Surcharge on firm income is not leviable when total income stays below the statutory threshold.

Surcharge was not leviable on the income of a firm where total income fell below the threshold prescribed in the relevant Finance Act. Although a firm was taxable at the maximum marginal rate under section 167A, section 2(29C) brought surcharge within that expression only when surcharge was otherwise applicable to the highest income slab. Because the assessee-firm's total income did not exceed the statutory limit, the legal basis for surcharge was absent and deletion of the surcharge was justified.

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Issues: Whether surcharge was leviable on the income of a firm whose total income was below the monetary threshold prescribed for surcharge.

Analysis: Section 167A, as applicable at the relevant time, provided for taxation of a firm at the maximum marginal rate. Section 2(29C) defined that expression to include surcharge on income-tax only if such surcharge was otherwise applicable in relation to the highest slab of income. The levy of surcharge depended on the Finance Act for the relevant year, which made surcharge applicable only where the total income exceeded the prescribed limit. Since the assessee-firm's total income was below that limit, the statutory basis for surcharge was absent.

Conclusion: Surcharge was not leviable on the assessee-firm, and the deletion of the surcharge was justified.

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