of National Association of Hon’ble Tribunal in the case of National Association of Hon’ble Tribunal in the case of National Association of Interlocking Surgeons Vs. ITO (Exemption), Pune in ITA Nos. Interlocking Surgeons Vs. ITO (Exemption), Pune in ITA Nos. Interlocking Surgeons Vs. ITO (Exemption), Pune in ITA Nos. Interlocking Surgeons Vs. ITO (Exemption), Pune in ITA Nos. 2816, 2817 and 2560/Pun/2024 dated 12.02.2025 2816, 2817 and 2560/Pun/2024 dated 12.02.2025 2816, 2817 and 2560/Pun/2024 dated 12.02.2025.
On the other hand ld. DR support On the other hand ld. DR support On the other hand ld. DR supported the order of ld. ed the order of ld. CIT(A).
We have heard the rival contentions and perused the We have heard the rival contentions and perused the We have heard the rival contentions and perused the We have heard the rival contentions and perused the material placed before us. We observe that the assessee is a material placed before us. We observe that the assessee is a material placed before us. We observe that the assessee is a material placed before us. We observe that the assessee is a public charitable trust registered under Bombay Charitable public charitable trust registered under Bombay Charitable public charitable trust registered under Bombay Charitable public charitable trust registered under Bombay Charitable Trust Act, 1950. The trust is not having regis Trust Act, 1950. The trust is not having regis Trust Act, 1950. The trust is not having registration u/s 12A u/s 12A of the Act and had filed the return under the status of AOP of the Act and had filed the return under the status of AOP of the Act and had filed the return under the status of AOP of the Act and had filed the return under the status of AOP on 05.07.2024 declaring income of Rs. 49,710/ on 05.07.2024 declaring income of Rs. 49,710/ on 05.07.2024 declaring income of Rs. 49,710/-. Since the . Since the income of the assessee is below taxable limit no tax income of the assessee is below taxable limit no tax income of the assessee is below taxable limit no tax liability liability is shown in the return filed by the assessee. However CPC shown in the return filed by the assessee. However CPC shown in the return filed by the assessee. However CPC shown in the return filed by the assessee. However CPC while processing the return applied MMR charging the le processing the return applied MMR charging the le processing the return applied MMR charging the le processing the return applied MMR charging the assessee tax at 30% on the income declared i.e without giving assessee tax at 30% on the income declared i.e without giving assessee tax at 30% on the income declared i.e without giving assessee tax at 30% on the income declared i.e without giving any basic exemption limit applicable to individuals and AOPs. any basic exemption limit applicable to individuals and AOPs. any basic exemption limit applicable to individuals and AOPs. any basic exemption limit applicable to individuals and AOPs. Though the assess Though the assessee filed the rectification u/s 1 ee filed the rectification u/s 154 of the Act 54 of the Act but failed to get to get any relief and subsequently before ld. CIT(A) any relief and subsequently before ld. CIT(A) any relief and subsequently before ld. CIT(A) also the action of CPC taxing the assessee at MMR as per also the action of CPC taxing the assessee at MMR as per also the action of CPC taxing the assessee at MMR as per also the action of CPC taxing the assessee at MMR as per Sec. 167B(1) of the Act has been upheld. Sec. 167B(1) of the Act has been upheld. Sec. 167B(1) of the Act has been upheld.
We note that the assessee is a charitable religious trust We note that the assessee is a charitable religious trust We note that the assessee is a charitable religious trust We note that the assessee is a charitable religious trust and there is no determinate share of trustees. W and there is no determinate share of trustees. W and there is no determinate share of trustees. We note that e note that in the decision in the decision relied by ld. Counsel for assessee in the case ld. Counsel for assessee in the case ld. Counsel for assessee in the case of National Association of Interlocking Surgeons National Association of Interlocking Surgeons National Association of Interlocking Surgeons (supra), this this Tribunal has dealt with the CBDT Circular No. 320 dated Tribunal has dealt with the CBDT Circular No. 320 dated Tribunal has dealt with the CBDT Circular No. 320 dated Tribunal has dealt with the CBDT Circular No. 320 dated 11.01.1982 and also insertion of Sec. 167B(1) to 167(A) of the 11.01.1982 and also insertion of Sec. 167B(1) to 167(A) of the 11.01.1982 and also insertion of Sec. 167B(1) to 167(A) of the 11.01.1982 and also insertion of Sec. 167B(1) to 167(A) of the Act and referred to various decisions holding that even referred to various decisions holding that even referred to various decisions holding that even referred to various decisions holding that even registered trust engaged in the charitable activity registered trust engaged in the charitable activity registered trust engaged in the charitable activity are liable to liable to
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST be taxed at the normal tax rates. The relevant finding of this be taxed at the normal tax rates. The relevant finding of this be taxed at the normal tax rates. The relevant finding of this be taxed at the normal tax rates. The relevant finding of this Tribunal in the said Tribunal in the said decision referred reads as under: decision referred reads as under:
I have hear I have heard the rival contentions and perused the record d the rival contentions and perused the record d the rival contentions and perused the record placed before me. The only issue that arises for my consideration placed before me. The only issue that arises for my consideration placed before me. The only issue that arises for my consideration placed before me. The only issue that arises for my consideration is whether the income of the assessee is chargeable to Normal is whether the income of the assessee is chargeable to Normal is whether the income of the assessee is chargeable to Normal is whether the income of the assessee is chargeable to Normal Tax rates or the Maximum Marginal Tax rates. The assessee is a Tax rates or the Maximum Marginal Tax rates. The assessee is a Tax rates or the Maximum Marginal Tax rates. The assessee is a Tax rates or the Maximum Marginal Tax rates. The assessee is a Trust registered Trust registered on 16.05.2007 formed with the following objects : on 16.05.2007 formed with the following objects : on 16.05.2007 formed with the following objects :
“1. To bring orthopaedic Surgeons of similar interest in interlocking To bring orthopaedic Surgeons of similar interest in interlocking To bring orthopaedic Surgeons of similar interest in interlocking To bring orthopaedic Surgeons of similar interest in interlocking nailing together. nailing together. 2. To discuss and diffuse knowledge of interlocking nailing techniques. To discuss and diffuse knowledge of interlocking nailing techniques. To discuss and diffuse knowledge of interlocking nailing techniques. To discuss and diffuse knowledge of interlocking nailing techniques. 3. To conduct seminar & conferences. To conduct seminar & conferences. 4. To give fellowships to upcoming Doctors in interlocking nailing To give fellowships to upcoming Doctors in interlocking nailing To give fellowships to upcoming Doctors in interlocking nailing To give fellowships to upcoming Doctors in interlocking nailing techniques. 5. To carry out newsletter/brochures of interlocking related subjects. To carry out newsletter/brochures of interlocking related subjects. To carry out newsletter/brochures of interlocking related subjects. 6. To carry out Research & Development programs/activities in the field To carry out Research & Development programs/activities in the field To carry out Research & Development programs/activities in the field To carry out Research & Development programs/activities in the field of interlocking nailing techniques. of interlocking nailing techniques.”
I have perused the Trust Deed dated 16.05.2007. I I have perused the Trust Deed dated 16.05.2007. I I have perused the Trust Deed dated 16.05.2007. I I have perused the Trust Deed dated 16.05.2007. I observe that there are Five observe that there are Five trustees and the individual share of trustees and the individual share of trustees and the individual share of the Members of the Trust is not specified in the said deed. CPC the Members of the Trust is not specified in the said deed. CPC the Members of the Trust is not specified in the said deed. CPC the Members of the Trust is not specified in the said deed. CPC processed the return of income for the year under appeal charging processed the return of income for the year under appeal charging processed the return of income for the year under appeal charging processed the return of income for the year under appeal charging the income of the assessee at Maximum Marginal Rate. Assessee the income of the assessee at Maximum Marginal Rate. Assessee the income of the assessee at Maximum Marginal Rate. Assessee the income of the assessee at Maximum Marginal Rate. Assessee filed the Rectification filed the Rectification application u/s.154 of the Act which has application u/s.154 of the Act which has application u/s.154 of the Act which has been rejected. Before us, ld. DR has stated that the application been rejected. Before us, ld. DR has stated that the application been rejected. Before us, ld. DR has stated that the application been rejected. Before us, ld. DR has stated that the application u/s.154 filed by the assessee u/s.154 was delayed. I have gone u/s.154 filed by the assessee u/s.154 was delayed. I have gone u/s.154 filed by the assessee u/s.154 was delayed. I have gone u/s.154 filed by the assessee u/s.154 was delayed. I have gone through the record and notice that the assessee had filed the through the record and notice that the assessee had filed the through the record and notice that the assessee had filed the through the record and notice that the assessee had filed the application u/s.154 fo application u/s.154 for rectifying the mistake apparent from r rectifying the mistake apparent from r rectifying the mistake apparent from record to the CPC for having wrongly charged the Maximum record to the CPC for having wrongly charged the Maximum record to the CPC for having wrongly charged the Maximum record to the CPC for having wrongly charged the Maximum Marginal Rate as against the Normal Tax Rate. However, the Marginal Rate as against the Normal Tax Rate. However, the Marginal Rate as against the Normal Tax Rate. However, the Marginal Rate as against the Normal Tax Rate. However, the applications filed by the assessee u/s.154 were combined applications filed by the assessee u/s.154 were combined applications filed by the assessee u/s.154 were combined applications filed by the assessee u/s.154 were combined together and a consolidated order was passe together and a consolidated order was passe together and a consolidated order was passed on 12.01.2023. d on 12.01.2023. Therefore, the application u/s.154 of the Act for the impugned Therefore, the application u/s.154 of the Act for the impugned Therefore, the application u/s.154 of the Act for the impugned Therefore, the application u/s.154 of the Act for the impugned assessment year was filed within the prescribed time limit. assessment year was filed within the prescribed time limit. assessment year was filed within the prescribed time limit.
