VIHAR TRUST,NEW DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, NEW DELHI

ITA 4372/DEL/2025Status: DisposedITAT Delhi29 January 2026AY 2021-227 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the tax has to be charged at the normal rate of tax as against the Maximum Marginal Rate (MMR). The reasoning was based on the fact that the assessee is a public charitable trust and its constitution and functions are such that the shares of its members are not determinable or defined in the manner contemplated by Section 167B of the Act. The Tribunal referred to CBDT Circular No. 320 dated 11.01.1982, which clarifies that in cases of charitable or religious trusts where members or trustees are not entitled to any share in the income, the provisions of Section 167A (now Section 167B) are not attracted, and tax is payable at the rate ordinarily applicable to the total income of an association of persons. The Tribunal also relied on the decisions of the Co-ordinate Bench in the case of Vindhya Trust and the ITAT Cochin Bench in the case of Mahakavi Edasseri Smarka Trust. The ratio decidendi is that for public charitable trusts where individual shares are not defined, the MMR is not applicable, and normal tax rates should be applied. The operative direction is to allow the grounds raised by the assessee, directing that tax be charged at normal rates.

What were the facts?

The assessee, Vihar Trust, is a charitable trust assessed as an AOP (trust) for assessment years 2021-22 to 2023-24. The assessee did not claim any benefit under Section 11 of the Income Tax Act, 1961, and paid tax at slab rates applicable to individuals. However, the CPC, while processing the returns under Section 143(1), charged tax at the Maximum Marginal Rate (MMR) and levied surcharge. The assessee contended that since it surrendered its registration under Section 12A, its income should be taxed at individual/HUF rates. The assessee relied on CBDT Circular No. 320 dated 11.01.1982, which states that where the share of a trust member is not defined, tax should be charged at normal rates, not MMR. The appeals are against the orders of the Ld. Commissioner of Income Tax (Appeals) upholding the CPC's action.

What were the issues?

1. Whether the income of the assessee, a charitable trust assessed as an AOP, should be taxed at the Maximum Marginal Rate (MMR) or at the normal tax rates applicable to individuals and HUFs, considering it has surrendered its Section 12A registration. This issue turns on the interpretation of Section 167B of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that since it surrendered its Section 12A registration, its income is taxable at the normal rates applicable to individuals and HUFs. It relied on CBDT Circular No. 320 dated 11.01.1982, which states that tax should be charged at normal rates when the share of a trust member is not defined. The assessee also cited decisions from the ITAT in the cases of Shalmali Khasbardar Foundation, Association of Interlocking Surgeons, Mahakavi Edasseri Smarka Trust, and Jain Sangh Parabdi Khayu Trustee. Revenue's Contention: The Revenue supported the orders of the lower authorities, which had upheld the charging of tax at MMR.

Which sections of the Income-tax Act were involved?

Section 167B,Section 143(1),Section 11,Section 12A,Section 164(1)(iv)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “A” BENCH: NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL

For Appellant: Shri Vasanti Ben Patel, Adv. &, Shri Mahender Gohel, Adv
For Respondent: Shri Krishna Kumar Ramawat
Hearing: 01.12.2025Pronounced: 29.01.2026

PER MANISH AGARWAL, AM :

The captioned appeals are filed by assessee against the different orders, dated 06.06.2025, 10.06.2025 & 15.06.2025 passed by Ld. Commissioner of Income Tax (A)/ADDL/JCIT(A), Ranchi [“Ld.CIT(A)”] u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of intimation order dated 13.10.2022, 15.06.2023 & 06.06.2024 passed u/s 143(1) of the Act pertaining to assessment year 2021-22 to 2023- 24 respectively.

ITA No.4372-4374/Del/2025

2.

As all the three captioned appeals filed by the assessee have similar issues which are inter-lin

The order continues below.

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