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TMI Blog2024 (10) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... f income tax (including surcharge of income tax, if any) applicable in relation to the highest slab of income in case of an individual. Thus, purpose of mentioning surcharge in that section is to compute maximum marginal rate as high rate of tax and also highest rate of surcharge. If one reads the provisions of the law as suggested by the learned A.R., mentionof the word surcharge in Section 2(29C) of the Act becomes redundant. The definition is not capable of any doubt and only meaning that it admits is that the rate on the maximum slab of income and maximum rate of surcharge is to be treated as the maximum marginal rate. The Finance Act for each year prescribes various slabs for each category of the assessee and the corresponding rates applicable. This view is also supported by the decision of C.V. Divakaran Family Trust [ 2001 (12) TMI 56 - KERALA HIGH COURT] It is also true that the Policy of Law as suggested in Section 2(29C) of the Act is to discourage discretionary trust by charging the income of such trust in the hands of the trustee at the maximum marginal rate except in certain specified situation. Thus, such a policy is defeated, if we hold that the beneficiary of a trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s. 143(1) made by CPC in respect of the rate of surcharge and erred: 1. In confirming that the appellant is liable to pay tax at maximum marginal rate the applicable rate of surcharge 37% viz. the maximum marginal rate in this case is 42.74%. 2. In not appreciating that once the total income of the appellant is ₹ 55,75,700/more than ₹ Fifty Lacs but less than ₹ one crore, the applicable rate of surcharge ought to be 10 percent as per clause (3) in Paragraph A of Part I to the Fist Schedule of the relevant Finance Act 3. In concluding that surcharge is a part of the rate of tax and not appreciating that the tax is required to be increased by surcharge, as applicable, and hence it is a separate charge other than tax. 4. In concluding that maximum marginal rate in section 2(29) covers not only maximum rate of income-tax but also maximum rate of surcharge also. 5. In not appreciating that the words rate of income-tax (including surcharge on income tax, if any in section 2(29) denotes two separate levies. 6. In confirming that the AO CPC has power to vary the rate of surcharge while processing the return u/s. 143(1). 7. The appellant craves leave to add to, withd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is that while applying the maximum marginal rate only tax of highest income tax slab will be considered and surcharge thereon will be considered as applicable to the income offered by the assessee as mentioned in Schedule-Part-I of Finance Act, 2021. The assessee also objected that the Assessing Officer cannot recompute the rate of income tax or the rate of surcharge in an intimation u/s. 143(1) of the Act. Assessee placed reliance on the decision of the Hon'ble Rajasthan High Court in the case of JKS Employees Welfare Fund vs. ITO 199 ITR 765. 5. The learned CIT(A) rejected the contention of the assessee and held that the maximum marginal rate is required to be computed at the highest rate of taxation and surcharge also. The learned CIT (A) further referred to the provisions of Section 2(29C) of the Act read with section 164 of the Act. He held that the provisions of Section 2(29C) of the Act do not remotely suggest to include surcharge in MMR as per different slab rates of income. He, therefore, held that it is clear that maximum marginal rate is required to be computed of the tax rate of highest slab @ 30% and surcharge for highest slab @ 37% alongwith education Cess @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax (including surcharge on income tax, if any) applicable in a relation to the highest slab of income in the case of an individual as specified in the Finance Act of the relevant year. Thus, according to the provisions, when assessee is to be taxed at maximum marginal rate, same is to be arrived at by taking highest slab of tax and highest slab of surcharge applicable in case of an individual. This view is already expressed in the commentary on Income Tax by Chaturvedi and Pithisaria as well as of the book published by Mr. Vinod Singhania. Even otherwise, language of law is clear that maximum marginal rate shall be maximum rate of tax and surcharge of the highest rate in case of an individual. If the surcharge was to be levied according to the slab rate of the assessee, it was not required to be mentioned in Section 2(29C) of the Act that rate of income tax (including surcharge of income tax, if any) applicable in relation to the highest slab of income in case of an individual. Thus, purpose of mentioning surcharge in that section is to compute maximum marginal rate as high rate of tax and also highest rate of surcharge. If one reads the provisions of the law as suggested b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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