THE EXECUTOR OF SOBHAGMAL M PATNI (DECEASED ),MUMBAI V. INCOME TAX OFFICER , WARD 30(1)(1), MUMBAI

ITA 2774/MUM/2025

AI Insights

The case revolves around the dispute concerning the applicable surcharge rate on the income of the estate of the deceased Mr. Sobhagmal Patni for the assessment year 2021-22. The estate, represented by its executor, contested the surcharge applied by the Central Processing Centre (CPC) under section 143(1) of the Income Tax Act, which was at the maximum marginal rate of 37%. The executor argued that the surcharge should be 10% as the total income was between Rs. 50 lakhs and Rs. 1 crore, based on the Finance Act's slab rates. The Commissioner of Income Tax (Appeals) upheld the CPC's decision, leading to the appeal before the Income Tax Appellate Tribunal. The Tribunal, referencing the decision in Araadhya Jain Trust, ruled in favor of the assessee, stating that the surcharge should be applied according to the slab rates and not the MMR.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706163 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2021-2022
• Other Referred Cases: Trust v. ITO (ITA no. 4272/Mum/2024), Araadhya Jain Trust, Anant Bajaj Trust, Kapur Family Trust
• Laws Referred To: Income Tax Act, Finance Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: VINIT SHAH
• Keywords: Rectification of order; Source of fund; Maximum Marginal Rate
• Section: 115JB

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 2774/MUM/2025 Assessment Year: 2021-22 The Executor of Sobhagmal M Patni Deceased 42A, Jolly Maker Apartment-I, Cuffe Parade, Colaba, S.O. Mumbai-400005 Vs. Income-tax Officer, Ward 30(1)(1), Kautilya Bhavan, Mumbai-400051. PAN NO. AAAAE 6964 C Appellant Respondent Assessee by : Mr. Vinit Shah Revenue by : Mr. Hemanshu Joshi, Sr. DR Date of Hearing : 25/06/2025 Date of pronouncement : 30/06/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 25.03.2025 passed by the Ld. Commissioner of Income- tax(Appeals)-National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2021-22, raising following grounds: In the fact and the circumstances of the case, and in law, the learned Addi/Joint Commissioner of Income-tax (Appeals) -(A)1 Kolkata, erred in confirming the variation in the intimation u/s 143(1) made by CPC in respect of the rate of surcharge and erred: 1. In confirming that the since the appellant is liable to pay tax at maximum marginal rate, the applicable rate of surcharge is 37% viz. the maximum rate of surcharge and hence the maximum marginal rate in this case is 42.74%. 2. In not appreciating that 54,99,430/- viz. more than Rs. fifty lakhs but less than Rs. one crore, the applicable rate of surcharge ought to be 10 per cent as per clause (a) in Paragraph A of Part I to the First Schedule of the relevant Finance Act. 3. In concluding that a) The MMR always constitutes highest slab tax rates & highest slab surcharge, if any, prescribed in Finance Act b) Part applicability of MMR is not permissible c) Once the appellant is subject to MMR, surcharge surcharge for highest 2. Briefly stated the facts of the case are that the appellant is Estate of the deceased Mr. Sobhagmal Patni and is the legal representative of the deceased assessee. The appellant filed the return of income for A.Y. 2021 54,99,430/- and calculated tax 12,19,419/- on such total income at the normal rate of tax. However, the CPC while processing the return u/s. 143(1) of the Act has calculated the tax and surcharge on such total income at Maximum Marginal Rate (M surcharge) was worked out to Rs. 15,18,733/ 3. Aggrieved by this adjustment made by the CPC, the assessee challenged it before the CIT(A) who The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 confirming the variation in the intimation u/s 143(1) made by CPC in respect of the rate of surcharge and erred: 1. In confirming that the since the appellant is liable to pay tax at maximum marginal rate, the applicable rate of surcharge is 37% viz. the maximum rate of surcharge and hence the maximum marginal rate in this case is 42.74%. 2. In not appreciating that since the total income of the appellant is Rs. viz. more than Rs. fifty lakhs but less than Rs. one crore, the applicable rate of surcharge ought to be 10 per cent as per clause (a) in Paragraph A of Part I to the First Schedule of the Finance Act. 3. In concluding that a) The MMR always constitutes highest slab tax rates & highest slab surcharge, if any, prescribed in Finance Act Part applicability of MMR is not permissible c) Once the appellant is subject to MMR, surcharge applicable will be surcharge for highest slab only Briefly stated the facts of the case are that the appellant is Estate of the deceased Mr. Sobhagmal Patni and is the legal representative of the deceased assessee. The appellant filed the ncome for A.Y. 2021-22 declaring total income of Rs. and calculated tax (including surcharge) on such total income at the normal rate of tax. However, the CPC while processing the return u/s. 143(1) of the Act the tax and surcharge on such total income at aximum Marginal Rate (MMR) whereby the tax payable was worked out to Rs. 15,18,733/-. Aggrieved by this adjustment made by the CPC, the assessee challenged it before the CIT(A) who held that once the appellant is The Executor of Sobhagmal M Patni 2 ITA No. 2774/MUM/2025 confirming the variation in the intimation u/s 143(1) made by CPC in 1. In confirming that the since the appellant is liable to pay tax at maximum marginal rate, the applicable rate of surcharge is 37% viz. the maximum rate of surcharge and hence the maximum marginal rate in since the total income of the appellant is Rs. viz. more than Rs. fifty lakhs but less than Rs. one crore, as per clause (a) in Paragraph A of Part I to the First Schedule of the a) The MMR always constitutes highest slab tax rates & highest slab applicable will be Briefly stated the facts of the case are that the appellant is an Estate of the deceased Mr. Sobhagmal Patni and is the legal representative of the deceased assessee. The appellant filed the 22 declaring total income of Rs. (including surcharge) of Rs. on such total income at the normal rate of tax. However, the CPC while processing the return u/s. 143(1) of the Act the tax and surcharge on such total income at whereby the tax payable (including Aggrieved by this adjustment made by the CPC, the assessee d that once the appellant is subject to MMR, the levy of surcharge @37% for which the assessee is in appeal before us. The relevant extract of the CIT(A)’s order is as under: “F 7] The submission of the appellant that MMR is f and not surcharge, is not correct. The MMR for this A.Y. 2021 is 42.74%. The rates of taxation provided in the first schedule part-l of Finance Act, 2020 are applicable to the appellant only to the extent of rates of highest slab of tax and the MMR is applicable to the appellant. There is no dispute on it. Here it is necessary to refer the Finance Act, 2020, chapter which determines/specifies the rates of income tax to be applicable. The section 2 starts with non subject to provision of sub Therefore, where sub specified in Part MMR purpose. The relevant part of sub Finance Act is as under: \"In cases to which the provisions of Chapter XII or Chapter XII or section 115JB XII-FB or sub- 164A or section 167 (hereinafter referred to as the Income chargeable shall be determined as provided in that Chapter or that section, and with reference to the rates imposed by sub section (1) or the rates as the case may be:\" (Emphasis supplied) Hence it is clear that, where MMR is applicable the rates specified in part calculating MMR and MMR will be charged in the cases by virtue of sub 2020. The rate of section 2(29C) of IT Act r.w.s. 164 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 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 to slab of income of individual and AOP. Therefore, the word \"if The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 the levy of surcharge is to be at the @37% for which the assessee is in appeal before us. The relevant extract of the CIT(A)’s order is as under:- F 7] The submission of the appellant that MMR is for Tax only and not surcharge, is not correct. The MMR for this A.Y. 2021 is 42.74%. The rates of taxation provided in the first schedule l of Finance Act, 2020 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, 2020, chapter 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 A.Y. 2021 Therefore, where sub-section 2 & 3 are applicable, the rates specified in Part-l of 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 or section 115JB or section 115JC or Chapter XII-FA or Chapter -section (1A) 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 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-l of schedule are only relevant to the extent of calculating MMR and MMR will be charged in the cases by virtue of sub-section 3 of section 2 of Finance Act, rate of MMR has to be calculated as per the provisions of section 2(29C) of IT Act r.w.s. 164 of the IT Act. The Finance Act of every year is only relevant to know the st 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 harge 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 to slab of income of individual and AOP. Therefore, the word \"if The Executor of Sobhagmal M Patni 3 ITA No. 2774/MUM/2025 the highest slab @37% for which the assessee is in appeal before us. The relevant F 7] The submission of the appellant that MMR is for Tax only and not surcharge, is not correct. The MMR for this A.Y. 2021-22 is 42.74%. The rates of taxation provided in the first schedule- l of Finance Act, 2020 are applicable to the appellant only to 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, 2020, chapter-Il, which determines/specifies the rates of income tax to be stante words such as section 2 & 3 for A.Y. 2021-22. section 2 & 3 are applicable, the rates l of first schedule required to be adopted for f section 2 of \"In cases to which the provisions of Chapter XII or Chapter XII-A FA or Chapter section (1A) of section 161 or section 164 or section tax Act, 1961 (43 of 1961) tax Act) apply, the tax chargeable shall be determined as provided in that Chapter or that section, and with reference to the rates imposed by sub- specified in that Chapter or section, as Hence it is clear that, where MMR is applicable the rates l of schedule are only relevant to the extent of calculating MMR and MMR will be charged in the applicable section 3 of section 2 of Finance Act, MMR has to be calculated as per the provisions IT Act. The Finance Act of every year is only relevant to know the st 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 harge to the highest slab of income is mentioned in the relevant Finance Act and it will be applicable for a particular A.Y. 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 mention in the schedule of Finance Act. If surcharge of highest slab 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 c suggest to include surcharge in MMR as per different slab rates of income/different income like dividend income. Rates mentioned in para are not applicable to the Act charging the tax at MMR are applicable to the appellant. Nature of income is not relevant as appellant is liable for taxation at MMR calculated as per provisions of section 2(29C) of IT Act. The provision clai case of this Appellant. Therefore, it is crystal clear that MMR is required to be computed as under on the basis of provisions of section 2(29C) of IT Act: Tax rates for highest slab Surcharge for h Education Cess Therefore MMR for this A.Y.2023 The MMR is also calculated by this method only in the commentary of Sampath mentioned are as under: (Here Surcharge is not Income - hence 20% of tax => Assessment year 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 \" 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 mention in the schedule of Finance Act. If surcharge of highest slab 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 rates of income/different income like dividend income. Rates mentioned in para -A, part-I, 1st schedule for dividend income are not applicable to the appellant. Provisions of section 164 of IT Act charging the tax at MMR are applicable to the appellant. Nature of income is not relevant as appellant is liable for taxation at MMR calculated as per provisions of section 2(29C) of IT Act. The provision claimed is applicable for Fils only and not in the case of this Appellant. Therefore, it is crystal clear that MMR is required to be computed as under on the basis of provisions of section 2(29C) of IT Act: Tax rates for highest slab - 30% - 30 Surcharge for highest slab -37% - 11.11 Education Cess -4% -1.63 Therefore MMR for this A.Y.2023-24 will be 42.74%. The MMR is also calculated by this method only in the commentary of Sampath lyengar. The year wise details mentioned are as under: (Here Surcharge is not on Tax but on hence 20% of tax => 12% of Income) Assessment year Maximum rate of tax Surcharge 60% 12% 60% 6% 60% 6% 60% 6% 60% 7% 55% 6.88% 50% nil 50% nil 50% 5% The Executor of Sobhagmal M Patni 4 ITA No. 2774/MUM/2025 \" 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 mention 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 alculating the MMR. This word does not remotely suggest to include surcharge in MMR as per different slab rates of income/different income like dividend income. Rates I, 1st schedule for dividend income appellant. Provisions of section 164 of IT Act charging the tax at MMR are applicable to the appellant. Nature of income is not relevant as appellant is liable for taxation at MMR calculated as per provisions of section 2(29C) of IT Act. med is applicable for Fils only and not in the Therefore, it is crystal clear that MMR is required to be computed as under on the basis of provisions of section 2(29C) of IT Act: The MMR is also calculated by this method only in the lyengar. The year wise details on Tax but on Surcharge 12% 6.88% Assessment year 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Extracts of commentary on Income 30.3 It was felt that the provisions of section 164, even after amendment in 1970, had not been fully effective in curbing the use of private trusts for avoiding proper tax liability. The Finance (No. 2) Act, 1980, has, therefore, made the followi to section 164 with a view to curbing tax avoidance through the medium of such trusts: (i) A discretionary trust will be liable to tax at the maximum marginal rate of income the entire income of a dis the maximum marginal rate of income applicable to the Finance Act of the relevant year to the highest slab of income in the case of an association of persons. Thus, for the assessment year The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 Assessment year Maximum rate of tax Surcharge 50% 5% 50% 8% 50% 12% 50% 12% 40% 12% 40% 12.00% 40% nil 40% nil 40% nil 30% -- 30% -- 30% 10% 30% 17% 30% 2% 30% 5% 30% 10% 30% 10% 30% 10% 30% 10% 30% 10% 30% 10% 30% -- 30% -- Extracts of commentary on Income-tax by Sampath Iyengar: 30.3 It was felt that the provisions of section 164, even after amendment in 1970, had not been fully effective in curbing the use of private trusts for avoiding proper tax liability. The Finance (No. 2) Act, 1980, has, therefore, made the following amendments to section 164 with a view to curbing tax avoidance through the medium of such trusts: A discretionary trust will be liable to tax at the maximum marginal rate of income-tax on their entire income. As a result, the entire income of a discretionary trust will be liable to tax at the maximum marginal rate of income-tax including surcharge) applicable to the Finance Act of the relevant year to the highest slab of income in the case of an association of persons. Thus, for the assessment year 1980-81, the entire income of a The Executor of Sobhagmal M Patni 5 ITA No. 2774/MUM/2025 Surcharge 12.00% Iyengar: 30.3 It was felt that the provisions of section 164, even after amendment in 1970, had not been fully effective in curbing the use of private trusts for avoiding proper tax liability. The Finance ng amendments to section 164 with a view to curbing tax avoidance through the A discretionary trust will be liable to tax at the maximum tax on their entire income. As a result, cretionary trust will be liable to tax at tax including surcharge) applicable to the Finance Act of the relevant year to the highest slab of income in the case of an association of persons. Thus, for 81, the entire income of a discretionary trust will be charged to tax at the rate of 72 per cent (income-tax 60 per cent plus surcharge 12 per cent) and for the assessment year 1981 tax 60 per cent plus surcharge For example surcharge for highest slab is 20% for A.Y. 1980 and highest slab tax rate of calculated as under: Tax rates for highest slab 60% Surcharge for highest slab Therefore MMR for this Similarly the MMR for 1981 Tax rates for highest slab Surcharge for highest slab PARTMEN Y Therefore MMR for this A.Y. 1981 In the book of Vinod Singhania also calculation which also supports the AO will have to be Here, there is no mention of any head or sources of Income. Moreover, the MMR of highest slab rate fo surcharge is levied at a particular rate of 15% of LTCG. This is not correct. The MMR always constitutes highest slab tax rates & highest slab surcharge if any prescribed in Finance Act. There is no doubt in it. tax 30% & surcharge @15% as per schedules of relevant Finance The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 discretionary trust will be charged to tax at the rate of 72 per tax 60 per cent plus surcharge 12 per cent) and for the assessment year 1981-82, at the rate of 66 per cent (income tax 60 per cent plus surcharge 6 per cent). For example surcharge for highest slab is 20% for A.Y. 1980 and highest slab tax rate of IT was 60%, then the MMR will be calculated as under: Tax rates for highest slab 60% - 60 Surcharge for highest slab - 20% - 12 Therefore MMR for this A.Y. 1980-81 will be 72%. Similarly the MMR for 1981-82 will be as under: Tax rates for highest slab - 60% - 60 Surcharge for highest slab - 10% - 6 Therefore MMR for this A.Y. 1981-82 will be 66%. In the book of Vinod Singhania also calculation the MMR is given which also supports the AO CPC's reason that surcharge @ 37% be charged. Here, there is no mention of any head or sources of Income. Moreover, 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 surcharge is levied at a particular rate of 15% of LTCG. This is not correct. The MMR always constitutes highest slab tax rates & highest slab surcharge if any prescribed in Finance Act. There is no doubt in it. Part applicability of MMR is not permissible i.e. the tax 30% & surcharge @15% as