ARULMIGU SIDDHI VINAYAGAR TEMPLE TRUST,CHENNAI vs. ITO, NCW-7(1),, CHENNAI

(अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Shri J.Prabhakar, CA प्रत्यर्थी की ओर से /Revenue by : Ms.Sheila Parthasarthy, Addl. CIT सुिवाई की तारीख/Date of Hearing : 05.12.2024 घोर्णा की तारीख /Date of Pronouncement : 22.01.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :

This appeal is filed against the order bearing DIN & Order No.ITBA/APL/S/250/2024-25/1067424070(1) dated 08.08.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A), for the assessment years 2020-21. Through the aforesaid appeal the assesse has challenged order u/s 250 dated 08.08.2024 passed by ADDL/JCIT(A)-1, Nashik.

2.0 The only issue in this appeal is the action of the Revenue in treating the income declared by the assessee of Rs.1,50,270/- for applying tax rate of MMR plus cess etc as against nil tax claimed by the assessee. The Ld. Counsel for the assessee submitted that the appellant is a religious trust constituted vide Deed of Trust dated 10/04/2018 primarily for the upkeep of the Siddhi Vinayagar Temple located at Mogappair, Chennai - 600 037 as well as to perform religious activities. The assessee had sought registration under Chapter II of the Income Tax Act vide application before the CIT (Exemptions) and was granted provisional registration u/s.12A with effect from 22/07/2023 applicable from Assessment Year 2024-25 until 2026-27. Return of income for assessment year 2020-21 as a charitable/religious trust in Form No.5 (as opposed to Form No.7 for registered charitable entities) was filed on 31/03/2021 declaring total income at Rs.1,50,270/- with NIL tax payable. The Ld. Counsel for assessee submitted that this was done since the threshold taxable limit for an AOP, to which class the appellant presently belonged was Rs.2,50,000/-. The Ld. Counsel contended that the CPC passed intimation u/s. 143(1) dated 25/11/2021 accepting the income returned at Rs.1,50,270/- but levied tax at Maximum Marginal Rate at the rate of 30% plus applicable CESS at 4% besides alleged

Page - 2 - of 5 interest for delayed payment and deferment of advance tax as well as delayed filing of return of income aggregating to Rs.61,010/-. It was argued that aggrieved by the aforesaid action, an appeal was filed however the Ld. First appellate authority dismissed on the premise that the mandate of Section 164(2) compels the levy of tax at Maximum Marginal Rate and hence the action of CPC was upheld. It was submitted that the Ld. First Appellate Authority ignored the case laws cited in the written submissions that in case the relevant income applicable to a charitable or religious trust which is not exempt u/s 11 or 12, rate of tax is that applicable to an association of persons, that is to say normal slab rates beyond the threshold taxable limit. The essential distinction between a charity registered and exempted under Chapter III as against a charity or religious institution not exempt thereunder under could not be comprehended. It was argued that Sub-section 2 of Section 164 would apply to charitable or religious Institutions violating the provisions of Section 11 or 12 as regards business income or voluntary contributions and tax thereon would be levied at normal slab rates in respect of such violated income as applicable to an Association of person and that the proviso to sub-section 2 of Section 164 levies tax at Maximum Marginal Rate in respect of violations hit by Clause (c) and (d) of Section 13(1) which refers to payments made to interested persons or in respect of Page - 3 - of 5 income arising out of violated investments u/s.11(5). The Ld. DR would like to make us believe on the correctness of the lower authorities.

3.0 We have heard rival submissions on the matter. We have noted that the assessee a religious trust was granted provision registration u/s 12A w.e.f. 22.07.2023 for AYs 2024-25 to 2026-27. For the assessment year under consideration it had filed its return of income on 31.03.2021, using Form-5 (as opposed to Form-7 required for registered charitable entities), declaring income of Rs.1,50,272/-. The threshold taxable limit for AOP to which class the appellant presently belongs to his Rs.2,50,000/-. We have noted that the action of CPC in levying tax at MMR on the returned income of Rs.1,50,272/- thus becomes incorrect. It is the case of the revenue that section 164(2) prescribes levy of MMR. We find force in the argument of the assessee that section 164(2) would apply to charitable or religious institutions found violating provisions of section 11 or 12, whereas the case of assessee is that it was a non- registered institution to which section 164(3)(a) would apply. Accordingly, we set aside the order of lower authorities and all the grounds of appeal raised by the assessee are allowed.

Page - 4 - of 5 4.0. In the result, the appeal of the assessee is allowed. Order pronounced on 22nd , January-2025 at Chennai. Sd/- Sd/- ( एबी टी. वकी) (अयिताभ शुक्ला) (ABY T VARKEY) (AMITABH SHUKLA) न्यानयक सदस्य / Judicial Member लेखा सदस्य /Accountant Member चेन्नई/Chennai, नदिांक/Dated: 22nd , January-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT – Chennai. 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF

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