Jaipur ITAT: Private Specific Trust with Sole Determinate Beneficiary Gets Individual Slab Rates

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.

2. The registry has noted that there is delay of 145 days filing of above appeals. The assesse by way of notarized affidavit stated that the delay is due to family members medical emergency and requested to condone the same. Considering the above submission, the delay is hereby condoned.

3. ITA No. 461/JPR/2025 is taken as the lead case. Brief facts of the case are, the assessee is a private specific trust (family trust) created for the benefit of a child namely Sanidhya Roongta, during her monitory by her grandparents as Trustees. The trust is having income from other sources namely interest income and gift receipts. The assessee trust always filing return of income in Form no. 5 and claiming tax/benefits slabs like that of an individual. However for Assessment Year 2015-16, the assessee filed ITR in Form no. 7 on 02.09.2015 and filed revised return of income on 21.03.2017 in ITR Form no. 5. The original return was processed by CPC, Bengaluru, resulting a demand of Rs. 70,988/- and denying the benefit of tax/slab rates applicable to individuals. It is thereafter, the assessee filed rectification application before AO stating that by mistake the assessee trust filed return of income in ITR Form no. 7 and requested to treat the ITR Form no. 7 as ITR Form no. 5 and allow slab rate tax benefit. The ld. AO dismissed the same by observing that there is no functionality in the computer system to rectify the ITR Form no. 7 e-filed with ITR form No. 5. Thus, there is no neither mistake, apparent on record nor there is any calculation mistake which requires to be rectified u/s 154 of the Act. Thereby, ld. AO rejected rectification application filed by the assessee.

4. Aggrieved against the rectification order, assessee filed an appeal before ld. CIT(A) who has also dismissed the assessee’s appeal by observing as follows:-

“…6.1 In his grounds of appeal of Form 35 filed with the appeal against order u/s 154 of the Act passed by ITO, ward-1(2), Kota, the appellant has stated that appellant is a private Trust as Children Benefit Trust. It has source of income from interest and gift and no business income and appellant is eligible for slab benefit like individual.

6.2 I have gone through all the facts of the case. It is seen that, the appellant filed its return of income for the A.Y.2015-16 on 02.09.2015 in ITR Form 5 and filed revised return of income on 21.03.2017 in ITR Form 7 which was processed by CPC, Bengaluru resulting in a demand of Rs.70988/-, Further, the appellant filed rectification application before AO stating that by mistake it has filed return of income in ITR Form 7 and requested to treat the ITR Form-7 as ITR Form-5 and allow slab benefit. The AO has rightly disposed off the appellant’s rectification application stating that it is not a mistake apparent from records as the appellant has originally filed its ITR in Form -5 and has been regularly been filing return of income from A.Y 2013-14 to 2017-18 in ITR Form-7. Further, the AO has rightly stated that there is no functionality available either with AO or with the undersigned to rectify the ITR e-filed with one ITR Form filed by the appellant to any other ITR Form. Further, if on any point, the tax-payers feel that they have made any mistake in ITR Form, the functionality has been provided to the tax payers that they can rectify their mistake by E filing revised return of income.

6.3 In the current scenario, if the appellant wish to avail the slab benefit, it may file revised return of income, if need be by taking resort to provisions of section 119(2)(b) of the Act after submitting all the relevant details.

6.4 Thus, on the basis of above discussion and after duly perusing all the details submitted by the appellant during appellate proceedings, I am of the opinion that the present appeal is not maintainable and is therefore dismissed.

7. In the result, the appeal is dismissed.”

5. Aggrieved against the appellate order, assessee is in appeal before us, raising following Grounds of Appeal in ITA No. 461/JPR/2025 for A.Y 2015-16:

Assessee was an pvt specifiec trust, there is only one beneficiary Sanidhya Roongta who was minor at that time as Sanidhya Roongta Benefit Trust, there is no business income only income from other source i.e interest income and gift received, cpc charged above income by applying MMR rate and raised the demand but slab benefit like individual should be given. In previous years and following years CPC give slab benefit like individual, but in said F.Y CPC charged above income by applying MMR rate and raised the demand, copy of intimation u/s 143(1) for A.Y 2018-19, copy of trust registration and provision for taxation of private specifiec trust enclosed.

6. At the time of hearing, the assessee counsel requested for adjournment on account that he is suffering with cold, cough and unable to attend hearing. However, on verification of record and files, it is found that no power of authority filed by the assessee in favour of the counsel. Further today is the 15th time of hearing of this appeal. Therefore, the request for adjournment is hereby rejected and the case was heard with the assistance of Sr. DR.

7. Sr. DR appearing for the Revenue submitted orders passed by the lower authorities does not require any interference and requested to dismiss the appeals filed by the assessee.

