TaxTMI 
TaxTMI 
2025 (10) TMI 910
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....se, the learned Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and confirming charging of surcharge @ 37% of Rs. 46,662/- instead Nil. 3.In law and in facts and circumstances of the Appellant case, the learned Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and confirming charging of health and education cess of Rs. 6,911/- instead of Rs. 5,045/-. 4.In law and in facts and circumstances of the Appellant case, the learned Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and confirming reducing the refund claimed from Rs. 51,750/- to Rs. 1,252/-. 5.In law and in facts and circumstance of the Appellant case, the learned Commissioner of Income-tax (Appeals) has grossly erred in dismissing the ground of the appellant and confirming in not allowing interest u/s. 244A of I.T. Act on refund. 6.Your appellant reserves the right to add, alter, amend all or any of the above grounds of appeal as may be advised from time to time." 3. The facts of the case which can be stated quite shortly are as follows: The ass....
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....t registered under the Indian Trusts Act. 1882, whereunder, the Trustees hold the power to decide the class of beneficiaries who can receive either capital or income from the Trust at the discretion of the Trustees. However, no one beneficiary has an absolute entitlement either to income or capital. In other words, in a discretionary trust, distribution of all capital and income is completely at the discretion of the Trustees. Generally speaking, in these kind of trusts not only the beneficiaries but even the shares of beneficiaries remain indeterminate. These Trusts/Association of Persons/Body of individuals are covered either u/s. 164 or 167B of the Act. These provisions provided that the income of such Trusts/AOPs/BOIs are brought to tax at the maximum marginal rate. The expression ''maximum marginal rate" has been defined u/s. 2(29C) of the Act as under: "maximum marginal rate" means the rate of income-nix (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, us the case may be, body of individuals as specified in the Finance Act of the relevant year; 23....
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....67B of the Income-tax Act, the tax chargeable shall be determined as provided in those Chapters or sections, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter or section, as the case may be. Thus, sub section 2(1) of Finance Act, which is subject to the provisions of sub-section (3). though, provides that income-tax shall be charged at the rate specified in Part 1 of the specified schedule, however, sub-section (3) carves out an exception in case of certain class of income or assessee's by providing that the chargeable tax shall be determined in terms with those Chapters or sections, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter or section, as the case may be. 25. In case of discretionary trusts, sections 164/167B of the Act. do not by themselve specify the rale of tax. They only say that tax on total income is to be determined at the maximum marginal rate. The definition of 'maximum marginal rate' u/s. 2(29C) of the Act, in turn, refers to the rate of income-tax applicable to the highest slab as provided under the Finance Act of the relevant year. Thus, for de....
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.... (III) In the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,- Rates of income-tax (1) where the total income does not exceed Rs. 5,00,000 Nil; (2) where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000 20 per cent. of the amount by which the total income exceeds Rs. 5,00,000; (3) where the total income exceeds Rs. 10,00,000 Rs. 1,00,000 plus 30 per cent. of the amount by which the total income exceeds Rs. 10,00,000. Surcharge on income-tax The amount of income-tax computed as per the preceding provisions of this Paragraph, or the provisions of section 111A or 112 or 112A of the Income-tax Act, shall be increased by a surcharge for the purposes of the Union, calculated, in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act,- (a) having a total income (including the income by way of dividend or income under the provisions of s....
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....rupees by more than the amount of income that exceeds one crore rupees; (c) two crore rupees but does not exceed five crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees; (d) five crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees. 26 On going through Paragraph A. Part (I) of First Schedule to the Finance Act-2023, it becomes very much clear that under item f (1), the rates of income tax applicable to individuals, Hindu undivided family or association of persons or body of individuals have been provided. As could be seen from the rates of income-tax for different income brackets, if the total income does not exceed Rs. 2,50,000/-, the rate of income tax is Nil. If the total income exceeds Rs. 2,50.000/-, but does not exceed Rs. 5,00,000/-, the rate of inco....
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....he head 'Surcharge on income-tax', there are different rates of surcharge on income tax, depending upon the categories of income. The rate of surcharge starts from minimum of 10% to the maximum of 37% on income-tax. The maximum rate of surcharge at 37% on income-tax is applicable in case of assessee's having total income, exceeding Rs. 5 crores. It further emanates that the minimum rate of surcharge @ 10% on the income-tax is applicable only when the income of the assessee is above Rs. 50 lacs, but less than Rs. 1 crore. Thus, as per Paragraph A, Part (I) of First Schedule to the Finance Act-2023, the threshold limit for applicability of surcharge is when total income is Rs. 50 lacs and above. In other words, if the total income is below the threshold limit of Rs. 50 lacs, there would be no surcharge. Even the first proviso under the heading 'Surcharge on income-tax' carves out an exception regarding the rate of surcharge by stating that in case where assessee's total income includes dividend income or income under the provisions of section 111 A, 1 12A and section 112A of the Act, the rate of surcharge on the amount of income-tax computed on that part of income....
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....owers the Union to impose surcharge for the purposes of Union. Whereas, Article 265 of the Constitution of India mandates that no tax can be collected without authority of law. Therefore, levy of surcharge has to be preceded by a law enacted by the parliament authorizing such levy. Thus, in absence of any law authorising levy of surcharge, it cannot be collected. This legal position is as clear as daylight hence, does not require further clarification with the use of words "if any' to mean whether the Finance Act of a particular year, if at all. provides for levy of surcharge or not. Though, in our view, there is no conflict between provisions contained u/s. 164/167B, 2(29C) of the Income Tax Act and section 2 of the Finance Act. however, even assuming that there are some conflicts, a harmonious construction has to be made to avoid absurdity and make the provisions workable. Thus, in our view, the expression 'if any' used in section 2(29C) has to be read not de hors but in conjunction with the computation mechanism provided under the heading 'surcharge on income tax' provided in section 2 of Finance Act. This view of ours is further fortified by the object for w....