Case Law Details
Air Force Navy Farm Owners Welfare Association Vs ITO (ITAT Delhi)
The issue under consideration is whether AOP is liable to tax at MMR if income of its members during relevant year exceeded basic exemption limit?
ITAT states that the provision of section 167B of the Act and, thereafter, proceeded to hold that, in the case of the assessee provision of section 167B (2) are applicable. The section 167B(2) prescribe that in case of any Association of Person (not being a case falling under subsection 1 of 167B ), if total income of the any member of the Association of Person (excluding the share from such Association) exceeds the maximum amount, which is not chargeable to tax under the Finance Act of the relevant year, the tax shall be charged on the total income of the Association at maximum marginal rate. In view of the provision, the Learned CIT(A) held that income of the members being in the slab of maximum rate of tax, the society is not entitled to the benefit of exemption from the minimum amount and liable to the incidence of maximum marginal rate income of section 167B(ii) of the Act. In our opinion, the finding of the Learned CIT(A) on the issue in dispute is well reasoned. A society registered under the Societies Registration Act, 1860, has been excluded from the provision of section 167B9(1). Thus, in case of any society, which though has been held as Association of Person and income of such Association is indeterminate; such society will be excluded from invoking of maximum marginal rate. But, the provision of section 167B(2) are applicable in case of Association of persons not being a case falling under sub-section 1. In view of the clear and unambiguous provisions of 167B(2), if income of any member (other than the share of such Association) is higher than the basic exemption limit of the relevant year, the income of the Association is chargeable at the maximum marginal rate.
Accordingly, the appeal of the assessee is dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
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