8. We have given our thoughtful consideration and perused the materials available on record. For the A.Y 2015-16, the assessee filed the return of income mistakenically in Form No. 7 on 02.09.2015 and then filed revised return of income on 21.03.2017 in Form No. 5. The CPC, Bengaluru processed the return in Form No. 7 and demanded of Rs. 70,988/- by denying the benefit of tax/slab rates application to individuals. It is thereafter the rectification application filed by the assessee were also rejected on the ground that there is no provisions in the system to change Form No. 7. This view was confirmed by ld. CIT(A) also, the assessee also placed on record for the subsequent assessment years. The assessee filed its return of income in Form No. 5 which were duly processed for the A.Ys 2017-18 to 2022-23 by CPC, Bengaluru providing slab benefit rate like that of individual and passed refund order vide intimation u/s 143(1) dated 14.06.2018 for the A.Y 2017-18 were refund of Rs. 20,208/- issued by the CPC, Bengaluru. Thus, in our considered view, the CPC is not correct in denying the benefit for the A.Y 2015-16.

8.1 The assessee also placed on record similarly placed private trust decisions of this Tribunal in the case of Samiksha Roongta Benefit Trust and Sakshi Roongta Benefit Trust in ITA Nos. 383 & 384/JPR/2025 and 385/JPR/2025 vide common order dated 08.09.2025 wherein the Co-ordinate Bench of this tribunal allowed the appeal of the assessee and not to charge tax at maximum marginal rate but to charge the trust as an individual or AOP at normal rate by observing as follows:-

“10. We have heard the rival contentions and perused the material placed on record. Before we proceed to decide the solitary issue raised by the assessee, it would be appropriate to reproduce the relevant part of the finding of the ld. CIT(A) being the order under challenge, which reads as follows;

The AO further states that there is no mistake as apparent from records therefore, he rejected the rectification petition u/s 154 of the Act as the same was out of the purview of the provisions of the said section. The appellant filed the instant appeal stating that the AO has charged the taxes at maximum marginal rate. Since, the claim of the appellant does not pertain to the issue of the order against which the instant appeal has been filed, the CIT(Appeal) cannot travel beyond the jurisdiction of the issue dealt in the order. Moreover, the appellant is a private trust without having been approved u/s 12A/12AA of the Act as trust. hence, I find the action of the CPC as well as the AO is in order in absence of registration u/s12A/12AA of the Act which requires no interference. Hence, the action of the AO is confirmed and the ground of appeal is dismissed. Thus, the ground of appeal is deleted.

As is evident that the desired benefit was denied to the assessee as they were not registered u/s. 12A/12AA of the Act. Merely an error in the ITR which was Bonafide, the benefit which is otherwise allowable cannot be denied. Before going into further in the matter of dispute at this stage it would be appropriate to refer to the provision of section 164(2) of the Act which reads as follows;

Charge of tax where share of beneficiaries unknown.

164. (1) Subject to the provisions of sub-sections (2) and (3), where any income in respect of which the persons mentioned in clauses (iii) and (iv) of sub-section (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as “relevant income”, “part of relevant income” and “beneficiaries”, respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate :

Provided that in a case where—

tax shall be charged on the relevant income or part of relevant income as if it were the total income of an association of persons :

Provided further that where any income in respect of which the person mentioned in clause (iv) of sub-section (1) of section 160 is liable as representative assessee consists of, or includes, profits and gains of business, the preceding proviso shall apply only if such profits and gains are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him.

(2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or which is of the nature referred to in sub-clause (iia) of clause (24) of section 2, or which is of the nature referred to in sub-section (4A) of section 11, tax shall be charged on so much of the relevant income as is not exempt under section 11 or section 12, as if the relevant income not so exempt were the income of an association of persons :

Provided that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate.

Here it is a case of trust created for the benefit of minor and their shares determined and therefore, in such a case the tax cannot be recovered at Maximum Marginal Rate [ MMR ] as there is only one beneficiary and the share is determined. Considering that aspect of the matter we direct the ld. AO not to charge tax to the assessee on MMR but to charge as Individual or AOP.

In the result, the appeal in ITA no. 383/JP/2025 filed by the assessee is allowed.”

9. In the present case before us, there is no change in facts. Here, in this case, the only beneficiary of the trust is Sanidhya Roongta and her share is also well determined. Therefore, the question of charging at maximum marginal rate does not arise. Therefore, we set aside the orders passed by lower authorities and direct the JAO to give benefit of slab rate applicable to individuals.

10. In the result, appeal filed by the assessee in ITA No. 461/JPR/2025 is hereby allowed.

ITA No. 462/JPR/2025 for A.Y 2016-17

11. The ground of appeal raised by the assessee are as follows:-

Assessee was an pvt specific trust, there is only one beneficiary Sanidhya Roongta who was minor at that time as sanidhya Roongta Benefit Trust, there is no business income only income from other source i.e interest income and gift received, CPC charged above income by applying MMR rate and raised the demand but slab benefit like individual should be given. In previous years and following years CPC give slab benefit like individual, but in said F.Y CPC charged above income by applying MMR rate and raised the demand, copy of intimation u/s 143(1) for A.Y 2018-19, copy of trust registration and provision for taxation of private specific trust enclosed response submitted on 16-may-2023 response type full response filed by self.

12. There is no change in the facts of the case as that of the Assessment Year 2015-16 year and therefore, decision rendered in ITA No. 461/JPR/2025 will be squarely applicable by mutatis mutandis to the present case.

13. In the result, appeal filed by the assessee in ITA No. 462/JPR/2025 is also allowed.

14. In the combined result, both appeals filed by the assessee are hereby allowed.

Order pronounced in the open court on 06-08-2026