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Facts
The assessee, a private specific trust for minor beneficiaries, was taxed at the Maximum Marginal Rate (MMR) by the CPC for assessment years 2015-16 and 2016-17, despite having no business income and individual beneficiary shares being determinate. The assessee sought rectification, claiming entitlement to individual slab benefits and citing an inadvertent filing of ITR-7, but the AO and CIT(A) denied relief, partly due to the lack of Section 12A/12AA registration.
Held
The Tribunal held that a private specific trust with determined beneficiary shares and no business income should not be taxed at MMR but as an Individual or Association of Persons, irrespective of the ITR form error or lack of Section 12A/12AA registration. It directed the AO to apply individual or AOP tax rates.
Key Issues
Whether a private specific trust with determinate shares and no business income, which inadvertently filed ITR-7, is entitled to individual slab benefits instead of being taxed at the Maximum Marginal Rate (MMR), despite lacking Section 12A/12AA registration.
Sections Cited
154, 143(1), 12A, 12AA, 164, 160, 2, 11, 12, 13
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA Nos. 383 & 384/JP/2025
said order of the ld. CIT(A), arise as against the separate order dated 26.08.2020 & 17.02.2020 passed under section 154 of the Income Tax Act, 1961 [ for short Act ] by ITO, Ward 1(2), Kota [ for short AO ].
Since the issue raised in these three appeals were identical were heard together and are disposed of by a common order by taking the fact of as lead case.
Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in on the following grounds;
1 ASSESSEE WAS AN PVT SPECIFIEC TRUST, THERE IS ONLY ONE BENEFICIARY SAMIKSHA ROONGTA WHO WAS MINOR AT THAT TIME AS SAMIKSHA ROONGTA BENEFIT TRUST, THERE IS NO BUSINESS INCOME ONLY INCOME FROM OTHER SOURCE i.e INTEREST INCOME AND GIFT RECEIVED, CPC CHARGED ABOVE INCOME BY APPLYING MMR RATE AND RAISED THE DEMAND BUT SLAB BENEFIT LIKE INDIVIDUAL SHOULD BE GIVEN. IN PREVIOUS YEARS AND FOLLOWING YEARS CPC GIVE SLAB BENEFIT LIKE INDIVIDUAL, BUT IN SAID F.Y CPC CHARGED ABOVE INCOME BY APPLYING MMR RATE AND RAISED THE DEMAND, COPY OF INTIMATION US 143(1) FOR A.Y 2018-19, COPY OF TRUST REGISTRATION AND PROVISION FOR TAXATION OF PRIVATE SPECIFIEC TRUST ENCLOSED. appeal:
ASSESSEE WAS AN PVT SPECIFIEC TRUST, THERE IS ONLY ONE BENEFICIARY SAMIKSHA ROONGTA WHO WAS MINOR AT THAT TIME AS SAMIKSHA ROONGTA BENEFIT TRUST, THERE IS NO BUSINESS INCOME ONLY INCOME FROM OTHER SOURCE i.e INTEREST INCOME AND GIFT RECEIVED, CPC CHARGED ABOVE INCOME BY APPLYING MMR RATE AND RAISED THE DEMAND BUT SLAB BENEFIT LIKE INDIVIDUAL SHOULD BE GIVEN. IN PREVIOUS YEARS AND FOLLOWING YEARS CPC GIVE SLAB BENEFIT LIKE INDIVIDUAL, BUT IN SAID F.Y CPC CHARGED ABOVE INCOME BY APPLYING MMR RATE AND RAISED THE DEMAND, COPY OF INTIMATION US 143(1) FOR A.Y 2018-19, COPY OF TRUST REGISTRATION AND PROVISION FOR TAXATION OF PRIVATE SPECIFIEC TRUST ENCLOSED. the assessee has taken following grounds of appeal:
