CLESTRA FOUNDATION ,BANGALORE V. INCOME TAX OFFICER, WARD-4(2)(3), BANGALORE

ITA 1478/BANG/2024

AI Insights

Clestra Foundation, a private trust, appealed against the order of the ADDL/JCIT(A) which upheld the surcharge applied by the CPC on dividend income. The primary contention was whether the surcharge should be applied on dividend income when the total income is below Rs. 50 lakhs. The CPC had processed the return under section 143(1) of the Income Tax Act, 1961, applying a 37% surcharge on the total tax, contrary to the assessee's calculation which applied the surcharge only on interest income. The Tribunal examined the definitions and applications of the Maximum Marginal Rate (MMR) as per the Income Tax Act and the Finance Act, and referenced several judicial precedents to arrive at its decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 34077 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-09-2024
• Assessment Year: 2023-2024
• Appeal Filed On: 08-08-2024
• Other Referred Cases: Income Tax Officer v. Tayal Sales Corporation, Sriram Trust vs. ITO(Exemptions), Anant Bajaj Trust Vs. Dy. Director of Income Tax, CPC, Aaradhya Jain Trust vs. ITO, Gosar Family Trust, Jamnagar and Ors. Vs. Commissioner of Income Tax, Rajkot and Ors., C.V. Divakaran Family Trust, JK Holdings
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GANESH R. GHALE; STANDING COUNSEL
• Assessee Lawyers: RAVINDRA T.
• Keywords: Maximum Marginal Rate
• Section: 250; 143(1); 13; 115JB

Judgement Text

"ITA No.1478/Bang/2024 Clestra Foundation, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’BENCH: BANGALORE BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.1478/Bang/2024 Assessment Year: 2023-24 Clestra Foundation Glenmore Huskur Gate Off 20th Km Hosur Road Electronic City PO Bangalore 560100 PAN NO : AAATB8882B Vs. ITO Ward-4(2)(3) Bangalore APPELLANT RESPONDENT Appellant by : Shri Ravindra T., A.R. Respondent by : Shri Ganesh R. Ghale, Standing Counsel for department. Date of Hearing : 09.09.2024 Date of Pronouncement : 18.11.2024 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against the order of ADDL/JCIT(A)-1, Ahmadabad dated 13.6.2024 vide DIN & Order No. ITBA/APL/S/250/2024-25/1065623558(1) for the AY 2023-24 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). The assessee has raised following grounds of appeal: 1. The order of the learned Assessing Officer of Income tax is contrary to law, facts and circumstances of the case. 2. The learned ADDL/JCIT (A)-1 AHMEDABAD/ Assessing officer erred in computing the Surcharge at 37% on Dividend Income which was contrary to the Finance Act wherein surcharge was not applicable for Income below Rs.50 lakhs. ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 2 of 14 3. The learned CPC erred in interpreting Section 2(29C) by levying Maximum marginal rate on the whole of the Income which was against the judicial precedent in [2003] 1 SOT 579 (Hyderabad) [01-02-2001] Income Tax Officer v. Tayal Sales Corporation. 4. Any other ground that may be taken during the course of appeal proceedings. 2. Brief facts of the case are that the assessee is a Private Trust and constitutes as an AOP. The assessee e-filed its Return of Income for the A.Y. 2023-24 on 29.07.2023 in the status of an AOP vide acknowledgement no. 822269230290723 declaring Total Income of Rs.41,69,630/- under the head Income from Other Sources only. The Income of the assessee consisted of Interest income of Rs.7,35,862/- and the dividend income from Domestic companies of Rs.34,31,064/-. Thereafter the return was processed by the CPC u/s 143(1) of the Act on 18.12.2023 with a demand of Rs. 4,35,180/-. 2.1 While processing the return of Income, the Taxable Income declared by the assessee was accepted by the CPC. The Calculation of Tax by the assessee and the CPC u/s 143(1) of the Act are given below for ease of reference which is only the moot issue in the present case: Calculation by assessee Calculation by CPC Income Interest income Dividends 7,38,562 34,31,064 7,38,562 34,31,064 Total Income (Rounded Off) 41,69,630 41,69,630 Tax Tax Surcharge** Cess 12,50,889 81,981 53,315 12,50,889 4,62,829 68,549 Total Tax 13,86,185 17,82,267 ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 3 of 14 Thus the assessee calculated the surcharge of Rs.81,981/- i.e. at the rate of 37% on the Tax on Interest income only and not on Dividend Income on the ground that the surcharge is not applicable for Income below Rs.50 lakhs, whereas the CPC calculated the surcharge amounting to Rs. 4,62,829/- i.e. at the rate of 37% on total tax, while processing the return u/s 143(1) of the Act and accordingly computed the balance demand payable of Rs. 4,35,175/- for the Asst. year 2023-24. 2.2 Aggrieved by the Intimation passed U/s 143(1) of the Act dated 18/12/2023, the assessee preferred an appeal before the ADDL/JCIT(A). 3. The ld. ADDL/JCIT(A) held that the submission of the assessee is not acceptable as the Maximum Marginal Rate (in short “MMR”) for the AY 2023-24 is 42.74% and the rates of taxation provided in the first schedule Part-I of Finance Act, 2022 are applicable to the assessee only to the extent of rates of highest slab of tax and surcharge. Further he referred the Finance Act, 2022, Chapter II, which determines/specifies the rates of income tax to be applicable. The section 2 starts with non-obstante words such as subject to provision of sub-section 2 & 3 for AY 2023-24. Therefore, where sub-section 2 & 3 are applicable, the rates specified in Part-I of first schedule required to be adopted for MMR purpose. In this regard, he referred to the relevant part of sub- section 3 of section 2 of Finance Act, as follows: \"In cases to which the provisions of Chapter XII or Chapter XII-A or section 115JB or section 115JC or Chapter XII-FA or Chapter XII-FB or sub- section (IA) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act) apply, the tax chargeable shall be determined as provided in that Chapter or that ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 4 of 14 section, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter or section, as the case may be:\" (Emphasis supplied).” 3.1 The ld. ADDL/JCIT(A) is of the opinion that the rate of MMR has to be calculated as per the provisions of section 2(29C) of IT Act r.w.s. 164 or 167B of the IT Act. The Finance Act of every year is only relevant to know the highest slab of rate of tax & surcharge. After considering both the rates of tax & surcharge of highest slab mentioned in the Finance Act, MMR is to be calculated and charged. The word “if any” in the section 2(29C) is relevant if the surcharge to the highest slab of income is mentioned in the relevant Finance Act and it will be applicable for a particular AY. For example, no surcharge was applicable for AY 2010-11 & 2011-12 to slab of income of individual and AOP. Therefore, the word “if any” is relevant. Here the word surcharge “if any” has relevance to levy of surcharge if mentioned in the Finance Act. The word “if any” is related to the specification/mandate of surcharge mentioned in the schedule of Finance Act. If surcharge of highest slab is mentioned in the Finance Act, then the surcharge will be included in the tax and MMR will be calculated accordingly. If no surcharge for highest slab is mentioned in the schedule of Finance Act, then no surcharge will be included in the tax quantum for calculating the MMR. This word does not remotely suggest to include surcharge in MMR as per different slab rates of income. Therefore, he held that the MMR is required to be computed as under on the basis of provisions of section 2(29C) of the Act: Tax rates for highest slab -30% - 30. Surcharge for highest slab -37% - 11.11 Education Cess -4% - 1.63% Therefore, the ld. ADDL/JCIT(A) held that the MMR for this AY 2023-24 will be 42.74% which is to be applied irrespective of the total income of the assessee. ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 5 of 14 3.2 The ld. ADDL/JCIT(A) further observed that the assessee has himself calculated the surcharge @37% on interest income of Rs.7,38,562/- only and therefore, it is accepted to the extent of interest income that where tax at the rate of MMR is chargeable the surcharge requires to be levied @37% irrespective of quantum of income. The same rate prevails for dividend income unless specifically excluded like income from STCG and LTCG and other type of income as mentioned in sub section 3 of section 2 of relevant Finance Act. Therefore, the ld. ADDL/JCIT(A) is of the view that the taxation of surcharge on dividend income also requires to be taxed @37% in view of provisions of section 2(29C) and other relevant provisions. In view of the above, he confirmed the action of AO of charging the surcharge @ 37% on dividend income also and dismissed the appeal of the assessee. 3.3 Aggrieved by the Order of the ld. ADDL/JCIT(A), the assessee has filed the present Appeal before this Tribunal. 4. The solitary issue raised in the present case is the manner of the calculation of Maximum marginal rate (MMR). 4.1 Before us, the ld. A.R. of the assessee has vehemently submitted that since its income from dividends amounting to Rs.34,31,064/- is way below of Rs.50 lakhs and hence the surcharge is not at all applicable to the assessee. He also submitted that while applying the MMR only tax rate of highest income slab will be considered and surcharge thereon will be considered only if the income of assessee crosses the specified threshold limit of income as mentioned in the schedule Part I of Finance Act, (06 of 22), 2022. The A.R further submitted that the section 2(29C) of the Act defines the term maximum marginal rate and mentions “including surcharge on income tax if any” that ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 6 of 14 means “if any” words means the charging of surcharge only after the income of assessee crosses the threshold limit as mentioned in the first schedule of relevant Finance Act. In short the assessee, contends that while deciding the MMR the surcharge is to be included only when the income crosses the threshold limits as mentioned in the Finance Act, 2022 applicable for this AY 2023-24. The ld. A.R. for the assessee heavily relied on the decisions of Hyderabad Tribunal in the case of ITO Vs. Tayal Sales Corporation (2003) 1 SOT 579 (Hyd.) as well as Sriram Trust vs. ITO(Exemptions) in ITA No. 439-441/Hyd/2024 dated 19/06/2024, in which it is held that no surcharge is to be included while calculating the MMR, if the threshold limit of income is not crossed. 3. On the other hand, the ld. D.R. submitted that the MMR will not be applicable in parts like in one part of highest slab rate for basic tax i.e. 30% is levied and in one part no surcharge is levied. The MMR always constitutes highest slab tax rates and highest slab surcharge if any prescribed in Finance Act unless specifically excluded like income from LTCG and STCG. The income of dividend shown by the assessee in the return of income is not excluded in the proviso to sub-section 3 of section 2 of Finance Act. He further submitted that once the assessee is liable for MMR, the surcharge applicable will be surcharge for highest slab only. Surcharge @ 37% is integral part of MMR and therefore, MMR will be 42.74% for AY 2023-24. 5. We have carefully considered the rival submissions and perused the materials available on record. In the present appeal it is an undisputed fact that the assessee is a private trust and therefore should be taxed at the maximum marginal rate. There is no dispute with regard to the total income declared by the ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 7 of 14 assessee in its return of Income. It is also an undisputed fact that the assessee has himself calculated the maximum marginal rate by applying the Income tax rate applicable in relation to the highest slab of income in case of an Individual/AOP/BOI. Further the assessee himself calculated the surcharge in relation to highest slab of Income on Interest Income only. The sole dispute is that whether MMR includes surcharge in relation to highest slab also even though the income of the assessee is way below the 50 Lakhs. 5.1 Before proceeding further, it is appropriate to take note of section 2(29C) of the Act for the purpose of this case, which reads as under: “2(29C)\"maximum marginal rate\" means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual, association of persons or, as the case may be, body of individuals as specified in the Finance Act of the relevant year” 5.2 Thus, from the plain reading of above section, the expression “Maximum Marginal Rate” is the rate of income tax (including surcharge on income tax, if any) applicable in relation to the highest slab of income in case of an individual, AOP or BOI as specified in the Finance Act of the relevant year. We also take a note that “including surcharge on income tax, if any” has been put in a pair of marks ( ), which in our opinion indicate that the text within them is conditional i.e. the bracketed information only applies, if certain conditions are met as often seen with phrases like “if any”. We are of the opinion that the inclusion of surcharge, if any implies that this amount is contingent upon the surcharge in relation to the highest slab of income as specified in the Finance Act of the relevant year. We agree with the view taken by the ld. CIT(A) that Finance Act of every year is only relevant to know the highest slab of rate of tax and surcharge. The word “if any” in the ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 8 of 14 section 2(29C) of the Act is relevant, if the