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TMI Blog2024 (8) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... g to levy of surcharge at a higher rate while processing the Return of Income under Section 143(1) of the Act. 1.2 It is submitted that the adjustment has been made without affording to the Appellant any opportunity of being heard and the same is in gross violation of principle of natural justice and also not in accordance with the provisions of Section 143(1)(a) of the Act. Hence, the said adjustments may kindly be struck down/set aside. [This ground of appeal is further continued in the statement attached herewith] 2. ERRONEOUS RATE OF SURCHARGE ON INTEREST INCOME AND CAPITAL GAIN RS. 1,26,26,157/-: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming levy of surcharge by the learned Assessing Officer (CPC) on Interest income (Rs. 97,09,652/-) and Capital gain other than that covered under Section 111A and 112A of the Act (Rs.29,16,505/-) at the maximum rate of 37% in the case of the Appellant. The learned AO failed to appreciate that the applicable rate of surcharge, as prescribed under the Part-I of the First Schedule to the Finance Act for the Total Income excluding Dividend Income and income covered under the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to the extent of calculating maximum marginal rate and maximum marginal rate will be charged in the applicable cases by virtue of section 3 of section 2 of Finance act, 2021. The rate of MMR has to be calculated as per the provisions of section 2 (29C) of the IT act read with section 164 of the IT act. The finance act of every year is only relevant to know the highest slab of rate of tax and surcharge. After considering both the rates of tax of highest/as well as surcharge of highest mentioned in the finance act maximum marginal rate is to be calculated and charged. The word 'if any' in section 2(29C) is relevant if the surcharge to the highest slab of income is mentioned in the relevant finance act and it would be applicable for a particular assessment year. For example, no surcharge was applicable for assessment year 2010-11 and 2011-12 to slab of income of individuals and AOP. Therefore, the word ('if any' as is relevant. Here the word surcharge 'us if any' has relevance to levy of surcharge if mentioned in the finance act. The word 'if any 'is related to the specification/mandate of surcharge mentioned in the schedule of finance act. If surch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the highest slab and also surcharge thereon of the highest slab rate provided in the finance act. ii. Central Processing Centre has taken the correct definition of the maximum marginal rate. Same is supported by the authoritative Commentary of The Sampath Aiyengar and Vinod K Singhania. iii. though in past years it might have been taken wrongly but now it is the correct computation of maximum marginal rate. iv. ITAT should consider what is the correct maximum marginal rate irrespective of the fact what has been taken by the central processing Centre and assessee in past. v. Further referred to the commentary of Chaturvedi & Pithisaria and Mr. Vinod K Singhania which is referred to and relied on by the learned CIT-A wherein the view taken by the learned AO is stated to be the correct view. vi. no other contrary view expressed by any authoritative commentary other than that taken by the learned CIT-A. vii. Therefore, the computation made by the learned central processing Centre and upheld by the learned CIT-A needs to be upheld. 08. We have carefully considered rival contentions and perused the orders of the learned lower authorities. 09. In the present appeal, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed under the finance Act as per slab applicable to income of the assessee. Thus, the purpose of mentioning surcharge in that section is to tax MMR as the Highest rate of tax for tax and surcharges. We should not read the section in the manner that word 'surcharge' mentioned in section 2 (29C) becomes redundant. 015. It is immaterial whether the CPC in one of the years accepted the ROI filed by the assessee, but when the issues are raised before us, we cannot hold that unsustainable view of revenue is in accordance with the law. 016. Honourable Kerala High court in case of C.V. Divakaran Family Trust[2002] 122 Taxman 405 (Kerala)/[2002] 254 ITR 222 (Kerala) held as under :- "2. We have heard Sri P.K.R. Menon, senior counsel for the revenue, and Sri P. Balachandran, counsel for the assessee. Sri Menon contended that the definition of 'maximum marginal rate' contained in Explanation 2 to section 164(3) is free from doubt. The counsel for the assessee contended that the interpretation placed by the Tribunal based on another decision of the Tribunal is correct. It is his contention that 'maximum marginal rate' is not the maximum rate as rightly held by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily to be answered in favour of the revenue and against the assessee and we do so." 017. Honourable supreme court in case of Gosar Family Trust, Jamnagar and Ors. Vs. Commissioner of Income Tax, Rajkot and Ors. (28.04.1995 - SC) MANU/SC/0316/1995 has held that "12. We must say that the policy of law as disclosed from Section 164(1) is to discourage discretionary trusts by charging the income of such trusts in the hands of trustees at the maximum marginal rate except in certain specified situations. The trust deed concerned herein is a discretionary trust of an extremely unusual type." 018. Thus, Levy of maximum marginal rate on Trust is a specific anti avoidance rule and therefore should be given a strict interpretation. Law prescribes that tax shall be charged on the whole of the income in respect of which such person is so liable at the maximum marginal rate. There is no intention to charge the assessee a bit lower than the rates of tax and surcharge applicable to an individual of maximum rate. We draw strength to hold so from the decision of Honourable Bombay high court in case of CIT V J K Holdings [270 ITR 593] 019. Though we are aware about several decision of ITAT on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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