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Facts
The assessee, an irrevocable private discretionary trust, filed its return declaring a total income of ₹8,16,680/-. The CPC processed this under Section 143(1) and raised a demand including surcharge at 37% and interest. The CIT(A) upheld this demand.
Held
The Tribunal held that surcharge is not leviable on the assessee's total income below ₹50,00,000/-, even if the Maximum Marginal Rate (MMR) is applicable, following a Special Bench decision. The mismatch in tax payable was restored to the Assessing Officer.
Key Issues
Whether surcharge is leviable on the total income of an irrevocable private discretionary trust below ₹50,00,000/-, even when taxed at MMR? Whether there was a computational mismatch in the demand notice.
Sections Cited
143(1), 234B, 164, 2(29C), 160, 167B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “H (SMC
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
ORDER PER OM PRAKASH KANT, AM These two appeals by the assessee are directed against, two separate order, both dated 08.06.2024 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals), Panchkula (hereinafter shall be referred as “CIT(A)”) for assessment year 2022- 23 and 2023-24. As identical issue-in-dispute is involved in both
Shailendra Gala Navneet Trust Shailendra Gala Navneet Trust 2 & 4354/MUM/2024 & these appeals, therefore, same were heard together and disposed off therefore, same were heard together and disposed off therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience. by way of this consolidated order for the sake of convenience. by way of this consolidated order for the sake of convenience.
The grounds raised by the assessee in appeal for assessment The grounds raised by the assessee in appeal for assessment The grounds raised by the assessee in appeal for assessment year 2022-23 are reproduced as under: 23 are reproduced as under:
Ground No. 1: Validity Ground No. 1: Validity of the adjustments made in the of the adjustments made in the Intimation u/s 143(1) Intimation u/s 143(1) 1. The learned CIT(A) erred in not quashing the impugned 1. The learned CIT(A) erred in not quashing the impugned 1. The learned CIT(A) erred in not quashing the impugned intimation order passed under section 143(1) of the Income intimation order passed under section 143(1) of the Income intimation order passed under section 143(1) of the Income Tax Act, 1961 as no opportunity of being heard was provided Tax Act, 1961 as no opportunity of being heard was provided Tax Act, 1961 as no opportunity of being heard was provided to the Appellant before lev to the Appellant before levying surcharge and additional ying surcharge and additional interest. Ground No. 2: Incorrect levy of surcharge amounting to Ground No. 2: Incorrect levy of surcharge amounting to Ground No. 2: Incorrect levy of surcharge amounting to Rs.90,651/- despite total income being less than 50 despite total income being less than 50 lakhs 1. The learned CIT(A) erred in not appreciating that surcharge 1. The learned CIT(A) erred in not appreciating that surcharge 1. The learned CIT(A) erred in not appreciating that surcharge on tax is not applicable as the total on tax is not applicable as the total income of the Appellant is income of the Appellant is below the threshold limit of Rs 50 lakhs. below the threshold limit of Rs 50 lakhs.
2. The learned CIT(A) failed to appreciate that the surcharge on 2. The learned CIT(A) failed to appreciate that the surcharge on 2. The learned CIT(A) failed to appreciate that the surcharge on tax is applicable only if the total income is above 50 lakhs as tax is applicable only if the total income is above 50 lakhs as tax is applicable only if the total income is above 50 lakhs as outlined in the First Schedule to Finance Act, 2021. outlined in the First Schedule to Finance Act, 2021.
3. Your Appellant prays that the surcharge of Rs.90,651/ Your Appellant prays that the surcharge of Rs.90,651/- Your Appellant prays that the surcharge of Rs.90,651/ levied in the impugned intimation order is incorrect, bad in law levied in the impugned intimation order is incorrect, bad in law levied in the impugned intimation order is incorrect, bad in law and hence the same may please be deleted. and hence the same may please be deleted. Ground No.3: Mismatch in Tax Payable and Net Amount Ground No.3: Mismatch in Tax Payable and Net Amount Ground No.3: Mismatch in Tax Payable and Net Amount Payable aggregating to Rs.17,452/ Payable aggregating to Rs.17,452/-
1. 1. The learned CPC erred in considering the Net Amount learned CPC erred in considering the Net Amount learned CPC erred in considering the Net Amount Payable as Rs.1,17,700/ Payable as Rs.1,17,700/- even though the Tax Payable is even though the Tax Payable is computed as Rs.1,00,248/ computed as Rs.1,00,248/- thus resulting into increase in thus resulting into increase in demand by Rs.17,452/ demand by Rs.17,452/-.
