TaxTMI 
TaxTMI 
2025 (7) TMI 1839
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....ncome earned instead of surcharge applicable at the rate of 10% in accordance with the provisions of First Schedule to Finance Act, 2020 as the appellant's total income exceeds Rs. 50 Lakhs but was less than Rs. 1 Crore for the year under consideration. 2. Your Appellant prays that the surcharge on tax on dividend income should be restricted to Rs. 2,62,290/- i.e. 10% of the total tax, rather than 15% on the total tax. Ground No.2: General Grounds of appeal 1. Your Appellant craves leave to file additional evidences during the course of appeal proceedings in terms of Rule 46A r.w.s. 250. 2. Your Appellant craves leave to add, amend, alter, modify or delete all or any of the above grounds of appeal." 4. Brief facts of the case are that the assessee is an irrevocable private discretionary trust formed under the Indian Trust Act, 1882. The assessee had filed its return of income u/s. 139(1) of the Act, dated 27.07.2022, declaring total income at Rs. 87,43,000/- out of the dividend income under the head 'Income from other sources' and the same was processed u/s. 143(1) of the Act, where the ld. AO/CPC raised a demand of Rs. 7,84,660/- vide int....
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....O, Ward 22(1)(6), ITA No. 4272/Mum/2024, order dated 09.04.2025, where the issue in hand has been dealt with elaborately. 9. The learned Departmental Representative ('ld. DR' for short) for the revenue on the other hand controverted the said fact and relied on the order of the lower authorities. 10. On the above factual matrix of the case, it is observed that the surcharge applicable of tax computed at Maximum Marginal Rate (MMR) in accordance with Section 164 of the Act along with Section 2(29C) of the Act is as per the relevant Finance Act. It is observed that for private discretionary trust which are governed by the provisions of Section 164 or 167B, the rate of surcharge is calculated as per the relevant Finance Act. The Maximum Marginal Rate (MMR) which is defined u/s. 2(29C) of the Act means rate of income tax which includes surcharge on income tax which is applicable at the highest slab, were the assessee is an individual, association of person, body of individual which are specified in the Finance Act of the relevant year. Pertinently, the provisions of Section 164 or 167B of the act does not expressly provide for levy of surcharge and it is only in Section 2(....
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...., 112A and section 112A of the Act, the rate of surcharge on the amount of incometax computed on that part of income shall not exceed 15%. In other words, if the total income of an assessee includes any income by way of dividend or income under certain provisions of the Act, the rate of surcharge on tax computed on such part of income under no circumstances would exceed 15%. 29. If we accept the contention of the Revenue that, irrespective of the nature or quantum of income, as per the definition of maximum marginal rate u/s.2(29C) of the Act, surcharge has to be computed at the highest rate of 37% applicable to the highest income bracket of Rs. 5 crores and above, then the exception provided under the first proviso under the heading 'Surcharge on income-tax' would become otiose. Even, the different rates of surcharge on income-tax provided under clause (a) to (e) applicable to the different slabs of income would become meaningless so far as discretionary trusts are concerned. In our view, such an interpretation would lead to absurdity, hence, is unworkable. In our view, once the definition of 'maximum marginal rate' refers to the rate of income-tax and surcharge provided ....
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.... view of ours is further fortified by the object for which levy of surcharge was introduced to the Finance Act - to augment the Revenue of the Union for developmental work by asking persons in the highest income bracket to contribute little more than the other citizens, for nation building. 31. As we find, the Revenue has placed strong reliance upon the decision of the coordinate bench in case of Araadhya Jain Trust (supra) and couple of other decisions, which are on similar line. Pertinently, the decision rendered in case of Anant Bajaj Trust vs. DDIT (in ITA No. 199/Mum/2024 vide order dated 26.08.2024) was subsequently recalled. Whereas, the bench has followed the decision of Anant Bajaj Trust (supra) while deciding the appeal of Kapur Family Trust vs. ITO (in ITA Nos. 3834 & 3835/Mum/2024 vide order dated 30.10.2024). Therefore, the decision rendered in case of Kapur Family Trust (supra) has lost its relevance. Insofar as the decision of the co-ordinate bench in the case of Araadhya Jain Trust (supra) is concerned, in our view, the bench has drawing its conclusion, primarily relying upon certain decisions of Hon'ble Kerala High Court and Hon'ble High Court of Bomba....