Nam Group Aslali Vs AO, CPC (ITAT Ahmedabad)
ITAT Ahmedabad held that as per the provisions of Section 167B of the Income Tax Act, Maximum Marginal Rate (MMR) is applicable on entire income of AOP if any one member of the AOP is taxable at a rate higher than MMR. Thus, matter restored to file of AO verify whether any member of AOP is taxable at rate higher than MMR.
Facts- Present appeal is preferred by the assessee against CIT(A) order, wherein, the levy of surcharge at the maximum marginal rate under Section 167B of the Income Tax Act, 1961 was uphold. The levy of surcharge was determined pursuant to intimations issued by the CPC, Bengaluru under Section 143(1) of the Act.
Conclusion- Held that as per the provisions of Section 167B of the Act, if even one member of the AOP is taxable at a rate higher than MMR, the entire income of the AOP will be taxed at MMR. Although the co-ownership agreement specifies determinate shares, the record does not conclusively establish the tax rates applicable to each co-owner. It is therefore necessary to verify the taxability of each co-owner to ensure that the correct rate of taxation is applied. Based on the facts, the co-ownership agreement, and judicial precedents, it is evident that Section 26 of the Act governs the taxation of the rental income from house property in this case. However, in light of the provisions of Section 167B of the Act, it is essential to ascertain whether any member of the AOP is taxable at a rate higher than MMR. In the interest of justice and to ensure compliance with the Act, the orders of the CIT(A) for both A.Y. 2022-23 and A.Y. 2023-24 are set aside, and the matter is restored to the file of the AO for proper verification.
