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TMI Blog2024 (10) TMI 1650X X X X Extracts X X X X X X X X Extracts X X X X ..... 22-23 & 2023-24. 2. As the issue involved in both the appeals under consideration is exactly same, hence for the sake of brevity, we are inclined to decide these appeals by passing this composite order and by taking into consideration ITA No. 3834/M/2024 as a lead case and result of the same shall apply mutatis mutandis to both the appeals under consideration. 3. ITA No. 3834/M/2024 In this case the Assessee is a family trust and has earned income from house property, business and profession, capital gain and from other sources. The Assessee during the year under consideration, has earned total income of Rs. 10,14,87,030/- out of which the amount of Rs. 5,60,81,538/- was shown as capital gain taxable @ special rate u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax includes surcharge meaning thereby the income tax including surcharge is to be levied at MMR and therefore the surcharge cannot be segregated and/or cannot be applied by taking refuge of other provisions of law. 6. We have heard the parties and perused the material available on record. It is not in controversy that the maximum marginal rate is applicable to the Assessee's declared income, on which the CPC has levied the surcharge @ 37% which has been affirmed by the Ld. Addl./Joint Commissioner. It is also admitted fact that according to the definition as prescribed u/s 2(29C) of the Act, maximum marginal rate is specified, which means the rate of tax (including surcharge on income tax, if any) applicable in relation to the highest s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate 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. Both the parties agreed that the income tax rate should be considered in relation to the highest slab of income in case of individual. 11. But the dispute is what should be the rate of surcharge applicable. According to the assessee the rate of surcharge shall be the surcharge applicable to the 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 the highest rate of surcharge applicable in case of an individual. Section 2 (29C) defines the maximum marginal rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable 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. 15. 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. 16. Honorable 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibes various slabs for each category of assessees and the corresponding rates of tax applicable. We find that the rate of tax on the highest slab for association of persons under the relevant Finance Act is 55 per cent and, therefore, the Assessing Officer rightly levied the same. The interpretation placed by the Tribunal for providing marginalization is against the definition contained in Explanation 2 to section 164(3). When the statute says that the 'maximum marginal rate' is the rate applicable on the highest slab of income, there is no scope for enquiry into the meaning of 'marginal' and we feel the Tribunal committed an error by assigning a literal interpretation to the definition clause contained in Explanation 2. We, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge applicable to an individual of maximum rate. We draw strength to hold so from the decision of Honorable Bombay high court in case of CIT V J K Holdings [270 ITR 593] 19. Though we are aware about several decision of ITAT on this issue Namely (1) Lintas Employees Holiday Assistance [ITA No 1796 /MUM/2024 dated 26-07- 2024], (2) Ujjwal Business Trust Bombay V CPC ITA 602 / M/2024 dt 28-06-2024] (3) Tayals Sales Corporation 1 SOT 579 (HYD), however as none of those decisions have considered the decision of honorable Supreme court and Honorable high courts and also the authoritative commentaries were also not placed before benches, we tend to follow the decision of Honorable High courts. 20. In the result, we confirm the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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