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST 9. In so far as the chargeability of the income of the assessee In so far as the chargeability of the income of the assessee In so far as the chargeability of the income of the assessee In so far as the chargeability of the income of the assessee at the Normal Tax Rate or the Maximum Marginal Rate at the Normal Tax Rate or the Maximum Marginal Rate at the Normal Tax Rate or the Maximum Marginal Rate, my , my attention was drawn to CBDT Circular No.320 dated 11.01.1982 attention was drawn to CBDT Circular No.320 dated 11.01.1982 attention was drawn to CBDT Circular No.320 dated 11.01.1982 attention was drawn to CBDT Circular No.320 dated 11.01.1982 which is placed at page 47 of the paper book, the contents of which is placed at page 47 of the paper book, the contents of which is placed at page 47 of the paper book, the contents of which is placed at page 47 of the paper book, the contents of which read as under : which read as under :
“2. A question has been raise whether the provisions of section 167A of the “2. A question has been raise whether the provisions of section 167A of the “2. A question has been raise whether the provisions of section 167A of the “2. A question has been raise whether the provisions of section 167A of the Income-tax Act which provide tax Act which provide for charging of tax at the maximum marginal for charging of tax at the maximum marginal for charging of tax at the maximum marginal rate on the total income of an association of persons where the individual rate on the total income of an association of persons where the individual rate on the total income of an association of persons where the individual rate on the total income of an association of persons where the individual shares of members in the income of such association are indeterminate of shares of members in the income of such association are indeterminate of shares of members in the income of such association are indeterminate of shares of members in the income of such association are indeterminate of unknown would also apply to income receivable by trustees on beh unknown would also apply to income receivable by trustees on beh unknown would also apply to income receivable by trustees on behalf of alf of provident funds, superannuation funds, gratuity funds, pension funds, etc provident funds, superannuation funds, gratuity funds, pension funds, etc provident funds, superannuation funds, gratuity funds, pension funds, etc provident funds, superannuation funds, gratuity funds, pension funds, etc created bono fide by persons carrying on business or profession exclusively created bono fide by persons carrying on business or profession exclusively created bono fide by persons carrying on business or profession exclusively created bono fide by persons carrying on business or profession exclusively for the benefit of the persons employed in such business. The Board have for the benefit of the persons employed in such business. The Board have for the benefit of the persons employed in such business. The Board have for the benefit of the persons employed in such business. The Board have been advised that cases wh been advised that cases where income received by the trustees on behalf of ere income received by the trustees on behalf of ere income received by the trustees on behalf of a recognised provident fund, approved superannuation fund and approved a recognised provident fund, approved superannuation fund and approved a recognised provident fund, approved superannuation fund and approved a recognised provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income gratuity fund is governed by section 10(25) of the Income gratuity fund is governed by section 10(25) of the Income-tax Act, the tax Act, the question of their being charged to tax does not arise. So far as question of their being charged to tax does not arise. So far as question of their being charged to tax does not arise. So far as cases where cases where income is receivable by the trustees, on behalf of an unrecognized provident income is receivable by the trustees, on behalf of an unrecognized provident income is receivable by the trustees, on behalf of an unrecognized provident income is receivable by the trustees, on behalf of an unrecognized provident fund or an unapproved superannuation fund, gratuity fund, pension fund or fund or an unapproved superannuation fund, gratuity fund, pension fund or fund or an unapproved superannuation fund, gratuity fund, pension fund or 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 any other fund created bona fide by a person carrying on a business or any other fund created bona fide by a person carrying on a business or any other fund created bona fide by a person carrying on a business or profession exclusively profession exclusively for the benefit of persons employed in such business for the benefit of persons employed in such business for the benefit of persons employed in such business or profession are concerned, they will continue to be charged to tax in the or profession are concerned, they will continue to be charged to tax in the or profession are concerned, they will continue to be charged to tax in the or profession are concerned, they will continue to be charged to tax in the manner prescribed by section 164(1)(iv) of the Income manner prescribed by section 164(1)(iv) of the Income manner prescribed by section 164(1)(iv) of the Income-tax Act, as hitherto tax Act, as hitherto Similarly, in the cases of registered societies, tr Similarly, in the cases of registered societies, tr Similarly, in the cases of registered societies, trade and professional ade and professional associations, social and sports clubs, charitable or religious trusts, etc, associations, social and sports clubs, charitable or religious trusts, etc, associations, social and sports clubs, charitable or religious trusts, etc, 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 where the members or trustees are not entitled to any share in the income of where the members or trustees are not entitled to any share in the income of where the members or trustees are not entitled to any share in the income of the association of persons, the provisions of new section 167A will not be the association of persons, the provisions of new section 167A will not be the association of persons, the provisions of new section 167A will not be the association of persons, the provisions of new section 167A will not be attracted and, accordingly, tax will be payable in such cases at the rate ed and, accordingly, tax will be payable in such cases at the rate ed and, accordingly, tax will be payable in such cases at the rate ed 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 ordinarily applicable to the total income of an association of persons and not ordinarily applicable to the total income of an association of persons and not ordinarily applicable to the total income of an association of persons and not at the maximum marginal rate. at the maximum marginal rate.
In the above circular, the last four lines indicate that in In the above circular, the last four lines indicate that in In the above circular, the last four lines indicate that in In the above circular, the last four lines indicate that in cases of regist cases of registered societies, trade and professional associations, ered societies, trade and professional associations, ered societies, trade and professional associations, social and sports clubs, charitable or religious trusts, etc, where social and sports clubs, charitable or religious trusts, etc, where social and sports clubs, charitable or religious trusts, etc, where social and sports clubs, charitable or religious trusts, etc, where the members or trustees are not entitled to any share in the the members or trustees are not entitled to any share in the the members or trustees are not entitled to any share in the the members or trustees are not entitled to any share in the income of the association of persons, the provisions of new income of the association of persons, the provisions of new income of the association of persons, the provisions of new income of the association of persons, the provisions of new section 167A w section 167A will not be attracted and tax will not be payable at ill not be attracted and tax will not be payable at ill not be attracted and tax will not be payable at the Maximum Marginal rate. However, section 167A of the Act the Maximum Marginal rate. However, section 167A of the Act the Maximum Marginal rate. However, section 167A of the Act the Maximum Marginal rate. However, section 167A of the Act was replaced by section 167B from 01.04.1989 and the same was replaced by section 167B from 01.04.1989 and the same was replaced by section 167B from 01.04.1989 and the same was replaced by section 167B from 01.04.1989 and the same reads as under : reads as under :
“Charge of tax where shares of members in association of persons “Charge of tax where shares of members in association of persons “Charge of tax where shares of members in association of persons or body of individuals unknown, etc. body of individuals unknown, etc. 167B. (1) Where the individual shares of the members of an association of (1) Where the individual shares of the members of an association of (1) Where the individual shares of the members of an association of (1) Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co persons or body of individuals (other than a company or a co persons or body of individuals (other than a company or a co-operative operative society or a society registered under the Societies Registration Act, 186 society or a society registered under the Societies Registration Act, 186 society or a society registered under the Societies Registration Act, 1860 (21 0 (21 of 1860) or under any law corresponding to that Act in force in any part of of 1860) or under any law corresponding to that Act in force in any part of of 1860) or under any law corresponding to that Act in force in any part of of 1860) or under any law corresponding to that Act in force in any part of
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST India) in the whole or any part of the income of such association or body are India) in the whole or any part of the income of such association or body are India) in the whole or any part of the income of such association or body are India) in the whole or any part of the income of such association or body are indeterminate or unknown, tax shall be charged on the total income of the indeterminate or unknown, tax shall be charged on the total income of the indeterminate or unknown, tax shall be charged on the total income of the indeterminate or unknown, tax shall be charged on the total income of the association or body at association or body at the maximum marginal rate : the maximum marginal rate : Provided that, where the total income of any member of such association or that, where the total income of any member of such association or that, where the total income of any member of such association or that, where the total income of any member of such association or body is chargeable to tax at a rate which is higher than the maximum body is chargeable to tax at a rate which is higher than the maximum body is chargeable to tax at a rate which is higher than the maximum body is chargeable to tax at a rate which is higher than the maximum marginal rate, tax shall be charged on the total income of the association or marginal rate, tax shall be charged on the total income of the association or marginal rate, tax shall be charged on the total income of the association or marginal rate, tax shall be charged on the total income of the association or body at such higher rate. at such higher rate. (2) Where, in the case of an association of persons or body of individuals as (2) Where, in the case of an association of persons or body of individuals as (2) Where, in the case of an association of persons or body of individuals as (2) Where, in the case of an association of persons or body of individuals as aforesaid [not being a case falling under sub aforesaid [not being a case falling under sub aforesaid [not being a case falling under sub-section (1)],— (i) the total income of any member thereof for the previous year (excluding his (i) the total income of any member thereof for the previous year (excluding his (i) the total income of any member thereof for the previous year (excluding his (i) the total income of any member thereof for the previous year (excluding his share from such share from such association or body) exceeds the maximum amount which is association or body) exceeds the maximum amount which is association or body) exceeds the maximum amount which is not chargeable to tax in the case of that member under the Finance Act of the not chargeable to tax in the case of that member under the Finance Act of the not chargeable to tax in the case of that member under the Finance Act of the not chargeable to tax in the case of that member under the Finance Act of the relevant year, tax shall be charged on the total income of the association or relevant year, tax shall be charged on the total income of the association or relevant year, tax shall be charged on the total income of the association or relevant year, tax shall be charged on the total income of the association or body at the maximum marginal rate; body at the maximum marginal rate; (ii) any member or members thereof is or are chargeable to tax at a rate or member or members thereof is or are chargeable to tax at a rate or member or members thereof is or are chargeable to tax at a rate or member or members thereof is or are chargeable to tax at a rate or rates which is or are higher than the maximum marginal rate, tax shall be rates which is or are higher than the maximum marginal rate, tax shall be rates which is or are higher than the maximum marginal rate, tax shall be rates which is or are higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the association or charged on that portion or portions of the total income of the association or charged on that portion or portions of the total income of the association or charged on that portion or portions of the total income of the association or body which is or are relatable to th body which is or are relatable to the share or shares of such member or e share or shares of such member or e share or shares of such member or members at such higher rate or rates, as the case may be, and the balance members at such higher rate or rates, as the case may be, and the balance members at such higher rate or rates, as the case may be, and the balance members at such higher rate or rates, as the case may be, and the balance of the total income of the association or body shall be taxed at the maximum of the total income of the association or body shall be taxed at the maximum of the total income of the association or body shall be taxed at the maximum of the total income of the association or body shall be taxed at the maximum marginal rate. marginal rate. Explanation. Explanation.—For the purposes of this section, the ind For the purposes of this section, the individual shares of the ividual shares of the members of an association of persons or body of individuals in the whole or members of an association of persons or body of individuals in the whole or members of an association of persons or body of individuals in the whole or members of an association of persons or body of individuals in the whole or any part of the income of such association or body shall be deemed to be any part of the income of such association or body shall be deemed to be any part of the income of such association or body shall be deemed to be any part of the income of such association or body shall be deemed to be indeterminate or unknown if such shares (in relation to the whole or any part indeterminate or unknown if such shares (in relation to the whole or any part indeterminate or unknown if such shares (in relation to the whole or any part indeterminate or unknown if such shares (in relation to the whole or any part of such income) are indeterminate or unknown on the date of formation of income) are indeterminate or unknown on the date of formation of income) are indeterminate or unknown on the date of formation of income) are indeterminate or unknown on the date of formation of such association or body or at any time thereafter.” such association or body or at any time thereafter.” such association or body or at any time thereafter.”