surcharge to the highest slab of income is mentioned in the relevant Finance Act and it will be applicable for a particular assessment year. Here the word “surcharge, if any” has relevance to levy of surcharge, if mentioned in the Finance Act. If surcharge of highest slab is mentioned in the Finance Act, then surcharge will be included in the tax and MMR will be calculated accordingly. If no surcharge is mentioned in the schedule of Finance Act, then no surcharge will be included in the tax quantum for calculating the MMR. This word does not remedially suggest to include surcharge in MMR as per different slab rates of income. We are of the opinion that the information that is enclosed with a pair of brackets can be removed from a sentence and still make sense as they are mostly just extra information. Therefore, if surcharge is not specified in the Finance Act, then it will not be a part of maximum marginal rate and only rate of income tax in relation to the highest slab of income will be considered. Under the similar facts and circumstances, recently the coordinate bench of ITAT, Mumbai in the case of Anant Bajaj Trust Vs. Dy. Director of Income Tax, CPC in ITA No.1995/Mum/2024 dated 26.8.2024 for the AY 2022-23 held as under: “08. We have carefully considered rival contentions and perused the orders of the learned lower authorities. 09. In the present appeal, there is no dispute between the parties that the assessee should be taxed at the maximum marginal rate. The issue is how to calculate the maximum marginal rate. 10. The assessee has computed maximum marginal rate 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. ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 9 of 14 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 rate as under:- [(29C) \"maximum marginal rate\" means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual 9[, association of persons or, as the case may be, body of individuals] as specified in the Finance Act of the relevant year;] 12. According to the provisions of section 2 (29C) the maximum marginal rate means the rate of income tax (including surcharge on income tax, if any), applicable in relation to the highest slab of income in the case of an individual as specified in the finance act of the relevant year. Thus, when an assessee is to be taxed at the maximum marginal rate, Maximum Marginal rates is to be arrived at by adding Highest slab of tax and Highest slab of surcharge applicable in case of an individual. This is also the opinion expressed in the Commentary of Chaturvedi & Pithisaris as well as of Vinod Singhania. The ld. CIT (A) has also quoted it extensively. We tend to agree with this view. 13. Language of law is also clear that maximum Marginal rate shall be Maximum rate of tax which is tax and surcharge of the highest rate in case of an individual. 14. If the surcharge was to be charged according to the slab rates of the assessee, it was not required to be mentioned in section 2 (29C) of the Act. There would not have been any need to mention surcharge u/s 2 (29C) of the act because it would have been then computed under the finance Act as per slab applicable 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. Honourable 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 for the assessee. Sri Menon contended that the definition of 'maximum marginal rate' contained in Explanation 2 to section 164(3) is free from doubt. ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 10 of 14 The counsel for the assessee contended that the interpretation placed by the Tribunal based on another decision of the Tribunal is correct. It is his contention that 'maximum marginal rate' is not the maximum rate as rightly held by the Tribunal. 3.Explanation2 to section 164(3) which is the subject-matter of these references is as follows : \"Explanation 2.—In this section, 'maximum marginal rate' means the rate of income tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an association of persons as specified in the Finance Act of the relevant year.\" There is no dispute that section 164 is the relevant section under which the assessee has to be assessed. It is the charging section by itself and all that it says is that the 'maximum marginal rate' of tax is to be applied on the computed income. 