2025 (6) TMI 1642 - AT - Income Tax

Rate of surcharge on the family trust s income - Levying surcharge of 37% as against the applicable rate of 10% based upon the income of the assessee - HELD THAT - While computing the tax liability the assessee has paid surcharge at the rate of 10%. In the intimation u/s 143(1) the CPC while processing the return levied the surcharge at the maximum rate of 37%. The assessee challenged the said action of CPC before Ld. CIT(A) but failed to succeed. Assessee has referred to the judgement of Araadhya Jain Trust 2025 (4) TMI 648 - ITAT MUMBAI held that the surcharge is to be levied as per income tax slab as provided in Paragraph A Part 1 First Schedule and as per first slab if income exceeds Rs. 50 lakhs but do not exceed Rs. 1 crore including the income by way of dividend or income under the provisions of section 111A section 112 and section 112A of the Act surcharge is leviable at the rate of 10%. Though there are three more slabs but since the case of the assessee falls under the first slab the assessee is required to pay surcharge at the rate of 10% and CIT(A) erred in confirming the action of the CPC of wrongly levying surcharge at the rate of 37%. Appeal of the assessee is allowed.

Summary

The Appellate Tribunal (ITAT Pune), per Manish Borad, AM, allowed the assessee's appeal against the order of the Ld. CIT(A), Faridabad, which had upheld the levy of a 37% surcharge by the CPC in the AY 2022-23 assessment. The sole issue was the applicable rate of surcharge on the family trust's income of Rs. 52,00,660. The Tribunal relied on the Special Bench Mumbai decision in Araadhya Jain Trust vs. ITO (ITA No.4272/Mum/2024), holding that surcharge must be levied according to the income tax slab in Paragraph A, Part 1, First Schedule. Since the assessee's income exceeded Rs. 50 lakhs but did not exceed Rs. 1 crore, the correct surcharge rate was 10%, not 37%. The Tribunal concluded that the Ld. CIT(A) erred in confirming the higher surcharge and set aside that finding, allowing the appeal.