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Facts
The assessee, an A.O.P., filed its return of income for A.Y. 2020-21 disclosing Rs.7,85,570/-, which was processed under section 143(1) and taxed at the Maximum Marginal Rate. Rectification petitions under section 154 were rejected by the CPC. The CIT(A) confirmed the Assessing Officer's action, leading the assessee to appeal before the Tribunal.
Held
The Tribunal observed that the CIT(A) erred in applying Section 167B and in deeming the AOP members' share indeterminate, when it was explicitly 'Zero Percent' and thus determinate. Citing a similar relief granted by the appellate authority in A.Y. 2023-24, the Tribunal set aside the CIT(A)'s order and remitted all disputed issues back to the CIT(A) for fresh adjudication. The appeals were allowed for statistical purposes.
Key Issues
Whether the Maximum Marginal Rate under Section 167B of the Income Tax Act is applicable to an Association of Persons (AOP) when the share of its members in profit or surplus is determinate (zero percent).
Sections Cited
143(1), 154, 250, 167B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PANAJI BENCH
Before: SHRI PAVAN KUMAR GADALE & SHRI G D PADMAHSHALI
Assessee by Shri.Tanzil R Padvekar.AR Revenue by Shri.Manikandan.S.Sr.DR सुनवाई क� तार�ख/Date of Hearing 23.04.2025 घोषणा क� तार�ख/Date of Pronouncement 25.04.2025 ORDER PER BENCH: These three appeals are filed by the assessee against the separate orders of the National Faceless Appeal Centre (NFAC), Delhi / (CIT(A) passed u/sec 250 of the Act.
Since the issues involved in these appeals are common and identical, hence they are clubbed, heard and a consolidated order is passed. For the sake of convenience, we shall take up A.Y 2020-21 as lead case and facts narrated. The assessee has raised the grounds of appeal challenging the order of the CIT(A)
The brief facts of the case are that, the assessee is a A.O.P and has filed the return of income for the A.Y 2020-21 on 9.01.2021 disclosing a total income of Rs.7,85.570/- and the return of income was processed under u/sec143(1) of the Act assessing the total income of Rs.7.85,570/- taxed at the Maximum Marginal Rate vide order dated 25-11-2021.Subsequently the assessee has filed the rectification petitions u/sec154 of the Act. Whereas the CPC has rejected the claim vide rectification order u/sec 154 of the Act dated 20-12-2022.
Aggrieved by the order, the assesse has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts, findings of the AO/CPC and submissions of the assessee but the CIT(A) has concurred with the action of the Assessing Officer and has dismissed the assesse appeal. Aggrieved by the order of the CIT(A), the assesse has filed an appeal before the Hon'ble Tribunal.
5. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the action of the A.O overlooking the facts and submissions. The appellate authority has wrongly held that the provisions of section 167B of the Act are applicable.Further the Ld.AR emphasized that the CIT(A) on the same disputed issue for Indian Dental Association. earlier years and the Latest A.Y.2023-24 has granted the relief. The Ld.AR substantiated the submissions with the factual paper book and judicial decisions and prayed for allowing the appeal. Per Contra, the Ld.DR supported the order of the CIT(A).
We heard the rival submissions and perused the material on record. The Ld.AR submitted that the CIT(A) has erred in sustaining the applicability of Maximum Marginal Rate u/sec167B of the Act overlooking the submissions and the judicial decisions and the Assessing Officer/CPC has ignored the factual aspects and rejected the assessee claim vide the rectification order. The Ld.AR mentioned that the appellate authority has erred in observing that the share of the members of AOP is indeterminate, whereas the no portion of profit or surplus of the AOP/Association is distributed to its members as the share is “Zero Percent” and is determinate. The Ld.AR demonstrated and placed the copy of the CIT(A) order for A.Y.2023-24 dated 18-04-2024, where the facts are similar and the relief was granted by the appellate authority. Therefore, we considering the facts, circumstances, CIT(A) order and submissions of the Ld.AR shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information on the disputed issue. Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh on Indian Dental Association. merits and the assesse should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of the appeal. And we allow the grounds of appeal of the assessee for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
A.Ys. 2021-22 & 2022-23.
As the facts and circumstances in these two appeals are identical to A.Y 2020-21 (except variance in figures) and the decision rendered in above paragraph 6&7 would apply mutatis mutandis for these appeals also. Accordingly, we allow the grounds of appeal of the assesse for statistical purposes.
In the result, the three appeals filed by the assessee are allowed for statistical purpose.
Order pronounced in the open court on 25.04.2025.