Fajle Rabbi Chand Charitable Trust Vs ITO (ITAT Pune)
The assessee, a public charitable trust registered under the Bombay Charitable Trust Act, 1950, appealed against the order of the Commissioner of Income Tax (Appeals), NFAC, confirming the action of the Assessing Officer in taxing its income at the Maximum Marginal Rate (MMR) under Section 167B of the Income-tax Act for Assessment Year 2024-25. The dispute arose from a rectification order passed under Section 154 of the Act.
The trust was not registered under Section 12A of the Income-tax Act and had filed its return as an Association of Persons (AOP), declaring income of ₹49,710. Since the declared income was below the taxable limit, no tax liability was shown in the return. However, while processing the return, the Centralized Processing Centre (CPC) applied the Maximum Marginal Rate and levied tax at 30% on the declared income without allowing the basic exemption limit ordinarily available to individuals and AOPs. The assessee’s rectification application under Section 154 was rejected, and the CIT(A) upheld the CPC’s action.
Before the Tribunal, the assessee submitted that the issue was squarely covered by the Tribunal’s earlier decision in National Association of Interlocking Surgeons v. ITO (Exemption), which held that charitable trusts are taxable at normal rates and not at the Maximum Marginal Rate. The Revenue supported the order of the CIT(A).
