Surcharge computation on mixed income must follow the statutory cap for dividend income, not a higher mechanical levy.

Surcharge under the Finance Act, 2023 must be computed by reference to the statutory category of income and the applicable proviso, not by applying a higher rate mechanically to non-dividend income. Where dividend income forms part of total income, the surcharge on that component is capped at the prescribed rate, and the assessment's 37% levy was therefore unsustainable. The tribunal restricted surcharge to 15% and directed modification of the assessment accordingly.

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Issues: Whether surcharge at 37% was leviable on the non-dividend income of the assessee, or whether surcharge was restricted to 15% under the Finance Act, 2023.

Analysis: The dispute turned on the correct application of the surcharge provisions in Paragraph A, Part I of the First Schedule to the Finance Act, 2023, read with the scheme explained in the Special Bench ruling on surcharge computation. The applicable surcharge depends on the category of assessee and the nature of income; the slab mechanism operates on income and not on surcharge itself. Where the total income includes dividend income, the proviso to the surcharge entry limits surcharge on that component to 15%. On the facts, the assessee's income comprised substantial dividend income, and the balance income did not justify application of 37% surcharge in the manner adopted in the assessment.

Conclusion: The levy of surcharge at 37% on the non-dividend income was not sustainable, and surcharge was restricted to 15% on the income of Rs. 34,07,065/-.

Final Conclusion: The assessee was entitled to relief on the surcharge computation, and the assessment was required to be modified accordingly.

Ratio Decidendi: Surcharge under the Finance Act must be computed according to the statutory category of income and the applicable proviso, and where dividend income forms part of total income, the surcharge on that component cannot exceed the prescribed cap.

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