2024 (11) TMI 233 - AT - Income Tax

Surcharge levied where the total income is less than Rs. 50 lacs - CIT(A) has contended that since the assessee s tax liability would fall under the maximum marginal rate, surcharge would be applicable in the case of assessee as per section 2(29) - assessee s contention that as per the Finance Bill, 2022 surcharge could be applicable only when the assessee in case of Individual, Hindu Undivided Family or Association of Person or Body of individuals having a total income, exceeding Rs. 50 lacs of such income tax - HELD THAT - Only when the total income exceeds Rs. 50 lacs then surcharge is leviable, where the rate of surcharge is fixed according to the slab of income. During the year under consideration, the income of the appellate was assessed by the ld. A.O./CPC at Rs. 6,73,590/- which is less than Rs. 50 lacs and, therefore, levying of surcharge would not be applicable for the same. We, therefore, direct the ld. A.O. to delete the surcharge levied in the hands of the assessee Trust. Ground no. 2 raised by the assessee is hereby allowed.

Summary

Issues:
1. Validity of adjustments made in the Intimation u/s 143(1)
2. Incorrect levy of surcharge despite total income being less than 50 lakhs
3. Levy of additional interest u/s. 234B and 234C
4. Mismatch in tax payable and net amount payable

Detailed Analysis:
Issue 1: The appeals were filed by the assessee Trust challenging the order of the Commissioner of Income Tax (Appeals) regarding adjustments made in the Intimation under section 143(1) of the Income Tax Act, 1961 for the Assessment Years 2023-24 & 2022-23. The lead case was ITA No. 2485/Mum/2024 for A.Y. 2022-23.

Issue 2: The main contention was the incorrect levy of surcharge amounting to Rs. 74,768 despite the total income being less than 50 lakhs. The Assessing Officer had levied the surcharge, which was upheld by the CIT(A) based on the maximum marginal rate. However, the assessee argued that surcharge is only applicable when the total income exceeds Rs. 50 lakhs. The ITAT held that surcharge could not be levied when the total income is less than Rs. 50 lakhs, as per the Finance Act, 2022. Therefore, the surcharge was directed to be deleted.

Issue 3: Ground no. 3 in one appeal and ground no. 4 in another appeal pertained to the levy of additional interest u/s. 234B and 234C. The ITAT directed the Assessing Officer to recompute the interest consequentially as per the relief granted in the surcharge issue.

Issue 4: In one of the appeals, a mismatch in tax payable and the net amount payable resulted in an increase in demand. The ITAT remanded this issue to the Assessing Officer for factual verification and determination of the actual demand accordingly.

In conclusion, all the appeals filed by the assessee were allowed, with the ITAT directing the deletion of surcharge, recomputation of interest, and further verification of the mismatch in tax payable. The judgment was pronounced on 22.10.2024.