Samiksha Roongta Benefit Trust Vs ITO (ITAT Jaipur)
MMR Not Automatic! Private Trust with Single Minor Beneficiary Gets Relief- ITR Form Error Can’t Cost Slab Benefit, Rules ITAT Jaipur
ITAT Jaipur Bench dealt with the important issue of whether income of private specific trusts having a single determinate beneficiary could be taxed at Maximum Marginal Rate (MMR) or whether slab benefit available to individuals/AOPs should be applied.
Both the trusts were created for the benefit of minor children under a family arrangement, having only interest income & small gifts during the relevant years. The returns were processed u/s 143(1) by CPC, which taxed the income at MMR & raised demand. Assessee contended that as private specific trusts with only one determinate beneficiary, they were entitled to normal slab benefits just like an individual. It was pointed out that in earlier & subsequent years, CPC itself had granted slab benefit & even issued refunds, but only in AYs 2015-16 & 2016-17 the income was wrongly taxed at MMR. Rectification petitions u/s 154 were filed, but AO rejected them on the ground that ITR had been filed in Form 7 instead of Form 5, & that there was no “mistake apparent from record”. CIT(A) also confirmed the AO’s action, adding that the trusts were not registered u/s 12A/12AA, therefore MMR was correctly applied.
