Section 164 of the Income Tax Act
Income-tax Act, 2025: s.307
Section 164 of the Income-tax Act, 1961 corresponds to section 307 (Charge of tax where share of beneficiaries unknown) of the Income-tax Act, 2025.
Read section 307 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 164 is CIT v. K. Srinivasan (83 ITR 346), cited in 129 of the 181 judgments on BharatTax that turn on this section.
Leading authorities on Section 164
The term 'tax' includes surcharge and cess. Surcharge and additional surcharge are considered components of income tax, which can be levied as a basic charge, surcharge, special surcharge, and additional surcharge.
Where the shares of beneficiaries in a trust are determinate, trustees must be assessed separately for each beneficiary's share, treating each beneficiary as an individual. The income is then taxed at the marginal rate applicable to individuals, not at the maximum rate for an association of persons.
Beneficiaries of a trust do not set up the trust, and trustees derive authority from the trust deed, meaning neither trustees nor beneficiaries form an association for a common purpose solely due to their existence.
An Assessing Officer can rectify a mistake apparent from the record under Section 154 if the assessee is erroneously taxed at individual rates when it should have been taxed as an AOP.
The definition of maximum marginal rate under section 2(29C) can be interpreted to determine the applicable surcharge rates, particularly for income including dividends, as per the First Schedule to the Finance Act. This affects how surcharge is calculated on taxable income.
The maximum marginal rate (MMR) of income tax is applied, and surcharge is levied separately if applicable. Surcharge is not leviable if the quantum of income is below a certain threshold.
