NAVBHARAT TRUST,AHMEDABAD vs. INCOMETAX OFFICER, WARD 1(3)(1),AHMEDABAD, AHMEDABAD

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ITA 1333/AHD/2026Status: DisposedITAT Ahmedabad11 August 2026AY 2023-246 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the double levy of surcharge was apparent and directed its deletion. It further ruled that since the assessee's income was below Rs. 50 lakhs, no surcharge was payable, and the income should be re-computed accordingly.

What were the facts?

The assessee's returned income was accepted, but the CPC levied a surcharge at 37% and education cess, along with interest under sections 234B and 234C, resulting in a higher demand. The assessee contended that its income was below Rs. 50 lakhs, making surcharge inapplicable.

What were the issues?

Whether surcharge is leviable at the highest rate prescribed in the schedule when the assessee's income is below the threshold for surcharge, and whether surcharge was levied twice.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(1),Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: Shri Sanjay Garg

For Appellant: Shri Hemanshu Shah, C.A
Hearing: 23/07/2026Pronounced: 11/08/2026

आदेश/O R D E R

The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), ADDL/JCIT(A)-1, Lucknow [hereinafter referred to as ‘Ld. CIT(A)’] dated 25/02/2026 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2023-24.

2.

The assessee has raised following grounds of appeal:- “1) In law and in facts and circumstances of the Appellant case, the learned Addl./Jt. Commissioner of Income-tax (Appeals) has erred in points of law and facts. 2) In law and in facts and circumstances of the Appellant case, the learned Addl./Jt. Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and upheld the action of the A.O. in charging of surcharge at the rate 37 percentage instead of at the rate Nil.

ITA No.1333/Ahd/2026 Navbharat Trust vs. ITO Asst.Year 2023-24 2

3) In law and in facts and circumstances of the Appellant case, the learned Addl./Jt. Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and upheld the action of the A.O. in charging of surcharge twice at the rate 37 percentage

4) In law and in facts and circumstances of the Appellant case, the learned Addl./Jt. Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and upheld the action of the A.O. in charging education cess of Rs.98,906/-

5) In law and in facts and circumstances of the Appellant case, the learned Addl./Jt. Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and upheld the action of the A.O. in charging interest u/s.234B of I.T. Act for Rs.40,530/- instead of Nil.

6) In law and in facts and circumstances of the Appellant case, the learned Addl./Jt. Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and upheld the action of the A.O. in charging interest u/s.234C of LT. Act for Rs.53,601/-.

7) In law and in facts and circumstances of the Appellant case, the learned Addl./Jt. Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and upheld the action of the A.O. in raising demand for Rs.8,46,840/-.

8) Your appellant reserves the right to add, alter, amend all OR any of the above grounds of appeal as may be advised from time to time.

Total Tax Effect Rs. 12,89,415”

3.

This appeal, pertaining to assessment year 2023-24, arises out of order u/s. 143(1) passed by CPC wherein the assessee’s returned income was accepted. However, while computing the tax payable by the assessee, while the total retuned and assessed income was Rs. 43,91,380/-, the CPC levied a surcharge @ 37% on the tax payable and also levied health and education cess amounting to Rs. 98,906/- as against Rs. 72,194/- offered by the assessee in the return of income. In the intimation u/s. 143(1) interest u/s. 234B amounting to Rs. 40,530/-

ITA No.1333/Ahd/2026 Navbharat Trust vs. ITO Asst.Year 2023-24 3 was also levied as against nil interest offered by the assessee and interest u/s. 234C at Rs. 53,601/- as against Rs. 18,783/- offered by the assessee under the provision. Aggrieved by the said adjustment resulting in a demand of Rs. 8,46,840/-, the assessee preferred appeal before the CIT(A). The Addl/JCIT(A)-1 Lucknow (NFAC) dismissed the appeal of the assessee on all the grounds.

4.

Aggrieved by the said appellate decision, the assessee is in appeal before us.

