2023 (5) TMI 968 - HC - Income Tax

High Court reviews tax deduction eligibility and income tax rate for Trust

M/s Sinhagad Technical Education Society in the matter between M/s Sinhagad Technical Education Society Versus Principal Commissioner of Income Tax- (Central), Pune

The High Court admitted the appeal to determine whether the receipt of fee exceeding the permissible limit as capitation fee would disqualify the Trust ... Deduction u/s 11 - assessment of trust - ITAT held that receipt of fee in the nature of capitation fee by the Appellant Trust in excess of the permissible fee would rendered the Appellant Trust ineligible for deduction u/s 11 - whether whole of the income of the Appellant Trust was liable to be taxed at the maximum marginal rate contrary to Section 164(2)? - HELD THAT:- Appeal admitted on substantial question of law. Registry is directed to communicate a copy of this order to the Tribunal. This would enable the Tribunal to keep papers and proceedings relating to the present appeal available, to be produced when sought for by the Court. No case for grant of any interim relief is made out. The Interim Application is rejected. Issues involved: Appeal u/s 260A of the Income Tax Act, 1961 against ITAT order for assessment year 2011-12.Issue 1: Whether receipt of fee in the nature of capitation fee by the Appellant Trust in excess of the permissible fee would render the Appellant Trust ineligible for deduction u/s 11 of the Income Tax Act, 1961Rs.The High Court admitted the appeal based on the substantial question of law regarding the eligibility of the Appellant Trust for deduction u/s 11 of the Income Tax Act, 1961. The main issue was whether the receipt of fee in the nature of capitation fee exceeding the permissible limit would disqualify the Trust for the deduction. The Court agreed to examine this question further.Issue 2: Whether the whole income of the Appellant Trust was liable to be taxed at the maximum marginal rate contrary to Section 164(2) of the Income Tax Act, 1961Rs.Another substantial question of law raised in the appeal was regarding the taxation of the entire income of the Appellant Trust at the maximum marginal rate, which was challenged based on Section 164(2) of the Income Tax Act, 1961. The Court decided to review whether the ITAT was correct in holding that the entire income of the Trust should be taxed at the maximum marginal rate.The High Court directed the Registry to provide a copy of the order to the Tribunal for reference, ensuring the availability of necessary papers for the appeal proceedings. Additionally, the Court rejected the Interim Application for lack of a case for granting interim relief.