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Income Tax Appellate Tribunal, ‘B’ (SMC
Before: SHRI MAHAVIR SINGH
आदेश /O R D E R
This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Order No.ITBA/NFAC/S/250/2023- 24/1054810703(1) dated 02.08.2023. The assessment order was passed by the Assessing Officer, Assessment Unit, Income Tax Department for the assessment year 2020-21 u/s.143(3) r.w.s.144B
- 2 - ITA No.1086/Chny/2023 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 31.08.2022.
At the outset, the ld.counsel for the assessee fairly admitted that the assessee trust has been granted registration u/s.12A of the Act only from assessment year 2021-22 to 2023-24 vide Provisional Registration No.AABTT9826GE20206 [Ref-copy of Form No.10AC dated 27.05.2021]. As far as assessment year 2020-21, the present assessment year, assessee admitted that there is no registration but he made only one request that the assessment in the case of assessee trust be taken as AOP wherein shares of members of trusts is indeterminate and tax should be computed only on surplus and charge tax in the manner prescribed u/s.164(1)(iv) of the Act. The ld.counsel for the assessee relied on the CBDT Circular No.320 dated 11.01.1982, which reads as under:- Section 167A of the Income-tax Act, inserted by the Finance Act, 1981 – Clarification regarding Circular No.320 Dated 11/1/1982 1. A reference is invited to paragraph 15.1 to 15.7 of the Explanatory Notes on the provisions relating to direct taxes in the Finance Act, 1981 [Circular No. 308, dated 29-6-1981] which explain the scope and ambit of section 167A, as inserted by the Finance Act, 1981.
A question has been raise whether the provisions of section 167A of the Income-tax Act which provide for charging of tax at the maximum marginal rate on the total income of an association of persons where the individual
- 3 - ITA No.1086/Chny/2023 shares of members in the income of such association are indeterminate or unknown would also apply to income receivable by trustees on behalf of provident funds, superannuation funds, gratuity funds, pension funds, etc., created bona fide by persons carrying on business or profession exclusively for the benefit of the persons employed in such business. The Board have been advised that cases where income received by the trustees on behalf of a recognised provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income-tax Act, the question of their being charged to tax does not arise. So far as cases where income is receivable by the trustees, on behalf of an unrecognized provident fund or an unapproved 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 are concerned, they will continue to be charged to tax in the manner prescribed by section 164(1)(iv) of the Income-tax Act, as hitherto. Similarly, in the cases of registered societies, trade and professional associations, social and sports clubs, charitable or religious trusts, etc., where the members or trustees are not entitled to any share in the income of the association of persons, the provisions of new section 167A will not be attracted and, accordingly, tax will be payable in such cases at the rate ordinarily applicable to the total income of an association of persons and not at the maximum marginal rate.
(Sd.) S.N. Shende Director, Central Board of Direct Taxes.
[F. No. 131(31)/81-TP(Pt.)], dated 11-1-1982.
The ld.counsel for the assessee only made request that the Assessing Officer be directed to make assessment accordingly. To this, the ld.Senior DR agreed.
After hearing both the sides and going through the fact that the assessee should be assessed as an AOP because it has no registration for assessment year 2020-21 u/s.12A of the Act. Hence,
- 4 - ITA No.1086/Chny/2023 the assessee should be assessed on surplus of income and expenditure and should be taxed in the manner prescribed u/s.164(1)(iv) of the Act, as per the CBDT circular. I direct the Assessing Officer accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 10th January, 2024 at Chennai. Sd/- (महावीर �सह ) (MAHAVIR SINGH) उपा�य� /VICE PRESIDENT चे�ई/Chennai, �दनांक/Dated, the 10th January, 2024 RSR आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकरआयु� /CIT 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF.