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Facts
A Debuttor Trust declared income of ₹10,93,740 in its ITR-5, paying tax at 30%. However, a 25% surcharge was levied during processing, which the assessee contested, arguing that surcharge was not applicable for income below ₹50 lakh and that the Deity, as a sole beneficiary, rendered Section 164 (Maximum Marginal Rate) inapplicable. The Ld. CIT(A) upheld the surcharge and the application of Section 164, leading to this appeal.
Held
The Tribunal, referencing a previous decision, ruled that surcharge is leviable on the total income quantum, not the tax rate, and thus no surcharge was applicable as the income was below ₹50 lakh and there was a sole beneficiary. It was further held that Section 164 provisions for unknown shares were not applicable since the share of the sole beneficiary (Deity) was not unknown.
Key Issues
Whether surcharge is applicable to a Debuttor Trust whose income is below ₹50 lakh and has a sole beneficiary (Deity), when taxed at the Maximum Marginal Rate (MMR) under Section 164. Also, whether Section 164 is applicable when the shares of beneficiaries are not unknown.
Sections Cited
250, 143(1), 164, 160, 2(29C), 164(1), 167B
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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
order
: 21-October-2025 ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Addl/JCIT(A)-3, Delhi [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2024-25 dated 25.02.2025, which has been passed against the intimation issued u/s 143(1) of the Act, dated 30.10.2024.
The assessee is in appeal before the Bench raising the following grounds of appeal: “(1) For that on the facts and in the circumstances the Ld. CIT(A) wrongly, arbitrarily and without examination of the Debuttor Trust Deed held that the appellant Trust should be charged at the maximum marginal rate (MMR) under section 164 of the Act so much so that he failed to consider that the Deity is an Artificial Juridical Person and as per the Trust Deed there are no beneficiaries whose shares are unknown.
“5. We have considered the submissions made and find that the surcharge @ 10% only should have been applied as the income was below Rs. 1 Crore. For A.Y. as the total income was only Rs. 24,78,407, therefore, no surcharge was leviable. Hence, the appeals are allowed for both the assessment years and the Ld. AO is directed to apply the surcharge @10% for A.Y. 2022-23 as the income did not exceed Rs. 1.0 Crore and apply NIL surcharge for A.Y. 2023-24 as the income did not exceed Rs. 50,000/-. Hence Ground Nos. 1, 2 and 3 are allowed. Ground No. 5 is general in nature and does not require any separate adjudication. Ground No. 4 is consequential in nature and the Ld. AO is directed to charge interest as per law on the tax levied.
In the result, both the appeals filed by the assessee are allowed.”
In the present case, the assessee contends that though the income is chargeable at MMR, since it did not exceed ₹50 Lakh, no surcharge was leviable for the impugned assessment year. Surcharge is applicable