Sanidhya Roongta Benefit Trust Vs ITO (ITAT Jaipur)
Jaipur ITAT: Private Specific Trust with Determinate Sole Beneficiary Entitled to Individual Slab Rates; Maximum Marginal Rate Not Applicable
The Jaipur ITAT allowed the appeals of Sanidhya Roongta Benefit Trust, holding that a private specific trust having a single determinate beneficiary cannot be taxed at the Maximum Marginal Rate (MMR) and is entitled to the slab rates applicable to an individual. The Tribunal directed the Jurisdictional Assessing Officer to grant the benefit of individual slab rates for AYs 2015-16 and 2016-17.
The assessee, a private specific family trust created for the benefit of a minor child, had income only from interest and gifts. Due to an inadvertent filing of the return in the wrong ITR Form, CPC processed the return by applying the Maximum Marginal Rate, denying the benefit of individual slab rates. The assessee’s rectification application under Section 154 was rejected on the ground that the system did not permit conversion of one ITR form into another, and the CIT(A) affirmed the rejection.
The Tribunal observed that the assessee had consistently filed returns in the correct form in the preceding and subsequent years, and CPC itself had granted the benefit of individual slab rates in those years. It held that a bona fide error in selecting the ITR form cannot deprive the assessee of a substantive tax benefit otherwise available under the Act.
Following its earlier decisions in Samiksha Roongta Benefit Trust and Sakshi Roongta Benefit Trust, the Tribunal reiterated that where a private trust has only one beneficiary with a determinate share, Section 164 does not warrant taxation at the Maximum Marginal Rate. Instead, the trust should be assessed as an Individual/AOP at the normal slab rates.
Since the sole beneficiary’s share was definite and ascertainable, the Tribunal held that the lower authorities were not justified in applying the Maximum Marginal Rate. It accordingly set aside their orders and directed the Assessing Officer to grant the slab rates applicable to an individual for both assessment years. The appeals were allowed.
Cases Discussed
- Samiksha Roongta Benefit Trust (ITAT Jaipur), ITA Nos. 383 & 384/JPR/2025, common order dated 08.09.2025
- Sakshi Roongta Benefit Trust (ITAT Jaipur), ITA No. 385/JPR/2025, common order dated 08.09.2025
FULL TEXT OF THE ORDER OF ITAT JAIPUR
These two appeals are filed by the assessee as against separate appellate orders both dated 20.08.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as “CIT(A)”), arising out of the rectification orders passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years 2015-16 and 2016-17.
