SHAILENDRA GALA NAVNEET TRUST ,MUMBAI V. DEPUTY DIRETOR OF INCOME TAX WARD 22(2)(1), MUMBAI

ITA 4355/MUM/2024

AI Insights

The case involves Shailendra Gala Navneet Trust appealing against the intimation orders under Section 143(1) of the Income Tax Act, 1961, for the assessment years 2022-23 and 2023-24. The primary issues contested were the levy of surcharge despite the total income being below Rs 50 lakhs and discrepancies in the tax payable and net amount payable as reflected in the intimation orders. The tribunal referenced a decision by the Special Bench of the ITAT, which clarified that while a discretionary trust is taxed at the maximum marginal rate, the surcharge should be computed based on the slab rates prescribed in the Finance Act. The tribunal's decision partly allowed the appeals, correcting the surcharge application but restoring the computational mismatch issue to the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712152 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2022-2023
• Other Referred Cases: Aaradhya Jain Trust v. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Assessee Lawyers: SANJAY PARIKH
• Keywords: Opportunity of being heard; Maximum Marginal Rate
• Section: 234B; 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H (SMC)” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA Nos. 4355 & 4354/MUM/2024 Assessment Year: 2022-23 & 2023-24 Shailendra Gala Navneet Trust, Navneet Bhavan, Bhavani Shankar Road, Nr. Shardasharm Society, Dadar (West)-Mumbai-400028. Vs. Income tax CPC, Dy. Director of Income-tax Ward 22(2)(1), Piramal Chamber, Dr. SS Roa Marg, Parel, Mumbai-400012. PAN NO. AALTS 8008 F Appellant Respondent Assessee by : Mr. Sanjay Parikh Revenue by : Mr. Pravin Salunkhe, Sr. DR Date of Hearing : 17/07/2025 Date of pronouncement : 24/07/2025 ORDER PER OM PRAKASH KANT, AM These two appeals by the assessee are directed against, two separate order, both dated 08.06.2024 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals), Panchkula (hereinafter shall be referred as “CIT(A)”) for assessment year 2022- 23 and 2023-24. As identical issue-in-dispute is involved in both Printed from counselvise.com these appeals, therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience. 2. The grounds raised by the assessee in appeal for assessment year 2022-23 are reproduced as under: Ground No. 1: Validity Intimation u/s 143(1) 1. The learned CIT(A) erred in not quashing the impugned intimation order passed under section 143(1) of the Income Tax Act, 1961 as no opportunity of being heard was provided to the Appellant before lev interest. Ground No. 2: Incorrect levy of surcharge amounting to Rs.90,651/- lakhs 1. The learned CIT(A) erred in not appreciating that surcharge on tax is not applicable as the total below the threshold limit of Rs 50 lakhs. 2. The learned CIT(A) failed to appreciate that the surcharge on tax is applicable only if the total income is above 50 lakhs as outlined in the First Schedule to Finance Act, 2021. 3. Your Appellant prays that the surcharge of Rs.90,651/ levied in the impugned intimation order is incorrect, bad in law and hence the same may please be deleted. Ground No.3: Mismatch in Tax Payable and Net Amount Payable aggregating to Rs.17,452/ 1. The learned CPC erred in considering the Net Amount Payable as Rs.1,17,700/ computed as Rs.1,00,248/ demand by Rs.17,452/ 2. Your Appellant Prays that the mismatch of the net amount Payable of Rs.17,452/ be deleted. Shailendra Gala Navneet Trust ITA Nos. 4355 & therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience. The grounds raised by the assessee in appeal for assessment 23 are reproduced as under: Ground No. 1: Validity of the adjustments made in the Intimation u/s 143(1) 1. The learned CIT(A) erred in not quashing the impugned intimation order passed under section 143(1) of the Income Tax Act, 1961 as no opportunity of being heard was provided to the Appellant before levying surcharge and additional Ground No. 2: Incorrect levy of surcharge amounting to despite total income being less than 50 1. The learned CIT(A) erred in not appreciating that surcharge on tax is not applicable as the total income of the Appellant is below the threshold limit of Rs 50 lakhs. 2. The learned CIT(A) failed to appreciate that the surcharge on tax is applicable only if the total income is above 50 lakhs as outlined in the First Schedule to Finance Act, 2021. Your Appellant prays that the surcharge of Rs.90,651/ levied in the impugned intimation order is incorrect, bad in law and hence the same may please be deleted. Ground No.3: Mismatch in Tax Payable and Net Amount Payable aggregating to Rs.17,452/- learned CPC erred in considering the Net Amount Payable as Rs.1,17,700/- even though the Tax Payable is computed as Rs.1,00,248/- thus resulting into increase in demand by Rs.17,452/-. 2. Your Appellant Prays that the mismatch of the net amount Rs.17,452/- in the impugned intimation may please Shailendra Gala Navneet Trust 2 ITA Nos. 4355 & 4354/MUM/2024 therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience. The grounds raised by the assessee in appeal for assessment of the adjustments made in the 1. The learned CIT(A) erred in not quashing the impugned intimation order passed under section 143(1) of the Income Tax Act, 1961 as no opportunity of being heard was provided ying surcharge and additional Ground No. 2: Incorrect levy of surcharge amounting to despite total income being less than 50 1. The learned CIT(A) erred in not appreciating that surcharge income of the Appellant is 2. The learned CIT(A) failed to appreciate that the surcharge on tax is applicable only if the total income is above 50 lakhs as Your Appellant prays that the surcharge of Rs.90,651/- levied in the impugned intimation order is incorrect, bad in law Ground No.3: Mismatch in Tax Payable and Net Amount learned CPC erred in considering the Net Amount even though the Tax Payable is thus resulting into increase in 2. Your Appellant Prays that the mismatch of the net amount in the impugned intimation may please Printed from counselvise.com Ground No.4: Incorrect levy of additional interest u/s 234B amounting to Rs.6,552/ 1. The learned CIT(A) consequently erred in not deleting the excess interest levied in the intimation order u/ Rs.6,552/-. Your Appellant prays that the excess interest levied in the intimation order may please 2.1 The appellant/assessee before us is an Discretionary Trust established under the provisions of the Indian Trust Act, 1882. The appellant filed its return of income for the Assessment Year 2022 of ₹8,16,680/-, consisting primarily of interest income taxable under the head \"Income from Other Sources.\" The said return was processed by the Central Processing Centre (CPC) under Section 143(1) of the Income Act\") vide intimation dated 16.03.2023. While the CPC accepted the returned income, a demand of surcharge levied at the rate of 37% and consequential interest under Section 234B of the Act. said intimation order before the Ld. CIT(A) challenging the surcharge levied at the maximum rate on the tax liability of the assessee. The Ld. CIT(A) rejected the contention of the assessee. Aggrieved, the assessee is in appeal be reproduced above. 3. The ground No. 1 of the appeal was not pressed by the assessee and therefore, same is dismissed as infructuous. Shailendra Gala Navneet Trust ITA Nos. 4355 & Ground No.4: Incorrect levy of additional interest u/s 234B amounting to Rs.6,552/- 1. The learned CIT(A) consequently erred in not deleting the excess interest levied in the intimation order u/s 234B of . Your Appellant prays that the excess interest levied in the intimation order may please be deleted. The appellant/assessee before us is an Irrevocable Private established under the provisions of the Indian t Act, 1882. The appellant filed its return of income for the Assessment Year 2022–23 on 16.07.2022, declaring a total income , consisting primarily of interest income taxable under the head \"Income from Other Sources.\" The said return was ocessed by the Central Processing Centre (CPC) under Section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as \"the Act\") vide intimation dated 16.03.2023. While the CPC accepted the returned income, a demand of ₹1,17,700/- was raised on accou surcharge levied at the rate of 37% and consequential interest under Section 234B of the Act. The assessee filed appeal against the said intimation order before the Ld. CIT(A) challenging the surcharge levied at the maximum rate on the tax liability of the assessee. The Ld. CIT(A) rejected the contention of the assessee. Aggrieved, the assessee is in appeal before us by way of grounds are The ground No. 1 of the appeal was not pressed by the assessee and therefore, same is dismissed as infructuous. Shailendra Gala Navneet Trust 3 ITA Nos. 4355 & 4354/MUM/2024 Ground No.4: Incorrect levy of additional interest u/s 1. The learned CIT(A) consequently erred in not deleting the s 234B of . Your Appellant prays that the excess interest Irrevocable Private established under the provisions of the Indian t Act, 1882. The appellant filed its return of income for the 23 on 16.07.2022, declaring a total income , consisting primarily of interest income taxable under the head \"Income from Other Sources.