Section 167B(2) — the law in short
What the courts have decided on section 167B(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Statutory position — s.167B: when an association of persons or body of individuals is charged at the maximum marginal rate, and when only part of its income is
CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
Our association of persons has fixed member shares, but one member has other income well above the basic exemption limit. Can the Assessing Officer still charge the association at the maximum marginal rate?
Yes. Section 167B(2)(i) is a separate and often-overlooked trigger: even where the members' shares are determinate, if the total income of ANY member for the previous year — excluding his share from the association or body — exceeds the maximum amount not chargeable to tax in the case of that member under the Finance Act of the relevant year, tax is charged on the total income of the association or body at the maximum marginal rate. Sub-section (1) is the more familiar trigger: where the individual shares of the members are indeterminate or unknown, tax is charged on the total income of the association or body at the maximum marginal rate, and its proviso pushes that up to a member's higher rate where any member is chargeable above the maximum marginal rate. Section 167B(2)(ii) deals with the split case where a member is chargeable at a rate higher than the maximum marginal rate: his relatable portion goes at the higher rate and the balance at the maximum marginal rate. Companies, co-operative societies and societies registered under the Societies Registration Act, 1860 or a corresponding State law are excluded from sub-section (1).
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.