9911796707
TMI Blog2024 (10) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 16.03.2023 passed by the Deputy Director of Income Tax, Central Processing Centre, Bangalore was dismissed. 2. The assessee is in appeal before us raising the following grounds of appeal: "In the fact and the circumstances of the case and in law, the learned Addl/Joint Commissioner of Income Tax (Appeals)-Panchkula erred in confirming the variance in the intimation 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 Rs. 55,75,700/more than Rs. Fifty Lacs but less than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined on the total income of Rs. 16,72,710/- is not in dispute. ii. The only dispute is that assessee has computed surcharge on the tax payable amounting to Rs. 1,67,271/-whereas the surcharge computed by Central Processing Centre is Rs. 6,18,903/-. Assessee computed surcharge @10% as per return of income filed. However, the Central Processing Centre computed surcharge @37% on the tax payable. iii. According to the assessee as the total income of the assessee as per return of income is Rs. 55,75,700/-, as per Paragraph-A of Part-I of the first Schedule to the Finance Act, 2021 the applicable rate of surcharge on such total income of Rs. 55,75,700/- is 10%. However, as per the order u/s. 143(1) of the Act tough there is no change in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65. 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 @ 4%. Therefore, the maximum marginal rate would be 42.74%. It is further held that while passing the intim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imum marginal rate. The issue involved is how to calculate the maximum marginal rate. The assessee has claimed while computing the maximum marginal rate by taking the Income Tax rate applicable in relation to the highest slab of income in case of an individual, this is also not in dispute. But the dispute is what should be the applicable rate of surcharge. The assessee claims that the rate of surcharge applicable to be assessee according to the income slab of the assessee and should not be at the highest rate of surcharge provided in the Finance Act. According to the Revenue, the surcharge rate should also be highest rate of surcharge applicable in case of an individual. 9. Section 2(29C) of the Act defines maximum marginal rate. It provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Hon'ble Kerala High Court in the case of CIT vs. C.V. Divakaran Family Trust [2002] 254 ITR 222 (Ker.). 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 trust is chargeable to tax and also surcharge at the highest slab, but the assessee trust is char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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