Rate of Surcharge in case of MMR

[LALIT MUNOYAT]

09-01-2022

An AOP assessable at Maximum Marginal Rate (MMR)was processed u/s 143(1) for Total Income of Rs. 94 Lakhs and tax was accordingly calculated correctly by the CPC. No dispute uptill here. However, while calculating Surcharge, it discarded the applicable Rate of Surcharge of 10% but instead applied the highest rate of Surcharge of 37% applicable for income beyond Rs. 5 Crore and worked a demand for Rs. 9 Lakhs.

As per Section 10(29C) 'Maximum Marginal Rate' means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual , association of persons or, as the case may be, body of individuals as specified in the Finance Act of the relevant year.

From the above definition it is not at clearly brought out that in every case of different level of income for which MMR is applicable, Surcharge will have to be necessarily charged at the highest rate of 37%.

The citation 2001 (2) TMI 877 - ITAT HYDERABAD Other Citation: [2003] 1 SOT 579 (HYD.) INCOME-TAX OFFICER VERSUS TAYAL SALES CORPORATION No.- IT. APPEAL NO. 1783 (HYD.) OF 1996 Dated.- February 1, 2001, may perhaps help the Ld. Members in forming their expert opinion.

Secondly, whether it is possible to file an Application for Rectification u/s 154 and an Appeal before the CIT(A) simultaneously against the said Intimation u/s 143(1)

The opinion of the Ld. Members shall be highly appreciated.

[DR.MARIAPPAN GOVINDARAJAN]

In my view charging @ the highest rate for income tax as well as surcharge is correct. You may file an appeal before the Commissioner of Income Tax (Appeals) and I hope no possibility of filing rectification application.

AI Summary

Incorrect 37% Surcharge on AOP Assessed at MMR; Should Have Been 10%. Consider Appeal with CIT (Appeals). An issue was raised regarding the incorrect application of a 37% surcharge rate on an Association of Persons (AOP) assessed at the Maximum Marginal Rate (MMR) for a total income of Rs. 94 Lakhs, instead of the applicable 10% rate. The query questioned whether the highest surcharge rate should apply in all MMR cases. A cited case might assist in forming an expert opinion. The response advised that the highest rate application was correct and suggested filing an appeal with the Commissioner of Income Tax (Appeals), noting that a rectification application might not be possible.