Now in the above provision, section 167B(1), only the Now in the above provision, section 167B(1), only the Now in the above provision, section 167B(1), only the Now in the above provision, section 167B(1), only the Company or Cooperative Societies registered under the Societies Company or Cooperative Societies registered under the Societies Company or Cooperative Societies registered under the Societies Company or Cooperative Societies registered under the Societies Registration A Registration Act are excluded and the remaining association of ct are excluded and the remaining association of ct are excluded and the remaining association of persons or body of individuals where individual share of the persons or body of individuals where individual share of the persons or body of individuals where individual share of the persons or body of individuals where individual share of the members are not known are indeterminate, tax is leviable at the members are not known are indeterminate, tax is leviable at the members are not known are indeterminate, tax is leviable at the members are not known are indeterminate, tax is leviable at the Maximum Marginal Rate. Before me, Ld. Counsel for the Maximum Marginal Rate. Before me, Ld. Counsel for the Maximum Marginal Rate. Before me, Ld. Counsel for the Maximum Marginal Rate. Before me, Ld. Counsel for the assessee has stated that as assessee has stated that assessee is a registered Charitable sessee is a registered Charitable sessee is a registered Charitable Trust and it is carrying out the charitable activity as per the Trust Trust and it is carrying out the charitable activity as per the Trust Trust and it is carrying out the charitable activity as per the Trust Trust and it is carrying out the charitable activity as per the Trust deed and even if share of the trustees are not defined, still the deed and even if share of the trustees are not defined, still the deed and even if share of the trustees are not defined, still the deed and even if share of the trustees are not defined, still the assessee being a Charitable Registered Trust engaged in the assessee being a Charitable Registered Trust engaged in the assessee being a Charitable Registered Trust engaged in the assessee being a Charitable Registered Trust engaged in the charitable activity is lia charitable activity is liable to taxed at the Normal Tax rate. To ble to taxed at the Normal Tax rate. To ble to taxed at the Normal Tax rate. To buttress his arguments, reliance was placed in the case of Dr. buttress his arguments, reliance was placed in the case of Dr. buttress his arguments, reliance was placed in the case of Dr. buttress his arguments, reliance was placed in the case of Dr. Shalmali Khasbardar Foundation Vs. ITO (supra) was placed Shalmali Khasbardar Foundation Vs. ITO (supra) was placed Shalmali Khasbardar Foundation Vs. ITO (supra) was placed Shalmali Khasbardar Foundation Vs. ITO (supra) was placed where also similar issue was for consideration and the finding of where also similar issue was for consideration and the finding of where also similar issue was for consideration and the finding of where also similar issue was for consideration and the finding of the Tribunal reads as under the Tribunal reads as under :
“We have perused the submissions advanced by both the sides in the light of “We have perused the submissions advanced by both the sides in the light of “We have perused the submissions advanced by both the sides in the light of “We have perused the submissions advanced by both the sides in the light of the records placed before us. the records placed before us.
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST 5. The assessee 5. The assessee has raised a preliminary issue challenging the validity of has raised a preliminary issue challenging the validity of has raised a preliminary issue challenging the validity of intimation under Section 143(1) of the Act passed without granting intimation under Section 143(1) of the Act passed without granting intimation under Section 143(1) of the Act passed without granting intimation under Section 143(1) of the Act passed without granting opportunity to the assessee, wherein an adjustment was made that was opportunity to the assessee, wherein an adjustment was made that was opportunity to the assessee, wherein an adjustment was made that was opportunity to the assessee, wherein an adjustment was made that was debatable in nature. The Ld. AR placed reliance on the decis debatable in nature. The Ld. AR placed reliance on the decis debatable in nature. The Ld. AR placed reliance on the decision of Hon’ble ion of Hon’ble Bombay High Court in the case of Bajaj Auto Finance Ltd. vs. CIT Pune Bombay High Court in the case of Bajaj Auto Finance Ltd. vs. CIT Pune Bombay High Court in the case of Bajaj Auto Finance Ltd. vs. CIT Pune Bombay High Court in the case of Bajaj Auto Finance Ltd. vs. CIT Pune reported in (2018) 404 ITR 564 (Bom) and the decision of Hon’ble Rajasthan reported in (2018) 404 ITR 564 (Bom) and the decision of Hon’ble Rajasthan reported in (2018) 404 ITR 564 (Bom) and the decision of Hon’ble Rajasthan reported in (2018) 404 ITR 564 (Bom) and the decision of Hon’ble Rajasthan High Court in the case of JKs Employees Welfare Fund vs. ITO reported in High Court in the case of JKs Employees Welfare Fund vs. ITO reported in High Court in the case of JKs Employees Welfare Fund vs. ITO reported in High Court in the case of JKs Employees Welfare Fund vs. ITO reported in (1993) 199 ITR 765 (Raj (1993) 199 ITR 765 (Raj). 5.1 It is noted that, Hon’ble Rajasthan High Court in case of JKs Employees 5.1 It is noted that, Hon’ble Rajasthan High Court in case of JKs Employees 5.1 It is noted that, Hon’ble Rajasthan High Court in case of JKs Employees 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 Welfare Fund (supra) considered what amounts to a prima facie adjustment Welfare Fund (supra) considered what amounts to a prima facie adjustment Welfare Fund (supra) considered what amounts to a prima facie adjustment by observing as under: by observing as under: “A bare perusal of section 143(1)(a) contemplate that the ITO has to accept “A bare perusal of section 143(1)(a) contemplate that the ITO has to accept “A bare perusal of section 143(1)(a) contemplate that the ITO has to accept “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, return as it is and in the proviso, three exceptions have been given, return as it is and in the proviso, three exceptions have been given, 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 which confer the jurisdiction on him for making adjustment. The action under which confer the jurisdiction on him for making adjustment. The action under which confer the jurisdiction on him for making adjustment. The action under this section cannot be taken beyond the power permitted by these three this section cannot be taken beyond the power permitted by these three this section cannot be taken beyond the power permitted by these three this section cannot be taken beyond the power permitted by these three exceptions. The third exception provi exceptions. The third exception provides that where any loss carried des that where any loss carried des that where any loss carried forward, deduction, allowance or relief claimed in the return, which, on the forward, deduction, allowance or relief claimed in the return, which, on the forward, deduction, allowance or relief claimed in the return, which, on the forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is basis of the information available in such return, accounts or documents, is basis of the information available in such return, accounts or documents, is basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed. The question is whether prima facie inadmissible, shall be disallowed. The question is whether prima facie inadmissible, shall be disallowed. The question is whether the the application of rate of tax can be covered by the term 'relief claimed in the application of rate of tax can be covered by the term 'relief claimed in the application of rate of tax can be covered by the term 'relief claimed in 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 return because application of a different rate of tar will not fall under the return because application of a different rate of tar will not fall under 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 category of loss carried forward, deduction, allowance. There is another category of loss carried forward, deduction, allowance. There is another category of loss carried forward, deduction, allowance. There is another provision in clause (i) provision in clause (i) regarding arithmetical errors in the return. There may regarding arithmetical errors in the return. There may regarding arithmetical errors in the return. There may be a case where the rate of tax is not disputed but while calculating the tax be a case where the rate of tax is not disputed but while calculating the tax be a case where the rate of tax is not disputed but while calculating the tax be a case where the rate of tax is not disputed but while calculating the tax there is an error which could be corrected under this clause, i.e., while there is an error which could be corrected under this clause, i.e., while there is an error which could be corrected under this clause, i.e., while there is an error which could be corrected under this clause, i.e., while calculating the tax on the normal rate or maximu calculating the tax on the normal rate or maximu calculating the tax on the normal rate or maximum marginal rate there is a m marginal rate there is a mistake which could be corrected and will fall in the category of arithmetical mistake which could be corrected and will fall in the category of arithmetical mistake which could be corrected and will fall in the category of arithmetical mistake which could be corrected and will fall in the category of arithmetical mistake, but whether maximum marginal rate is to be applied or the normal mistake, but whether maximum marginal rate is to be applied or the normal mistake, but whether maximum marginal rate is to be applied or the normal mistake, but whether maximum marginal rate is to be applied or the normal rate is applicable is not covered by any of the too clauses of the proviso t rate is applicable is not covered by any of the too clauses of the proviso t rate is applicable is not covered by any of the too clauses of the proviso to rate is applicable is not covered by any of the too clauses of the proviso t section 143(1)(a). The matter has also to be considered from another angle section 143(1)(a). The matter has also to be considered from another angle section 143(1)(a). The matter has also to be considered from another angle section 143(1)(a). The matter has also to be considered from another angle that the word prima facie which has been used therein means on the face of that the word prima facie which has been used therein means on the face of that the word prima facie which has been used therein means on the face of that the word prima facie which has been used therein means on the face of and refers to the items, on which there cannot be two opinions. If the matter and refers to the items, on which there cannot be two opinions. If the matter and refers to the items, on which there cannot be two opinions. If the matter and refers to the items, on which there cannot be two opinions. If the matter is arguable one or debatab is arguable one or debatable then the same cannot be disallowed under the le then the same cannot be disallowed under the le then the same cannot be disallowed under the proviso.” 