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of The appellant trust claimed to be formed for public charitable activities and registered under the Rajasthan Public Trust Act 1959, regularly filing its income tax returns since 1970. However, it lacked registration u/s 12AA. The issue pertained to the taxability of the trust's income at the maximum marginal rate or normal rate, and the levy of interest u/ss 234A, B, C & D. The decision in Gurjar Pushkarana Vidyotejak Mandal held that if a trust is ineligible for exemption u/ss 11 or 12 due to Section 13(1)(b), its income cannot be taxed at the maximum marginal rate but at rates specified for an AOP u/s 164(2). If Sections 13(1)(c) or 13(1)(d) are attracted, the relevant income must be taxed at the maximum marginal rate. Section 164(2) stipulates that if income is not exempt u/s 11 due to violation of Section 13(1)(c) or 13(1)(d), the relevant income shall be taxed at the maximum marginal rate, not the entire income. Since the appellant trust lacked registration u/s 12AA, its entire declared income shall be taxable at normal tax rates as per the proviso to Section 164(2), applicable to.
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