KELLOGG ALUMNI CLUB,DELHI vs. DEPUTY DIRECTOR OF INCOME TAX CPC, BENGALURU

Briefly stated, facts are that asssessee filed return of income on 30.07.2023, declaring total income of Rs. 6,71,350/-. AO accepted the said income and determined the tax at Rs. 2,01,405/-. As per the assessee, no surcharge on the same was chargeable under the Act. However, the CPC charged surcharge at 37% on the tax payable. AO has given consequential effect on Health and Education Cess, Interest u/s. 234B and S. 234C of the Act. In view of the intimation, the assessee is an AOP and therefore, the tax is chargeable at maximum marginal rate which also includes surcharge at maximum marginal rate. According to the assessee, it being an AOP, the tax is chargeable at 30%, however, no surcharge is payable considering the income was not exceeding Rs. 50 lacs.

In appeal Ld. CIT(A) dismissed the appeal of the assessee by observing as under:- “…7. Decision :- The Appellant has submitted that the status of the appellant is AOP, Resident of India. From the record it is no clear as to whether the appellant is registered as a Charitable Trust. As per the intimation status is shown as AOP. Tax rate applicable to AOP is at maximum marginal rate. The maximum marginal rate means tax rate at maximum rate which is 30% as well as surcharge is payable at 37% on the tax levied. An AOP where the share of the members is not determined, the tax is chargeable at maximum marginal rate including surcharge. 7.1 Ground No. 1 1. Surcharge of Rs. 74,520/- on income tax needs to be deleted. The appellant is an AOP and the share of its members is in determined and hence the tax is chargeable at maximum marginal rate. The appellant’s contention that no surcharge is leviable as per S.2 of Chapter II of Finance Act, 2023 read with Paragraph A of Part 1 first schedule 2 Finance Act, 2023 is not correct. As per S. 164 of the Act if the income of the AOP is chargeable to maximum marginal rate and the share of its members is in determined then the tax is payable at maximum marginal rate. The maximum marginal rate has been denied u/s. 2(29C) of the Act which states as under:- S.2(29C) “maximum marginal rate” means the rate of income-tax (including surcharge on income tax, if 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 individuals as specified in the Finance Act of the relevant years;” 2 | P a g e

Against the aforesaid order of the Ld. First Appellate Authority, assessee is in appeal before this Tribunal.

None appeared on behalf of the assessee, despite issue of notice for hearing, hence, I am proceeding exparate qua the assessee, after hearing the Ld. DR and perusing the records.

I have heard the Ld. DR and perused the records. Section 2(29C) stipulates that the “maximum marginal rate” means the rate of income-tax (including surcharge on income tax, if 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 individuals as specified in the Finance Act of the relevant year, hence, the CPC has 3 | P a g e correctly charged surcharge on the tax @37%, and in first appeal the same was rightly confirmed by the Ld. CIT(A), which do not require any interference on my part, hence, I affirm the action of the Ld. CIT(A) on this count and reject the ground no. 1 raised by the assessee. Since other grounds are consequential in nature, hence, the same were not allowed by the Ld. CIT(A) and accordingly, we also confirm the finding of the Ld. CIT(A) on this account with respect to other grounds and reject the other grounds.

In the result, the Assessee’s appeal is dismissed. Order pronounced in the Open Court on 05.05.2025.