2. Your Appellant Prays that the mismatch of the net amount 2. Your Appellant Prays that the mismatch of the net amount 2. Your Appellant Prays that the mismatch of the net amount Payable of Rs.17,452/ Rs.17,452/- in the impugned intimation may please in the impugned intimation may please be deleted.
Shailendra Gala Navneet Trust Shailendra Gala Navneet Trust 3 & 4354/MUM/2024 &
Ground No.4: Incorrect levy of additional interest u/s Ground No.4: Incorrect levy of additional interest u/s Ground No.4: Incorrect levy of additional interest u/s 234B amounting to Rs.6,552/ 234B amounting to Rs.6,552/- 1. The learned CIT(A) consequently erred in not deleting the 1. The learned CIT(A) consequently erred in not deleting the 1. The learned CIT(A) consequently erred in not deleting the excess interest levied in the intimation order u/ excess interest levied in the intimation order u/s 234B of s 234B of Rs.6,552/-. Your Appellant prays that the excess interest . Your Appellant prays that the excess interest . Your Appellant prays that the excess interest levied in the intimation order may please levied in the intimation order may please be deleted. 2.1 The appellant/assessee before us is an The appellant/assessee before us is an Irrevocable Private Irrevocable Private Discretionary Trust established under the provisions of the Indian established under the provisions of the Indian established under the provisions of the Indian Trust Act, 1882. The appellant filed its return of income for the t Act, 1882. The appellant filed its return of income for the t Act, 1882. The appellant filed its return of income for the Assessment Year 2022 Assessment Year 2022–23 on 16.07.2022, declaring a total income 23 on 16.07.2022, declaring a total income of ₹8,16,680/-, consisting primarily of interest income taxable , consisting primarily of interest income taxable , consisting primarily of interest income taxable under the head "Income from Other Sources." The said return was under the head "Income from Other Sources." The said return was under the head "Income from Other Sources." The said return was processed by the Central Processing Centre (CPC) under Section ocessed by the Central Processing Centre (CPC) under Section ocessed by the Central Processing Centre (CPC) under Section 143(1) of the Income 143(1) of the Income-tax Act, 1961 (hereinafter referred to as "the tax Act, 1961 (hereinafter referred to as "the Act") vide intimation dated 16.03.2023. While the CPC accepted the Act") vide intimation dated 16.03.2023. While the CPC accepted the Act") vide intimation dated 16.03.2023. While the CPC accepted the returned income, a demand of ₹1,17,700/- was raised on accou returned income, a demand of was raised on account of surcharge levied at the rate of 37% and consequential interest surcharge levied at the rate of 37% and consequential interest surcharge levied at the rate of 37% and consequential interest under Section 234B of the Act. under Section 234B of the Act. The assessee filed appeal against the filed appeal against the said intimation order before the Ld. CIT(A) challenging the said intimation order before the Ld. CIT(A) challenging the said intimation order before the Ld. CIT(A) challenging the surcharge levied at the maximum rate on the tax liability of the surcharge levied at the maximum rate on the tax liability of the surcharge levied at the maximum rate on the tax liability of the assessee. The Ld. CIT(A) rejected the contention of the assessee. assessee. The Ld. CIT(A) rejected the contention of the assessee. assessee. The Ld. CIT(A) rejected the contention of the assessee. Aggrieved, the assessee is in appeal be Aggrieved, the assessee is in appeal before us by way of grounds are by way of grounds are reproduced above.
The ground No. 1 of the appeal was not pressed by the The ground No. 1 of the appeal was not pressed by the The ground No. 1 of the appeal was not pressed by the assessee and therefore, same is dismissed as infructuous. assessee and therefore, same is dismissed as infructuous. assessee and therefore, same is dismissed as infructuous.