5.2 It is noted that Hon’ble Bombay High Court while considering the issue 5.2 It is noted that Hon’ble Bombay High Court while considering the issue 5.2 It is noted that Hon’ble Bombay High Court while considering the issue 5.2 It is noted that Hon’ble Bombay High Court while considering the issue of what amounts to a prima facie adjustment that could be made under of what amounts to a prima facie adjustment that could be made under of what amounts to a prima facie adjustment that could be made under of what amounts to a prima facie adjustment that could be made under Section 143(1)(a), relied on Instruction No.1814 date Section 143(1)(a), relied on Instruction No.1814 date Section 143(1)(a), relied on Instruction No.1814 dated 04.041989. Hon’ble d 04.041989. Hon’ble Bombay High Court also referred to the decision of its Co Bombay High Court also referred to the decision of its Co Bombay High Court also referred to the decision of its Co-ordinate Bench in ordinate Bench in Khatau Junkar Ltd. And Another vs K.S. Pathania reported in (1992) 196 ITR Khatau Junkar Ltd. And Another vs K.S. Pathania reported in (1992) 196 ITR Khatau Junkar Ltd. And Another vs K.S. Pathania reported in (1992) 196 ITR Khatau Junkar Ltd. And Another vs K.S. Pathania reported in (1992) 196 ITR 157 (Bom) and held that the word “prima facie inadmissible” in clause (iii) of 157 (Bom) and held that the word “prima facie inadmissible” in clause (iii) of 157 (Bom) and held that the word “prima facie inadmissible” in clause (iii) of 157 (Bom) and held that the word “prima facie inadmissible” in clause (iii) of Section 143(1)(a)’ means, ‘on the face of it the claim is not admissible’. on 143(1)(a)’ means, ‘on the face of it the claim is not admissible’. on 143(1)(a)’ means, ‘on the face of it the claim is not admissible’. on 143(1)(a)’ means, ‘on the face of it the claim is not admissible’. Hon’ble High Court observed that, it means the claim does not require any Hon’ble High Court observed that, it means the claim does not require any Hon’ble High Court observed that, it means the claim does not require any Hon’ble High Court observed that, it means the claim does not require any further inquiry before deemed disallowed. further inquiry before deemed disallowed. 5.2 Hon’ble Court further observed that where a claim was made which 5.2 Hon’ble Court further observed that where a claim was made which 5.2 Hon’ble Court further observed that where a claim was made which 5.2 Hon’ble Court further observed that where a claim was made which require further inquiry, it cannot be disallowed without hearing the parties require further inquiry, it cannot be disallowed without hearing the parties require further inquiry, it cannot be disallowed without hearing the parties require further inquiry, it cannot be disallowed without hearing the parties and / or giving the opportunity to submit proof in support of its claim. and / or giving the opportunity to submit proof in support of its claim. and / or giving the opportunity to submit proof in support of its claim. and / or giving the opportunity to submit proof in support of its claim. Hon’ble Bombay High Court thus observed that, debatable issues cannot be Hon’ble Bombay High Court thus observed that, debatable issues cannot be Hon’ble Bombay High Court thus observed that, debatable issues cannot be Hon’ble Bombay High Court thus observed that, debatable issues cannot be adjusted by way of intimation und adjusted by way of intimation under Section 143(1)(a), which would lead to er Section 143(1)(a), which would lead to er Section 143(1)(a), which would lead to an arbitrary and unreasonable intimation being issued leading to chaos. In an arbitrary and unreasonable intimation being issued leading to chaos. In an arbitrary and unreasonable intimation being issued leading to chaos. In an arbitrary and unreasonable intimation being issued leading to chaos. In our view the above proposition by Hon’ble Bombay High Court as well as our view the above proposition by Hon’ble Bombay High Court as well as our view the above proposition by Hon’ble Bombay High Court as well as our view the above proposition by Hon’ble Bombay High Court as well as Hon’ble Rajasthan High Court squarely is applicable to the present f Hon’ble Rajasthan High Court squarely is applicable to the present f Hon’ble Rajasthan High Court squarely is applicable to the present facts of acts of the case. Accordingly ground no.1 of the assessee stands allowed. Accordingly ground no.1 of the assessee stands allowed. Accordingly ground no.1 of the assessee stands allowed. (B) Ground No.2 raised by the assessee, is on the applicability of the (B) Ground No.2 raised by the assessee, is on the applicability of the (B) Ground No.2 raised by the assessee, is on the applicability of the (B) Ground No.2 raised by the assessee, is on the applicability of the maximum marginal rate, for which reliance was placed on the decision of maximum marginal rate, for which reliance was placed on the decision of maximum marginal rate, for which reliance was placed on the decision of maximum marginal rate, for which reliance was placed on the decision of
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST Hon’ble Bombay High Court in the cas Hon’ble Bombay High Court in the case of CIT vs. Marsons Beneficiary Trust e of CIT vs. Marsons Beneficiary Trust e of CIT vs. Marsons Beneficiary Trust (supra). It is noted that present assessee before us is admittedly a public (supra). It is noted that present assessee before us is admittedly a public (supra). It is noted that present assessee before us is admittedly a public (supra). It is noted that present assessee before us is admittedly a public charitable trust, where the shares of the beneficiaries are in determinate are charitable trust, where the shares of the beneficiaries are in determinate are charitable trust, where the shares of the beneficiaries are in determinate are charitable trust, where the shares of the beneficiaries are in determinate are not known, unlike an AOP, where the beneficiaries have a defin not known, unlike an AOP, where the beneficiaries have a defin not known, unlike an AOP, where the beneficiaries have a defined share in ed share in the income. It is noted that Section 164 is a special provision that prevails the income. It is noted that Section 164 is a special provision that prevails the income. It is noted that Section 164 is a special provision that prevails 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 over the general provision of Section 167B. The decision of Hon’ble Bombay over the general provision of Section 167B. The decision of Hon’ble Bombay 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 High Court in case of CIT vs. Marsons Beneficiary Trust (supra) has High Court in case of CIT vs. Marsons Beneficiary Trust (supra) has High Court in case of CIT vs. Marsons Beneficiary Trust (supra) has considered the fact in considered the fact in a case of a Trust, where the beneficiaries in the share a case of a Trust, where the beneficiaries in the share a case of a Trust, where the beneficiaries in the share was determinate and therefore, Hon’ble Court held that the earnings on was determinate and therefore, Hon’ble Court held that the earnings on was determinate and therefore, Hon’ble Court held that the earnings on 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 behalf of such Trust would be taxed as an AOP. As a corollary in the present behalf of such Trust would be taxed as an AOP. As a corollary in the present 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 facts, the share of the beneficiaries are not known facts, the share of the beneficiaries are not known though the assessee in though the assessee in the return of income mentioned itself to be an AOP and therefore provisions the return of income mentioned itself to be an AOP and therefore provisions the return of income mentioned itself to be an AOP and therefore provisions 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 of Section 167B are not applicable. If we analyze the alternative plea raised of Section 167B are not applicable. If we analyze the alternative plea raised 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 that the assessee had not claimed any exemption under Sections 11 and 12 that the assessee had not claimed any exemption under Sections 11 and 12 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 e year under consideration therefore, there not being a situation of e year under consideration therefore, there not being a situation of e 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 denial of exemption under Sections 13(1)(c) or 13(1)(d) the assessee come denial of exemption under Sections 13(1)(c) or 13(1)(d) the assessee come 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 within the ambit to subject that portion of income to the maximum marginal within the ambit to subject that portion of income to the maximum marginal within the ambit to subject that portion of income to the maximum marginal rate. Accordingly, in our view assesse rate. Accordingly, in our view assessee cannot be subjected to maximum e cannot be subjected to maximum e cannot be subjected to maximum marginal rate for the year under consideration merely because it filed its marginal rate for the year under consideration merely because it filed its marginal rate for the year under consideration merely because it filed its marginal rate for the year under consideration merely because it filed its return of income in form ITR return of income in form ITR – 7 as against ITR 7 as against ITR – 5. Accordingly, Ground No.2 raised by the assessee stands allowed.” Accordingly, Ground No.2 raised by the assessee stands allowed.” Accordingly, Ground No.2 raised by the assessee stands allowed.”
