KANIKA TRUST,NAGPUR vs. ITO WARD - 1, EXEMP, NAGPUR

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.”

In the result, appeal of the Assessee is allowed.