2024 (7) TMI 1621 - AT - Income Tax

Levy of surcharge @ 30% on maximum marginal rate of tax @ 30% -HELD THAT - As the income of the assessee did not exceed the monetary limit of Rs. 50 lakhs and therefore levy of surcharge is not warranted as per First schedule introduced vide Finance Act 2021 hence the surcharge levied by the CPC and affirmed by the Ld. Commissioner is deleted. Decided in favour of assessee.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment is whether the levy of a 37% surcharge on the Maximum Marginal Rate (MMR) of tax at 30% was correctly applied to the assessee's income, which was less than Rs. 50,00,000. The Tribunal examined whether the surcharge could be levied when the taxable income did not exceed the threshold for surcharge imposition as per the relevant provisions of the Income Tax Act, 1961, and the Finance Act, 2021.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework involves the interpretation of the surcharge provisions under the Income Tax Act, 1961, particularly in the context of the Finance Act, 2021. The Finance Act prescribes that surcharge is applicable only if the total income exceeds specified thresholds. The Tribunal also referred to a precedent set by its co-ordinate bench in a related case, M/s. Lintas Employees Professional Development Trust vs. ITO, which clarified the application of surcharge based on income thresholds.

Court's Interpretation and Reasoning

The Tribunal interpreted the relevant provisions of the Finance Act, 2021, which stipulate that surcharge is levied only if the total income exceeds Rs. 50 lakhs. The Tribunal noted that the income assessed in the present case was below this threshold, thus rendering the surcharge inapplicable. The Tribunal emphasized judicial consistency by aligning its decision with the precedent set in the Lintas case.

Key Evidence and Findings

The key finding was that the assessee's income was indeed less than Rs. 50 lakhs, as confirmed by the departmental representative. This factual determination was crucial in deciding the applicability of the surcharge.

Application of Law to Facts

The Tribunal applied the provisions of the Finance Act, 2021, to the facts of the case, concluding that since the assessee's income did not exceed Rs. 50 lakhs, the surcharge was not warranted. The Tribunal's decision was based on the clear stipulation in the Finance Act that surcharge applies only above certain income thresholds.

Treatment of Competing Arguments

The Tribunal considered the arguments presented by both parties. The assessee argued against the surcharge based on the income threshold, while the revenue did not contest the factual assertion that the income was below Rs. 50 lakhs. The Tribunal resolved the issue by adhering to the statutory provisions and the precedent set in the Lintas case.

Conclusions

The Tribunal concluded that the surcharge levied was unwarranted given the assessee's income was below the threshold of Rs. 50 lakhs. The Tribunal ordered the deletion of the surcharge, thereby allowing the assessee's appeal.

SIGNIFICANT HOLDINGS

The Tribunal held that the levy of a surcharge is contingent upon the total income exceeding specified thresholds as per the Finance Act, 2021. It established the principle that where the income does not exceed Rs. 50 lakhs, no surcharge is applicable. This holding is significant as it reinforces the interpretation of income thresholds for surcharge application under the Income Tax Act.

Core Principles Established

The judgment reinforces the principle that statutory provisions regarding tax and surcharge thresholds must be strictly adhered to. It also underscores the importance of judicial consistency by aligning with past decisions in similar cases.

Final Determinations on Each Issue

The Tribunal determined that the surcharge levied on the assessee was not justified as the income was below the Rs. 50 lakhs threshold. The appeal was allowed, and the surcharge was ordered to be deleted.