4.1 Grounds of appeal no. 1 is general.

4.2 Grounds of appeal nos. 2 and 3 relate to levy of surcharge @ 37%. The assessee has contended that its income as returned and as assessed is below Rs. 50 lakhs and therefore no surcharge was payable thereon under the First Schedule to the Finance Act for the relevant assessment year. It is seen that in the computation of income, the assessee, itself, had applied a surcharge of 37% on the income tax computed at the rate of 30% on the total income. Above that, the education cess has also been computed by the assessee at Rs. 72,194/- and added to that amount. In the computation of income u/s 143(1), the CPC has added a surcharge of 37% over the total amount of tax, surcharge and cess computed by the assessee and added Rs. 6,67,797/- on that amount. The Additional/JCIT(A) held that surcharge was indeed applicable @ 37% because of the definition of “maximum marginal rate” as contained in section 2(29C) of the Act includes

ITA No.1333/Ahd/2026 Navbharat Trust vs. ITO Asst.Year 2023-24 4 surcharge of income tax, if any, applicable in relation to the highest slab of income in the hands of the individual, association of persons, or as the case may be, body of individuals, as specified in the Finance Act of the relevant year. The ld.Addl/JCIT(A) concluded that this expression “maximum marginal rate” includes the highest rate of surcharge of income tax even in slabs for which surcharge is not at all mentioned in the Finance Act. Accordingly, it was held that the said rate for financial year 2003-04 is 42.74%. In coming to this conclusion, the Addl/JCIT(A) relied on the decision of Hon’ble Kerala High Court in case of CIT vs. CV Divakaran Family Trust (2012) 124 taxman 405/254 ITR 222 (Kerala).

5.

I have examined the facts and the case laws relied in the impugned order. The assessee itself had computed surcharge @ 37% which was included in the payable tax of Rs. 18,96,000/- paid by the assessee. In the intimation u/s. 143(1), the surcharge was levied once @ 37% and addition Rs. 6,67,797/- was made on that amount. The interest levied u/s. 234A, 234B, 234C and Section 234F have been recomputed accordingly.

5.1 Against the intimation u/s. 143(1), the assessee had taken two grounds viz (i) that the surcharge was not at all leviable since appellant’s taxable income was below Rs. 50 lakhs and (ii) that there was an error in levying surcharge twice @ 37%.

ITA No.1333/Ahd/2026 Navbharat Trust vs. ITO Asst.Year 2023-24 5 5.2 The impugned appellate order, the ld. Addl. JCIT/NFAC has simply proceeded on the basis that surcharge was leviable @ 37% and has not dealt with the issue of levy of surcharge for the second time in the intimation u/s. 143(1).

5.3 The double levy of surcharge is apparent from the records and it is hereby directed to be deleted. Ground of Appeal No. 3 is decided in favour of the assessee.

5.4 On the fundamental issue, whether surcharge should be levied @ highest rate prescribed in the schedule under the Finance Act merely for the reason that the assessee was required to be taxed at the “maximum marginal rate”, I find that this issue is squarely covered in favour of the assessee by the decision of Rajkot Bench of the Tribunal in ITA No. 164/Rjt/2025 in the case of Manjar Discretionary Family Trust vs. ITO. In that case, by a detailed order and following the decision of ITAT Mumbai in the case of Aradhya Jain trust vs. ITO, ITA No. 4272/Mum/2024, the Tribunal has held that the reference to “maximum marginal rate” is the rate applicable to the highest slab of income, the surcharge will be applicable at the rate prescribed for that slab of income in the Schedule to the Finance Act. In the present case, the total income of the assessee being Rs. 43,91,380/- it was liable to tax @ 30% as applicable to the highest slab of income, but being income below Rs. 50 lakhs, no surcharge will be payable by the assessee. The assessee’s income therefore be re-computed accordingly. Ground of Appeal No. 2 is decided in favour of the assessee.

ITA No.1333/Ahd/2026 Navbharat Trust vs. ITO Asst.Year 2023-24 6

5.5 Regarding grounds of appeal nos. 4, 5 and 6, in view of my decision in the aforesaid grounds with regard to levy of surcharge, interest levied u/s. 234B and 234C of the Act and education cess will be re-computed accordingly.

5.6 Grounds of appeal nos. 7 and 8 are general and are already covered by the aforesaid decision.

6.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the Open Court on 11/08/2026.

/- . Sd/- (Sanjay Garg) Judicial Member

अहमदाबाद/Ahmedabad, %दनांक/Dated 11/08/2025 *a.k. TRUE COPY आदेश क� '�त(ल)प अ*े)षत/Copy of the Order forwarded to : 1. अपीलाथL/ The Appellant 2. 'PयथL/ The Respondent. संबंFधत आयकर आयुRत/ Concerned CIT 3. 4. आयकर आयुRत ( अपील ) / The CIT(A)-(NFAC) 5. )वभागीय '�त�नFध, आयकर अपील�य अFधकरण ,अहमदाबाद/DR,ITAT, Ahmedabad. 6. गाड� फाईल /Guard file.

आदेशानुसार/ BY ORDER,

सहायकपंजीकार (Asstt. Registrar) आयकर अपील�य अFधकरण, ITAT, Ahmedabad

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