Narmada Trust Vs ITO (ITAT Delhi)
Tax Me, Not Maximally! – ITAT Delhi Tells CPC to Drop the 30% Hammer on Narmada Trust- Taxable at Normal Slab Rates, Not at Maximum Marginal Rate
Assessee had filed its return for AY 2023-24 declaring income of ₹47.95 crore. The CPC, while processing the return u/s 143(1), levied tax at 30% along with surcharge @37%. CIT(A) upheld this adjustment, treating the Trust as an AOP with indeterminate shares. Before the Tribunal, Assessee explained that it had surrendered its 12A registration, was not claiming exemption u/s 11 & had been regularly carrying out charitable activities. It argued that CBDT Circular No. 320 dated 11.01.1982 specifically provides that charitable or religious trusts where trustees have no individual shares are to be taxed at normal slab rates and not at MMR.
Tribunal agreed with the Assessee, observing that the issue was squarely covered by the CBDT circular, which remains binding on the Department. It held that charitable or religious trusts, even if not claiming exemption under sections 11 & 12, cannot be taxed at MMR merely because their beneficiaries are indeterminate. The Bench followed earlier coordinate bench rulings in Vindhya Trust and Tulsi Trust which had taken an identical view.