I find the Delhi Bench I find the Delhi Bench of Tribunal in the case of Air Force of Tribunal in the case of Air Force of Tribunal in the case of Air Force Navy Farm Owners Vs. ITO (supra) dealing with the similar issue Navy Farm Owners Vs. ITO (supra) dealing with the similar issue Navy Farm Owners Vs. ITO (supra) dealing with the similar issue Navy Farm Owners Vs. ITO (supra) dealing with the similar issue has held as under : has held as under :
“8. Heard rival submissions, perused the orders of the authorities below Heard rival submissions, perused the orders of the authorities below Heard rival submissions, perused the orders of the authorities below Heard rival submissions, perused the orders of the authorities below and the materials placed before me. and the materials placed before me. 9. On reading of the On reading of the directions of the Tribunal, it is very much clear that directions of the Tribunal, it is very much clear that directions of the Tribunal, it is very much clear that the Tribunal for limited purpose of examining the applicability of provisions the Tribunal for limited purpose of examining the applicability of provisions the Tribunal for limited purpose of examining the applicability of provisions the Tribunal for limited purpose of examining the applicability of provisions of Section 167B the matter was set aside to Assessing Officer to decide the of Section 167B the matter was set aside to Assessing Officer to decide the of Section 167B the matter was set aside to Assessing Officer to decide the of Section 167B the matter was set aside to Assessing Officer to decide the issue in accordance with law. Ld. CIT(A) held issue in accordance with law. Ld. CIT(A) held issue in accordance with law. Ld. CIT(A) held that the provisions of Section that the provisions of Section 167B are applicable to the Assessee. 167B are applicable to the Assessee. 10. The issue of whether the provisions of Section 167B of the Act are The issue of whether the provisions of Section 167B of the Act are The issue of whether the provisions of Section 167B of the Act are The issue of whether the provisions of Section 167B of the Act are applicable to the assessee applicable to the assessee society which is registered under the Societies society which is registered under the Societies society which is registered under the Societies Registration Act, 1860 is concerned, I find that the issue has been decided Registration Act, 1860 is concerned, I find that the issue has been decided Registration Act, 1860 is concerned, I find that the issue has been decided Registration Act, 1860 is concerned, I find that the issue has been decided by the Visakapatnam Tribunal in the case of M/s Anand Educational Society by the Visakapatnam Tribunal in the case of M/s Anand Educational Society by the Visakapatnam Tribunal in the case of M/s Anand Educational Society by the Visakapatnam Tribunal in the case of M/s Anand Educational Society vs. ITO (supra), wherein the Tribunal following its earli vs. ITO (supra), wherein the Tribunal following its earli vs. ITO (supra), wherein the Tribunal following its earlier order in the case of er order in the case of Vidyodaya Educational Society vs. DCIT held that once the society is Vidyodaya Educational Society vs. DCIT held that once the society is Vidyodaya Educational Society vs. DCIT held that once the society is Vidyodaya Educational Society vs. DCIT held that once the society is registered under the Societies Registration Act the applicability of maximum registered under the Societies Registration Act the applicability of maximum registered under the Societies Registration Act the applicability of maximum registered under the Societies Registration Act the applicability of maximum marginal rates u/s 167B of the Act would not arise. While holding so, the marginal rates u/s 167B of the Act would not arise. While holding so, the marginal rates u/s 167B of the Act would not arise. While holding so, the marginal rates u/s 167B of the Act would not arise. While holding so, the Tribunal obs Tribunal observed as under: “5. We have heard both the parties and perused the material placed on “5. We have heard both the parties and perused the material placed on “5. We have heard both the parties and perused the material placed on “5. We have heard both the parties and perused the material placed on record. Though the Ld.CIT(A) held that the maximum marginal rate is record. Though the Ld.CIT(A) held that the maximum marginal rate is record. Though the Ld.CIT(A) held that the maximum marginal rate is record. Though the Ld.CIT(A) held that the maximum marginal rate is applicable in the case of the assessee, who is having exempt income as well applicable in the case of the assessee, who is having exempt income as well applicable in the case of the assessee, who is having exempt income as well applicable in the case of the assessee, who is having exempt income as well as taxable income, but th as taxable income, but there is no such distinction provided under section ere is no such distinction provided under section ere is no such distinction provided under section 167B of the Act. This Tribunal in the case cited supra held that normal rates 167B of the Act. This Tribunal in the case cited supra held that normal rates 167B of the Act. This Tribunal in the case cited supra held that normal rates 167B of the Act. This Tribunal in the case cited supra held that normal rates are applicable in the case of the Society registered under Societies Act. For are applicable in the case of the Society registered under Societies Act. For are applicable in the case of the Society registered under Societies Act. For are applicable in the case of the Society registered under Societies Act. For the sake of clarity and convenience, we extract re the sake of clarity and convenience, we extract re the sake of clarity and convenience, we extract relevant part of the order of levant part of the order of this Tribunal in para No.10 this Tribunal in para No.10-11 which reads as under: 11 which reads as under: 10. The next submission of the assessee is taxing the income at maximum 10. The next submission of the assessee is taxing the income at maximum 10. The next submission of the assessee is taxing the income at maximum 10. The next submission of the assessee is taxing the income at maximum marginal rate. 4s per section 167B of the Act, in case of an assessee marginal rate. 4s per section 167B of the Act, in case of an assessee marginal rate. 4s per section 167B of the Act, in case of an assessee marginal rate. 4s per section 167B of the Act, in case of an assessee registered under Societies Act, registered under Societies Act, the same is excluded for taxing the income at the same is excluded for taxing the income at the same is excluded for taxing the income at
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST for maximum marginal rate. For ready reference we extract relevant part of for maximum marginal rate. For ready reference we extract relevant part of for maximum marginal rate. For ready reference we extract relevant part of for maximum marginal rate. For ready reference we extract relevant part of Section 167B(1) of the Act which reads as under: Section 167B(1) of the Act which reads as under: Section 167B(1) of the Act which reads as under: 167B. (1) Where the individual shares of the members of an association of 167B. (1) Where the individual shares of the members of an association of 167B. (1) Where the individual shares of the members of an association of 167B. (1) Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co body of individuals (other than a company or a co-operative operative society or a society registered under the Societies Registration Act, 1860 (21 society or a society registered under the Societies Registration Act, 1860 (21 society or a society registered under the Societies Registration Act, 1860 (21 society or a society registered under the Societies Registration Act, 1860 (21 of1860) or under any law corresponding to that Act in force in any part of of1860) or under any law corresponding to that Act in force in any part of of1860) or under any law corresponding to that Act in force in any part of of1860) or under any law corresponding to that Act in force in any part of India) in the whole or any part of the in India) in the whole or any part of the income of such association or body are come of such association or body are come of such association or body are indeterminate or unknown, tax shall be charged on the total income of the indeterminate or unknown, tax shall be charged on the total income of the indeterminate or unknown, tax shall be charged on the total income of the indeterminate or unknown, tax shall be charged on the total income of the association or body at the maximum marginal rate : association or body at the maximum marginal rate : association or body at the maximum marginal rate : Plain reading of section 167B of the Act indicates that the income of Plain reading of section 167B of the Act indicates that the income of Plain reading of section 167B of the Act indicates that the income of Plain reading of section 167B of the Act indicates that the income of company or cooperative company or cooperative society or a society registered under Societies Act of society or a society registered under Societies Act of society or a society registered under Societies Act of 1860 are excluded from charging the tax at maximum marginal rate (MMR) 1860 are excluded from charging the tax at maximum marginal rate (MMR) 1860 are excluded from charging the tax at maximum marginal rate (MMR) 1860 are excluded from charging the tax at maximum marginal rate (MMR) and would be chargeable at normal rates. In the similar facts and and would be chargeable at normal rates. In the similar facts and and would be chargeable at normal rates. In the similar facts and and would be chargeable at normal rates. In the similar facts and circumstances, circumstances, circumstances, circumstances, the the the the coordinate coordinate coordinate coordinate bench bench bench bench of of of of ITAT ITAT ITAT ITAT in in in in ITA ITA ITA ITA Nos.212 Nos.212 Nos.212 Nos.212 to to to to 215/vizag/2014 in the case of Sri Lakshmiganapathi Seva Samithi Vs. C1T 15/vizag/2014 in the case of Sri Lakshmiganapathi Seva Samithi Vs. C1T 15/vizag/2014 in the case of Sri Lakshmiganapathi Seva Samithi Vs. C1T 15/vizag/2014 in the case of Sri Lakshmiganapathi Seva Samithi Vs. C1T dated 26.8.2016 held that in case of society, the application of maximum dated 26.8.2016 held that in case of society, the application of maximum dated 26.8.2016 held that in case of society, the application of maximum dated 26.8.2016 held that in case of society, the application of maximum marginal rate does not arise. For ready reference, we reproduce the extract marginal rate does not arise. For ready reference, we reproduce the extract marginal rate does not arise. For ready reference, we reproduce the extract marginal rate does not arise. For ready reference, we reproduce the extract of relevant part of the order of the of relevant part of the order of the Tribunal in para No.13 which reads as Tribunal in para No.13 which reads as Tribunal in para No.13 which reads as under: "13. As regards the applicability of maximum marginal rate of tax is "13. As regards the applicability of maximum marginal rate of tax is "13. As regards the applicability of maximum marginal rate of tax is "13. As regards the applicability of maximum marginal rate of tax is concerned, the C1T was of the opinion that the A.O. ought to have applied concerned, the C1T was of the opinion that the A.O. ought to have applied concerned, the C1T was of the opinion that the A.O. ought to have applied concerned, the C1T was of the opinion that the A.O. ought to have applied maximum marginal rate of tax to the income of the society. But, t maximum marginal rate of tax to the income of the society. But, t maximum marginal rate of tax to the income of the