INCOME TAX ACT, 1961

Section 167

Liability in special cases - Applicability of section 167B taxing at maximum marginal rate - Assessee in the status of AOP -

Ninty-nine Air-Force and Navy Officers constituted an association for management of farmhouses allotted to them by the Air Force Naval Housing Board. Association claimed its functioning on the concept of mutuality without indulging in any business activity. AO in the assessment Order, however, assessed interest income from non-members as taxable. AO held the status of assessee as AOP as against claim of the assessee as Artificial Juridical Person (AJP) and applied maximum marginal rate of tax after invoking section 167B. Held: Section 167B(2) prescribes that in case of any AOP not being a case falling under sub-section (1) of section 167B if total income of the any member of AOP exceeds the maximum amount, which was not chargeable to tax under the Finance Act of the relevant year, the tax shall be charged on the total income of the Association at maximum marginal rate. CIT(A) held that income of the members being in the slab of maximum rate of tax, the society is not entitled to the benefit of exemption from the minimum amount and liable to the incidence of maximum marginal rate income of section 167B(2)(ii). Since assessee had not disputed the finding of CIT(A) that income of its member during the year under consideration exceeds the basic exemption limit, therefore, appeal of assessee was dismissed.

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2013-14

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