Shailendra Gala Navneet Trust Shailendra Gala Navneet Trust 4 & 4354/MUM/2024 &
Ground No. 2 pertains to the grievance regarding levy of Ground No. 2 pertains to the grievance regarding levy of Ground No. 2 pertains to the grievance regarding levy of surcharge at the highest rate surcharge at the highest rate of 37% despite the assessee’s total of 37% despite the assessee’s total income being below income being below ₹50,00,000/-. It is the specific case of the . It is the specific case of the assessee that surcharge is not leviable in the present case as the assessee that surcharge is not leviable in the present case as the assessee that surcharge is not leviable in the present case as the total income declared falls below the threshold limit prescribed total income declared falls below the threshold limit prescribed total income declared falls below the threshold limit prescribed under the Finance Act, 2 under the Finance Act, 2021. The Ld. CIT(A) rejected this 021. The Ld. CIT(A) rejected this contention, holding that the assessee, being an contention, holding that the assessee, being an Irrevocable Private Irrevocable Private Discretionary Trust with indeterminate beneficiaries, falls within the with indeterminate beneficiaries, falls within the with indeterminate beneficiaries, falls within the purview of Section 164(1) of the Act, which mandates taxation at purview of Section 164(1) of the Act, which mandates taxation at purview of Section 164(1) of the Act, which mandates taxation at the Maximum Margin Maximum Marginal Rate (MMR). The CIT(A) further held that the . The CIT(A) further held that the MMR includes not just the highest basic rate of tax (30%) but also MMR includes not just the highest basic rate of tax (30%) but also MMR includes not just the highest basic rate of tax (30%) but also the highest surcharge as prescribed in the Finance Act of the the highest surcharge as prescribed in the Finance Act of the the highest surcharge as prescribed in the Finance Act of the relevant year, i.e., 37%, and therefore concluded that the effective relevant year, i.e., 37%, and therefore concluded that the effective relevant year, i.e., 37%, and therefore concluded that the effective rate applicable to the assessee was 42.744% for the A.Y. 2022 cable to the assessee was 42.744% for the A.Y. 2022–23. cable to the assessee was 42.744% for the A.Y. 2022 The relevant finding of The relevant finding of Ld. CIT(A) is reproduced as under: as under:
“6. Decision:
6.1 The appellant in its submission has raised the fact that the income 6.1 The appellant in its submission has raised the fact that the income 6.1 The appellant in its submission has raised the fact that the income of assessee is below Rs.50 lacsand that there is no provision under of assessee is below Rs.50 lacsand that there is no provision under of assessee is below Rs.50 lacsand that there is no provision under Finance Act 2021 to levy surcharge in the case of assesseedeclaring Finance Act 2021 to levy surcharge in the case of assesseedeclaring Finance Act 2021 to levy surcharge in the case of assesseedeclaring total income at Rs. 8,16,680/- in the return of the income. There is no There is no total income at Rs. 8,16,680/ dispute regarding the applicability of maximum marginal rate to dispute regarding the applicability of maximum marginal rate to dispute regarding the applicability of maximum marginal rate to the appellant. The only dispute in this appeal is applicability of The only dispute in this appeal is applicability of The only dispute in this appeal is applicability of surcharge of highest income slab i.e. 37% to the case of appellant by surcharge of highest income slab i.e. 37% to the case of appellant by surcharge of highest income slab i.e. 37% to the case of appellant by CPC instead of no surcharge as CPC instead of no surcharge as per the provisions of Finance Act 2021 per the provisions of Finance Act 2021 when the total income does not exceeds Rs 50 lakhs as contented by when the total income does not exceeds Rs 50 lakhs as contented by when the total income does not exceeds Rs 50 lakhs as contented by appellant. 6.2 However, the assessee, being a private trust where share of 6.2 However, the assessee, being a private trust where share of 6.2 However, the assessee, being a private trust where share of beneficiaries is unknown, will be governed by section 164 of the Income beneficiaries is unknown, will be governed by section 164 of the Income beneficiaries is unknown, will be governed by section 164 of the Income
