LIPI JAIN FAMILY TRUST,ASHOKNAGAR V. INCOME TAX OFFICER EXEMPTION WARD GWALIOR, GWALIOR

ITA 78/AGR/2025

AI Insights

The case involves the Lipi Jain Family Trust appealing against the order of the Commissioner of Income Tax (Appeals), Faridabad, which upheld the tax calculation at the maximum marginal rate (MMR) by the Central Processing Centre (CPC). The trust argued that it is a private discretionary trust where the beneficiaries do not have any taxable income, and thus, the income should be taxed at the normal rate. Initially, the trust filed its return in ITR-7, which is not meant for private trusts, but later rectified this by filing in ITR-5 along with a rectification application under section 154 of the Act. The Tribunal agreed with the trust's position, citing the specific provisions applicable to private family trusts and the lack of taxable income among its beneficiaries.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396755 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Assessee Lawyers: SUBHASH JAIN
• Keywords: Revised return; Maximum Marginal Rate
• Section: 154

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH ‘SMC’: AGRA BEFORE SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.78/AGR/2025 (ASSESSMENT YEAR: 2016-17) Lipi Jain Family Trust, Ward No.18, Subhash Ganj, Gawalior-473331 Madhaya Pradesh PAN-AABTL3606J Vs. Income Tax Officer (Exemption), Ward Gwalior, Madhya Pradesh. (Appellant) (Respondent) Assessee by Shri Subhash Jain, CA Department by Shri Shailendra Srivastava, Sr. DR Date of Hearing 20/05/2025 Date of Pronouncement 29/05/2025 O R D E R [ PER MANISH AGARWAL, AM: This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals), Faridabad [CIT(A) in short] in Appeal No. Addl./JCIT(A), Faridabad/10001/2015-16 dated 23.01.2025 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) for Assessment Year 2016-17. 2. The sole issue involved in this appeal with respect to the taxability of the income of the assessee as per maximum marginal rate(“MMR”) as against the normal rate of the tax. The CPC has 2 ITA No.78 /Agr/2025 Lipi Jain Family Trust vs. ITO processed the return in terms of the order dated 19.10.2017 wherein the tax is calculated on MMR by ignoring the fact that the assessee is a private family trust where the beneficiary is not having any taxable income. The assessee against such order filed an appeal before the Ld. CIT(A) who vide impugned order dismissed the appeal of the assessee by observing that the assessee has filed the return of income in form ITR-7 and not in form ITR-5 though the same was filed at a later stage along with the application u/s 154 of the Act and, therefore, there is no error in the order of CPC and dismissed the appeal of the assessee. 3. Before us, the Ld. AR submit that the assessee has filed the revised return along with rectification application and, therefore, the tax has to be calculated on the normal rate of taxes. He further submit that inadvertently return of income was filed in ITR-7. The assesse is private discretionary trust where beneficiary is not having taxable income, due to inadvertent error, tax should not be charged on MMR. 4. On the other hand, the Ld. CIT-DR supports the order of the lower authorities and requested for the confirmation of the same. 5. We have heard the rival submissions and perused the material available on record. In the instant case, it is seen that at first occasion, the assessee has filed the return in form i.e. ITR-7 which is not meant for private trust, however, along with rectification application, the assessee has filed the ITR-5 and submit that where 3 ITA No.78 /Agr/2025 Lipi Jain Family Trust vs. ITO the trust is created solely for the benefit of specified beneficiaries, tax should not be charged at MMR, more particularly when the beneficiary is not having any taxable income. As the assessee trust was created by will of Shri Babulal Jain exclusively for the benefit of relatives dependent for their support and maintenance, therefore, it is private family trust. Assesse since beginning claimed that it had no beneficiary who is having taxable income. In view of the fact and in view of the proviso to section 164(1) of the Act, income of the assessee is to be taxed at the normal rate. Therefore, we direct the AO to charge tax at normal rate of tax as against MMR charge on the income declared by the assessee. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 29.05.2025. Sd/- Sd/- (SUNIL KUMAR SINGH) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:29.05.2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR "