Lintas Employees Recreation Trust Vs ITO (ITAT Mumbai)
ITAT Mumbai held that Private Discretionary Trust whose income is chargeable to tax at maximum marginal rate is not leviable to pay surcharge if the slab rates are below Rs. 50 Lakhs. Accordingly, surcharge is not leviable in the present case and appeal is allowed.
Facts- Assessee trust filed the return of income under the status of AOP. The CPC had determined the tax liability by applying surcharge @37% on the total tax payable. CIT(A) held that it is an undisputed fact that maximum marginal rate is to be applied and tax and surcharge has to calculated as per the provision of Section 2(29C) of the Act r.w.s. 164 / 167B of the Income Tax Act. He held that MMR is required to be completed on the basis of provision of Section 2(29C) of the Act and MMR for A.Y.2022-23 and 2023-24 will be 42.74%. Accordingly, he upheld the levy of surcharge on the tax.
Being aggrieved, the present appeal is filed by the assessee.
Conclusion- Held that in case of ‘Private Discretionary Trust’ whose income is chargeable to tax at marginal rate, surcharge has to be computed on the income tax having reference to the slab rates prescribed in the Finance Act under the ‘surcharge of Income Tax’, accordingly, we hold that even if rate tax is applicable at maximum marginal rate however, if the slab rates are below Rs.50,00,000/- for levy of surcharge, no surcharge can be levied. Here in this case, it is not in dispute that slab rate of income of the assessee trust is much below of Rs.50,00,000/- and therefore, surcharge cannot be levied.