Shailendra Gala Navneet Trust Shailendra Gala Navneet Trust 5 & 4354/MUM/2024 & tax Act, 1961. The relevant portion of the section 164 is reproduced Act, 1961. The relevant portion of the section 164 is reproduced Act, 1961. The relevant portion of the section 164 is reproduced below: "Charge of tax where share of beneficiaries unknown. "Charge of tax where share of beneficiaries unknown. 164. (1) Subject to the provisions of sub 164. (1) Subject to the provisions of sub-sections (2) and (3), where any sections (2) and (3), where any income in respect of which the persons mentioned in clau income in respect of which the persons mentioned in clauses (iii) and (iv) ses (iii) and (iv) of sub-section (1) of section section (1) of section-160 are liable as representative assessees 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the or any part thereof is not specifically receivable on behalf or for the or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons benefit of any one person or where the individual shares of the persons benefit of any one person or where the individual shares of the persons on whose behalf or f on whose behalf or for whose benefit such income or such part thereof is or whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the receivable are indeterminate or unknown (such income, such part of the receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as income and such persons being hereafter in this section referred to as income and such persons being hereafter in this section referred to as "relevant income", "part of relevant income" and "beneficiaries", "relevant income", "part of relevant income" and "beneficiari "relevant income", "part of relevant income" and "beneficiari respectively), tax shall be charged on the relevant income or part of respectively), tax shall be charged on the relevant income or part of respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate." relevant income at the maximum marginal rate." 6.3. Further, the maximum marginal rate is defined under section 6.3. Further, the maximum marginal rate is defined under section 6.3. Further, the maximum marginal rate is defined under section 2(29C) as "the rate of income 2(29C) as "the rate of income-tax (including surcharge on income tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an any) applicable in relation to the highest slab of income in the case of an any) applicable in relation to the highest slab of income in the case of an individual, association of persons or, as the case may be, body of individual, association of persons or, as the case may be, body of individual, association of persons or, as the case may be, body of individuals as specified in the Finance Act of the relevant year" individuals as specified in the Finance Act of the relevant year" individuals as specified in the Finance Act of the relevant year" 6.4. Further the appellant has contented th 6.4. Further the appellant has contented that although the rate of at although the rate of income tax applicable to the Appellant is the highest i.e., 30%, however income tax applicable to the Appellant is the highest i.e., 30%, however income tax applicable to the Appellant is the highest i.e., 30%, however the rate of surcharge applicable to the Appellant will be in lines with the the rate of surcharge applicable to the Appellant will be in lines with the the rate of surcharge applicable to the Appellant will be in lines with the rates of surcharge as prescribed in the First Schedule to Finance Act, rates of surcharge as prescribed in the First Schedule to Finance Act, rates of surcharge as prescribed in the First Schedule to Finance Act, 2020 as has been the intent of legislature and that is why the words "if been the intent of legislature and that is why the words "if been the intent of legislature and that is why the words "if any" have been mentioned in the definition of the maximum marginal any" have been mentioned in the definition of the maximum marginal any" have been mentioned in the definition of the maximum marginal rate. 6.5 The submission of the appellant is not acceptable. The rates of 6.5 The submission of the appellant is not acceptable. The rates of 6.5 The submission of the appellant is not acceptable. The rates of taxation provided in the first schedule taxation provided in the first schedule-part-I of Finance Act, 2021 are nce Act, 2021 are applicable to the appellant only to the extent of rates of highest slab of applicable to the appellant only to the extent of rates of highest slab of applicable to the appellant only to the extent of rates of highest slab of tax and surcharge. It is clear the MMR is applicable to the appellant. tax and surcharge. It is clear the MMR is applicable to the appellant. tax and surcharge. It is clear the MMR is applicable to the appellant. There is no dispute on it. Here it is necessary to refer the Finance Act, There is no dispute on it. Here it is necessary to refer the Finance Act, There is no dispute on it. Here it is necessary to refer the Finance Act, chapter-II, which determines/specifies the rates of income tax to be determines/specifies the rates of income tax to be determines/specifies the rates of income tax to be applicable. The section 2 starts with non applicable. The section 2 starts with