ASSESSEE WAS AN PRIVATE SPECIFIEC TRUST AS CHILDREN BENEFIT TRUST IN NAME OF M/S SAKSHI ROONGTA BENEFIT TRUST FOR BENEFIT OF BENEFICIARY SAKSHI DURING HER MINORITY. THERE IS NO BUSINESS INCOME, ONLY INCOME FROM INTEREST AND PETTY GIFT DURING A/Y 2016-17 CPC CHARGED TAXED BY APPLYING MMR AND RAISE THE DEMAND, NOW WE WOULD LIKE TO SAY THAT ABOVE TRUST IS PRIVATE SPECIFIEC TRUST SO SLAB BENEFIT LIKE INDIVIDUAL SHOULD BE GIVEN DURING A/Y 2017-18 AND 2018-19 ALSO CPC TAXED AT INDIVIDUAL RATE ONLY, COPY OF INTIMATION ORDER FOR A/Y 2017- 18 AND 2018-19 ENCLOSED, BUT DURING A/Y 2016-17 CPC TANED AT MMR RATE COPY OF TRUST DEED ENCLOSED TO VERIFY THAT IT IS PRIVATE SPECIFIEC TRUST FOR BENEFIT OF BENEFICIARY SAKSHI DURING HER MINORITY WE MAKE RECTIFICATION REQUEST MANY TIMES WITH CPC BUT CPC DOES NOT CONSIDER THE MATTER AND DEMAND PERSIST. SO AT LAST WE LIKE TO SAY THAT ABOVE TRUST IS PRIVATE SPECIFIEC TRUST SO SLAB BENEFIT LIKE INDIVIDUAL SHOULD BE GIVEN, THERE IS NO BUSINESS INCOME AND. assessee "Samiksha Roongta Benefit Trust" (hereinafter referred to as appellant/assessee") is a private trust. Appellant filed its return of income for AY 2015-16 on 02/09/2015 and same was revised on 21/03/2017 declaring total income of Rs. 2,20,550/-. In the intimation issued under section 143(1) of the Act, CPC taxed income at MMR rate without giving Slab benefit like individual and raised demand of Rs. 72,370/.
Aggrieved by the intimation u/s 143(1) of the Act, the appellant filed rectification application before the AO on 17/02/2020 stating that the ITR-7 was filed by mistake as appellant was a private trust treated it as AOP/BOI.
On verification, the AO observed that the ITR-7 was filed by mistake is beyond to reality/facts as the appellant regularly filles its ITR from AY 2013 to 2017 in ITR form-7 and there is no functionality on system to rectify the ITR form filed by appellant in any other ITR form. The AO rejected the request of the appellant and passed order u/s 154 of the Act on 26/08/2020 sustaining demand.
Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: to 385/JP/2025 Samiksha Roongta Benefit Trust “On perusal of the facts and grounds of the case, SOF and the evidences available on record, it is evident that the appellant has declared its income of Rs. 2,20,550/- originally in ITR 5 on 02/09/2015 which was subsequently revised and filed ITR7 on 21/03/2017 and was processed by the CPC. The appellant filed a rectification petition before the JAO stating that inadvertently, the revised ITR 7 was filed by it and requested the AO to treat the originally filed ITR in form ITR 5 as the return of income. However, the AO rejected the rectification petition, stating that the appellant had been filing its regular returns for previous AYs 2013-14 to 2017-18 in ITR 7 and there is no functionality in the system to rectify the e-filed ITR from one form to other. The AO further states that there is no mistake as apparent from records therefore, he rejected the rectification petition u/s 154 of the Act as the same was out of the purview of the provisions of the said section. The appellant filed the instant appeal stating that the AO has charged the taxes at maximum marginal rate. Since, the claim of the appellant does not pertain to the issue of the order against which the instant appeal has been filed, the CIT(Appeal) cannot travel beyond the jurisdiction of the issue dealt in the order. Moreover, the appellant is a private trust without having been approved u/s 12A/12AA of the Act as trust. hence, I find the action of the CPC as well as the AO is in order in absence of registration u/s12A/12AA of the Act which requires no interference. Hence, the action of the AO is confirmed and the ground of appeal is dismissed. Thus, the ground of appeal is deleted.
