Ria Zaveri Trust Vs ACIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) Ahmedabad has ruled in favor of Ria Zaveri Trust, setting aside an excessive surcharge imposed by the CIT(A). The appeal was filed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), concerning the assessment year 2021-22. The key issue was whether a 37% surcharge was applicable, as levied by CIT(A), instead of the 10% surcharge claimed by the trust in its return.
The tribunal considered similar cases where the surcharge was contested, including Ujjwal Business Trust Vs. ITO, M/s. Lintas Employees Holiday Assistance Trust Vs. CPC, and Shriram Trust Vs. ITO. As per Section 2(29C) of the Income Tax Act, the maximum marginal rate includes surcharge applicable to the highest slab of income. The tribunal emphasized that surcharge rates are determined based on income slabs defined in the Finance Act of the relevant year. The Finance Bill 2022 specifies that a surcharge is applicable only if the total income exceeds Rs. 50 lakh.
The ITAT observed that in this case, the trust had reported a total income of only Rs. 36,930, far below the threshold for surcharge application. The tribunal criticized CPC’s automatic surcharge application, stating that it did not align with statutory provisions. The CIT(A) was also faulted for not rectifying the error. The ITAT held that surcharge should be levied only when taxable income crosses prescribed thresholds, and mere classification as an Association of Persons (AOP) does not justify an automatic surcharge.
