A L SREENIVASA SHENOY & OTHERS,ERNAKULAM vs. ITO, NON CORPORATE WARD 1(1), KOCHI

Brief facts of the case are that the appellant is an AOP. The return of income for AY 2024-25 was filed on 29.07.2024. The said return of income was processed by the CPC u/s. 143(1) of the A.L. Sreenivasa Shenoy & Others Income Tax Act, 1961 (the Act) vide intimation dated 01.1`1.2024. While processing the return of income the CPC levied surcharge @ 37% as against 10% applied by the appellant trust.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

The learned counsel for the assessee submits that the CPC, without fully understanding the definition of maximum marginal rate as defined u/s. 2(29C) of the Act, erroneously applied surcharge at higher rate of 37%. It is further submitted that the rate of surcharge applicable to the appellant is only 10% as the income returned falls in the range of Rs. 50 lakhs to one crore. In this connection the assessee also placed reliance on the decision of the Bombay Tribunal in the case of Araadhya Jain Trust v. ITO [2025] 4 TMI 648.

On the other hand, the learned Sr. DR supporting the order of the CIT(A) submits that no interference is called for.

We have heard the rival contentions and perused the material available on record. The issue in dispute is with regard to what should be the maximum marginal rate to be applied to the appellant trust. In the case of private trusts, whose income is charged to tax at A.L. Sreenivasa Shenoy & Others maximum marginal rate, surcharge is to be computed on the income by referring to the slab rate prescribed in the Finance Act under the head ‘Surcharge on Income Tax”. In the present case, undisputedly the surcharge on income is 10% as the income returned by the assessee falls in the category of Rs. 50 lakhs to one crore.

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