NATIONAL INSTITUTE OF BANK MANAGEMENT,MUMBAI V. ACIT EXEMPTION CIRCLE 2, MUMBAI

ITA 392/MUM/2025

AI Insights

The case involves the National Institute of Bank Management, a society registered under the Societies Registration Act, 1860, which appealed against the decision of the Commissioner of Income Tax (Appeals) confirming the Assessing Officer's order. The Assessing Officer had levied tax at the maximum marginal rate on the society's income, invoking section 167B of the Income Tax Act, 1961. The society contested this, arguing that section 167B specifically excludes societies registered under the Societies Registration Act, 1860. The Tribunal agreed with the society's position, noting that the provisions of section 167B did not apply, and consequently, the tax levied at the maximum marginal rate was unjustified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471325 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: S. ANANTHAN
• Keywords: Set aside; Rectification of order; Maximum Marginal Rate
• Section: 154; 11; 12A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “B” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA No. 392/Mum/2025 Assessment Year : 2016-17 National institute of Bank Management, S-14, Pemino, Altamount Road, Mumbai PAN : AAATN0040P vs. Asst. Commissioner of Income Tax, Exemption Circle-2, 6th Floor, Cumballa Hill, MTNL TE Building, Pedder Road, Dr. Gopalrao Deshmukh Marg, Cumballa Hill, Mumbai (Appellant) (Respondent) Assessee by : Shri S. Ananthan Revenue by : Shri Leyaqat Ali Aafaqui Date of Hearing : 04-03-2025 Date of Pronouncement : 07-03-2025 O R D E R PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt.26-11-2024 passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to AY. 2016-17. The assessee is aggrieved by the decision of the Ld.CIT(A) in confirming the order passed by the AO u/s. 154 of the Income Tax Act, 1961 („the Act‟); wherein the AO had levied tax at the rate of maximum marginal rate on the assessee u/s. 167B of the Act. 2 ITA No. 392/Mum/2025 2. We heard the parties and perused the record. The Ld.AR submitted that the assessee is a Society registered under the Societies Registration Act, 1860 on 24-09-1969. This fact is very much known to the revenue since many years. The assessee is also granted registration u/s 12A of the Act as Society only. The Ld A.R also produced a copy of a Certificate of registration dt. 24-09-1969 issued by the Asst. Registrar of Societies, Greater Bombay region, bearing Regn. No. BOM.127/69G.B.B.S.D granted to the assessee. Referring to the provisions of section 167B of the Act, the Ld.AR submitted that the said provisions specifically exclude a society registered under the Societies Registration Act, 1860. Accordingly, the Ld.AR submitted that the provisions of sec.167B will not be applicable to the assessee and hence the AO was not justified in invoking the provisions of section 167B of the Act in the hands of the assessee. 2.1. The Ld.AR further submitted that the assessee has claimed its income is exempt u/s. 11 of the Act. However, the assessee was denied exemption u/s. 11 of the Act by the AO and he determined the total income of the assessee at Rs. 7.99 crores and levied tax thereon at normal rates. However, by the impugned rectification order passed u/s 154 of the Act, the AO has levied tax at maximum marginal rate. The Ld A.R submitted that, in the appellate proceedings, the ITAT has already allowed exemption u/s. 11 of the Act and as such the tax liability has become NIL in the hands of the assessee. Hence, the question of levying tax at the maximum marginal rate will not arise on merits also. 3. The Ld.DR on the contrary, supported the order passed by the Ld.CIT(A). 4. We notice that the AO has levied tax at maximum marginal rate by invoking the provisions of section 167B of the Act. The said provisions are read as under:- 3 ITA No. 392/Mum/2025 “167B. (1) Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co- operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India) in the whole or any part of the income of such association or body are indeterminate or unknown, tax shall be charged on the total income of the association or body at the maximum marginal rate : Provided that, where the total income of any member of such association or body is chargeable to tax at a rate which is higher than the maximum marginal rate, tax shall be charged on the total income of the association or body at such higher rate. (2) Where, in the case of an association of persons or body of individuals as aforesaid [not being a case falling under sub-section (1)],— (i) the total income of any member thereof for the previous year (excluding his share from such association or body) exceeds the maximum amount which is not chargeable to tax in the case of that member under the Finance Act of the relevant year, tax shall be charged on the total income of the association or body at the maximum marginal rate; (ii) any member or members thereof is or are chargeable to tax at a rate or rates which is or are higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the association or body which is or are relatable to the share or shares of such member or members at such higher rate or rates, as the case may be, and the balance of the total income of the association or body shall be taxed at the maximum marginal rate. Explanation.—For the purposes of this section, the individual shares of the members of an association of persons or body of individuals in the whole or any part of the income of such association or body shall be deemed to be indeterminate or unknown if such shares (in relation to the whole or any part of such income) are indeterminate or unknown on the date of formation of such association or body or at any time thereafter.” 4.1. A careful perusal of the provision would show that the provisions of sec.167B(1) specifically excludes a society registered under Societies Registration Act, 1860. We notice that the assessee herein is a society registered under the Societies Registration Act. The certificate given by the Asst. Registrar of Societies is scanned below:- 4 ITA No. 392/Mum/2025 Hence, the provisions of section 167B of the Act will not apply to the assessee. Accordingly, the tax authorities are not justified in levying tax at maximum marginal rate. Even otherwise, according to Ld A.R, the tax demanded by the AO for this year has already been deleted by the appellate authorities. Accordingly, we set aside the order passed by the Ld.CIT(A) and quash the rectification order passed by the AO u/s. 154 of the Act. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 07-03-2025 Sd/- Sd/- [SANDEEP GOSAIN] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 07-03-2025 TNMM 5 ITA No. 392/Mum/2025 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "