NK TRUST,MUMBAI V. WARD 25(3)(1), MUMBAI

ITA 1086/MUM/2025

AI Insights

The case involves Nk Trust appealing against the order of CIT(A)-1, Jaipur, which pertained to the assessment year 2023-24. The primary contention was the rate of surcharge applied to the total liability based on the normal income. The appellant argued for a surcharge rate of 25%, contrasting with the 45.33% applied by the Assessing Officer. The tribunal referenced a similar case, Araadhya Jain Trust vs. Income Tax Officer, where it was determined that for Private Discretionary Trusts, the surcharge should be computed based on slab rates prescribed for the relevant assessment year. The tribunal's decision favored the appellant, directing the Assessing Officer to adjust the surcharge accordingly.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360843 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2023-2024
• Other Referred Cases: Araadhya Jain Trust vs. Income Tax Officer
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: SUNIL HIRAWAT
• Keywords: Maximum Marginal Rate

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI (JUDICIAL MEMBER) AND SHRI OMKARESHWAR CHIDARA (ACCOUNTANT MEMBER) I.T.A. No. 1086/Mum/2025 Assessment Year: 2023-24 Nk Trust 21-C(A), Mittal Tower, C-Wing, 2nd Floor Maharashtra-400021 PAN:AACTN5160C Vs. Ward 25(3)(1) Kautilya Bhavan, G Block BKC, Bandra Kurla Complex, Bandra East Mahrashtra-4000051 (Appellant) (Respondent) Appellant by Shri Sunil Hirawat Respondent by Shri Leyaqat Ali Aafaqui, SR. A.R. Date of Hearing 07.05.2025 Date of Pronouncement 21.05.2025 ORDER Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 22/01/2025 passed by CIT(A)-1, Jaipur for assessment year 2023-24 on following grounds of appeal : “ GROUNDS OF APPEAL NO. 1 On facts and in law, the Learned AddI/JCIT (A)-1, Jaipur had erred in not directing the Learned Assessing Officer to levy surcharge on total liability based on the total normal income of the 2 ITA No. 1086/Mum/2025; A.Y. 2023-24 Nk Trust appellant. In appellant's case surcharge should be restricted to 25% instead of 45.33%. GROUNDS OF APPEAL NO. 2 The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Hon'ble ITAT to decide this appeal according to law.” 2. At the outset, the Ld.AR submitted that, the only issue in the present appeal relates to applicability of maximum marginal rate on the surcharge as against the slab rates. He placed the order passed by Hon’ble Special Bench of Mumbai Tribunal in the case of Araadhya Jain Trust vs. Income Tax Officer along with interveners passed on 09/04/2025 in ITA no. 4272/Mum/2024 for assessment year 2023-24 and submitted that, the issue now stand covered. 2.1 On the contrary, the Ld.DR relied on the orders passed by the authorities below. 3. We note that, Hon’ble Special Bench considered the issue by observing as under: “32. However, upon carefully going through these decisions, we are of the considered view that the issue arising in the present case never fell for consideration before the Hon'ble Courts. The issue in dispute in those cases was primarily concerning what should be the maximum marginal rate and its applicability. The issue 'whether the rate of surcharge would also be at the highest rate while computing tax at maximum marginal rate was never the issue before the Hon'ble Courts. Thus, in our view, the view expressed by the co-ordinate benches in decisions referred to in Paragraph 10(supra) lay down the correct proposition of law. Thus, in the ultimate analysis, we hold, in case of Private Discretionary Trusts, whose income is chargeable to tax at maximum marginal rate, surcharge has to be computed on the income tax having reference to the slab rates prescribed in the Finance Act under the heading 'surcharge on income tax' appearing in Paragraph A, Part 1, First Schedule, applicable to the relevant assessment year. 3 ITA No. 1086/Mum/2025; A.Y. 2023-24 Nk Trust Hence, reference is decided in favour of the assessee. The records may be returned back to the respective benches for deciding the appeals accordingly.” 3.1 Respectfully, the following above view we direct the Ld.AO to compute the surcharge based on the slab rates as observed herein above. Accordingly the grounds raised by the assessee stands allowed. In the result the order passed by the assessee stands allowed. Order pronounced in the open court on 21/05/2025 SD/- SD/- (OMKARESHWAR CHIDARA) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 21/05/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order (Asstt. Registrar) ITAT, Mumbai "