society. But, the fact is he fact is that once the society is registered under the Societies Registration Act, the that once the society is registered under the Societies Registration Act, the that once the society is registered under the Societies Registration Act, the that once the society is registered under the Societies Registration Act, the applicability of maximum marginal rate does not arise, it is because the applicability of maximum marginal rate does not arise, it is because the applicability of maximum marginal rate does not arise, it is because the applicability of maximum marginal rate does not arise, it is because the societies are registered under the Societies Registration Act are prohibited societies are registered under the Societies Registration Act are prohibited societies are registered under the Societies Registration Act are prohibited societies are registered under the Societies Registration Act are prohibited from distribution from distribution of any surplus to its members. Once the distribution of of any surplus to its members. Once the distribution of of any surplus to its members. Once the distribution of profit to its members is prohibited, the question of determination of share of profit to its members is prohibited, the question of determination of share of profit to its members is prohibited, the question of determination of share of profit to its members is prohibited, the question of determination of share of each individual member does not arise. Hence, the CIT was not correct in each individual member does not arise. Hence, the CIT was not correct in each individual member does not arise. Hence, the CIT was not correct in each individual member does not arise. Hence, the CIT was not correct in coming to the conclusion that the rate of tax a coming to the conclusion that the rate of tax a coming to the conclusion that the rate of tax applicable to the assessee is pplicable to the assessee is maximum marginal rate of tax without understanding the provisions." maximum marginal rate of tax without understanding the provisions." maximum marginal rate of tax without understanding the provisions." 11. The assessee is a society registered under Societies Act, 1860 as 11. The assessee is a society registered under Societies Act, 1860 as 11. The assessee is a society registered under Societies Act, 1860 as 11. The assessee is a society registered under Societies Act, 1860 as evidenced from the registration certificate. The facts are similar in this case, evidenced from the registration certificate. The facts are similar in this case, evidenced from the registration certificate. The facts are similar in this case, evidenced from the registration certificate. The facts are similar in this case, therefore, following the decision of coordinate bench and section 167B of the re, following the decision of coordinate bench and section 167B of the re, following the decision of coordinate bench and section 167B of the re, following the decision of coordinate bench and section 167B of the Act, we hold that the income of the assessee is to be taxed at normal rates Act, we hold that the income of the assessee is to be taxed at normal rates Act, we hold that the income of the assessee is to be taxed at normal rates Act, we hold that the income of the assessee is to be taxed at normal rates but not at maximum marginal rate, accordingly, we set aside the order of the but not at maximum marginal rate, accordingly, we set aside the order of the but not at maximum marginal rate, accordingly, we set aside the order of the but not at maximum marginal rate, accordingly, we set aside the order of the Ld. CIT(A) and allow the appeal Ld. CIT(A) and allow the appeal of the assessee on this ground. of the assessee on this ground. 6. During the appeal hearing, the Ld. DR did not bring any other decision of 6. During the appeal hearing, the Ld. DR did not bring any other decision of 6. During the appeal hearing, the Ld. DR did not bring any other decision of 6. During the appeal hearing, the Ld. DR did not bring any other decision of the higher court to controvert the case laws relied upon by the Ld.AR. Since, the higher court to controvert the case laws relied upon by the Ld.AR. Since, the higher court to controvert the case laws relied upon by the Ld.AR. Since, the higher court to controvert the case laws relied upon by the Ld.AR. Since, the facts are identical, respectfully following the rule of consiste the facts are identical, respectfully following the rule of consiste the facts are identical, respectfully following the rule of consistency and the ncy and the view taken by this Tribunal in the case cited supra, we hold that the income view taken by this Tribunal in the case cited supra, we hold that the income view taken by this Tribunal in the case cited supra, we hold that the income view taken by this Tribunal in the case cited supra, we hold that the income of the assessee is to be taxed at normal rates, but not at maximum marginal of the assessee is to be taxed at normal rates, but not at maximum marginal of the assessee is to be taxed at normal rates, but not at maximum marginal of the assessee is to be taxed at normal rates, but not at maximum marginal rates. Accordingly, we set aside the order of the Ld.CIT(A) and allow the rates. Accordingly, we set aside the order of the Ld.CIT(A) and allow the rates. Accordingly, we set aside the order of the Ld.CIT(A) and allow the rates. Accordingly, we set aside the order of the Ld.CIT(A) and allow the appeal of the ass appeal of the assessee.” Similar view has been taken by the Hyderabad Bench of ITAT in the case of Similar view has been taken by the Hyderabad Bench of ITAT in the case of Similar view has been taken by the Hyderabad Bench of ITAT in the case of Similar view has been taken by the Hyderabad Bench of ITAT in the case of KMR Educational Society vs. ACIT [68 SOT 163]. KMR Educational Society vs. ACIT [68 SOT 163]. KMR Educational Society vs. ACIT [68 SOT 163]. 11. Facts being identical following the above decisions. I hold that the 11. Facts being identical following the above decisions. I hold that the 11. Facts being identical following the above decisions. I hold that the 11. Facts being identical following the above decisions. I hold that the provisions of section 167B have no application to t provisions of section 167B have no application to t provisions of section 167B have no application to the Assessee and the he Assessee and the income of the assessee cannot be taxed at maximum marginal rates. Ground income of the assessee cannot be taxed at maximum marginal rates. Ground income of the assessee cannot be taxed at maximum marginal rates. Ground income of the assessee cannot be taxed at maximum marginal rates. Ground nos. 1.a, 1.c to 1.e are allowed.” nos. 1.a, 1.c to 1.e are allowed.”
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST 13. I also find the Cochin Bench of Tribunal in the case of I also find the Cochin Bench of Tribunal in the case of I also find the Cochin Bench of Tribunal in the case of I also find the Cochin Bench of Tribunal in the case of Mahakavi Edasseri Smaraka Trust Vs. ITO (supra) had dealt with Mahakavi Edasseri Smaraka Trust Vs. ITO (supra) had dealt with Mahakavi Edasseri Smaraka Trust Vs. ITO (supra) had dealt with Mahakavi Edasseri Smaraka Trust Vs. ITO (supra) had dealt with identical issue and has observed as under : ntical issue and has observed as under : ntical issue and has observed as under :
“4. We have heard the party before us, and perused the material on record. “4. We have heard the party before us, and perused the material on record. “4. We have heard the party before us, and perused the material on record. “4. We have heard the party before us, and perused the material on record. 4.1 The issue arising in the instant case, and toward which we have 4.1 The issue arising in the instant case, and toward which we have 4.1 The issue arising in the instant case, and toward which we have 4.1 The issue arising in the instant case, and toward which we have perused the impugned order and also the grounds raised before the firs perused the impugned order and also the grounds raised before the firs perused the impugned order and also the grounds raised before the first perused the impugned order and also the grounds raised before the firs appellate authority, is the manner in which the income of such an Institution appellate authority, is the manner in which the income of such an Institution appellate authority, is the manner in which the income of such an Institution appellate authority, is the manner in which the income of such an Institution is to be computed in the absence of any application of income, i.e., if the is to be computed in the absence of any application of income, i.e., if the is to be computed in the absence of any application of income, i.e., if the is to be computed in the absence of any application of income, i.e., if the allowance for 15% of the income from property held under trust is to be allowance for 15% of the income from property held under trust is to be allowance for 15% of the income from property held under trust is to be allowance for 15% of the income from property held under trust is to be allowed u/s. 11(1)(a) u/s. 11(1)(a) of the Act or not. The relevant part of the impugned of the Act or not. The relevant part of the impugned of the Act or not. The relevant part of the impugned order read as under: order read as under: '7.2 Thus it is seen that the appellant has claimed a deduction of Rs. '7.2 Thus it is seen that the appellant has claimed a deduction of Rs. '7.2 Thus it is seen that the appellant has claimed a deduction of Rs. '7.2 Thus it is seen that the appellant has claimed a deduction of Rs. 15429/- from its total gross receipt of Rs. 1,02,862/ from its total gross receipt of Rs. 1,02,862/ from its total gross receipt of Rs. 1,02,862/- and offered an adjusted total income of Rs. 87,433/ adjusted total income of Rs. 87,433/- in its return of income. However, the in its return of income. However, the in its return of income. However, the deduction claimed by the appellant for Rs. 15,429/ deduction claimed by the appellant for Rs. 15,429/ deduction claimed by the appellant for Rs. 15,429/- being 15% of the gross being 15% of the gross receipts accumulated or set apart for application to charitable or religious receipts accumulated or set apart for application to charitable or religious receipts accumulated or set apart for application to charitable or religious receipts accumulated or set apart for application to charitable or religious purposes is not allowabl purposes is not allowable to the appellant because the appellant has not e to the appellant because the appellant has not e to the appellant because the appellant has not reflected any application of funds for its purposes in respect of the remaining reflected any application of funds for its purposes in respect of the remaining reflected any application of funds for its purposes in respect of the remaining reflected any application of funds for its purposes in respect of the remaining 85% of the gross receipts. Therefore, the adjustment made by 85% of the gross receipts. Therefore, the adjustment made by 85% of the gross receipts. Therefore, the adjustment made by the CPC the CPC is upheld and the grounds nos. 2 & 3 are dismissed.' (emphasis, ours) pheld and the grounds nos. 2 & 3 are dismissed.' (emphasis, ours) pheld and the grounds nos. 2 & 3 are dismissed.' (emphasis, ours) 4.2 Section 11(1)(a) Section 11(1)(a) of the Act, also read out during hearing, reads as under: of the Act, also read out during hearing, reads as under: of the Act, also read out during hearing, reads as under: Income from property held for charitable or religious Income from property held for charitable or religious Income from property held for charitable or religious purposes. 