1993 (6) TMI 114

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.... states that the rate means the rate applicable to the highest slab and hence for asst. yr. 1985-86 the rate to be applied is the flat rate of 55%." 3. The assessee is a private trust engaged in the textile business. The assessee is assessed to income-tax under s. 161(1A) of the IT Act, 1961. While completing the assessment, the Assessing Officer charged the tax at the maximum marginal rate of tax. While so doing, he charged the tax @ 55% on the income of the assessee because it represented the highest rate of tax prescribed in the Finance Act, 1985. 4. Being aggrieved, the assessee took up the matter in appeal before the CIT(A), who held as follows: "For the asst. yr. 1985-86, this maximum rate of tax will be "Rs. 35,250 plus 55% ....

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.... on income-tax in relation to slab of income. Moreover, the Explanation does not refer to "maximum rate of tax". On the other hand it goes a step further and describes it as "maximum marginal rate of tax". In other words, the maximum rate will have to subject to certain marginalisation as provided for in the First Schedule itself wherein the rate of income-tax are prescribed on slab basis. Only when the income-tax is worked out on that basis, of course, with reference to the highest slab of income, one would be able to find out the surcharge thereon. For example, say the income is Rs. 1,50,000. The computation of tax will be as follows: . Tax (a) Upto Rs. 1 lakh Rs. 35,250 (b) Excess over 1 lakh @ 55% Rs. 27,500 Total ....