non-obstante words such as obstante words such as subject to provision of sub subject to provision of sub-section 2 & 3 for A.Y. 2022-23. Therefore, 23. Therefore, where sub-section 2 & 3 are applicable, the rates specified in Part section 2 & 3 are applicable, the rates specified in Part-I of section 2 & 3 are applicable, the rates specified in Part first schedule required to be adopted for MMR purpose. The relevant first schedule required to be adopted for MMR purpose. The relevant first schedule required to be adopted for MMR purpose. The relevant part of sub-section 3 of section 2 of Finance Act is as under: section 3 of section 2 of Finance Act is as under: "In cases to which the provisions of Chapter XII or Chapter XII-A or "In cases to which the provisions of Chapter XII or Chapter XII "In cases to which the provisions of Chapter XII or Chapter XII section 115JB or section 115JC or Chapter XII section 115JB or section 115JC or Chapter XII-FA or Chapter XII FA or Chapter XII-FB or sub-section (1A) of section 161 or section 164 or section 164A or section section (1A) of section 161 or section 164 or section 164A or section section (1A) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act, 1961 (43 of 196 tax Act, 1961 (43 of 1961) (hereinafter referred to as 1) (hereinafter referred to as Shailendra Gala Navneet Trust Shailendra Gala Navneet Trust 6 & 4354/MUM/2024 ITA Nos. 4355 & the Income-tax Act) apply, the tax chargeable shall be determinedas tax Act) apply, the tax chargeable shall be determinedas tax Act) apply, the tax chargeable shall be determinedas provided in that Chapter or that section, and with reference to the rates provided in that Chapter or that section, and with reference to the rates provided in that Chapter or that section, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter or section (1) or the rates as specified in that Chapter or section (1) or the rates as specified in that Chapter or section, as the case may be:" (Emphasis supplied) the case may be:" (Emphasis supplied) Hence it is clear that, where MMR is applicable the rates specified in Hence it is clear that, where MMR is applicable the rates specified in Hence it is clear that, where MMR is applicable the rates specified in part-I of schedule are only relevant to the extent of calculating MMR and I of schedule are only relevant to the extent of calculating MMR and I of schedule are only relevant to the extent of calculating MMR and MMR will be charged in the applicable cases by virtue of sub-section 3 MMR will be charged in the applicable cases by virtue of sub MMR will be charged in the applicable cases by virtue of sub of section 2 of Finance Act, 2021. The rate of MMR has to be calculated f section 2 of Finance Act, 2021. The rate of MMR has to be calculated f section 2 of Finance Act, 2021. The rate of MMR has to be calculated as per the provisions of section 2(29C) of IT Act. r.w.s. 164 or 167B of as per the provisions of section 2(29C) of IT Act. r.w.s. 164 or 167B of as per the provisions of section 2(29C) of IT Act. r.w.s. 164 or 167B of the IT Act. The Finance Act of every year is only relevant to know the the IT Act. The Finance Act of every year is only relevant to know the the IT Act. The Finance Act of every year is only relevant to know the highest slab of rate of tax & surcharge. highest slab of rate of tax & surcharge. After considering both the rates After considering both the rates of tax of highest slab as well as surcharge of highest slab mentioned in of tax of highest slab as well as surcharge of highest slab mentioned in of tax of highest slab as well as surcharge of highest slab mentioned in the Finance Act MMR is to be calculated & charged. The word "if any" in the Finance Act MMR is to be calculated & charged. The word "if any" in the Finance Act MMR is to be calculated & charged. The word "if any" in the section 2(29C) is relevant if the surcharge to the highest slab of the section 2(29C) is relevant if the surcharge to the highest slab of the section 2(29C) is relevant if the surcharge to the highest slab of income is mentioned in the relevant Finance Act and it will be applicable is mentioned in the relevant Finance Act and it will be applicable is mentioned in the relevant Finance Act and it will be applicable for a particular A.Y. For Ex. no surcharge was applicable for A.Y. 2010- for a particular A.Y. For Ex. no surcharge was applicable for A.Y. 2010 for a particular A.Y. For Ex. no surcharge was applicable for A.Y. 2010 11 & 2011-12 to slab of income of individual and AOP. Therefore, the 12 to slab of income of individual and AOP. Therefore, the 12 to slab of income of individual and AOP. Therefore, the word "if any" is relevant. Here the word surchar word "if any" is relevant. Here the word surcharge "if any" has ge "if any" has relevance to levy of surcharge if mentioned in the Finance Act. The word relevance to levy of surcharge if mentioned in the Finance Act. The word relevance to levy of surcharge if mentioned in the Finance Act. The word "if any" is related to the specification/mandate of surcharge mentioned "if any" is related to the specification/mandate of surcharge mentioned "if any" is related to the specification/mandate of surcharge mentioned in the schedule of Finance Act. If surcharge of highest slab is mentioned in the schedule of Finance Act. If surcharge of highest slab is mentioned in the schedule of Finance Act. If surcharge of highest slab is mentioned in the Finance Act th in the Finance Act then this surcharge will be included in the tax and en this surcharge will be included in the tax and MMR will be calculated accordingly. If no surcharge for highest slab is MMR will be calculated accordingly. If no surcharge for highest slab is MMR will be calculated accordingly. If no surcharge for highest slab is mentioned in the schedule of Finance Act then no surcharge will be mentioned in the schedule of Finance Act then no surcharge will be mentioned in the schedule of Finance Act then no surcharge will be included in the tax quantum for calculating the MMR. This word does included in the tax quantum for calculating the MMR. This word does included in the tax quantum for calculating the MMR. This word does not remotely suggest to include surcharge in MMR as per different slab not remotely suggest to include surcharge in MMR as per different slab not remotely suggest to include surcharge in MMR as per different slab rates of income. 6.6 Thus, the MMR will not be applicable in parts like in one part of 6.6 Thus, the MMR will not be applicable in parts like in one part of 6.6 Thus, the MMR will not be applicable in parts like in one part of highest slab rate for basic tax i.e. 30% is levied & in one part no highest slab rate for basic tax i.e. 30% is levied & in one part no highest slab rate for basic tax i.e. 30% is levied & in one part no surcharge is levied. This is surcharge is levied. This is not correct. The MMR always constitutes not correct. The MMR always constitutes highest slab tax rates & highest slab surcharge if any prescribed in highest slab tax rates & highest slab surcharge if any prescribed in highest slab tax rates & highest slab surcharge if any prescribed in Finance Act unless specifically excluded like income from LTCG and Finance Act unless specifically excluded like income from LTCG and Finance Act unless specifically excluded like income from LTCG and STCG. The income of dividend shown by the appellant in the return of STCG. The income of dividend shown by the appellant in the return of STCG. The income of dividend shown by the appellant in the return of income is not excluded in the proviso to sub section 3 of section 2 of ot excluded in the proviso to sub section 3 of section 2 of ot excluded in the proviso to sub section 3 of section 2 of Finance Act. Part applicability of MMR is not permissible i.e. the tax 30% Finance Act. Part applicability of MMR is not permissible i.e. the tax 30% Finance Act. Part applicability of MMR is not permissible i.e. the tax 30% & no surcharge as per schedules of relevant Finance Act on it is not & no surcharge as per schedules of relevant Finance Act on it is not & no surcharge as per schedules of relevant Finance Act on it is not permissible. Appellant has paid basic income tax at permissible. Appellant has paid basic income tax at 30% rate requires to 30% rate requires to be kept in mind. Once the appellant is eligible for MMR surcharge be kept in mind. Once the appellant is eligible for MMR surcharge be kept in mind. Once the appellant is eligible for MMR surcharge applicable will be surcharge for highest slab only. Surcharge @37% is applicable will be surcharge for highest slab only. Surcharge @37% is applicable will be surcharge for highest slab only. Surcharge @37% is integral part of MMR and therefore MMR will be 42.74% for A.Y. 2022- integral part of MMR and therefore MMR will be 42.74% for A.Y. 2022 integral part of MMR and therefore MMR will be 42.74% for A.Y. 2022 23.
Therefore, the tax rate 7. Therefore, the tax rate charged in the case of the assessee will be charged in the case of the assessee will be maximum marginal rate which also includes surcharge as defined in maximum marginal rate which also includes surcharge as defined in maximum marginal rate which also includes surcharge as defined in section 2(29C) of the Act. Therefore, the CPC order u/s 143(1) levying section 2(29C) of the Act. Therefore, the CPC order u/s 143(1) levying section 2(29C) of the Act. Therefore, the CPC order u/s 143(1) levying
Shailendra Gala Navneet Trust Shailendra Gala Navneet Trust 7 & 4354/MUM/2024 & the surcharge is as per law and is upheld and the appeal of the the surcharge is as per law and is upheld and the appeal of the the surcharge is as per law and is upheld and the appeal of the appellant is dismissed. dismissed.”
