AOP is liable to tax at MMR if income of its members during relevant year exceeded basic exemption limit: Delhi ITAT
AOP is liable to tax at MMR if income of its members during relevant year exceeded basic exemption limit: Delhi ITAT
Air Force Navy Farm Owners Welfare Association
[2020] 117 906 (Delhi – Trib.)
Held :
Where assessee society, registered under Societies Registration Act, 1860, was holding status of AOP, in view of fact that income of its members during relevant year exceeded basic exemption limit, having regard to provisions of section 167B(2), income of assessee was liable to be taxed at maximum marginal rate
Short Over View :
– Section 167B of the Income-tax Act, 1961
– Association of persons
– Charge of tax (Applicability of)
– Assessment year 2013-14
– Some Air Force and Naval officers formed assessee association for management of their farmhouses
– Association was registered under Societies Registration Act, 1860
– Asssessee claimed its functioning on concept of mutuality without indulging in any business activity
– Assessing Officer, however, held status of assessee as Association of Persons (AOP) and applied maximum marginal rate of tax after invoking section 167B
– Assessee filed appeal contending that irrespective of status of assessee held by Assessing Officer as AOP, assessee being registered under Societies Registration Act, 1860, provisions of section 167B were not applicable
– Three Issue before ITAT & it’s judgment were as under :
First Issue:
“Whether in view of provisions of section 167B(1), a society, registered under Societies Registration Act, 1860, which though has been held as AOP, if income of such AOP is indeterminate, such society will be excluded from invoking of maximum marginal rate?”
– ITAT held it as “Yes”
Second Issue :
“Whether, however, in terms of provisions of section 167B(2), if income of any member of AOP (other than share of such Association) is higher than basic exemption limit of relevant year, income of said AOP is chargeable at maximum marginal rate?”
– ITAT again held it as yes.
Third Issue :
“Whether, since, in instant case, assessee had not disputed finding of Assessing Officer that income of its members during year under consideration exceeded basic exemption limit, impugned order passed by him was to be upheld?”
– ITAT again held it as Yes.
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