TaxTMI 
TaxTMI 
2026 (3) TMI 1261
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....covered by the Special Bench of the Mumbai in the case of Araadhya Jain Trust Vs. ITO, ITA No. 4272/Mum/2024, A.Y. 2023-24, order dated 09.04.2025, wherein a similar issue has been decided in favour of the assessee. The Ld. AR therefore, prayed that the issue may be kindly to be decided in the light of said decision by following the same as the facts are similar. 4. The Ld. DR on the other hand, relied on the order of authorities below. 5. The facts in brief are that the assessee filed its return of income for the impugned assessment year on 17.10.2020 declaring total income of Rs. 4,56,900/- on which, tax of Rs. 1,42,553/- was computed. While filing the return of income surcharge was calculated based on the slab applicable to the individual. Pertinent to state that the assessee is discretionary trust, and the order under Section 143(1) of the Act was passed by the AO-CPC on 24.12.2021, wherein the total income of the assessee trust was assessed incorrectly at Rs. 12,20,710/-. The assessee filed rectification before the AO-CPC vide order dated 21.05.2024 for calculating wrong income and against the levy of interest. The AO CPC passed the rectification order dated 21.05.2024 w....
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.... Trib.) (SB)/[2025] 126 ITR(T) 1 (Mumbai - Trib.) (SB)/[2025] 212 ITD 1 (Mumbai - Trib.) (SB)[09-04-2025], wherein the co-ordinate Bench has held as under:- "21. We have given a thoughtful consideration to the rival submissions and perused materials on record. We have also applied our mind to the judicial precedents cited before us. The short issue arising for consideration before us is, 'whether the definition of maximum marginal rate in terms with section 2(29C) of the Act can be interpreted in a manner to suggest that not only the rate of tax on the total income of assessee would be at the highest rate, but even the surcharge to be computed on such tax would be at the highest rate'. 22. Before we proceed to deal with the issue, let us understand what is meant by a 'Private Discretionary Trust'. A 'Discretionary Trust' is generally a Trust registered under the Indian Trusts Act, 1882, where under, 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 o....
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.... clear that as per sub-section (1) of section 2, for the A.Y. 2023-24 income-tax shall be charged at the rate specified in Paragraph A, Part (I) of First Schedule to the Finance Act-2023 and such tax shall be increased by a surcharge, collected for the purposes of the Union, calculated in each case in the manner provided therein. Of-course, sub section (1) of section 2 is subject to the provisions of sub-sections (2) and (3). Sub section (2) of section 2 speaks of an assessee having net agricultural income exceeding five thousand rupees, in addition to total income, hence, is not relevant for our purpose. However, sub section (3) of section 2 of Finance Act provides that in case of assessee's covered under Chapter XII or XII-A or section 115JB or section 115JC or Chapter XII-FA or Chapter XII-FB or sub-section (1A) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act, the tax chargeable shall be determined as provided in those Chapters or sections, and with reference to the rates im-posed 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 provi....
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....income exceeds Rs. 10,00,000 Rs. 1,12,500 plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000. (II) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year, - Rates of income-tax (1) where the total income does not exceed Rs. 3,00,000 Nil; (2) where the total income exceeds Rs. 3,00,000 but does not exceed Rs. 5,00,000 5 per cent of the amount by which the total income exceeds Rs. 3,00,000; (3) where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000 Rs. 10,000 plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000; (4) where the total income exceeds Rs. 10,00,000 Rs. 1,10,000 plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000. (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....
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....dend or income under the provisions of section 111A, section 112 and section 112A of the Income-tax Act, the rate of surcharge on the amount of income-tax computed in respect of that part of income shall not exceed fifteen per cent: Provided further that in case of an association of persons consisting of only companies as its members, the rate of surcharge on the amount of Income-tax shall not exceed fifteen per cent: Provided also that in the case of persons mentioned above having total income exceeding,- (a) fifty lakh rupees but not exceeding one crore rupees, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees; (b) one crore rupees but does not exceed two 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 one crore 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 t....
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....ining Explanatory Notes to Provisions of Finance Act, 2017, a copy of which is placed at pg. no. 47 of the Paper Book filed by the NIK Family Trust, refers the expression 'slab' to the various categories of income. Thus, in terms with sections 164/167B r.w.s. 2(29C) of the Act, tax as per maximum marginal rate would mean 'the rate of tax applicable to the highest slab of income' under Item (1) of Paragraph A, Part (I) of First Schedule to the Finance Act-2023. 28. Under the head 'Surcharge on income-tax' appearing in Paragraph A, Part (1), First Schedule it has been provided that the amount of income-tax computed as per the rate of income-tax under Item (1), (2) and (3) or under the provisions of section 111A or section 112 or section 112A or the provision of section 115BAC of the Income Tax Act, shall be increased by a surcharge, for the purposes of the Union, calculated in the case of particular class of assessees in the manner provided therein. As could be seen from items (a) to (e), provided under the head 'Surcharge on income-tax', there are different rates of surcharge on income tax, depending upon the categories of income. The rate of....
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....ead to undesirable consequences and would be discriminatory. In our view, the expression 'including Surcharge on income-tax, if any', within the bracketed portion of section 2(29C) of the Act, would mean the surcharge as provided in the computation mechanism under the heading 'surcharge on income tax' finding place in Paragraph A, Part (I) of First Schedule to the Finance Act-2023. 30. The Revenue has taken a line of argument that the words 'if any' succeeding the words 'including surcharge on income tax' appearing in the definition of maximum marginal rate u/s. 2(29C) of the Act are only for the purpose that when levy of surcharge is specifically provided under the Finance Act of the relevant year, it would be included in income-tax computed at the highest rate, otherwise, not. Though, at first blush this argument of the department sounds attractive, however, on deeper analysis it is found to be superfluous, for the following reasons. As discussed earlier, Article 271 of the Constitution of India, empowers the Union to impose surcharge for the purposes of Union. Whereas, Article 265 of the Constitution of India mandates that no tax can be c....