SAI JYOT TRUST,MUMBAI vs. DCIT - CIRCLE 32 (1), MUMBAI

ITA 4800/MUM/2026Status: DisposedITAT Mumbai23 September 20264 pages
AI SummaryAllowed

What were the facts?

The assessee, Sai Jyot Trust, filed an appeal against the order of the CIT(A) for Assessment Year 2023-24. The assessee is a private discretionary trust. The dispute pertains to the computation of tax liability, specifically the surcharge. The assessee claimed that it inadvertently calculated its tax at the maximum marginal rate (MMR) and surcharge, resulting in a higher tax liability than correct. The Central Processing Centre (CPC) processed the return, and a subsequent rectification application was rejected. The CIT(A) confirmed the action of the CPC/AO. The assessee argued that while the income is taxable at MMR, the surcharge should be computed with reference to slab rates, citing a Special Bench decision. The revenue supported the order of the CIT(A).

What did the Tribunal hold?

The Tribunal held that there is no dispute on the status of the assessee being a private discretionary trust, which is to be taxed at the maximum marginal rate. However, the surcharge has to be computed on income tax with reference to the slab rate. The Tribunal respectfully followed the decision of the Special Bench of the Mumbai Tribunal in the case of Araadhya Jain Trust vs. ITO (supra). Accordingly, the Assessing Officer (AO) was directed to recompute the surcharge by following the decision of the Special Bench. The grounds of appeal raised by the assessee were allowed. The operative direction was to recompute the surcharge.

What were the issues?

1. Whether the Appellant Trust is assessable as per the provisions of section 167B of the Income Tax Act, 1961, at the maximum marginal rate of tax without any marginal relief on surcharge. (Question of law and fact, concerning Section 167B). Assessee's contentions: The trust is assessable as per the provisions of the Act applicable to it, and the CIT(A) erred in not appreciating this. The trust deed was created pursuant to a will, making CBDT Circular No. 577 applicable, and its assessment should be made as per the first proviso to section 164(1) of the Act. The trust is a discretionary trust and its chargeable tax rate was worked out at 42.74%, which is incorrect. The CIT(A) erred in relying on a distinguishable case. The assessee is not pressing grounds 2 and 3. Revenue's contentions: The learned Senior Departmental Representative supported the order of the learned CIT(A).

Which sections of the Income-tax Act were involved?

Section 167B,Section 164(1)

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER (Physical Hearing) Sai Jyot Trust, DCIT, Circle – 32(1), Mumbai 101, Cosmos Apartment, S.V. Road, vs Kautilya Bhavan, G Block, BKC, Vile Parle (West), Mumbai – 400056. Bandra (E), Mumbai – 400051. [PAN: AAFTS9354J] Appellant / Assessee Respondent / Revenue Assessee by Shri Pankaj Toprani, Advocate, a/w Ms. Krupa Shah, Advocate Revenue by Shri Rajgopal Parthasarathi, Sr. DR Date of Institution 24.04.2026 Date of hearing 27.07.2026 Date of pronouncement 23.09.2026 Order under section 254(1) of Income Tax Act

PER PAWAN SINGH, JUDICIAL MEMBER:

1.

This appeal by assessee is directed against the separate orders of ld. CIT(A)/ADDL/JCIT(A) – 2, Bengaluru dated 03.03.2026 for Assessment Year (AY) 2023-24. The assessee has raised following grounds of appeal:

“1. The Ld. Addl./JCIT (A) 2, Bengaluru (hereinafter referred to as "the Ld. Addl./JCIT (A)") erred in law and on facts in holding that the Appellant Trust is assessable as per the provisions of section 167B of the Income tax Act 1961 ("the Act") at the maximum marginal rate of tax without any margi

The order continues below.

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