Application of Maximum Marginal Rate on Trust with Known Beneficiaries: ITAT directs to apply Individual Rates [Read Order]

The Income Tax Appellate Tribunal (ITAT)  Chennai bench quashed  the application of maximum marginal rate on the trust with known beneficiaries and directed it to apply individual rate upon return of Income of the trust.

Assessee, Dinroze Estate is assessed as an Association of Person (AOP). The return of the estate was filed considering the provisions of Section 161 of the Income Tax Act. The trust earns income primarily under the head ‘income from house  property'. During the assessment proceedings, the AO taxed the returned income at Maximum margin rate of 30%.

Aggrieved by the order, the assessee filed an appeal  before the commissioner of Income Tax Appeals, CIT(A), who dismissed the appeal and confirmed the addition. Therefore the assessee filed another appeal before the tribunal.

S. Venugopalan , counsel for the assessee submitted that the assessee has computed tax at rates which are applicable to an individual assessee. Assessee is a specified trust wherein the names of the beneficiaries are known and their shares are determined.

Further, similar rate was charged for AYs 2017-18 and 2018-19 against which the rectification of the assessee was allowed. In Assessment Years 2011-12 to 2013-14 also, the rates adopted by the assessee was  accepted.

D.Hema Bhupal, Counsel for the revenue,  supported the decision of the lower authorities.

After reviewing the facts submitted by both parties, the two member bench of Manoj Kumar Aggarwal (Accountant Member) and V. Durga Rao (Judicial Member) quashed  the application of maximum marginal rate on the trust with known beneficiaries and directed it to apply individual rates upon return of Income of the trust.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates