Charitable trust taxation without defined members taxed at normal slab rates, not maximum marginal rate

A charitable trust that did not claim exemption under section 11 was held taxable at the normal slab rates applicable to an association of persons, not at the maximum marginal rate. The Tribunal relied on its coordinate bench rulings and CBDT Circular No. 320 dated 11-01-1982, which states that where a charitable or religious trust has no defined members or ascertainable shares in income, the maximum marginal rate does not apply. The trust's public charitable character and absence of distributable shares were treated as the decisive factors.

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Issues: Whether a charitable trust, not claiming exemption under section 11, could be assessed in the status of an association of persons at the maximum marginal rate or whether tax was leviable at the normal slab rates applicable to an individual.

Analysis: The trust was engaged in charitable ies for the benefit of the public at large and had no defined members or ascertainable shares in income. The Tribunal followed its coordinate bench decisions and relied on Circular No. 320 dated 11-01-1982, which clarifies that in cases of charitable or religious trusts and similar bodies where members or trustees are not entitled to shares in the income, the provisions for maximum marginal rate are not attracted and tax is payable at the rate ordinarily applicable to the total income of an association of persons.

Conclusion: The assessee was entitled to be taxed at the normal slab rates and not at the maximum marginal rate; the ground was allowed.

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