NARMADA TRUST,NEW DELHI vs. THE INCOME TAX OFFICER, NEW DELHI

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ITA 3034/DEL/2025Status: DisposedITAT Delhi28 October 2025AY 2023-24Bench: SH. M. BALAGANESH, ACCOUNTANT MEMBER\nAND\nSH. SUDHIR KUMAR, JUDICIAL MEMBER\nITA No.3034/DEL/2025\nAssessment Year: 2023-24\nNarmada Trust B-60/61 C/o Vs. Income Tax Officer Circle\nBajaj Auto Limited Naraina,\nIndustrial Area Phase-ll\nMitraon Naraina Industrial\nEstate South West Delhi\n110028 New Delhi\nPAN No. AAATN0321K\n(APPELLANT)\n25 (1)\nNew Delhi\n(RESPONDENT)\nAppellant by\nMs. Vasantiben Patel, Adv,\nSh. M.A.Gohel, CA,\nRespondent by\nSh. Om Prakash, Sr.DR\nDate of hearing:\n119 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee, being a charitable trust not claiming benefits under Section 11 and not having indeterminate shares of members, is eligible for tax at normal slab rates as per CBDT Circular No. 320. Consequently, the tax should be levied at the normal slab rates applicable to Associations of Persons.

What were the facts?

The assessee, a charitable trust that surrendered its registration and did not claim benefits under Section 11, was taxed at the Maximum Marginal Rate (MMR) of 30% and a surcharge of 37% during the processing of its return under Section 143(1). The assessee argued that it should be taxed at normal slab rates applicable to individuals and the surcharge should be 25%.

What were the issues?

Whether a charitable trust that has surrendered its registration and not claimed Section 11 benefits is liable to be taxed at the Maximum Marginal Rate (MMR) or normal slab rates, and the applicable surcharge rate.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 11,Section 167A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “C”, DELHI

Before: SH. M. BALAGANESH & SH. SUDHIR KUMAR

For Appellant: Ms. Vasantiben Patel, Adv
Hearing: 11/09/2025Pronounced: 28/10/2025

Date of hearing: 11/09/2025 Date of Pronouncement: 28/10/2025 ORDER

PER SUDHIR KUMAR, JUDICIAL MEMBER:

1.

1. This appeal by the assessee is directed against the order of the Commissioner Of Income Tax Appeal Addl/JCIT(A) -1 Kolkata [hereinafter referred to as “Ld.CIT(A)”] vide order dated 06.03.2025 pertaining to A.Y. 2023-24 arising out the intimation order dated 07.03.2024 u/s.143(1) of the Income-tax Act, 1961, (in short ‘the Act’).

2. The assessee has raised the following grounds in appeal: 1.1 On, the fact and in the circumstances of the case and law, the learned Commissioner of Income Tax (Appeals) CIT(Appeals) erred in confirming tax levied by the Deputy Director Of income Tax ,CPC (herein referred to as” the AO” @ flat rate of 30% (i.e Maximum Marginal Rate) while processing the Return of income under Section 143(1) of the Act. 1.2. It is submitted that the adjustment has been made without affording the Appellant any opportunity of being heard and the same is in gross violation of principles of natural justice and also the provisions of section 143(1) of the Act. 1.3.It is submitted that the issue relating to the rate of tax and surcharge is high debatable question of law and cannot be settled under section 143(1) of the Act. ii. Rate of Tax 2.1 On, the fact and in the circumstances of the case and law, the learned CIT (Appeals) erred in confirming tax levied by the learned Assessing Officer (CPC) at flat rate , rate of 30%, instead of normal slab rates applicable in the case of the Applicant while processing the Return of Income under section 143(1) of the Act.

2.2 The learned CIT(A) failed to appreciate that the Appellant is an Association of Person (AOP) a charitable trust not availing benefits of section 11 of the Act and liable to pau tax at the slab rates applicable in the case of Individual, etc. Erroneous Levy of Surcharge: 3.1 The learned CIT (A) erred in confirming the surcharge t levied by the levied by the learned Assessing Officer at the rate of 37%, on the entire Income of the Appellant instead of the applicable rate of 25% in the case of the Appellant while processing the Return of Income filed for the above year under section 143(1) of the Act. 3.2. The learned CIT (A) failed to appreciate that the Total Income of the Appellate for the above year is RS.47,95,49,379/- (including the income by way of Dividend Rs. 47,75,79,425/-) exceeds Rs. 5 crores. However, it is not covered by either Clause (iii) or clause (iv) of the Paragraph ( A) of Part –I of First Schedule to the Finance Act as total Income excluding Dividend Income {Rs.45,75,79,425/-} is only Rs.2,19,69,954/- and hence, surcharge is payable on such income @25% and not @ 37 %. Therefore, the rate of surcharge applicable on income other than the income by way of dividend or income under the provisions of section 111A and 112 A of the Act is 25 %.

