Rose Trust Vs DCIT (ITAT Delhi)
Finance Act Controls Surcharge, Not MMR – ITAT Upholds Lower Rate for Trust- Surcharge on Trust Income Restricted to 15% from 37%- ITAT Delhi
Assessee, Rose Trust, filed its return declaring total income of ₹6.43 crore (including dividend income of ₹6.09 crore). While processing u/s 143(1), CPC levied surcharge @37% on the total income, instead of 15% claimed by Assessee. On rectification u/s 154, AO restricted 15% surcharge only on dividend income but continued 37% on balance ₹34.07 lakh. CIT(A) upheld the 37% rate, observing that Assessee did not qualify for the lower rate as per Finance Act provisions.
Before ITAT, Assessee contended that surcharge should be uniformly 15%, relying on Special Bench in Araadhya Jain Trust [2025] 173 taxmann.com 343 (Mum), & also on coordinate bench decisions in Tulsi Trust, Jasmina Trust & its own case for earlier year. It was submitted that under Part I, Paragraph A of the First Schedule to the Finance Act, 2023, surcharge on dividend income or income under sections 111A, 112, 112A cannot exceed 15%, & that the same principle applies since Assessee’s residual income was only ₹34.07 lakh.
ITAT observed that the issue stood settled by Araadhya Jain Trust (SB), which clarified that “Maximum Marginal Rate” u/s 164 & 167B refers only to tax rate, not surcharge rate, & surcharge must follow Finance Act provisions. As per Finance Act, 2023, the applicable surcharge for an AOP with dividend income (opting for new tax regime) is 15%, not 37%.
