Loading judgment…
Facts
The assessee's appeal was against an order concerning the levy of surcharge. The assessee declared an income of ₹1,21,490 and claimed that no surcharge would be applicable as per Schedule-1 of the Finance Act, 2022-23.
Held
The Tribunal, relying on a previous judgment of the Special Bench, held that the surcharge must be computed with reference to the slab rates prescribed in the Finance Act, applicable to the relevant assessment year, and not necessarily at the highest rate.
Key Issues
Whether the surcharge is to be computed at the highest slab rate or according to the applicable slab rates for the assessment year.
Sections Cited
250 of the Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, NAGPUR “SMC” BENCH: NAGPUR
Before: SHRI NARENDER KUMAR CHOUDHRY
This appeal has been preferred by the assessee against the order dated 31/03/2024 impugned herein passed by the Ld. ADDL/ JCIT (A)–7, Delhi [in short, “Ld. Commissioner”] u/sec. 250 of the Income Tax Act, 1961 (for short, “the Act”) for the Assessment Year (for short, “AY”) 2022-23.
The issue involved in the present appeal pertains to levy of surcharge @ 37% which is highest slab, as against the surcharge shown at „NI‟L. Because the income declared by the Assessee is ₹ 1,21,490/– and therefore, the assessee has claimed that no 2 ITA.No. 276/NAG/2024 surcharge, according to schedule–1 of the Finance Act, 2022–23, would be applicable.
Heard the parties and perused the material available on record.
Recently, this Court in the case of Geetika Trust No.2 vs. ITO in dated 19/06/2025 dealt with an identical issue and decided in favour of the assessee while relying on the judgment of the Special Bench concerning the issue, in the case of Araadhya Jain Trust vs. ITO [2025] 212 ITD 01 /173 taxmann.com 343 (Mumbai–Trib.)(SB) {Order dated 09/04/2025}, wherein the Hon‟ble Special Bench has held as under: “32. However, upon carefully going through these decisions, we are of the considered view that the issue arising in the present case never fell for consideration before the Hon‟ble Courts. The issue in dispute in those cases was primarily concerning what should be the maximum marginal rate and its applicability. The issue „whether the rate of surcharge would also be at the highest rate while computing tax at maximum marginal rate‟ was never the issue before the Hon‟ble Courts. Thus, in our view, the view expressed by the coordinate benches in decisions referred to in Paragraph 10(supra) lay down the correct proposition of law. Thus, in the ultimate analysis, we hold, in case of Private Discretionary Trusts, whose income is chargeable to tax at maximum marginal rate, surcharge has to be computed on the income tax having reference to the slab rates prescribed in the Finance Act under the heading „surcharge on income tax‟ appearing in Paragraph A, Part 1, First Schedule, applicable to the relevant assessment year. Hence, reference is decided in favour of the assessee. The records may be returned back to the respective benches for deciding the appeals accordingly.”
3 ITA.No. 276/NAG/2024 5. Since, the issue is squarely covered in favour of the assessee by the aforesaid judgment, hence, the appeal of the Assessee is allowed and surcharge is deleted.
In the result, appeal of the Assessee is allowed.
Order pronounced in the open Court on 20.06.2025.