Association of Person’s Income of Rs. 1.4L Not Taxable at Maximum Marginal Rate u/s 167B: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, held that income of ₹1,45,720 earned by an Association of Persons (AOP) cannot be subjected to tax at the maximum marginal rate (MMR) and held that the section 167B of the Income Tax Act, 1961 were not applicable.

The appellant, Gulmohar Park Journalists Colony Welfare Association, AOP, had filed its return of income for the Assessment Year (AY) 2024-25 declaring total income of ₹1,45,720. The return was processed under section 143(1) of Income Tax Act by the CPC, which subjected the income to tax at 30% along with a 25% surcharge by invoking MMR.

The Commissioner of Income Tax (Appeals) (CIT(A)), upheld the action of the CPC. The appellant filed an appeal challenging this order.

Atishaya, the counsel for the appellant contended that the appellant income level did not warrant application of MMR and that section 167B of the Income Tax Act had been wrongly invoked. It was further submitted that the appellant had opted for the new tax regime under section 115BAC of the Income Tax Act and the normal tax rates would be applied.

Ravi Kant Chaudhary, appeared as counsel for the respondent.

Madhumita Roy, Judicial Member and Amitabh Shukla, Technical Member after considering the submissions and material on record, observed that the total income of the appellant was only ₹1,45,720 and thus did not justify taxation at the maximum marginal rate. It held that the application of Section 167B in such circumstances was erroneous.

The Tribunal set aside the order and directed the Assessing Officer to recompute the tax liability without applying MMR. In light of facts and circumstances the appeal of the appellant was allowed.

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