\" The said return was ocessed by the Central Processing Centre (CPC) under Section tax Act, 1961 (hereinafter referred to as \"the Act\") vide intimation dated 16.03.2023. While the CPC accepted the was raised on account of surcharge levied at the rate of 37% and consequential interest filed appeal against the said intimation order before the Ld. CIT(A) challenging the surcharge levied at the maximum rate on the tax liability of the assessee. The Ld. CIT(A) rejected the contention of the assessee. by way of grounds are The ground No. 1 of the appeal was not pressed by the assessee and therefore, same is dismissed as infructuous. Printed from counselvise.com 4. Ground No. 2 pertains to the grievance regarding levy of surcharge at the highest rate income being below assessee that surcharge is not leviable in the present case as the total income declared falls below the threshold limit prescribed under the Finance Act, 2 contention, holding that the assessee, being an Discretionary Trust with indeterminate beneficiaries, falls within the purview of Section 164(1) of the Act, which mandates taxation at the Maximum Margin MMR includes not just the highest basic rate of tax (30%) but also the highest surcharge as prescribed in the Finance Act of the relevant year, i.e., 37%, and therefore concluded that the effective rate applicable to the assessee was 42.744% for the A.Y. 2022 The relevant finding of “6. Decision: 6.1 The appellant in its submission has raised the fact that the income of assessee is below Rs.50 lacsand that there is no provision under Finance Act 2021 to levy surcharge in the case of assesseedeclaring total income at Rs. 8,16,680/ dispute regarding the applicability of maximum marginal rate to the appellant. The only dispute in this appeal is applicability of surcharge of highest income slab i.e. 37% to the case of appellant by CPC instead of no surcharge as when the total income does not exceeds Rs 50 lakhs as contented by appellant. 6.2 However, the assessee, being a private trust where share of beneficiaries is unknown, will be governed by section 164 of the Income Shailendra Gala Navneet Trust ITA Nos. 4355 & Ground No. 2 pertains to the grievance regarding levy of surcharge at the highest rate of 37% despite the assessee’s total income being below ₹50,00,000/-. It is the specific case of the assessee that surcharge is not leviable in the present case as the total income declared falls below the threshold limit prescribed under the Finance Act, 2021. The Ld. CIT(A) rejected this contention, holding that the assessee, being an Irrevocable Private with indeterminate beneficiaries, falls within the purview of Section 164(1) of the Act, which mandates taxation at Maximum Marginal Rate (MMR). The CIT(A) further held that the MMR includes not just the highest basic rate of tax (30%) but also the highest surcharge as prescribed in the Finance Act of the relevant year, i.e., 37%, and therefore concluded that the effective cable to the assessee was 42.744% for the A.Y. 2022 The relevant finding of Ld. CIT(A) is reproduced as under: 6.1 The appellant in its submission has raised the fact that the income of assessee is below Rs.50 lacsand that there is no provision under Finance Act 2021 to levy surcharge in the case of assesseedeclaring total income at Rs. 8,16,680/- in the return of the income. There is no dispute regarding the applicability of maximum marginal rate to The only dispute in this appeal is applicability of surcharge of highest income slab i.e. 37% to the case of appellant by CPC instead of no surcharge as per the provisions of Finance Act 2021 when the total income does not exceeds Rs 50 lakhs as contented by 6.2 However, the assessee, being a private trust where share of beneficiaries is unknown, will be governed by section 164 of the Income Shailendra Gala Navneet Trust 4 ITA Nos. 4355 & 4354/MUM/2024 Ground No. 2 pertains to the grievance regarding levy of of 37% despite the assessee’s total . It is the specific case of the assessee that surcharge is not leviable in the present case as the total income declared falls below the threshold limit prescribed 021. The Ld. CIT(A) rejected this Irrevocable Private with indeterminate beneficiaries, falls within the purview of Section 164(1) of the Act, which mandates taxation at . The CIT(A) further held that the MMR includes not just the highest basic rate of tax (30%) but also the highest surcharge as prescribed in the Finance Act of the relevant year, i.e., 37%, and therefore concluded that the effective cable to the assessee was 42.744% for the A.Y. 2022–23. as under: 6.1 The appellant in its submission has raised the fact that the income of assessee is below Rs.50 lacsand that there is no provision under Finance Act 2021 to levy surcharge in the case of assesseedeclaring There is no dispute regarding the applicability of maximum marginal rate to The only dispute in this appeal is applicability of surcharge of highest income slab i.e. 37% to the case of appellant by per the provisions of Finance Act 2021 when the total income does not exceeds Rs 50 lakhs as contented by 6.2 However, the assessee, being a private trust where share of beneficiaries is unknown, will be governed by section 164 of the Income Printed from counselvise.com tax Act, 1961. The relevant portion of the section 164 is reproduced below: \"Charge of tax where share of beneficiaries unknown. 164. (1) Subject to the provisions of sub income in respect of which the persons mentioned in clau of sub-section (1) of section or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or f receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as \"relevant income\", \"part of relevant income\" and \"beneficiari respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate.\" 6.3. Further, the maximum marginal rate is defined under section 2(29C) as \"the rate of income 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\" 6.4. Further the appellant has contented th income tax applicable to the Appellant is the highest i.e., 30%, however the rate of surcharge applicable to the Appellant will be in lines with the rates of surcharge as prescribed in the First Schedule to Finance Act, 2020 as has been the intent of legislature and that is why the words \"if any\" have been mentioned in the definition of the maximum marginal rate. 6.5 The submission of the appellant is not acceptable. The rates of taxation provided in the first schedule applicable to the appellant only to the extent of rates of highest slab of tax and surcharge. It is clear the MMR is applicable to the appellant. There is no dispute on it. Here it is necessary to refer the Finance Act, chapter-II, which determines/specifies the rates of income tax to be applicable. The section 2 starts with non subject to provision of sub where sub-section 2 & 3 are applicable, the rates specified in Part first schedule required to be adopted for MMR purpose. The relevant part of sub-section 3 of section 2 of Finance Act is as under: \"In cases to which the provisions of Chapter XII or Chapter XII section 115JB or section 115JC or Chapter XII sub-section (1A) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act, 1961 (43 of 196 Shailendra Gala Navneet Trust ITA Nos. 4355 & Act, 1961. The relevant portion of the section 164 is reproduced \"Charge of tax where share of beneficiaries unknown. 164. (1) Subject to the provisions of sub-sections (2) and (3), where any income in respect of which the persons mentioned in clauses (iii) and (iv) section (1) of section-160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as \"relevant income\", \"part of relevant income\" and \"beneficiari respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate.\" 6.3. Further, the maximum marginal rate is defined under section 2(29C) as \"the rate of income-tax (including surcharge on income 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\" 6.4. Further the appellant has contented that although the rate of income tax applicable to the Appellant is the highest i.e., 30%, however the rate of surcharge applicable to the Appellant will be in lines with the rates of surcharge as prescribed in the First Schedule to Finance Act, been the intent of legislature and that is why the words \"if any\" have been mentioned in the definition of the maximum marginal 6.5 The submission of the appellant is not acceptable. The rates of taxation provided in the first schedule-part-I of Finance Act, 2021 are applicable to the appellant only to the extent of rates of highest slab of tax and surcharge. It is clear the MMR is applicable to the appellant. There is no dispute on it. Here it is necessary to refer the Finance Act, 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 A.Y. 2022-23. Therefore, section 2 & 3 are applicable, the rates specified in Part first schedule required to be adopted for MMR purpose. The relevant section 3 of section 2 of Finance Act is as under: \"In cases to which the provisions of Chapter XII or Chapter XII section 115JB or section 115JC or Chapter XII-FA or Chapter XII section (1A) of section 161 or section 164 or section 164A or section tax Act, 1961 (43 of 1961) (hereinafter referred to as Shailendra Gala Navneet Trust 5 ITA Nos. 4355 & 4354/MUM/2024 Act, 1961. The relevant portion of the section 164 is reproduced sections (2) and (3), where any ses (iii) and (iv) 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons or whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as \"relevant income\", \"part of relevant income\" and \"beneficiaries\", respectively), tax shall be charged on the relevant income or part of 6.3. Further, the maximum marginal rate is defined under section 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\" at although the rate of income tax applicable to the Appellant is the highest i.e., 30%, however the rate of surcharge applicable to the Appellant will be in lines with the rates of surcharge as prescribed in the First Schedule to Finance Act, been the intent of legislature and that is why the words \"if any\" have been mentioned in the definition of the maximum marginal 6.5 The submission of the appellant is not acceptable. The rates of nce Act, 2021 are applicable to the appellant only to the extent of rates of highest slab of tax and surcharge. It is clear the MMR is applicable to the appellant. There is no dispute on it. Here it is necessary to refer the Finance Act, determines/specifies the rates of income tax to be obstante words such as 23. Therefore, section 2 & 3 are applicable, the rates specified in Part-I of first schedule required to be adopted for MMR purpose. The relevant \"In cases to which the provisions of Chapter XII or Chapter XII-A or FA or Chapter XII-FB or section (1A) of section 161 or section 164 or section 164A or section 1) (hereinafter referred to as Printed from counselvise.com the Income-tax Act) apply, the tax chargeable shall be determinedas provided in that Chapter or that 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) Hence it is clear that, where MMR is applicable the rates specified in part-I of schedule are only relevant to the extent of calculating MMR and MMR will be charged in the applicable cases by virtue of sub of section 2 of Finance Act, 2021. 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. of tax of highest slab as well as surcharge of highest slab mentioned in the Finance Act MMR is to be calculated & 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 A.Y. For Ex. no surcharge was applicable for A.Y. 2010 11 & 2011-12 to slab of income of individual and AOP. Therefore, the word \"if any\" is relevant. Here the word surchar 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 th 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. 6.6 Thus, the MMR will not be applicable in parts like in one part of highest slab rate for basic tax i.e. 30% is levied & in one part no surcharge is levied. This is highest slab tax rates & 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 appellant in the return of income is not excluded in the proviso to sub section 3 of section 2 of Finance Act. Part applicability of MMR is not permissible i.e. the tax 30% & no surcharge as per schedules of relevant Finance Act on it is not permissible. Appellant has paid basic income tax at be kept in mind. Once the appellant is eligible for MMR surcharge applicable will be surcharge for highest slab only. Surcharge @37% is integral part of MMR and therefore MMR will be 42.74% for A.Y. 2022 23. 7. Therefore, the tax rate maximum marginal rate which also includes surcharge as defined in section 2(29C) of the Act. Therefore, the CPC order u/s 143(1) levying Shailendra Gala Navneet Trust ITA Nos. 4355 & tax Act) apply, the tax chargeable shall be determinedas provided in that Chapter or that section, and with reference to the rates section (1) or the rates as specified in that Chapter or the case may be:\" (Emphasis supplied) Hence it is clear that, where MMR is applicable the rates specified in I of schedule are only relevant to the extent of calculating MMR and MMR will be charged in the applicable cases by virtue of sub f section 2 of Finance Act, 2021. 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 of highest slab as well as surcharge of highest slab mentioned in the Finance Act MMR is to be calculated & charged. The word \"if any\" in the section 2(29C) is relevant if the surcharge to the highest slab of is mentioned in the relevant Finance Act and it will be applicable for a particular A.Y. For Ex. no surcharge was applicable for A.Y. 2010 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 this 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 6.6 Thus, the MMR will not be applicable in parts like in one part of highest slab rate for basic tax i.e. 30% is levied & in one part no surcharge is levied. This is not correct. The MMR always constitutes highest slab tax rates & 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 appellant in the return of ot excluded in the proviso to sub section 3 of section 2 of Finance Act. Part applicability of MMR is not permissible i.e. the tax 30% & no surcharge as per schedules of relevant Finance Act on it is not permissible. Appellant has paid basic income tax at 30% rate requires to be kept in mind. Once the appellant is eligible for MMR surcharge applicable will be surcharge for highest slab only. Surcharge @37% is integral part of MMR and therefore MMR will be 42.74% for A.Y. 2022 7. Therefore, the tax rate charged in the case of the assessee will be maximum marginal rate which also includes surcharge as defined in section 2(29C) of the Act. Therefore, the CPC order u/s 143(1) levying Shailendra Gala Navneet Trust 6 ITA Nos. 4355 & 4354/MUM/2024 tax Act) apply, the tax chargeable shall be determinedas provided in that Chapter or that section, and with reference to the rates section (1) or the rates as specified in that Chapter or Hence it is clear that, where MMR is applicable the rates specified in I of schedule are only relevant to the extent of calculating MMR and MMR will be charged in the applicable cases by virtue of sub-section 3 f section 2 of Finance Act, 2021. 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 After considering both the rates of tax of highest slab as well as surcharge of highest slab mentioned in the Finance Act MMR is to be calculated & charged. The word \"if any\" in the section 2(29C) is relevant if the surcharge to the highest slab of is mentioned in the relevant Finance Act and it will be applicable for a particular A.Y. For Ex. no surcharge was applicable for A.Y. 2010- 12 to slab of income of individual and AOP. Therefore, the ge \"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 en this 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 6.6 Thus, the MMR will not be applicable in parts like in one part of highest slab rate for basic tax i.e. 30% is levied & in one part no not correct. The MMR always constitutes highest slab tax rates & 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 appellant in the return of ot excluded in the proviso to sub section 3 of section 2 of Finance Act. Part applicability of MMR is not permissible i.e. the tax 30% & no surcharge as per schedules of relevant Finance Act on it is not 30% rate requires to be kept in mind. Once the appellant is eligible for MMR surcharge applicable will be surcharge for highest slab only. Surcharge @37% is integral part of MMR and therefore MMR will be 42.74% for A.Y. 2022- charged in the case of the assessee will be maximum marginal rate which also includes surcharge as defined in section 2(29C) of the Act. Therefore, the CPC order u/s 143(1) levying Printed from counselvise.com the surcharge is as per law and is upheld and the appeal of the appellant is dismissed. 5. However, before us, the assessee has relied upon the binding decision of the Special Bench of the Income Tax Appellate Tribunal (ITAT), Mumbai, in taxmann.com 343 (SB)], wherein it was held that although income of a private discretionary trust is taxable at the maximum marginal rate as per Section 164(1), the must still be computed with reference to the sl prescribed in the First Schedule to the relevant Finance Act. The Special Bench authoritatively held that if the total income of the assessee does not exceed even in cases to which MMR applies. undisputed fact that the total income declared by the assessee is ₹8,16,680/-, which is below the threshold limit of prescribed under the Finance Act, 2021 for applicability of surcharge. Respectfully, following the Special Bench in Aaradhya Jain Trust surcharge was leviable on the tax liability of the assessee, and consequently, computation of tax at the effective rate of 42.744% was erroneous and contrary to law. the appeal of the assessee is allowed. 6. Ground No. 3 relates to a computational mismatch between the tax payable and the net amount payable as reflected in the intimation issued under Section 143(1) of the Act. The Ld. Counsel Shailendra Gala Navneet Trust ITA Nos. 4355 & the surcharge is as per law and is upheld and the appeal of the dismissed.” However, before us, the assessee has relied upon the binding decision of the Special Bench of the Income Tax Appellate Tribunal (ITAT), Mumbai, in Aaradhya Jain Trust v. ITO taxmann.com 343 (SB)], wherein it was held that although income of a private discretionary trust is taxable at the maximum marginal rate as per Section 164(1), the surcharge component must still be computed with reference to the sl prescribed in the First Schedule to the relevant Finance Act. The Special Bench authoritatively held that if the total income of the assessee does not exceed ₹50,00,000/-, surcharge is not leviable even in cases to which MMR applies.. In the present case, it is an undisputed fact that the total income declared by the assessee is , which is below the threshold limit of prescribed under the Finance Act, 2021 for applicability of Respectfully, following the ratio laid down by the Aaradhya Jain Trust (supra), we hold that no surcharge was leviable on the tax liability of the assessee, and consequently, computation of tax at the effective rate of 42.744% was erroneous and contrary to law. Accordingly, the ground No. 2 of the appeal of the assessee is allowed. Ground No. 3 relates to a computational mismatch between the tax payable and the net amount payable as reflected in the intimation issued under Section 143(1) of the Act. The Ld. Counsel Shailendra Gala Navneet Trust 7 ITA Nos. 4355 & 4354/MUM/2024 the surcharge is as per law and is upheld and the appeal of the However, before us, the assessee has relied upon the binding decision of the Special Bench of the Income Tax Appellate Tribunal Aaradhya Jain Trust v. ITO [(2025) 173 taxmann.com 343 (SB)], wherein it was held that although income of a private discretionary trust is taxable at the maximum marginal surcharge component of such MMR must still be computed with reference to the slab thresholds prescribed in the First Schedule to the relevant Finance Act. The Special Bench authoritatively held that if the total income of the , surcharge is not leviable present case, it is an undisputed fact that the total income declared by the assessee is , which is below the threshold limit of ₹50,00,000/- prescribed under the Finance Act, 2021 for applicability of io laid down by the (supra), we hold that no surcharge was leviable on the tax liability of the assessee, and consequently, computation of tax at the effective rate of 42.744% ngly, the ground No. 2 of Ground No. 3 relates to a computational mismatch between the tax payable and the net amount payable as reflected in the intimation issued under Section 143(1) of the Act. The Ld. Counsel Printed from counselvise.com for the assessee referred to page 8 of the intimation u/s 143(1) of the Act and drew our attention to Clause 26 of the intimation, which reflected the tax liability as indicated a net demand of difference of ₹17,452/ discrepancy was brought to the notice of the Ld. CIT(A), no adjudication thereon was made. the view that the issue involves factual verification pertai computation and figures in the intimation, which can be appropriately examined only at the level of the Assessing Officer. We, therefore, restore this issue to the file of the Assessing Officer for necessary verification and rectification, if warra accordance with law. is accordingly allowed for statistical purposes. 7. The ground No. 4 being consequential same is not required to be adjudicated and dismissed as infructuous. 8. The grounds for assessment under: Ground No. 1: Validity of the adjustments made in the Intimation u/s 143(1) 1. The learned CIT(A) erred in not quashing the impugned intimation order passed under section 143(1) of the Income opportunity of being heard was provided to the Appellant before levying surcharge and additional interest. Ground No. 2: Incorrect levy of surcharge amounting to Rs.36,911/- despite total income being less than 50 lakhs Shailendra Gala Navneet Trust ITA Nos. 4355 & referred to page 8 of the intimation u/s 143(1) of drew our attention to Clause 26 of the intimation, which reflected the tax liability as ₹1,00,248/-, whereas Clause 27 indicated a net demand of ₹1,17,700/-, resulting in an un 17,452/-. It was submitted that although this discrepancy was brought to the notice of the Ld. CIT(A), no adjudication thereon was made. Upon due consideration, we are of the view that the issue involves factual verification pertai computation and figures in the intimation, which can be appropriately examined only at the level of the Assessing Officer. We, therefore, restore this issue to the file of the Assessing Officer for necessary verification and rectification, if warra accordance with law. The ground No. 3 of the appeal of the assessee is accordingly allowed for statistical purposes. The ground No. 4 being consequential same is not required to be adjudicated and dismissed as infructuous. The grounds for assessment year 2023-24 are reproduced as Ground No. 1: Validity of the adjustments made in the Intimation 1. The learned CIT(A) erred in not quashing the impugned intimation order passed under section 143(1) of the Income Tax Act, 1961 as no opportunity of being heard was provided to the Appellant before levying surcharge and additional interest. Ground No. 2: Incorrect levy of surcharge amounting to despite total income being less than 50 lakhs Shailendra Gala Navneet Trust 8 ITA Nos. 4355 & 4354/MUM/2024 referred to page 8 of the intimation u/s 143(1) of drew our attention to Clause 26 of the intimation, , whereas Clause 27 , resulting in an unexplained . It was submitted that although this discrepancy was brought to the notice of the Ld. CIT(A), no Upon due consideration, we are of the view that the issue involves factual verification pertaining to computation and figures in the intimation, which can be appropriately examined only at the level of the Assessing Officer. We, therefore, restore this issue to the file of the Assessing Officer for necessary verification and rectification, if warranted, in The ground No. 3 of the appeal of the assessee The ground No. 4 being consequential same is not required to 4 are reproduced as Ground No. 1: Validity of the adjustments made in the Intimation 1. The learned CIT(A) erred in not quashing the impugned intimation Tax Act, 1961 as no opportunity of being heard was provided to the Appellant before levying Ground No. 2: Incorrect levy of surcharge amounting to despite total income being less than 50 lakhs Printed from counselvise.com 1. The learned CIT(A) erred in not appreciating that surcharge on tax is not applicable as the total income of the Appellant is below the threshold limit of Rs 50 lakhs. 2. The learned CIT(A) failed to appreciate that the surcharge on tax is applicable only if the total First Schedule to Finance Act, 2021. 3. Your Appellant prays that the surcharge of Rs.36,911/ impugned intimation order is incorrect, bad in law and hence the same may please be deleted. Ground No.3: Incorrect levy of additional interest u/s 234B and 234C aggregating to Rs.3,417/ 1. The learned CIT(A) consequently erred in not deleting the excess interest levied in the intimation order u/s 234B and 234C of Rs.1,512/ and Rs.1,905/-. 2. Your Appellant prays that the excess interest u/s 234B & 234C levied in the intimation order may please 8.1 The grounds raised in year under consideration are identical to the grounds, we have already adjudicated in the appeal of the assessee for assessment same, the relevant grounds for assessment year 2023 decided mutatis mutandis. 9. In the result, the appeal of the assessee in assessment year 2022-23 is partly allowed for statistical purposes whereas appeal for assessment year 2023 Order pronounced in the open Court on Sd/ (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Shailendra Gala Navneet Trust ITA Nos. 4355 & CIT(A) erred in not appreciating that surcharge on tax is not applicable as the total income of the Appellant is below the threshold limit of Rs 50 lakhs. 2. The learned CIT(A) failed to appreciate that the surcharge on tax is applicable only if the total income is above 50 lakhs as outlined in the First Schedule to Finance Act, 2021. 3. Your Appellant prays that the surcharge of Rs.36,911/- levied in the impugned intimation order is incorrect, bad in law and hence the same may please be deleted. 3: Incorrect levy of additional interest u/s 234B and 234C aggregating to Rs.3,417/- 1. The learned CIT(A) consequently erred in not deleting the excess interest levied in the intimation order u/s 234B and 234C of Rs.1,512/ nt prays that the excess interest u/s 234B & 234C levied in the intimation order may please be deleted The grounds raised in year under consideration are identical we have already adjudicated in the appeal of the assessee for assessment year 2022-23 and therefore following the he relevant grounds for assessment year 2023 decided mutatis mutandis. In the result, the appeal of the assessee in assessment year 23 is partly allowed for statistical purposes whereas appeal for assessment year 2023-24 is allowed. nounced in the open Court on 24/07/2025. Sd/- Sd/ (RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Shailendra Gala Navneet Trust 9 ITA Nos. 4355 & 4354/MUM/2024 CIT(A) erred in not appreciating that surcharge on tax is not applicable as the total income of the Appellant is below the 2. The learned CIT(A) failed to appreciate that the surcharge on tax is income is above 50 lakhs as outlined in the levied in the impugned intimation order is incorrect, bad in law and hence the same 3: Incorrect levy of additional interest u/s 234B and 1. The learned CIT(A) consequently erred in not deleting the excess interest levied in the intimation order u/s 234B and 234C of Rs.1,512/- nt prays that the excess interest u/s 234B & 234C The grounds raised in year under consideration are identical we have already adjudicated in the appeal of the d therefore following the he relevant grounds for assessment year 2023-24 are In the result, the appeal of the assessee in assessment year 23 is partly allowed for statistical purposes whereas appeal /07/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Dated: 24/07/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Shailendra Gala Navneet Trust ITA Nos. 4355 & Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Shailendra Gala Navneet Trust 10 ITA Nos. 4355 & 4354/MUM/2024 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "