TMI Blog2022 (10) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... n my opinion, that proviso is not applicable as relied on by the ld. DR. Admittedly, the trustees are not entitled to any share in the income of the assessee as it is meant for charitable or religious purposes. Therefore, the tax rates in such cases are at the rate ordinarily applicable to an association of persons and not at the maximum marginal rate. In the light of above finding of Tribunal of Shri Hanuman Mandir Trust [ 2002 (2) TMI 357 - ITAT PUNE ] we note that the assessee is a religious trust and the income derived from property of the said trust utilized to the deity and there is not dispute with regard to the said fact as it was contended by the ld. AR that the entire income goes to the deity who is the assessee. Therefore, these findings are applicable to the facts on hand and hold that the assessee is assessable under the status of AOP, as per the rates applicable to an individual. Further, in the case of Vijaya Durga Devi Trust [ 2019 (6) TMI 1047 - ITAT PUNE ] which is also a religious trust assessed in the status of AOP which is evident from para 2 of the said decision. The Tribunal held the income of the said trust is to be computed on the basis of tax rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reful reading of sub-section (2) of section 164 of the Act, I note that in the case of relevant income which derived from property held under trust wholly for charitable or religious purposes, the said income is not exempt u/s. 11 of the Act is to be treated the income of association of persons. Admittedly, for having no registration u/s. 12A of the Act, the CPC, Bangalore denied exemption u/s. 11 of the Act, but however, applied maximum marginal rate. It is also not disputed that the income was not derived from property held under the trust wholly for charitable and religious purpose. I note that the copy of notarized trust deed is placed on record consisting of 1 to 22 pages. It is noted from Point No. 3 of the said trust deed that all movable and immovable properties of trust mentioned in the Schedule I or any other properties remained mentioning through oversite are treated as property of the trust. Further, the new income accretions thereto by way of acquisition, donations, gift or by any other source shall be called trust properties. Therefore, it is not disputed by the ld. DR that the income so declared is not derived from the properties held by the assessee. As discussed ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of tax is applicable to the assessee. He submits that the CIT(A) has to read the entire Circular No. 387 of 1984 as a whole, but not, taking those portions which are not applicable to the assessee. He drew my attention to full text of the said circular at page 3 of the paper book. On perusal of the said circular, I note that at Point No. 28.1 it is explained that levy of income-tax at maximum marginal rate is applicable in the case of charitable and religious trusts which forfeit tax exemption. I note that the assessee did not forfeit the tax exemption but it was denied for not having registration u/s. 12A of the Act. Therefore, maximum marginal rate would not be applied to the assessee under Point No. 28.1. Further, the contention of ld. AR is that the CIT(A) conveniently reproduced Point Nos. 28.3, 28.4, 28.5, 28.6 and 28.7 of Circular No. 387 of 1984. He submits that the said Point Nos. 28.2 to 28.7 are not applicable as the assessee did not forfeit the exemption provided under (a) to (c) under Point No. 28.2. I note that under Clause (a), the levy of maximum marginal rate will come into play if the author of the trust, trustee or manager of the trust, substantial contribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held under the trust wholly for charitable or religious purposes, provisions of Section 164(2) will come into operation, but since under Schedule to Finance Act, rates of income-tax for AOP were the same as those of individual and, therefore, the assessee even though assessable under the status of AOP is still to be taxed as per the rates applicable to an individual. I further hold that proviso to Section 164(2) was wrongly applied in the present case to tax the assessee at the maximum marginal rate, because maximum marginal rate could be applied only if there was failure on the part of the trust under Section 13(1)(c) or 13(1)(d) of the Act which is not the reason for denying benefits of Section 11 in the present case. In view of the above legal position, I hold that Section 164(2) applies and the tax is to be calculated on the AOP on the minimum marginal rate. 9. In the light of above finding of Tribunal in SMC Bench in the case of Shri Hanuman Mandir Trust (supra), I note that the assessee is a religious trust and the income derived from property of the said trust utilized to the deity and there is not dispute with regard to the said fact as it was contended by the ld. AR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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