TaxTMI 
TaxTMI 
2001 (12) TMI 56
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....a trust assessable to tax under section 164 of the Income-tax Act, 1961. The assessment was completed under section 143(1) of the Act accepting the return by levying tax at 55 per cent. plus surcharge. The assessee made an application under section 154 of the Income-tax Act, 1961, for rectification of the assessment on the ground that the "maximum marginal rate" referred to in Explanation 2 to sec....
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....ferred the following two questions for our decision: "1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law land fact in holding that there can be no two views on the meaning of maximum marginal rate of tax? 2. Whether, on the facts and in the circumstances of the case, the prin ciples laid down and the calculation reached by the Tribunal in regard to the co....
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.... any) applicable in relation to the highest slab of income in the case of an association of persons as specified in the Finance Act of the relevant year." There is no dispute that section 164 is the relevant section under which the assessee has to be assessed. It is the charging section by itself and all that it says is that the "maximum marginal rate" of tax is to be applied on the com puted inc....
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....providing marginalisation is against the definition contained in Explanation 2 to section 164(3). When the statute says that the "maximum marginal rate" is the rate applicable on the highest slab of income there is no scope for enquiry on the meaning of "marginal" and we feel the Tribunal committed an error by assigning a literal interpretation to the defi nition clause contained in Explanation 2.....