Ajmera Green Acres Apartment Owners Welfare Association Vs ITO (ITAT Bangalore)
Bengaluru ITAT: Apartment Owners’ Welfare Association Not Taxable at Maximum Marginal Rate
The Bengaluru ITAT held that an Apartment Owners’ Welfare Association registered under the Karnataka Societies Registration Act, 1960 cannot be taxed at the maximum marginal rate (MMR) under section 167B merely because the members’ shares were shown as “zero” in the return of income. The Central Processing Centre had processed the return under section 143(1) by applying the maximum marginal rate, and the CIT(A) upheld the adjustment on the ground that the members’ shares were “indeterminate”. The assessee contended that there was no profit-sharing arrangement, its income was applied solely for the objects of the society, and the disclosure of members’ shares as “zero” could not be equated with indeterminate shares. It also pointed out that in its own earlier assessment years, the Department had accepted taxation at the normal slab rates after remand proceedings.
The Tribunal accepted the assessee’s contention and held that section 167B expressly excludes societies registered under the Societies Registration Act or any corresponding State law. Since the assessee was a registered society under the Karnataka Societies Registration Act, 1960, the provisions of section 167B had no application, irrespective of the disclosure made regarding members’ shares in the return. The ITAT also relied on its earlier decision in AME Harmony Apartment Owners Welfare Association and noted that the Revenue itself had accepted the same position in the assessee’s own earlier years. Accordingly, it directed that the assessee’s income be taxed at the normal slab rates applicable to an Association of Persons and not at the maximum marginal rate. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by Ajmera Green Acres Apartment Owners Welfare Association (“the assessee” or “the appellant”) is directed against the appellate order dated 29 January 2026 passed by the Commissioner of Income Tax (Appeals), Addl./JCIT(A)-4, Hyderabad. By the impugned order, the learned CIT(A) dismissed the assessee’s appeal against the intimation dated 28 December 2024 issued by CPC, Bengaluru, under section 143(1) of the Income-tax Act, 1961 (“the Act”) for Assessment Year 2024-25, relevant to Financial Year 2023-24.