11. (1) Subject to the provisions of 11. (1) Subject to the provisions of sections 60 sections 60 to 63, the following income , the following income shall not be included in the total income of the previous year of shall not be included in the total income of the previous year of shall not be included in the total income of the previous year of the person in the person in receipt of the income receipt of the income— (a) income derived from property held under trust wholly for charitable or (a) income derived from property held under trust wholly for charitable or (a) income derived from property held under trust wholly for charitable or (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such religious purposes, to the extent to which such income is applied to such religious purposes, to the extent to which such income is applied to such religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set ap purposes in India; and, where any such income is accumulated or set ap purposes in India; and, where any such income is accumulated or set apart purposes in India; and, where any such income is accumulated or set ap for application to such purposes in India, to the extent to which the income so for application to such purposes in India, to the extent to which the income so for application to such purposes in India, to the extent to which the income so for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income accumulated or set apart is not in excess of fifteen per cent of the income accumulated or set apart is not in excess of fifteen per cent of the income accumulated or set apart is not in excess of fifteen per cent of the income from such property; from such property; (b) to (d) ......... (b) to (d) ......... 4.3 The issue arising, in fine, is the applicability of 4.3 The issue arising, in fine, is the applicability of 4.3 The issue arising, in fine, is the applicability of section 11(1)(a) of the Act of the Act in the absence of any application of its income for it's objects by the in the absence of any application of its income for it's objects by the in the absence of any application of its income for it's objects by the in the absence of any application of its income for it's objects by the assessee, a charitable trust, during the relevant year. We see no reason for it assessee, a charitable trust, during the relevant year. We see no reason for it assessee, a charitable trust, during the relevant year. We see no reason for it assessee, a charitable trust, during the relevant year. We see no reason for it being not so, and neithe being not so, and neither has any been stated by the Revenue at any stage. r has any been stated by the Revenue at any stage. r has any been stated by the Revenue at any stage. The language of the provision is unambiguously clear, so that an assessee is The language of the provision is unambiguously clear, so that an assessee is The language of the provision is unambiguously clear, so that an assessee is The language of the provision is unambiguously clear, so that an assessee is not entitled to, save where an option is specifically exercised in its respect, not entitled to, save where an option is specifically exercised in its respect, not entitled to, save where an option is specifically exercised in its respect, not entitled to, save where an option is specifically exercised in its respect, and before expiry of the time allowed for furnis and before expiry of the time allowed for furnis and before expiry of the time allowed for furnishing the return of income u/s. u/s. 139(1) of the Act, accumulate or set aside for application in excess of 15% of of the Act, accumulate or set aside for application in excess of 15% of of the Act, accumulate or set aside for application in excess of 15% of of the Act, accumulate or set aside for application in excess of 15% of it's income from the property held under trust. That is to say, it is necessarily it's income from the property held under trust. That is to say, it is necessarily it's income from the property held under trust. That is to say, it is necessarily it's income from the property held under trust. That is to say, it is necessarily to, save where an option is specifically exercised in its respect to, save where an option is specifically exercised in its respect ere an option is specifically exercised in its respect - which is not which is not so in the instant case, apply 85% of it's income for charitable purposed so in the instant case, apply 85% of it's income for charitable purposed so in the instant case, apply 85% of it's income for charitable purposed so in the instant case, apply 85% of it's income for charitable purposed during the relevant year. The assessee, as afore during the relevant year. The assessee, as afore during the relevant year. The assessee, as afore-said, having not done so, said, having not done so, it's income is accordingly to be limit it's income is accordingly to be limited thereto, i.e., 85% of it's total income. A ed thereto, i.e., 85% of it's total income. A ed thereto, i.e., 85% of it's total income. A reading of Explanation 1 to reading of Explanation 1 to section 11(1), reproduced hereunder, makes it , reproduced hereunder, makes it , reproduced hereunder, makes it abundantly clear that in the absence of option being exercised, the deeming abundantly clear that in the absence of option being exercised, the deeming abundantly clear that in the absence of option being exercised, the deeming abundantly clear that in the absence of option being exercised, the deeming qua application of income, which extends to the shortfall w.r.t. eighty cation of income, which extends to the shortfall w.r.t. eighty cation of income, which extends to the shortfall w.r.t. eighty-five five percent of income derived from property held under trust, shall not apply: percent of income derived from property held under trust, shall not apply: percent of income derived from property held under trust, shall not apply: Explanation 1. Explanation 1.--For the purposes of clauses (a) and (b), For the purposes of clauses (a) and (b),-- (1) in computing the fifteen per cent of the income wh (1) in computing the fifteen per cent of the income wh (1) in computing the fifteen per cent of the income which may be accumulated ich may be accumulated or set apart, any such voluntary contributions as are referred to in or set apart, any such voluntary contributions as are referred to in or set apart, any such voluntary contributions as are referred to in section section 12 shall be deemed to be part of the income; shall be deemed to be part of the income; shall be deemed to be part of the income;
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST (2) if, in the previous year, the income applied to charita (2) if, in the previous year, the income applied to charita (2) if, in the previous year, the income applied to charitable or religious ble or religious purposes in India falls short of eighty purposes in India falls short of eighty-five per cent of the income derived five per cent of the income derived five per cent of the income derived during that year from property held under trust, or, as the case may be, held during that year from property held under trust, or, as the case may be, held during that year from property held under trust, or, as the case may be, held during that year from property held under trust, or, as the case may be, held under trust in part, by any amount under trust in part, by any amount— (i) for the reason that the whole or any part of (i) for the reason that the whole or any part of (i) for the reason that the whole or any part of the income has not been the income has not been received during that year, or received during that year, or (ii) for any other reason, (ii) for any other reason, Mahakavi Edasseri Smaraka Trust v. Income Tax Mahakavi Edasseri Smaraka Trust v. Income Tax Mahakavi Edasseri Smaraka Trust v. Income Tax Officer then-- -- (a) in the case referred to in sub (a) in the case referred to in sub-clause (i), so much of the income applied to clause (i), so much of the income applied to clause (i), so much of the income applied to such purposes in India during the such purposes in India during the previous year in which the income is previous year in which the income is previous year in which the income is received or during the previous year immediately following as does not received or during the previous year immediately following as does not received or during the previous year immediately following as does not received or during the previous year immediately following as does not exceed the said amount, and exceed the said amount, and (b) in the case referred to in sub (b) in the case referred to in sub-clause (ii), so much of the income applied to clause (ii), so much of the income applied to clause (ii), so much of the income applied to such purposes in India during the previ such purposes in India during the previous year immediately following the ous year immediately following the ous year immediately following the previous year in which the income was derived as does not exceed the said previous year in which the income was derived as does not exceed the said previous year in which the income was derived as does not exceed the said previous year in which the income was derived as does not exceed the said amount, may, at the option of the person in receipt of the income (such option amount, may, at the option of the person in receipt of the income (such option amount, may, at the option of the person in receipt of the income (such option amount, may, at the option of the person in receipt of the income (such option to be exercised before the expiry of the time allowed under sub to be exercised before the expiry of the time allowed under sub to be exercised before the expiry of the time allowed under sub-section (1) ion (1) of section 139 section 139 for furnishing the return of income, in such form and manner for furnishing the return of income, in such form and manner for furnishing the return of income, in such form and manner as may be prescribed) be deemed to be income applied to such purposes as may be prescribed) be deemed to be income applied to such purposes as may be prescribed) be deemed to be income applied to such purposes as may be prescribed) be deemed to be income applied to such purposes during the previous year in which the income was during the previous year in which the income was during the previous year in which the income was derived; and the income derived; and the income so deemed to have been applied shall not be taken into account in so deemed to have been applied shall not be taken into account in so deemed to have been applied shall not be taken into account in so deemed to have been applied shall not be taken into account in calculating the amount of income applied to such purposes, in the case calculating the amount of income applied to such purposes, in the case calculating the amount of income applied to such purposes, in the case calculating the amount of income applied to such purposes, in the case referred to in sub referred to in sub-clause (i), during the previous year in which the income is clause (i), during the previous year in which the income is clause (i), during the previous year in which the income is received or duri received or during the previous year immediately following, as the case may ng the previous year immediately following, as the case may ng the previous year immediately following, as the case may be, and, in the case referred to in sub be, and, in the case referred to in sub-clause (ii), during the previous year clause (ii), during the previous year clause (ii), during the previous year immediately following the previous year in which the income was derived. immediately following the previous year in which the income was derived. immediately following the previous year in which the income was derived. The application in the instant case being nil The application in the instant case being nil The application in the instant case being nil, the shortfall extends to the , the shortfall extends to the entire 85%. 