However, before us, the assessee has relied upon the binding However, before us, the assessee has relied upon the binding However, before us, the assessee has relied upon the binding decision of the Special Bench of the Income Tax Appellate Tribunal decision of the Special Bench of the Income Tax Appellate Tribunal decision of the Special Bench of the Income Tax Appellate Tribunal (ITAT), Mumbai, in (ITAT), Mumbai, in Aaradhya Jain Trust v. ITO Aaradhya Jain Trust v. ITO [(2025) 173 taxmann.com 343 (SB)], wherein it was held that although income taxmann.com 343 (SB)], wherein it was held that although income taxmann.com 343 (SB)], wherein it was held that although income of a private discretionary trust is taxable at the maximum marginal of a private discretionary trust is taxable at the maximum marginal of a private discretionary trust is taxable at the maximum marginal rate as per Section 164(1), the rate as per Section 164(1), the surcharge component surcharge component of such MMR must still be computed with reference to the slab thresholds must still be computed with reference to the sl must still be computed with reference to the sl prescribed in the First Schedule to the relevant Finance Act. The prescribed in the First Schedule to the relevant Finance Act. The prescribed in the First Schedule to the relevant Finance Act. The Special Bench authoritatively held that if the total income of the Special Bench authoritatively held that if the total income of the Special Bench authoritatively held that if the total income of the assessee does not exceed ₹50,00,000/-, surcharge is not leviable assessee does not exceed , surcharge is not leviable even in cases to which MMR applies. even in cases to which MMR applies.. In the present case, it is an present case, it is an undisputed fact that the total income declared by the assessee is undisputed fact that the total income declared by the assessee is undisputed fact that the total income declared by the assessee is ₹8,16,680/-, which is below the threshold limit of , which is below the threshold limit of ₹50,00,000/- , which is below the threshold limit of prescribed under the Finance Act, 2021 for applicability of prescribed under the Finance Act, 2021 for applicability of prescribed under the Finance Act, 2021 for applicability of surcharge. Respectfully, following the Respectfully, following the ratio laid down by the io laid down by the Special Bench in Aaradhya Jain Trust Aaradhya Jain Trust (supra), we hold that no (supra), we hold that no surcharge was leviable on the tax liability of the assessee, and surcharge was leviable on the tax liability of the assessee, and surcharge was leviable on the tax liability of the assessee, and consequently, computation of tax at the effective rate of 42.744% consequently, computation of tax at the effective rate of 42.744% consequently, computation of tax at the effective rate of 42.744% was erroneous and contrary to law. was erroneous and contrary to law. Accordingly, the ground No. 2 of ngly, the ground No. 2 of the appeal of the assessee is allowed. the appeal of the assessee is allowed.
Ground No. 3 relates to a computational mismatch between Ground No. 3 relates to a computational mismatch between Ground No. 3 relates to a computational mismatch between the tax payable and the net amount payable as reflected in the the tax payable and the net amount payable as reflected in the the tax payable and the net amount payable as reflected in the intimation issued under Section 143(1) of the Act. The Ld. Counsel intimation issued under Section 143(1) of the Act. The Ld. Counsel intimation issued under Section 143(1) of the Act. The Ld. Counsel
Shailendra Gala Navneet Trust Shailendra Gala Navneet Trust 8 & 4354/MUM/2024 & for the assessee referred to page 8 of the intimation u/s 143(1) of referred to page 8 of the intimation u/s 143(1) of referred to page 8 of the intimation u/s 143(1) of the Act and drew our attention to Clause 26 of the intimation, drew our attention to Clause 26 of the intimation, drew our attention to Clause 26 of the intimation, which reflected the tax liability as which reflected the tax liability as ₹1,00,248/-, whereas Clause 27 , whereas Clause 27 indicated a net demand of ₹1,17,700/-, resulting in an un indicated a net demand of , resulting in an unexplained difference of ₹17,452/ 17,452/-. It was submitted that although this . It was submitted that although this discrepancy was brought to the notice of the Ld. CIT(A), no discrepancy was brought to the notice of the Ld. CIT(A), no discrepancy was brought to the notice of the Ld. CIT(A), no adjudication thereon was made. adjudication thereon was made. Upon due consideration, we are of Upon due consideration, we are of the view that the issue involves factual verification pertaining to the view that the issue involves factual verification pertai the view that the issue involves factual verification pertai computation and figures in the intimation, which can be computation and figures in the intimation, which can be computation and figures in the intimation, which can be appropriately examined only at the level of the Assessing Officer. appropriately examined only at the level of the Assessing Officer. appropriately examined only at the level of the Assessing Officer. We, therefore, restore this issue to the file of the Assessing Officer We, therefore, restore this issue to the file of the Assessing Officer We, therefore, restore this issue to the file of the Assessing Officer for necessary verification and rectification, if warranted, in for necessary verification and rectification, if warra for necessary verification and rectification, if warra accordance with law. accordance with law. The ground No. 3 of the appeal of the assessee The ground No. 3 of the appeal of the assessee is accordingly allowed for statistical purposes. is accordingly allowed for statistical purposes.
7. The ground No. 4 being consequential same is not required to The ground No. 4 being consequential same is not required to The ground No. 4 being consequential same is not required to be adjudicated and dismissed as infructuous. be adjudicated and dismissed as infructuous.
