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Facts
The assessee, an Artificial Juridical Person (Deity), filed its income tax return calculating tax at normal slab rates. However, the intimation under Section 143(1) applied the Maximum Marginal Rate (MMR) of 30%, resulting in a demand. The ld. Addl./JCIT(Appeals) dismissed the assessee's appeal, confirming the application of MMR.
Held
The Tribunal held that since the Deity is the sole beneficiary and its share of income is determinate, Section 167B of the Act is not applicable. Citing Supreme Court precedent, the Tribunal ruled that the Deity, being a juristic person with the status of an individual, should be taxed at individual slab rates. The appeal was therefore allowed.
Key Issues
Whether an Artificial Juridical Person (Deity) with a sole and determinate beneficiary should be taxed at the Maximum Marginal Rate (MMR) under Section 167B or at individual slab rates.
Sections Cited
143(1), 167B, 11, 12
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
order : August 25, 2025 O R D E R The present appeal is directed at the instance of assessee against the order of Id. Additional/ Joint Commissioner of Income Tax (Appeals)-1, Coimbatore dated 30.12.2024 passed for Assessment Year 2024-2025.
Brief facts of the case are that the appellant-assessee is an Artificial Juridical person, which filed its return of income in Form ITR 5 on 29.07.2014 calculating tax at the normal slab rate as (A.Y. 2024-2025) Sree Sree Lachhminarain Jew Ramchandra Jew Shambsada Shew Jew applicable to an individual. However, the tax has been calculated in the intimation order under section 143(1) of the Act dated 07.10.2024 at the maximum marginal rate of 30% plus HEC as applicable and demand raised at Rs.1,53,230/-. Being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. Addl./JCIT(Appeals) dismissed the appeal of the assessee by observing as under:- “The appellant has questioned the taxation of the income of the Trust at MMR. The appellant is admitting that in the ITR filed the status of the Appellant was declared as Artificial Juridical Person and the sub status was declared as Any other AJP. But the Appellant now claims that "Artificial Juristic Person" is to be taken as of individual has to be taxed at normal rates and not at MMR rates. Section 167B of the Act provides the rate of tax where the shares of members in association of persons or body of individuals, are unknown or indeterminate. Sub-section (1) of the said section reads as follows: 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-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of 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 association or body at the maximum marginal rate : 5.2. The PAN of the appellant is AAAJS2050Aand the fifth letter is ‘J’ that means it is an Artificial juristic person. In the ITR the appellant admits it has opted for Artificial juristic person and Other AJP in the sub status.
5.4. The software of the CPC works the applicable tax rates considering the answers to the above questions. If in the case of a Trust which is an AOP/BOI/AJP if the answers given proves that shares of beneficiaries are determinate and none of the beneficiaries have taxable income and the Trust is not doing any business activity, then the software of the CPC works the applicable tax rates as individual rate. If the 2 (A.Y. 2024-2025) Sree Sree Lachhminarain Jew Ramchandra Jew Shambsada Shew Jew answers to any of these questions are “yes’ or is given as “blank” the software of the CPC works the applicable tax rates as MMR. The software of the CPC has followed the answers given by the appellant that it is a Trust as per PAN and the shares of beneficiaries are not determinate, the Trust is doing Business activity and hence MMR is applied. 5.5. According to the Act the taxation can be based on share of beneficiaries are determinate or indeterminate and whether section 11/12 is applicable. In this classification only Trusts with shares of beneficiaries’ determinate and none of the beneficiaries having taxable income are to be taxed at individual rates. All other Trust/ AOP/BOI/AJP including taxable income of Trusts with 12A registration are to be taxed at MMR. The Trust doing business is also to be taxed at MMR. In the case of AOP if the share of members is defined and none of the members are having taxable income this will be taxed at normal rates. The appellant has stated that none of the members of AOP has taxable income but the percentage of share is left blank that means shares are not determinate. The CPC has followed the provisions of the ACT only and the order u/s 143(1) is correct and requires no interference. If the AJP is doing business the taxation rate is MMR. The CPC has correctly worked out tax rate at MMR and is in consonance with the claim of the appellant in the ITR. The appellant has claimed that Memorandum explaining the provisions in finance bill 2024 issued by Central Board of Direct Taxes for explaining the provisions of the Finance Act,2024 wherein it specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company) as per Paragraph A of Part I of the First Schedule. 5.6. This is correct but section 167B states that for association of persons, body of individuals or artificial juridical person if certain conditions are not fulfilled the rate of taxation, is MMR. The appellant case falls into this list and is taxable at MMR rates. The grounds raised by the appellant are dismissed”.
On being aggrieved, the assessee preferred an appeal before the ITAT on the following ground:-
(A.Y. 2024-2025) Sree Sree Lachhminarain Jew Ramchandra Jew Shambsada Shew Jew “That on the facts and circumstances of the case, the ld. JCIT of Income Tax (Appeals) erred in sustaining order passed by CPC u/s. 143(1) thereby confirming rate of taxation on MMR rate @ 30% plus HEC (as applicable) on ‘returned income’ of the assessee (Deities) instead of normal rates of taxation as applicable to individuals”.
At the time of hearing, it was the submission of the ld. Counsel for the assessee that as the assessee deity being a juristic person, it can hold property and be in receipt of income and since the sole beneficiary is the Deity/assessee having the status of an ‘individual’ the tax rates applicable to individual would apply to it. The ld. Counsel further submitted that since the entire income belonged to only person, i.e. the Deity, the provisions of section 167B of the Act are not applicable in the present case because section 167B would become applicable when the income of Association or Body are indeterminate and then in such a situation, the tax rate applicable would be at maximum marginal rate. It was the further submission of the ld. Counsel for the assessee that the assessee be allowed the basic exemption limit as applicable to an individual and pleaded to set aside the order of ld. Addl./JCIT(Appeals).
On the other hand, ld. Departmental Representative supported the order of lower authorities.
I have heard the rival submissions and perused the material available on record. It is an undisputed fact that the Trust has been created in the year 1958 and as per the Trust Deed, the entire income is to be used for the upkeep of Deity. It is also an undisputed fact that the Deity is the sole beneficiary of the Trust. 4 (A.Y. 2024-2025) Sree Sree Lachhminarain Jew Ramchandra Jew Shambsada Shew Jew It is also a fact that there is no dispute with respect to the status of the assessee and the income returned by the assessee. The only dispute is whether the tax has to be computed on the basis of tax rates applicable to an individual or the provisions of Sec. 167B would apply. The perusal of Sec.l67B of the Act reveals that the provision applies to an Association or Persons or Body of Individuals where its income is indeterminate or unknown, then the tax shall be charged at the maximum marginal rate. In the present case, it is a fact that the Deity is the sole beneficiary and it is not a case where the share of its income is unknown or indeterminate. In such a situation, I am of the view that provisions of Sec.167B would not be applicable and since the Deity is a juristic person and having the status of an individual, as held by Hon’ble Apex Court in the case of Official Trustee of West Bengal- vs.- CIT reported in (1974) 93 ITR 348, the tax rates and the slabs as applicable to an individual would apply. The decision is squarely applicable to the facts of the case as relied by the ld. Counsel for the assessee. I therefore hold so. I therefore direct that the tax slab as applicable to individual be applied to the assessee. Thus, the ground raised by the assessee is allowed.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 25/08/2025.