3.

The brief facts of the case are that the assessee is a charitable Religious Trust, filed its return of income declaring at Rs.47,95,59,380/-and calculate the tax on the income at the normal rate of tax. The return was processed u/s 143(1) of the Act by CPC wherein the tax was calculated on the flat rate 30%, instead of the normal slab rates. The CPC also charged the surcharged at the rate of 37% instead of 25%. Against the said order the assessee filed an appeal before the Ld. CIT(A), who vide his order dated 06-03-2025 dismissed the appeal of the assessee. Aggrieved the order of the Ld. CIT(A) the assessee filed this appeal before the tribunal.

4.

The Ld. AR of the assessee submitted that assessee is a charitable trust and is engaged in the charitable activities for the benefit of public at large. The assessee trust has surrendered the certificate of registration granted to it u/s 12 A(a) of the Act. The assessee trust has not claimed any benefit u/s 11 of the Act and is assessed to tax as per the rate prescribed normal slab rate, however, it was assessed at Maximum Marginal Rate (MMR). She also submitted that as per the circular No. 320 dated 11-01-1982[F. No. 131(31) /81-TP(Pt.) the tax is to be levied at the normal slab rate.

Ld. AR further submitted that the case is squarely covered by the decision of the co-ordinate bench in the case of Vindhya Trust v. DCIT in and Tulsi Trust v. Dy.CIT in ITA No. 1410/Del/2025.

5.

The Ld. Sr. DR has relied the order of the lower authorities and requested for the confirmation of the same. We have heard the both parties and perused the material available on the record. In the present case the appellate trust is a charitable trust and does not claim any benefit of exemption under section 12 A of the Act. As the assessee relied upon the CBDT Circular No. 320 dated 11-01-1982[F. No. 131(31) /81-TP(PL)(Pt.). The said circular is reproduced as under; Circular; No. 320 dated 11-01-1982[F. No. 131(31) /81-TP (PL) (Pt.) SECTION 167 A ASSESSMENT WHERE SHARES OF MEMBERS UNKNOWN) 911. Whether the section is applicable to income received by trustees on behalf of provident funds created exclusively for the benefit of employees

1.

“A reference is invited to paragraph 15.1to 15.7 of the Explanatory notes on the provisions relating to direct taxes in the Finance Act, 1981 [circular No. 308 dated 29-06-1981] which explain the scope and ambit of section 167A, as inserted by the Finance Act, 1981.

2.

A question has been raise whether the provisions of section 167A of the Income tax Act which provides for charging of tax at the maximum marginal rate on the total income of an association of persons where the individual shares of members in the income of such association are indeterminate or unknown would also apply to income receivable by trustee on behalf of provident funds, superannuation funds, gratuity funds pension funds etc, created bona fide by the 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 recognized 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 changed 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 shares 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.”

As stated above the Appellant has carried on charitable activities by granting donations to the extent of Rs.20,00,000/- to eligible trusts/institutions and has not claimed the benefits of section 11 of the Act. Accordingly, The above referred Circular clearly applies and the tax is to be levied at the normal slab rates. In view of the above, the Appellants prays Your Honour to kindly direct the learned Assessing Officer to apply rate tax correctly as explained above and re-work the tax payable by the Appellant and oblige.”

6.

Ld. AR not pressed the ground No. 1 hence, decided against the assessee as not pressed. As regards as other grounds the case of the assessee has fulfilled the condition of the said circular and thus eligible to charge tax at the slab rates prescribed for Association of Persons for A.Y. 2023-24. Accordingly, we hold that the tax should be charged in the case of the assessee as per normal slab rate of Association of Persons. The grounds No.2 and 3 raised by the assessee are allowed and the appeal of the assessee is partly allowed for statistical purpose.

7.

In the result the appeal of the assessee is partly allowed for statistical purpose.

Order pronounced in the open court on 28.10.2025.

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