7. Feeling dissatisfied with the finding so recorded in the order of the ld. CIT(A), the assessee preferred the present appeal before this tribunal on the solitary ground as reproduced hereinabove. To support the ground so raised by the assessee, ld. AR of the assessee, has filed the written submissions, which reads as follows :
ASSESSEE WAS AN PRIVATE SPECIFIC TRUST (FAMILY TRUST) CREATED FOR BENEFIT OF CHILD ie SAMIKSHA ROONGTA DURING HER MINORITY. CREATED BY GRAND FATHER SH BABU LAL ROONGTA AND TRUSTEES SH. SANDEEP ROONGTA AND SMT SAPNA ROONGTA. ASSESSEE WAS AN PRIVATE SPECIFIC TRUST HAVING ONLY INCOME FROM OTHER SOURCE LE INTEREST INCOME AND GIFT RECEIVED DURING THE YEAR UNDER to 385/JP/2025 Samiksha Roongta Benefit Trust CONSIDERATION LE A.Y 2015-16 & AY 16-17 CPC CHARGED ABOVE INCOME BY APPLYING MMR RATE AND RAISED THE DEMAND. BUT IN ABOVE CASE SLAB BENEFIT LIKE INDIVIDUAL SHOULD BE GIVEN DURING AY 2014-15..2017-18 2018-19, 19-20, 20-21, 21-22 CPC PROVIDE SLAB BENEFIT LIKE INDIVIDUAL AND PASSED REFUND ORDER. WE MAKE ONLINE RECTIFICATION WITH CPC AGAINST THE ORDER MANY TIMES BUT CPC DOES NOT GIVE ANY RELIEF, THEN WE MAKE RECTIFICATION REQUEST BEFORE A.O. THEY ALSO UPHELD THE ORDER OF CPC, AGAINST THE RECTIFICATION ORDER WE FILE APPEAL BEFORE CITIA), BUT CIT(A) ALSO REJECTED THE PLEA, NOW WE FILE APPEAL BEFORE HONOURABLE BENCH AND REQUEST TO PLEASE CONSIDER THE REQUEST AND GIVE RELIEF IN ABOVE CASE. THERE IN NO BUSINESS INCOME, INCOME FROM OTHER SOURCE ONLY I.E INTEREST INCOME AND GIFT RECEIVED. THERE IS ONLY ONE BENEFICIARY IN ABOVE TRUST i.e SAKSHI ROONGTA, SO SHARE OF BENEFICIARY IS ALSO DETERMINATE, SO TAX SHOULD BE APPLIED BY GIVING SLAB BENEFIT LIKE INDIVIDUAL AND NO MMR BE APPLIED. COPY OF RECTIFICATION ORDER OF A.O COPY OF CIT(A) ORDER. COPY OF TRUST DEED COPY OF INTIMATION ORDER AY 2014-15,, 2017-18, 2018-19, 19-20, 20-21 and 21-22 (SLAB BENEFIT PRVODED BY CPC) INCOME TAX PROVISION FOR TAX RATE ON PRIVATE SPECIFIC TRUST/FAMILY TRUST.
The ld. AR of the assessee in addition to the above written submission submitted that the considering the status being the trust for the benefit of minor it should be taxed as an AOP and the individual slab rate benefit is required to be given. The CPC denied and the assessee filed an application u/s. 154 to JAO which was rejected wrongly and the benefit the assessee is not registered u/s. 12A/12AA of the Act.
Per contra, ld. DR relied upon the finding recorded in the order of the lower authority. In addition, ld. DR submitted the factual report of the ld. AO on the issue which reads as follows:
Comments of the AO on the grounds of appeal:-
The assessee had filed its return of income for the A.Y 2015-16 on 02.09.2015 in ITR form-5 and revised ITR filed on 21.03.2017 in ITR form-7 and the same has been processed by the CPC on 19.10.2017 creating a demand of Rs. 72,370/-.
The assessee has filed rectification application before the ITO (Exemption), Kota on 17.02.2020 stating that ITR filed in form no. 7 by mistake and the status of the assessee was a private trust and should be treated it as AOP/BOI and slab benefit like individual should be given. The then AO has rejected the application of the assessee on 26.08.2020 as no mistake apparent from the record and there was no functionality on the system to change the one ITR form to other ITR form.
Aggrieved by the order passed u/s 154 dated 26.08.2020, the assessee preferred the 1 appeal before the CIT(A). The Id. CIT(A) dismissed the appeal of the assessee vide appeal order dated 30.09.2024 stating that the action of the CPC as well as the AO is in order in absence of registration u/s 12A/12AA of the Act which requires no interference. Further, the assessee filed appeal before the hon'ble ITAT against the order of CIT(A) dated 30.09.2024.
In view of the above facts, it is submitted that the assessee has filed its ITR in form no. 7 declaring total income of Rs. 2,20,550/- for the year under consideration and the same was processed by the CPC and tax calculated at MMR as per rules and created a demand of Rs. 72,370/-. The return processed by the CPC is found to be in order as the assessee has filed its ITR in form no. 7 for the year under consideration and the provisions/functionality to change the to 385/JP/2025 Samiksha Roongta Benefit Trust ITR form (ITR-7 to ITR-5) is not available with the jurisdiction AO. Hence, he correctly rejected the rectification application of the assessee.
Submitted for your necessary action.
We have heard the rival contentions and perused the material placed on record. Before we proceed to decide the solitary issue raised by the assessee, it would be appropriate to reproduce the relevant part of the finding of the ld. CIT(A) being the order under challenge, which reads as follows;
The AO further states that there is no mistake as apparent from records therefore, he rejected the rectification petition u/s 154 of the Act as the same was out of the purview of the provisions of the said section. The appellant filed the instant appeal stating that the AO has charged the taxes at maximum marginal rate. Since, the claim of the appellant does not pertain to the issue of the order against which the instant appeal has been filed, the CIT(Appeal) cannot travel beyond the jurisdiction of the issue dealt in the order. Moreover, the appellant is a private trust without having been approved u/s 12A/12AA of the Act as trust. hence, I find the action of the CPC as well as the AO is in order in absence of registration u/s12A/12AA of the Act which requires no interference. Hence, the action of the AO is confirmed and the ground of appeal is dismissed. Thus, the ground of appeal is deleted.
As is evident that the desired benefit was denied to the assessee as they were not registered u/s. 12A/12AA of the Act. Merely an error in the ITR which was Bonafide, the benefit which is otherwise allowable cannot be denied. Before going into further in the matter of dispute at this stage it would be appropriate to refer to the provision of section 164(2) of the Act which reads as follows; to 385/JP/2025 Samiksha Roongta Benefit Trust Charge of tax where share of beneficiaries unknown. 164. (1) Subject to the provisions of sub-sections (2) and (3), where any income in respect of which the persons mentioned in clauses (iii) and (iv) of sub-section (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as "relevant income", "part of relevant income" and "beneficiaries", respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate : Provided that in a case where—
(i) none of the beneficiaries has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or (ii) the relevant income or part of relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or (iii) the relevant income or part of relevant income is receivable under a trust created before the 1st day of March, 1970, by a non-testamentary instrument and the Assessing Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust was created bona fide exclusively for the benefit of the relatives of the settlor, or where the settlor is a Hindu undivided family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly dependent on the settlor for their support and maintenance; or (iv) the relevant income is receivable by the trustees on behalf of a provident fund, superannuation fund, gratuity fund, pension fund or any other fund created bona fide by a person carrying on a business or profession exclusively for the benefit of persons employed in such business or profession, tax shall be charged on the relevant income or part of relevant income as if it were the total income of an association of persons : Provided further that where any income in respect of which the person mentioned in clause (iv) of sub-section (1) of section 160 is liable as representative assessee consists of, or includes, profits and gains of business, the preceding proviso shall apply only if such profits and gains are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him. (2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or which is of the nature referred to in sub-clause (iia) of clause (24) of section 2, or which is of the nature referred to in sub-section (4A) of section 11, tax shall be charged on so much of the relevant income as is not exempt under section 11 or section 12, as if the relevant income not so exempt were the income of an association of persons : Provided that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate.
Here it is a case of trust created for the benefit of minor and their shares determined and therefore, in such a case the tax cannot be recovered at Maximum Marginal Rate [ MMR ] as there is only one beneficiary and the share is determined. Considering that aspect of the matter we direct the ld. AO not to charge tax to the assessee on MMR but to charge as Individual or AOP. is allowed.
The fact of the case in & 385/JP/2025 are similar to the and we have heard both the parties and persuaded the materials available on record. Therefore, it is not imperative to repeat the facts, various grounds raised by the assessee and the arguments of both the parties in & 385/JP/2025. Hence, the bench feels that the decision taken by us in for the Assessment Year 2015-16 shall apply mutatis mutandis in the case of Samiksha Roongta Benefit Trust & Sakshi Roongta Benefit Trust in & 385/JP/2025 for the Assessment Year 2016-17.
In the result, the appeal filed by the assessee in & 385/JP/2025 are also allowed.
Order pronounced in the open court on 08/09/2025.
Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 08/09/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू to 385/JP/2025 Samiksha Roongta Benefit Trust 1. The Appellant- Samiksha Roongta Benefit Trust, Kota Sakshi Roongta Benefit Trust, Kota 2. izR;FkhZ@ The Respondent- ITO, Ward-01, Kota vk;dj vk;qDr@ The ld CIT 3. vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZ QkbZy@ Guard File (ITA Nos. 383 to 385/JP/2025) vkns'kkuqlkj@ By order,
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