The grounds for assessment The grounds for assessment year 2023-24 are reproduced as 4 are reproduced as under:
Ground No. 1: Validity of the adjustments made in the Intimation Ground No. 1: Validity of the adjustments made in the Intimation Ground No. 1: Validity of the adjustments made in the Intimation u/s 143(1) 1. The learned CIT(A) erred in not quashing the impugned intimation 1. The learned CIT(A) erred in not quashing the impugned intimation 1. The learned CIT(A) erred in not quashing the impugned intimation order passed under section 143(1) of the Income order passed under section 143(1) of the Income Tax Act, 1961 as no Tax Act, 1961 as no opportunity of being heard was provided to the Appellant before levying opportunity of being heard was provided to the Appellant before levying opportunity of being heard was provided to the Appellant before levying surcharge and additional interest. surcharge and additional interest. Ground No. 2: Incorrect levy of surcharge amounting to Ground No. 2: Incorrect levy of surcharge amounting to Ground No. 2: Incorrect levy of surcharge amounting to Rs.36,911/- despite total income being less than 50 lakhs despite total income being less than 50 lakhs despite total income being less than 50 lakhs
Shailendra Gala Navneet Trust Shailendra Gala Navneet Trust 9 & 4354/MUM/2024 &
The learned CIT(A) erred in not appreciating that surcharge on tax is CIT(A) erred in not appreciating that surcharge on tax is CIT(A) erred in not appreciating that surcharge on tax is not applicable as the total income of the Appellant is below the not applicable as the total income of the Appellant is below the not applicable as the total income of the Appellant is below the threshold limit of Rs 50 lakhs. threshold limit of Rs 50 lakhs.
2. The learned CIT(A) failed to appreciate that the surcharge on tax is 2. The learned CIT(A) failed to appreciate that the surcharge on tax is 2. The learned CIT(A) failed to appreciate that the surcharge on tax is applicable only if the total applicable only if the total income is above 50 lakhs as outlined in the income is above 50 lakhs as outlined in the First Schedule to Finance Act, 2021. First Schedule to Finance Act, 2021.
3. Your Appellant prays that the surcharge of Rs.36,911/ 3. Your Appellant prays that the surcharge of Rs.36,911/- levied in the levied in the impugned intimation order is incorrect, bad in law and hence the same impugned intimation order is incorrect, bad in law and hence the same impugned intimation order is incorrect, bad in law and hence the same may please be deleted. may please be deleted. Ground No.3: Incorrect levy of additional interest u/s 234B and 3: Incorrect levy of additional interest u/s 234B and 3: Incorrect levy of additional interest u/s 234B and 234C aggregating to Rs.3,417/ 234C aggregating to Rs.3,417/-
1. 1. The learned CIT(A) consequently erred in not deleting the excess 1. The learned CIT(A) consequently erred in not deleting the excess 1. The learned CIT(A) consequently erred in not deleting the excess interest levied in the intimation order u/s 234B and 234C of Rs.1,512/- interest levied in the intimation order u/s 234B and 234C of Rs.1,512/ interest levied in the intimation order u/s 234B and 234C of Rs.1,512/ and Rs.1,905/-.
2. Your Appellant prays that the excess interest u/s 234B & 234C nt prays that the excess interest u/s 234B & 234C nt prays that the excess interest u/s 234B & 234C levied in the intimation order may please levied in the intimation order may please be deleted 8.1 The grounds raised in year under consideration are identical The grounds raised in year under consideration are identical The grounds raised in year under consideration are identical to the grounds, we have already adjudicated in the appeal of the we have already adjudicated in the appeal of the we have already adjudicated in the appeal of the assessee for assessment assessee for assessment year 2022-23 and therefore following the d therefore following the same, the relevant grounds for assessment year 2023 he relevant grounds for assessment year 2023-24 are he relevant grounds for assessment year 2023 decided mutatis mutandis. decided mutatis mutandis.
In the result, the appeal of the assessee in assessment year In the result, the appeal of the assessee in assessment year In the result, the appeal of the assessee in assessment year 2022-23 is partly allowed for statistical purposes whereas appeal 23 is partly allowed for statistical purposes whereas appeal 23 is partly allowed for statistical purposes whereas appeal for assessment year 2023 for assessment year 2023-24 is allowed.
Order pronounced in the open Court on nounced in the open Court on 24/07/2025. /07/2025.