Deity is a juristic person having status of individual, Section 167B not applicable

Deity is a juristic person having status of individual, Tax rates/slabs as applicable to an individual would apply. Section 167B not applicable.

ABCAUS Case Law Citation:
ABCAUS 3048 (2019) (07) ITAT

Important Case Laws Cited/relied upon by the parties:
Official Trustee of West Bengal Vs. CIT (1974) 93 ITR 348
ITO Vs. Shri Hanuman Mandir Trust (2003) 78 TTJ 469

The appellant assessee was a religious trust stated to have been formed in 1968 and was being hitherto assessed in the status of AOP.

The return of the trust was processed u/s 143(1) of the Income Tax Act, 1961 (the Act) whereby a demand was raised. Thereafter assessee raised objections and filed rectification application u/s 154 which was rejected.

Aggrieved by the order of AO, assessee carried the matter before CIT(A) who upheld the order of AO. Aggrieved by the order of CIT(A), assessee was in appeal before the Tribunal.

The appellant submitted that the object of the Trust inter-alia was the maintenance and upkeep of the deity. The sole beneficiary as per the Trust Deed was the Deity and that the Deity being a juristic person, it can hold property and be in receipt of income and for this proposition he relied on the decision of Hon’ble Apex Court.

It was submitted that since the sole beneficiary was the Deity having the status of an “individual”, the tax rates applicable to individual would apply to it.

It was further submitted that the CIT(A) had erred in applying the provisions of Section 167B of the Act to the case of the assessee. He submitted that provisions of Section 167B are not applicable to the present facts because Section 167B would become applicable when the income of the association or body are indeterminate and then in such a situation the tax rate applicable would be at maximum marginal rate.

He submitted that in the present case since the entire income belonged to only since person, i.e. the Deity, provisions of Sec. 167B of the Act were not applicable. He therefore submitted that the assessee be allowed the basic exemption limit as applicable to an individual.

The Tribunal observed that undisputed fact was that as per the trust deed, the entire income was to be used for the upkeep of Deity. It was also an undisputed fact that the Deity was the sole beneficiary of the Trust. Again, there was no dispute with respect to the status of the assessee and the income returned by the assessee. The only dispute was whether the tax had to be computed on the basis of tax rates applicable to an individual or the provisions of Section 167B would apply.

The Tribunal noted that Section 167B of the Act provides that it applies to an association or persons or body of individuals where its income is indeterminate or unknown then the tax shall be charged at the maximum marginal rate.

The Tribunal stated that the Deity was the sole beneficiary and it was not a case where the share of its income was unknown or indeterminate. In such a situation the Tribunal opined that the provisions of Section 167B would not be applicable and since the Deity is a juristic person and having the status of an individual, as held by Hon’ble Apex Court and the tax rates and the slabs as applicable to an individual would apply.

Therefore the Tribunal directed that the tax slab as applicable to individual be applied to the assessee.

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