Wings Educational Society Vs ITO (ITAT Visakhapatnam)
Summary: Wings Educational Society, a society registered under the Societies Registration Act, 1860, filed its return for AY 2024-25 in the status of an AOP/BOI declaring total income of Rs. 2,47,640/-. The Centralized Processing Center/Ld. AO processed the return by applying the maximum marginal rate along with surcharge and cess, resulting in tax of Rs. 96,580/- and interest of Rs. 11,628/-, and raised a demand of Rs. 1,08,210/-. The assessee challenged the adjustment before the Ld. CIT(A), which sustained the adjustment, and thereafter appealed to the Tribunal. The assessee contended that, being a society registered under the Societies Registration Act, 1860, it was eligible for the normal rate of tax applicable to an AOP/BOI and that the provisions of section 167B could not justify taxation at the maximum marginal rate merely because the return was filed in the status of AOP/BOI. The assessee also challenged the interest of Rs. 6,755/- under section 234B and Rs. 4,873/- under section 234C. The Tribunal noted that the appellant was a society registered under the Societies Registration Act, 1860, had filed its return in the status of AOP/BOI and had reported income below the taxable limit. It held, on the facts recorded in the order, that the assessee was eligible for the normal rate of tax in terms of section 167B. The Tribunal therefore directed the Ld. AO to compute tax at the normal rate and, where the total income was below the taxable limit, to accept the return without any tax liability. The appeal filed by the assessee was accordingly allowed. The order was pronounced in the open court on 21th August, 2026.
Registered Society Cannot Be Taxed at Maximum Marginal Rate Merely Because It Filed Return as AOP: Visakhapatnam ITAT
Wings Educational Society, registered under the Societies Registration Act, filed its return for AY 2024-25 in the status of an AOP/BOI, declaring income of ₹2.47 lakh. Although the income was below the taxable limit, the CPC applied the maximum marginal rate along with surcharge, cess and interest, raising a demand of ₹1.08 lakh. The adjustment was upheld by the appellate authority.
The Visakhapatnam ITAT held that the assessee was a registered society entitled to taxation at the normal rates applicable to an AOP/BOI and that the maximum marginal rate under Section 167B could not be mechanically applied. Since the returned income was below the taxable limit, the Tribunal directed the Assessing Officer to accept the return without any tax liability and allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal is filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)/Ld. Addl/JCIT(A), Panaji, [hereinafter in short “Ld. CIT(A)”] vide DIN: ITBA/APL/250/2025-26/1085367513(1) dated 30-Jan-2026 for the Assessment Year 2024-25.
2. The Assessee has raised the following grounds of appeal:
“1. The impugned order of Learned Addl/ Joint Commissioner of Income -Tax (Appeals), Panaji, Office of Commissioner of Income-Tax Appeal, is erroneous both on facts and in law applicable to the appellant’s case and is therefore not tenable.
2. The L earned Addl/ Joint Commissioner of Income Tax (Appeals), Panaji, erred both in law and on facts in holding that, Section 167B of the Income- tax Act, 1961 is applicable to the appellant and thereby upholding the adjustment made by the Centralized Processing Center, wherein the returned income of Rs. 2,47,640/- was taxed at the Maximum Marginal Rate in place of normal rates, resulting in a demand of Rs. 1,08,210/-.
2A. The Learned Addl/ Joint Commissioner of Income Tax (Appeals), Panaji, failed to appreciate that, as apparent from the return of income, the appellant is an Association of Persons with sub- status “Society registered under the Societies Registration Act, 1860 or any law corresponding to that state” and that Section 167B is therefore inapplicable, the tax liability having been correctly computed by the appellant as nil under the normal applicable rates.
3. On the facts and circumstances of the appellant’s case, the Learned Addl./Joint Commissioner of Income-Tax (Appeals), Panaji, failed to appreciat e that no intimation or opportunity of being heard was given by the Centralized Processing Center before making adjustments. by applying the Maximum Marginal Rate instead of the normal rates. This action was without legal authority and in violation of the principles of natural justice, yet the appellate authority erroneously dismissed the appellant’s contention as devoid of merit.
4. On the facts and in the circumstances of the Appellant’s case, the very levy and quantification of interest of Rs. 6,755/- un der Section 234B and Rs.4,873/- under Section 234C of the Income- tax Act, 1961 is incorrect, not tenable, and liable to be deleted.
5. For these grounds, or for any other ground or grounds that may be urged during the course of the hearing of the appeal, t he Appellant respectfully prays that the Hon’ble Income Tax Appellate Tribunal maybe pleased to allow the appeal with consequential relief in favour of the Appellant, or grant any other relief that the Hon’ble Tribunal may deem fit in the facts and circumstances of the case.”
3. Brief facts of the case are that, assessee is a Society Registered under Andhra Pradesh Societies Registration Act, 2001 and has filed its return of income on 31.07.2024, for the A.Y. 2024-25, declaring a total income of Rs.2,47,640/-. The Centralized Processing Center / Ld.AO, processed the return of income and made an adjustment, by levy of tax by applying maximum marginal rates along with surcharge and cess amounting to Rs.96,580/- and interest at Rs.11,628/-, respectively, and raised demand of Rs.1,08,210/-.
4. Being aggrieved by the adjustment made by the Centralized Processing Center / Ld.AO, assessee preferred an appeal before the Ld. CIT(A) and filed its submissions. After considering, the submissions of the assessee, Ld. CIT(A) sustained the adjustments made by the Ld.AO.
5. Being aggrieved by the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal.
6. Learned Counsel for the assessee, Shri Prabhakara Murthy, Advocate, submitted that the Ld.AO/Centralized Processing Centre, computed the tax at maximum marginal rate on the income disclosed by the assessee, even though, the assessee is a Society Registered under the Society Registration Act and eligible for normal rate of tax in terms of section 167B of the Act. The Ld. CIT(A) without considering relevant submissions of the assessee, simply upheld the reason given by the Ld.AO. Therefore, he submitted that the order of the Ld.CIT(A) should be set- aside and Ld.AO/CPC may be directed to compute the tax at a normal rate applicable to AOP/BOI in terms of section167 of the Act.
7. Learned Senior AR for the Revenue, Shri A.P.Babu, Sr.AR, relied upon the orders of the Ld. CIT(A).
8. We have heard both the sides, perused the material available on record and had gone through the orders of the authorities below. Admittedly, the appellant is a Society registered under the Societies Registration Act,1860, filed its return of income in the status of AOP/BOI and year under consideration is below the taxable limit. The Ld.AO/CPC computed the tax at Maximum Marginal Rate, on the ground that the assessee is not entitled for normal rate of tax just because it is a society, and, further assessee need to prove other conditions including the conditions of Shares of Members etc. We find that the assessee has filed return of income in the status of AOP/BOI and reported income much below the taxable limit. Further, assessee is also Registered Under the Society Registration Act, 1860, and eligible for normal rate of tax in terms of section 167B of the Act. Therefore, we direct the Ld.AO to compute the tax at normal rate of tax on the income returned by the assessee, in case, the assessee reported total income which is below the taxable limit, then the Ld.AO is directed to accept the return of income filed by the assessee without any tax liability.
9. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 21th August, 2026.