'Maximum marginal rate' is defined as the rate of tax applicable in relation to the highest slab of income provided for association of persons in the relevant Finance Act. We feel that the definition is not capable of any doubt, and the only meaning that it admits is that the rate on the maximum slab of income for association of persons is to be treated as the maximum marginal rate of tax for the purpose of section 164. The Finance Act for each year prescribes 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 Explanation2 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 Explanation2. We, therefore, find that the Assessing Officer has rightly applied the 'maximum marginal rate' at 55 per cent which was the rate applicable on the highest slab of income for association of persons under the relevant Finance Act. We find that the Calcutta High Court in Surendranath Gangopadhyaya Trust v. CIT [1983] 142 ITR 149 1 and the Madhya Pradesh High Court in Piarelal Sakseria Family Trust v. CIT [1982] 136 ITR 583 have taken a similar view in the matter. In view of our interpretation, the questions have necessarily to be answered in favour of the revenue and against the assessee and we do so.” ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 11 of 14 17. Honourable Supreme Court in case of Gosar Family Trust, Jamnagar and Ors. Vs. Commissioner of Income Tax, Rajkot and Ors.(28.04.1995 SC) - MANU/SC/0316/1995 has held that “12. We must say that the policy of law as disclosed from Section 164(1) is to discourage discretionary trusts by charging the income of such trusts in the hands of trustees at the maximum marginal rate except in certain specified situations. The trust deed concerned herein is a discretionary trust of an extremely unusual type.” 18. Thus, Levy of maximum marginal rate on Trust is a specific anti avoidance rule and therefore should be given a strict interpretation. Law prescribes that tax shall be charged on the whole of the income in respect of which such person is so liable at the maximum marginal rate. There is no intention to charge the assessee a bit lower than the rates of tax and surcharge applicable to an individual of maximum rate. We draw strength to hold so from the decision of Honourable 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- 072024], (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 Honourable 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 ld. CIT (A) holding that maximum marginal rate is Correctly computed by the CPC taking the Maximum rates of Income tax and maximum rates of surcharge applicable in case of an individual for the AY. 21. Appeal of the assessee is dismissed.” 5.3 Of late, again the same coordinate bench of ITAT, Mumbai in the case of Aaradhya Jain Trust vs. ITO in ITA No.2197/Mum/2024 dated 7.10.2024 for the AY 2022-23 held as under: 8. We have carefully considered the rival contention and have also perused the orders of the lower authorities. In the present appeal, there is no dispute between the parties that assessee is a private discretionary trust, therefore, should be taxed at the maximum marginal rate. The issue involved is how to calculate the ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 12 of 14 maximum marginal rate. The assessee has claimed while computing the maximum marginal rate 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. But the dispute is what should be the applicable rate of surcharge. The assessee claims that the rate of surcharge applicable to be 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 highest rate of surcharge applicable in case of an individual. 9. Section 2(29C) of the Act defines maximum marginal rate. It provides that maximum marginal rate means the rate of income tax (including surcharge on income tax, if any) applicable in a relation to the highest slab of income in the case of an individual as specified in the Finance Act of the relevant year. Thus, according to the provisions, when assessee is to be taxed at maximum marginal rate, same is to be arrived at by taking highest slab of tax and highest slab of surcharge applicable in case of an individual. This view is already expressed in the commentary on Income Tax by Chaturvedi and Pithisaria as well as of the book published by Mr. Vinod Singhania. Even otherwise, language of law is clear that maximum marginal rate shall be maximum rate of tax and surcharge of the highest rate in case of an individual. If the surcharge was to be levied according to the slab rate of the assessee, it was not required to be mentioned in Section 2(29C) of the Act that rate of income tax (including surcharge of income tax, if any) applicable in relation to the highest slab of income in case of an individual. Thus, purpose of mentioning surcharge in that section is to compute maximum