Gauri Ananya Educational Beneficiary Trust Vs DCIT (ITAT Lucknow)
Rectification u/s 154 not permissible – Trust rightly taxed at Maximum Marginal Rate due to indeterminate shares of beneficiaries
Assessee filed its return as an AOP/Trust. The return was processed u/s 143(1) & tax was levied at Maximum Marginal Rate (MMR) as per section 164, on the ground that beneficiaries’ shares were not specified.
Assessee did not file appeal against the 143(1) intimation. Instead, it filed rectification u/s 154, claiming MMR was wrongly applied. CPC rejected the rectification. CIT(A) upheld the rejection.
Before ITAT, Assessee argued:
- There was no apparent mistake, hence 154 order was invalid.
- Trust was not carrying on business.
- There were only 2 beneficiaries with equal shares.
- Reliance was placed on Dhariya Beneficiary Trust (SMC) order.
However, during hearing, the Bench asked whether the trust deed specified the shares of beneficiaries. Counsel admitted that shares were NOT specified in the trust deed & remained indeterminate.
Tribunal held:
- Section 164(1) mandates MMR when beneficiaries’ shares are unknown or indeterminate.
- Returning the ROI without specifying shares means CPC rightly applied MMR.
- There was no “mistake apparent from record” – hence rectification u/s 154 was not applicable.
- Since assessee failed to appeal against 143(1) intimation, it attained finality.
- One cannot seek benefit from one’s own failure to specify shares.
Accordingly, CIT(A)’s order was upheld & the appeal was dismissed.