4.4 We are conscious that the assessee did not file an appeal against the 4.4 We are conscious that the assessee did not file an appeal against the 4.4 We are conscious that the assessee did not file an appeal against the 4.4 We are conscious that the assessee did not file an appeal against the Intimation u/s. 143(1)(a) u/s. 143(1)(a) of the Act raising the impugned demand, preferring of the Act raising the impugned demand, preferring of the Act raising the impugned demand, preferring instead rectification thereof, scope of which is severely limited. This, to our rectification thereof, scope of which is severely limited. This, to our rectification thereof, scope of which is severely limited. This, to our rectification thereof, scope of which is severely limited. This, to our mind, would not constrain us inasmuch as the Revenue itself has made the mind, would not constrain us inasmuch as the Revenue itself has made the mind, would not constrain us inasmuch as the Revenue itself has made the mind, would not constrain us inasmuch as the Revenue itself has made the impugned adjustment under summary proceedings impugned adjustment under summary proceedings impugned adjustment under summary proceedings u/s. 143(1)(a), the scope , the scope of which is, again, limited to apparently incorrect claims, which is not the of which is, again, limited to apparently incorrect claims, which is not the of which is, again, limited to apparently incorrect claims, which is not the of which is, again, limited to apparently incorrect claims, which is not the case. The assessee shall accordingly be assessed at the returned income of case. The assessee shall accordingly be assessed at the returned income of case. The assessee shall accordingly be assessed at the returned income of case. The assessee shall accordingly be assessed at the returned income of Rs.87,430. 4.5 Continuing further, even as observed by the Bench during hearing, the 4.5 Continuing further, even as observed by the Bench during hearing, the 4.5 Continuing further, even as observed by the Bench during hearing, the 4.5 Continuing further, even as observed by the Bench during hearing, the principal issue arising in the instant case, inasmuch as it is this that leads to cipal issue arising in the instant case, inasmuch as it is this that leads to cipal issue arising in the instant case, inasmuch as it is this that leads to cipal issue arising in the instant case, inasmuch as it is this that leads to the impugned demand, is the tax rate applied, which has been by the the impugned demand, is the tax rate applied, which has been by the the impugned demand, is the tax rate applied, which has been by the the impugned demand, is the tax rate applied, which has been by the Revenue at the maximum marginal rate, duly raised by the assessee per its Revenue at the maximum marginal rate, duly raised by the assessee per its Revenue at the maximum marginal rate, duly raised by the assessee per its Revenue at the maximum marginal rate, duly raised by the assessee per its grounds of appeal before us. The ass grounds of appeal before us. The assessee surely did not raise this issue essee surely did not raise this issue essee surely did not raise this issue before the ld. CIT(A), whose adjudication accordingly does not include the before the ld. CIT(A), whose adjudication accordingly does not include the before the ld. CIT(A), whose adjudication accordingly does not include the before the ld. CIT(A), whose adjudication accordingly does not include the same. We, nevertheless, consider the same. We, nevertheless, consider the Mahakavi Edasseri Smaraka Trust v. Mahakavi Edasseri Smaraka Trust v. Mahakavi Edasseri Smaraka Trust v. Income Tax Officer same, being a legal issue, with the relevant facts Income Tax Officer same, being a legal issue, with the relevant facts Income Tax Officer same, being a legal issue, with the relevant facts Income Tax Officer same, being a legal issue, with the relevant facts available on record, adjudicating the same in disposal of the appeal, upon vailable on record, adjudicating the same in disposal of the appeal, upon vailable on record, adjudicating the same in disposal of the appeal, upon vailable on record, adjudicating the same in disposal of the appeal, upon hearing Smt. Devi, the ld. Sr. DR. hearing Smt. Devi, the ld. Sr. DR. 4.6 We again find no reason for application of 4.6 We again find no reason for application of 4.6 We again find no reason for application of section 167B of the Act, of the Act, prescribing the maximum prescribing the maximum marginal rate in the instant case, which is one of a marginal rate in the instant case, which is one of a marginal rate in the instant case, which is one of a charitable trust. charitable trust. Section 167B, as a reading of the provision would show, is , as a reading of the provision would show, is , as a reading of the provision would show, is only where the shares of the beneficiaries of the trust are not known. Th only where the shares of the beneficiaries of the trust are not known. Th only where the shares of the beneficiaries of the trust are not known. The only where the shares of the beneficiaries of the trust are not known. Th assessee, registered as a charitable trust, is a public body and, accordingly, assessee, registered as a charitable trust, is a public body and, accordingly, assessee, registered as a charitable trust, is a public body and, accordingly, assessee, registered as a charitable trust, is a public body and, accordingly, there is no question of it's beneficiaries being individual members, whose there is no question of it's beneficiaries being individual members, whose there is no question of it's beneficiaries being individual members, whose there is no question of it's beneficiaries being individual members, whose shares have therefore to be defined. The application thereof in the instant shares have therefore to be defined. The application thereof in the instant shares have therefore to be defined. The application thereof in the instant shares have therefore to be defined. The application thereof in the instant case is wholly misconcei case is wholly misconceived. The matter in fact stands clarified by the Board ved. The matter in fact stands clarified by the Board ved. The matter in fact stands clarified by the Board per it's Circular No. 320, dated 11/01/1982, also binding on the Revenue. per it's Circular No. 320, dated 11/01/1982, also binding on the Revenue. per it's Circular No. 320, dated 11/01/1982, also binding on the Revenue. per it'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 The tax rate accordingly is to be computed as per the normal rates as The tax rate accordingly is to be computed as per the normal rates as The tax rate accordingly is to be computed as per the normal rates as applicable to Association of Persons. The same, in our vie applicable to Association of Persons. The same, in our vie applicable to Association of Persons. The same, in our view, is again an w, is again an
ITA 3114/PUN/2025 FAJLE RABBI CHAND CHARITABLE FAJLE RABBI CHAND CHARITABLE TRUST apparent mistake and, where contested, outside the ambit of apparent mistake and, where contested, outside the ambit of apparent mistake and, where contested, outside the ambit of s. 143(1)((a) in ((a) in the first instance, so that it could not have been effected there the first instance, so that it could not have been effected there the first instance, so that it could not have been effected there-under.”
The decisions of Coordinate Ben The decisions of Coordinate Ben The decisions of Coordinate Benches referred (supra) ches referred (supra) having dealt the very same issue as has been raised in the having dealt the very same issue as has been raised in the having dealt the very same issue as has been raised in the having dealt the very same issue as has been raised in the instant bunch of appeals, I find that the ratio laid down by the instant bunch of appeals, I find that the ratio laid down by the instant bunch of appeals, I find that the ratio laid down by the instant bunch of appeals, I find that the ratio laid down by the Coordinate Benches in the decisions referred (supra) are squarely Coordinate Benches in the decisions referred (supra) are squarely Coordinate Benches in the decisions referred (supra) are squarely Coordinate Benches in the decisions referred (supra) are squarely applicable on the facts of the instant case applicable on the facts of the instant case applicable on the facts of the instant case and therefore, and therefore, respectfully following the judicial precedents I am inclined to hold respectfully following the judicial precedents I am inclined to hold respectfully following the judicial precedents I am inclined to hold respectfully following the judicial precedents I am inclined to hold that the income of the assessee is not chargeable to tax at that the income of the assessee is not chargeable to tax at that the income of the assessee is not chargeable to tax at that the income of the assessee is not chargeable to tax at Maximum Marginal Rate but is chargeable to tax at Normal Rate. Maximum Marginal Rate but is chargeable to tax at Normal Rate. Maximum Marginal Rate but is chargeable to tax at Normal Rate. Maximum Marginal Rate but is chargeable to tax at Normal Rate. The Revenue authorities are directed to calculat The Revenue authorities are directed to calculat The Revenue authorities are directed to calculate the tax liability e the tax liability of the assessee as per the Normal Tax rates. Accordingly, I set of the assessee as per the Normal Tax rates. Accordingly, I set of the assessee as per the Normal Tax rates. Accordingly, I set of the assessee as per the Normal Tax rates. Accordingly, I set aside the impugned order of ld.CIT(A) and allow the grounds of aside the impugned order of ld.CIT(A) and allow the grounds of aside the impugned order of ld.CIT(A) and allow the grounds of aside the impugned order of ld.CIT(A) and allow the grounds of appeal raised by the assessee. appeal raised by the assessee.
On On On On going going going going through through through through the the the the above above above above decision decision decision decision and and and and due due due due examination of the facts of t examination of the facts of the instant case, we find that ratio he instant case, we find that ratio he instant case, we find that ratio laid down by this Tribunal in the case of laid down by this Tribunal in the case of laid down by this Tribunal in the case of National Association National Association of Interlocking Surgeons of Interlocking Surgeons (supra) is squarely applicable on the is squarely applicable on the is squarely applicable on the facts of the instant case and therefore facts of the instant case and therefore facts of the instant case and therefore we reverse the finding reverse the finding of ld. CIT(A) and held that the assessee is not liable to be A) and held that the assessee is not liable to be A) and held that the assessee is not liable to be A) and held that the assessee is not liable to be taxed on MMR taxed on MMR u/s 167B of the Act. T u/s 167B of the Act. Therefore since the herefore since the income of the assessee is below the basic exemption limit, income of the assessee is below the basic exemption limit, income of the assessee is below the basic exemption limit, no no tax is payable by tax is payable by the assessee. Accordingly the grounds the assessee. Accordingly the grounds of appeal raised by the assessee raised by the assessee are allowed. are allowed.
In the result, the appeal In the result, the appeal of by the by the assessee is allowed as assessee is allowed as per terms indicated above. per terms indicated above.
Order pronounced in the open court on Order pronounced in the open court on 15 Ma ay 2026.
Sd/- Sd/- PAVAN KUMAR GADALE PAVAN KUMAR GADALE MANISH BORAD JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER Pune Dated: 15.05.2026 6
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