marginal rate as high rate of tax and also highest rate of surcharge. If one reads the provisions of the law as suggested by the learned A.R., mention of the word surcharge in Section 2(29C) of the Act becomes redundant. The definition is not capable of any doubt and only meaning that it admits is that the rate on the maximum slab of income and maximum rate of surcharge is to be treated as the maximum marginal rate. The Finance Act for each year prescribes various slabs for each category of the assessee and the corresponding rates applicable. This view is also supported by the decision of the Hon'ble Kerala High Court in the case of CIT vs. C.V. Divakaran Family Trust [2002] 254 ITR 222 (Ker.). It is also true that the Policy of Law as suggested in Section 2(29C) of the Act is to discourage discretionary trust by charging the income of such trust in the hands of the trustee at the maximum marginal rate except in certain specified situation. Thus, such a policy is defeated, if we hold that the beneficiary of a trust is chargeable to tax and also surcharge at the highest slab, but the assessee trust is charged to tax at the highest slab but lower rate of surcharge. We also draw support from the decision of the Hon'ble Supreme Court in the case of Gosar Family Trust, Jamnagar etc vs. CIT dated 28.04.1994 (MANU/ SC/0316/1995). 10. The levy of maximum marginal rate on trust is thus specific anti Avoidance rule and therefore should be given a strict interpretation. Law prescribes that tax shall be charged on income in respect of which such person is so liable at the maximum marginal rate. There is no provision in the law to charge specific discretionary trust bit lower than the rates of tax and surcharge applicable to a beneficiary individual. We also draw strength from the decision ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 13 of 14 of the Hon'ble Bombay High Court in the case of CIT vs. JK Holdings [2003] 133 Taxman 443 (Bombay) 11. The learned A.R. have relied upon the several decisions of the coordinate Benches, however, none of those decisions has considered the decision of the Hon'ble Supreme Court and Hon'ble High Courts as well as the authoritative commentaries, as stated above. We are duty bound to follow those decisions. 12. In the result, we confirm the order of the learned CIT(A) holding that the maximum marginal rate is correctly computed by the Central Processing Centre by taking the maximum rate of income tax and maximum of rate of surcharge applicable in case of an individual for the assessment year and same is applicable on assessee , a private discretionary trust. 13. In view of above discussion, the Ground Nos. 1 to 5 of the appeal are dismissed. 14. The next contention of the assessee is that CPC does not have any power to vary the rate of surcharge by processing the return of income u/s. 143(1) of the Act. For this proposition we find that CPC has power to compute the correct amount of tax and sum payable by the assessee in terms of provisions of Section 143(1)(b) and (c) of the Act. Therefore, on this ground also, we do not find any reason to interfere with the order of the learned CIT(A). 15. In the result, the appeal of the assessee is dismissed.” 5.4 Since in the present case, the assessee has highly relied on the decision of ITAT Hyderabad ‘B’ Bench in the case of ITO Vs. Tayal Sales Corporation (2003) 1 SOT 579 (Hyd) as well as decision of Hyderabad “SMC” Bench in the case of Sriram Trust, Hyderabad Vs. ITO (Exemptions) in ITA No.439 to 441/Hyd/2024 dated 19.6.2024 for the AYs 2021-22 to 2023-24, in our opinion, the recent judgement of Mumbai Bench in the case of Anant Bajaj Trust cited (supra) has also considered the judgment in the case of Tayal Sales Corporation cited (supra) & therefore binding precedent. Accordingly, we respectfully following the decision in the case of Anant Bajaj Trust cited (supra) as well as Aaradhya Jain Trust cited (supra), we confirm the order of ld. CIT(A) holding that Maximum Marginal Rate is correctly computed by the CPC taking the rate of income tax and surcharge applicable in relation to the highest slab of income in case of individual/AOP/BOI for the ITA No.1478/Bang/2024 Clestra Foundation, Bangalore Page 14 of 14 assessment year under consideration. With the above observations we dismiss the appeal of the assessee. 6. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 18th Nov, 2024 Sd/- (Ramit Kochar) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 18th Nov, 2024. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "