Private Trust Appeal Remanded for Reconsideration by Tax Commissioner

The Appellate Tribunal allowed the appeal of the private trust created under a will for statistical purposes, remanding the case back to the Commissioner of Income Tax (Appeals) for a detailed reconsideration. The Tribunal directed the Commissioner to re-examine the case, considering the decision of the Gujarat High Court in a similar case, and providing adequate hearing to the assessee. The Tribunal found that the initial dismissal of the appeal by the Commissioner without considering the relevant legal precedent required a fresh adjudication in the interest of justice.

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Issues:
1. Assessment of a private trust created under a will at the maximum marginal tax rate.

Analysis:
The case involved an appeal for the assessment year 2018-19 filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi. The assessee, a private trust created under a will, had filed a return of income declaring an amount which was processed under section 143(1) of the Income Tax Act, 1961. The dispute arose when the tax was calculated at the maximum marginal rate, resulting in a demand being raised. The assessee filed a rectification application, which was confirmed by the CPC, Bengaluru under section 154 of the Act. Subsequently, the assessee appealed before the Ld. CIT(A) challenging the tax liability imposed at the maximum marginal rate.

The main contention raised by the assessee was that, based on the decision of the Gujarat High Court in the case of Deepak Family Trust, trustees of a discretionary trust should be assessed as individuals and not as an association of persons. The counsel for the assessee argued that in the case of a trust formed under a will, the trust should be assessed at individual rates of taxation and not at the maximum marginal rate as done in the present case. On the other hand, the Revenue relied on the observations made in the order passed by the Ld. CIT(A).

Upon hearing the contentions of both parties and examining the material on record, the Appellate Tribunal observed that the Ld. CIT(A) had dismissed the assessee's appeal summarily without considering the impact of the decision in the case of Deepak Family Trust. Consequently, in the interest of justice, the Tribunal set aside the case to the file of the Ld. CIT(A) for a fresh adjudication. The Ld. CIT(A) was directed to re-examine the case, giving adequate opportunity of hearing to the assessee and taking into consideration the decision of the Gujarat High Court in the case of Deepak Family Trust.

In conclusion, the appeal of the assessee was allowed for statistical purposes, and the case was remanded back to the Ld. CIT(A) for a detailed reconsideration in light of the relevant legal precedent.

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