SLAB FOR UNREGISTERED TRUST

[BHARAT COKING COAL LIMITED]

A public trust namely Gurudwara Shri Guru Singh Sabha Trust, (no defined share of trustees) has been registered at the registry office of the state government in Nov'14. However registration u/s 12A of Income Tax Act has not been applied for i.e. not recognised as per Income Tax Act for want of audited accounts for three years.

Trust earns some House Property Income for FY 2014-15 on which TDS has been made. A return in ITR 7 has been filed wherein no expenses have been claimed on the opinion received that expenses can only be claimed by registered trust. The return was declared defective for non furnishing of audit details which was later furnished. In the ITR 7 tax was auto-computed giving basic exemption of ₹ 2.5 lakh (treating it as AOP). However the return processed at CPC has computed tax at Maximum Marginal Rate(MMR). Is the action by CPC correct? Whether unregistered trust,(as per Income Tax) will be charged MMR or will be treated as AOP and slab benefit will be given? Whether unregistered trust can claim expenditure of charitable nature? Original return being belated, can 154 application be filed for claim of expenditure?

Thanks in advance. Anxiously waiting for reply and guidance on the aforesaid issue.

AI Summary

Unregistered Trust Taxed at Maximum Marginal Rate; Clarifications on AOP Taxation and Section 154 Expense Claims A public trust, Gurudwara Shri Guru Singh Sabha Trust, registered with the state but not under section 12A of the Income Tax Act, filed an ITR 7 for FY 2014-15, claiming no expenses due to its unregistered status. The return was initially defective due to missing audit details but was later processed, with tax computed at the Maximum Marginal Rate (MMR) instead of a basic exemption, treating it as an Association of Persons (AOP). Queries arose regarding whether an unregistered trust should be taxed at MMR, if it can claim charitable expenses, and if a belated return allows for a 154 application to claim expenses. Responses clarified AOP taxation rules and limitations on claiming new expenditures under section 154.