per schedules of relevant Finance The Executor of Sobhagmal M Patni 6 ITA No. 2774/MUM/2025 discretionary trust will be charged to tax at the rate of 72 per tax 60 per cent plus surcharge 12 per cent) and for 82, at the rate of 66 per cent (income- For example surcharge for highest slab is 20% for A.Y. 1980-81 IT was 60%, then the MMR will be the MMR is given CPC's reason that surcharge @ 37% Here, there is no mention of any head or sources of Income. will not be applicable in parts like in one part r basic tax i.e. 30% is levied & in one part surcharge is levied at a particular rate of 15% of LTCG. This is not correct. The MMR always constitutes highest slab tax rates & highest slab surcharge if any prescribed in Finance Act. There is Part applicability of MMR is not permissible i.e. the tax 30% & surcharge @15% as per schedules of relevant Finance Act on it is not permissible. Once the appellant is subject to 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. 2021 this ground of Appeal. The Appellant has informed that by an Order u/s 154, the CPC has reduced the S C on STCG & LTCG from 37% to 15% and t Surcharge charged u/s 143(1)(a) of Rs 1,62,265/ reduced to Rs 1,06,593/ reduced from Rs 3,72,430/ 154 dated 09/06/2023, without any Reason. Hence, the Ground No.2 is DISMISSED. Ho have no effect on the Rectification Order passed by the CPC on 09/06/2023 after filing of this Appeal 4. We have carefully perused the orders passed by the lower authorities, material on record and the arguments made appellant and revenue. The total income of Rs. 54,99,340/ by the assessee comprises of STCG, LTCG and other income and there is no dispute on the applicability of Maximum Marginal Rate on the tax payable. The only issue is whether surcharge on payable should be @37% and therefore the MMR should be 42.74% or not. The appellant argues that since the total income of the appellant is Rs. 54,99,430/ than Rs. 1 crore, the applicable surcharge ought to be clause (a) in Paragraph A of Part I to the First Schedule of the relevant Finance Act. Hon’ble Special Bench of this Tribunal in the case of Trust v. ITO (ITA no. 4272/Mum/2024) the ultimate analysis, in case of Private Discretionary Trusts, whose income is chargeable to tax at MMR, surcharge has to be computed The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 Act on it is not permissible. Once the appellant is subject to MMR, surcharge applicable will be surcharge for highest slab only. @37% is integral part of MMR and therefore MMR will be 42.74% for A.Y. 2021-22. Hence, there is no ground to allow this ground of Appeal. The Appellant has informed that by an Order u/s 154, the CPC has reduced the S C on STCG & LTCG from 37% to 15% and t Surcharge charged u/s 143(1)(a) of Rs 1,62,265/ reduced to Rs 1,06,593/-. The Disputed Demand has been reduced from Rs 3,72,430/- u/s 143(1)(a) to Rs 73,908/ 154 dated 09/06/2023, without any Reason. Hence, the Ground No.2 is DISMISSED. However, this order will have no effect on the Rectification Order passed by the CPC on 09/06/2023 after filing of this Appeal on 13/12/2022. We have carefully perused the orders passed by the lower authorities, material on record and the arguments made appellant and revenue. The total income of Rs. 54,99,340/ by the assessee comprises of STCG, LTCG and other income and there is no dispute on the applicability of Maximum Marginal Rate on the tax payable. The only issue is whether surcharge on payable should be @37% and therefore the MMR should be 42.74% or not. The appellant argues that since the total income of the appellant is Rs. 54,99,430/- viz. more than Rs. 50 lakhs but less than Rs. 1 crore, the applicable surcharge ought to be clause (a) in Paragraph A of Part I to the First Schedule of the relevant Finance Act. This issue has been recently addressed by the Hon’ble Special Bench of this Tribunal in the case of Trust v. ITO (ITA no. 4272/Mum/2024) wherein it is held that in the ultimate analysis, in case of Private Discretionary Trusts, whose income is chargeable to tax at MMR, surcharge has to be computed The Executor of Sobhagmal M Patni 7 ITA No. 2774/MUM/2025 Act on it is not permissible. Once the appellant is subject to MMR, surcharge applicable will be surcharge for highest slab only. @37% is integral part of MMR and therefore MMR will 22. Hence, there is no ground to allow The Appellant has informed that by an Order u/s 154, the CPC has reduced the S C on STCG & LTCG from 37% to 15% and the Surcharge charged u/s 143(1)(a) of Rs 1,62,265/-has been . The Disputed Demand has been u/s 143(1)(a) to Rs 73,908/- u/s wever, this order will have no effect on the Rectification Order passed by the CPC on 13/12/2022.” We have carefully perused the orders passed by the lower authorities, material on record and the arguments made by appellant and revenue. The total income of Rs. 54,99,340/- offered by the assessee comprises of STCG, LTCG and other income and there is no dispute on the applicability of Maximum Marginal Rate on the tax payable. The only issue is whether surcharge on such tax payable should be @37% and therefore the MMR should be 42.74% or not. The appellant argues that since the total income of the viz. more than Rs. 50 lakhs but less than Rs. 1 crore, the applicable surcharge ought to be 10% as per clause (a) in Paragraph A of Part I to the First Schedule of the This issue has been recently addressed by the Hon’ble Special Bench of this Tribunal in the case of Araadhya Jain wherein it is held that in the ultimate analysis, in case of Private Discretionary Trusts, whose income is chargeable to tax at MMR, surcharge has to be computed on the income tax having reference to the slab rates prescribed in the Finance Act under the h appearing in Paragraph A, Part 1, First Schedule, applicable to the relevant assessment year. The relevant portion of this decision is reproduced as under: “26. On going through Paragraph A, Part (I) of First Schedule to the Finance Act-2023, it becomes very much clear that under Item (1), the rates of income tax applicable to individuals, Hindu undivided family or association of persons or body of individuals hav provided. As could be seen from the rates of income income brackets, if the total income does not exceed Rs.2,50,000/ the rate of income tax is Nil. If the total income exceeds Rs.2,50,000/-, but does not exceed Rs.5,00,000/ tax is 5% of the amount by which the total income exceeds Rs.2,50,000/-. Where the total income exceeds Rs.5,00,000/ des not exceed Rs.10,00,000/ plus 20% of the amount by which the total income e Rs.5,00,000/- Rs.10,00,000/- amount by which the total income exceeds Rs.10,00,000/ per the rates of income tax prescribed in Item (1), the h income is Rs.10 lacs and above and the applicable rate of income tax is 30%. Thus, in terms with section 2(29C) of the Act, the maximum marginal rate of tax will be 30% as applicable to the highest slab of income. 27. The expression 'slab' section 2 or even under Paragraph A, Part (I) of First Schedule to the Finance Act-2023. However, as per the materials placed before us, it is observed that in Press Note dated 01.12.1965 issued by Government of India, copy of which is placed at pg. no. 45 of the Paper Book, submitted in case of NIK Family Trust, the expression 'slab' refers to 'income' and not the tax. In fact, even section 2(29C) of the Act refers to highest slab of income. Even Circular No. 2 (F.No. 370142/15/2017 Provisions of Finance Act, 2017, a copy of which is placed at pg. no. 47 of the Paper Book filed by the NIK Family Trust, refers the expression 'slab' to the various categories of income. Thu with sections 164/167B r.w.s. 2(29C) of the Act, tax as per maximum marginal rate would mean 'the rate of tax applicable to the highest slab of income' under Item (1) of Paragraph A, Part (I) of First Schedule to the Finance Act 28. Under the head 'Surcharge on income Paragraph A, Part (1), First Schedule it has been provided that the amount of income The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 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. The relevant portion of this decision is reproduced as under:- On going through Paragraph A, Part (I) of First Schedule to the 2023, it becomes very much clear that under Item (1), the rates of income tax applicable to individuals, Hindu undivided family or association of persons or body of individuals hav provided. As could be seen from the rates of income-tax for different income brackets, if the total income does not exceed Rs.2,50,000/ the rate of income tax is Nil. If the total income exceeds , but does not exceed Rs.5,00,000/-, the rate of income tax is 5% of the amount by which the total income exceeds . Where the total income exceeds Rs.5,00,000/ des not exceed Rs.10,00,000/-, the rate of income tax is Rs.12,500 plus 20% of the amount by which the total income e and lastly, where the total income exceeds -, then the rate of tax is Rs.1,12,500/-plus 30% of the amount by which the total income exceeds Rs.10,00,000/-. Thus, as per the rates of income tax prescribed in Item (1), the highest slab of income is Rs.10 lacs and above and the applicable rate of income tax is 30%. Thus, in terms with section 2(29C) of the Act, the maximum marginal rate of tax will be 30% as applicable to the highest slab of 27. The expression 'slab' is not mentioned either in sub-section (1) of section 2 or even under Paragraph A, Part (I) of First Schedule to the 2023. However, as per the materials placed before us, it is observed that in Press Note dated 01.12.1965 issued by f India, copy of which is placed at pg. no. 45 of the Paper Book, submitted in case of NIK Family Trust, the expression 'slab' refers to 'income' and not the tax. In fact, even section 2(29C) of the Act refers to highest slab of income. Even Circular No. 2 (F.No. 370142/15/2017-TPL] containing Explanatory Notes to Provisions of Finance Act, 2017, a copy of which is placed at pg. no. 47 of the Paper Book filed by the NIK Family Trust, refers the expression 'slab' to the various categories of income. Thus, in terms with sections 164/167B r.w.s. 2(29C) of the Act, tax as per maximum marginal rate would mean 'the rate of tax applicable to the highest slab of income' under Item (1) of Paragraph A, Part (I) of First Schedule to the Finance Act-2023. r the head 'Surcharge on income-tax' appearing in Paragraph A, Part (1), First Schedule it has been provided that the amount of income-tax computed as per the rate of income-tax under The Executor of Sobhagmal M Patni 8 ITA No. 2774/MUM/2025 on the income tax having reference to the slab rates prescribed in eading ‘surcharge on income tax’ appearing in Paragraph A, Part 1, First Schedule, applicable to the relevant assessment year. The relevant portion of this decision is On going through Paragraph A, Part (I) of First Schedule to the 2023, it becomes very much clear that under Item (1), the rates of income tax applicable to individuals, Hindu undivided family or association of persons or body of individuals have been tax for different income brackets, if the total income does not exceed Rs.2,50,000/-, the rate of income tax is Nil. If the total income exceeds e rate of income tax is 5% of the amount by which the total income exceeds . Where the total income exceeds Rs.5,00,000/- but , the rate of income tax is Rs.12,500 plus 20% of the amount by which the total income exceeds and lastly, where the total income exceeds plus 30% of the . Thus, as ighest slab of income is Rs.10 lacs and above and the applicable rate of income tax is 30%. Thus, in terms with section 2(29C) of the Act, the maximum marginal rate of tax will be 30% as applicable to the highest slab of section (1) of section 2 or even under Paragraph A, Part (I) of First Schedule to the 2023. However, as per the materials placed before us, it is observed that in Press Note dated 01.12.1965 issued by f India, copy of which is placed at pg. no. 45 of the Paper Book, submitted in case of NIK Family Trust, the expression 'slab' refers to 'income' and not the tax. In fact, even section 2(29C) of the Act refers to highest slab of income. Even Circular No. 2/2018 TPL] containing Explanatory Notes to Provisions of Finance Act, 2017, a copy of which is placed at pg. no. 47 of the Paper Book filed by the NIK Family Trust, refers the s, in terms with sections 164/167B r.w.s. 2(29C) of the Act, tax as per maximum marginal rate would mean 'the rate of tax applicable to the highest slab of income' under Item (1) of Paragraph A, Part (I) of First tax' appearing in Paragraph A, Part (1), First Schedule it has been provided that the tax under Item (1), (2) and (3) or under the provisions of section 111A or section 112 or section 112A or the provision of section 115BAC of the Income Tax Act, shall be increased by a surcharge, for the purposes of the Union, calculated in the case of particular class of assessees in the manner provided therein. As could be seen from i provided under the head 'Surcharge on income different rates of surcharge on income tax, depending upon the categories of income. The rate of surcharge starts from minimum of 10% to the maximum of 37% on income surcharge at 37% on income having total income, exceeding Rs.5 crores. It further emanates that the minimum rate of surcharge @ 10% on the incometax is applicable only when the income of the assessee is a than Rs.1 crore. Thus, as per Paragraph A, Part (I) of First Schedule to the Finance Act surcharge is when total income is Rs.50 lacs and above. In other words, if the total income is there would be no surcharge. Even the first proviso under the heading 'Surcharge on incometax' carves out an exception regarding the rate of surcharge by stating that in case where assessee's total income includes section 111A, 112A and section 112A of the Act, the rate of surcharge on the amount of incometax computed on that part of income shall not exceed 15%. In other words, if the total income of an assessee includes any income by way of dividend or income under certain provisions of the Act, the rate of surcharge on tax computed on such part of income under no circumstances would exceed 15%. 29. If we accept the contention of the Revenue that, irrespective of the nature or quantum of income, as per the definition of maximum marginal rate u/s.2(29C) of the Act, surcharge has to be computed at the highest rate of 37% applicable to the highest income bracket of Rs.5 crores and above, then the exception provided unde proviso under the heading 'Surcharge on income otiose. Even, the different rates of surcharge on income under clause (a) to (e) applicable to the different slabs of income would become meaningless so far as discre concerned. In our view, such an interpretation would lead to absurdity, hence, is unworkable. In our view, once the definition of 'maximum marginal rate' refers to the rate of income surcharge provided under the Finance Act of th the rates of incometax and applicable rate of surcharge as provided under Paragraph A, Part (I) of First Schedule to the Finance Act would apply. Any other interpretation, in our view, would lead to undesirable consequences and the expression 'including Surcharge on income bracketed portion of section 2(29C) of the Act, would mean the surcharge as provided in the computation mechanism under the heading 'surcharge on i (I) of First Schedule to the Finance Act The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 Item (1), (2) and (3) or under the provisions of section 111A or section 112 or section 112A or the provision of section 115BAC of the Income Tax Act, shall be increased by a surcharge, for the purposes of the Union, calculated in the case of particular class of assessees in the manner provided therein. As could be seen from items (a) to (e), provided under the head 'Surcharge on income-tax', there are different rates of surcharge on income tax, depending upon the categories of income. The rate of surcharge starts from minimum of 10% to the maximum of 37% on income-tax. The maximum rate of surcharge at 37% on income-tax is applicable in case of assessees having total income, exceeding Rs.5 crores. It further emanates that the minimum rate of surcharge @ 10% on the incometax is applicable only when the income of the assessee is above Rs.50 lacs, but less than Rs.1 crore. Thus, as per Paragraph A, Part (I) of First Schedule to the Finance Act-2023, the threshold limit for applicability of surcharge is when total income is Rs.50 lacs and above. In other words, if the total income is below the threshold limit of Rs.50 lacs, there would be no surcharge. Even the first proviso under the heading 'Surcharge on incometax' carves out an exception regarding the rate of surcharge by stating that in case where assessee's total income includes dividend income or income under the provisions of section 111A, 112A and section 112A of the Act, the rate of surcharge on the amount of incometax computed on that part of income shall not exceed 15%. In other words, if the total income of an udes any income by way of dividend or income under certain provisions of the Act, the rate of surcharge on tax computed on such part of income under no circumstances would exceed 15%. 29. If we accept the contention of the Revenue that, irrespective of e nature or quantum of income, as per the definition of maximum marginal rate u/s.2(29C) of the Act, surcharge has to be computed at the highest rate of 37% applicable to the highest income bracket of Rs.5 crores and above, then the exception provided under the first proviso under the heading 'Surcharge on income-tax' would become otiose. Even, the different rates of surcharge on income-tax provided under clause (a) to (e) applicable to the different slabs of income would become meaningless so far as discretionary trusts are concerned. In our view, such an interpretation would lead to absurdity, hence, is unworkable. In our view, once the definition of 'maximum marginal rate' refers to the rate of income surcharge provided under the Finance Act of the relevant year, then the rates of incometax and applicable rate of surcharge as provided under Paragraph A, Part (I) of First Schedule to the Finance Act would apply. Any other interpretation, in our view, would lead to undesirable consequences and would be discriminatory. In our view, the expression 'including Surcharge on income-tax, if any', within the bracketed portion of section 2(29C) of the Act, would mean the surcharge as provided in the computation mechanism under the heading 'surcharge on income tax' finding place in Paragraph A, Part (I) of First Schedule to the Finance Act-2023. The Executor of Sobhagmal M Patni 9 ITA No. 2774/MUM/2025 Item (1), (2) and (3) or under the provisions of section 111A or section 112 or section 112A or the provision of section 115BAC of the Income Tax Act, shall be increased by a surcharge, for the purposes of the Union, calculated in the case of particular class of assessees in the tems (a) to (e), tax', there are different rates of surcharge on income tax, depending upon the categories of income. The rate of surcharge starts from minimum of imum rate of tax is applicable in case of assessees having total income, exceeding Rs.5 crores. It further emanates that the minimum rate of surcharge @ 10% on the incometax is applicable bove Rs.50 lacs, but less than Rs.1 crore. Thus, as per Paragraph A, Part (I) of First Schedule 2023, the threshold limit for applicability of surcharge is when total income is Rs.50 lacs and above. In other below the threshold limit of Rs.50 lacs, there would be no surcharge. Even the first proviso under the heading 'Surcharge on incometax' carves out an exception regarding the rate of surcharge by stating that in case where assessee's total dividend income or income under the provisions of section 111A, 112A and section 112A of the Act, the rate of surcharge on the amount of incometax computed on that part of income shall not exceed 15%. In other words, if the total income of an udes any income by way of dividend or income under certain provisions of the Act, the rate of surcharge on tax computed on such part of income under no circumstances would exceed 15%. 29. If we accept the contention of the Revenue that, irrespective of e nature or quantum of income, as per the definition of maximum marginal rate u/s.2(29C) of the Act, surcharge has to be computed at the highest rate of 37% applicable to the highest income bracket of r the first tax' would become tax provided under clause (a) to (e) applicable to the different slabs of income tionary trusts are concerned. In our view, such an interpretation would lead to absurdity, hence, is unworkable. In our view, once the definition of 'maximum marginal rate' refers to the rate of income-tax and e relevant year, then the rates of incometax and applicable rate of surcharge as provided under Paragraph A, Part (I) of First Schedule to the Finance Act-2023, would apply. Any other interpretation, in our view, would lead to would be discriminatory. In our view, tax, if any', within the bracketed portion of section 2(29C) of the Act, would mean the surcharge as provided in the computation mechanism under the ncome tax' finding place in Paragraph A, Part 30. The Revenue has taken a line of argument that the words 'if any' succeeding the words 'including surcharge on income tax' appearing in the definition of maxim only for the purpose that when levy of surcharge is specifically provided under the Finance Act of the relevant year, it would be included in income Though, at first blush this argument of the department sounds attractive, however, on deeper analysis it is found to be superfluous, for the following reasons. As discussed earlier, Article 271 of the Constitution of India, empowers the Union to impose surcharge for the purposes of Union. Whereas, Article 265 of the Constitution of India mandates that no tax can be collected without authority of law. Therefore, levy of surcharge has to be preceded by a law enacted by the parliament authorizing such levy. Thus, in absenc authorising levy of surcharge, it cannot be collected. This legal position is as clear as daylight, hence, does not require further clarification with the use of words 'if any' to mean whether the Finance Act of a particular year, if at all, p surcharge or not. Though, in our view, there is no conflict between provisions contained u/s. 164/167B, 2(29C) of the Income Tax Act and section 2 of the Finance Act, however, even assuming that there are some conflicts, a harmonious co avoid absurdity and make the provisions workable. Thus, in our view, the expression 'if any' used in section 2(29C) has to be read not de hors but in conjunction with the computation mechanism provided under the heading 'surcha Finance Act. This view of ours is further fortified by the object for which levy of surcharge was introduced to the Finance Act augment the Revenue of the Union for developmental work by asking persons in the highest income bracket to contribute little more than the other citizens, for nation building. 31. As we find, the Revenue has placed strong reliance upon the decision of the coordinate bench in case of Araadhya Jain Trust (supra) and couple of other de Pertinently, the decision rendered in case of Anant Bajaj Trust (supra) was subsequently recalled. Whereas, the bench has followed the decision of Anant Bajaj Trust (supra) while deciding the appeal of Kapur Family Trust of Kapur Family Trust (supra) has lost its relevance. Insofar as the decision of the co (supra) is concerned, in our view, the bench has drawing its conclusion, primarily relying upon certain decisions of Hon'ble Kerala High Court and Hon'ble High Court of Bombay. As discussed elsewhere in the order. 32. However, upon carefully going through these decisions, we are of the considered view that the issue aris 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 The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 30. The Revenue has taken a line of argument that the words 'if any' succeeding the words 'including surcharge on income tax' appearing in the definition of maximum marginal rate u/s. 2(29C) of the Act are only for the purpose that when levy of surcharge is specifically provided under the Finance Act of the relevant year, it would be included in income-tax computed at the highest rate, otherwise, not. rst blush this argument of the department sounds attractive, however, on deeper analysis it is found to be superfluous, for the following reasons. As discussed earlier, Article 271 of the Constitution of India, empowers the Union to impose surcharge for e purposes of Union. Whereas, Article 265 of the Constitution of India mandates that no tax can be collected without authority of law. Therefore, levy of surcharge has to be preceded by a law enacted by the parliament authorizing such levy. Thus, in absence of any law authorising levy of surcharge, it cannot be collected. This legal position is as clear as daylight, hence, does not require further clarification with the use of words 'if any' to mean whether the Finance Act of a particular year, if at all, provides for levy of surcharge or not. Though, in our view, there is no conflict between provisions contained u/s. 164/167B, 2(29C) of the Income Tax Act and section 2 of the Finance Act, however, even assuming that there are some conflicts, a harmonious construction has to be made to avoid absurdity and make the provisions workable. Thus, in our view, the expression 'if any' used in section 2(29C) has to be read not de hors but in conjunction with the computation mechanism provided under the heading 'surcharge on income tax' provided in section 2 of Finance Act. This view of ours is further fortified by the object for which levy of surcharge was introduced to the Finance Act augment the Revenue of the Union for developmental work by asking e highest income bracket to contribute little more than the other citizens, for nation building. 31. As we find, the Revenue has placed strong reliance upon the decision of the coordinate bench in case of Araadhya Jain Trust (supra) and couple of other decisions, which are on similar line. Pertinently, the decision rendered in case of Anant Bajaj Trust (supra) was subsequently recalled. Whereas, the bench has followed the decision of Anant Bajaj Trust (supra) while deciding the appeal of Kapur Family Trust (supra). Therefore, the decision rendered in case of Kapur Family Trust (supra) has lost its relevance. Insofar as the decision of the co-ordinate bench in the case of Araadhya Jain Trust (supra) is concerned, in our view, the bench has drawing its sion, primarily relying upon certain decisions of Hon'ble Kerala High Court and Hon'ble High Court of Bombay. As discussed elsewhere in the order. 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 The Executor of Sobhagmal M Patni 10 ITA No. 2774/MUM/2025 30. The Revenue has taken a line of argument that the words 'if any' succeeding the words 'including surcharge on income tax' appearing um marginal rate u/s. 2(29C) of the Act are only for the purpose that when levy of surcharge is specifically provided under the Finance Act of the relevant year, it would be tax computed at the highest rate, otherwise, not. rst blush this argument of the department sounds attractive, however, on deeper analysis it is found to be superfluous, for the following reasons. As discussed earlier, Article 271 of the Constitution of India, empowers the Union to impose surcharge for e purposes of Union. Whereas, Article 265 of the Constitution of India mandates that no tax can be collected without authority of law. Therefore, levy of surcharge has to be preceded by a law enacted by e of any law authorising levy of surcharge, it cannot be collected. This legal position is as clear as daylight, hence, does not require further clarification with the use of words 'if any' to mean whether the rovides for levy of surcharge or not. Though, in our view, there is no conflict between provisions contained u/s. 164/167B, 2(29C) of the Income Tax Act and section 2 of the Finance Act, however, even assuming that there nstruction has to be made to avoid absurdity and make the provisions workable. Thus, in our view, the expression 'if any' used in section 2(29C) has to be read not de hors but in conjunction with the computation mechanism provided rge on income tax' provided in section 2 of Finance Act. This view of ours is further fortified by the object for which levy of surcharge was introduced to the Finance Act - to augment the Revenue of the Union for developmental work by asking e highest income bracket to contribute little more than 31. As we find, the Revenue has placed strong reliance upon the decision of the coordinate bench in case of Araadhya Jain Trust cisions, which are on similar line. Pertinently, the decision rendered in case of Anant Bajaj Trust (supra) was subsequently recalled. Whereas, the bench has followed the decision of Anant Bajaj Trust (supra) while deciding the appeal of (supra). Therefore, the decision rendered in case of Kapur Family Trust (supra) has lost its relevance. Insofar as the ordinate bench in the case of Araadhya Jain Trust (supra) is concerned, in our view, the bench has drawing its sion, primarily relying upon certain decisions of Hon'ble Kerala High Court and Hon'ble High Court of Bombay. As discussed 32. However, upon carefully going through these decisions, we are of ing 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 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 coordinate benches in decisions referred to in Paragraph 10(supra) lay down the correct propos 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 income tax' appearing in Paragraph A, Part 1, First Schedule, applicable to the relevant assessment year. Hence, reference is decided in favour of the assessee. The records may be returned back to the respective 4.1 Respectfully following the decision of the Hon’ble Special Bench, we are inclined to hold that the surcharge in the present case ought to have been levied based on the slab rates and not on the MMR. The ground of appeal of the assessee are accordingly allowed. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on Sd/- (SANDEEP GOSAIN JUDICIAL MEMBER Mumbai; Dated: 30/06/2025 Dragon Legal/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// The Executor of Sobhagmal M Patni ITA No. 2774/MUM/2025 tax at maximum marginal rate' was never the issue before the Hon'ble Courts. Thus, in our view, the view expressed by the coordinate 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. Hence, reference is decided in favour of the assessee. The records may be returned back to the respective benches for deciding the appeals accordingly. Respectfully following the decision of the Hon’ble Special Bench, we are inclined to hold that the surcharge in the present case ought to have been levied based on the slab rates and not on round of appeal of the assessee are accordingly In the result, the appeal filed by the assessee is allowed. nounced in the open Court on 30/06/2025. Sd/ (SANDEEP GOSAIN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai The Executor of Sobhagmal M Patni 11 ITA No. 2774/MUM/2025 tax at maximum marginal rate' was never the issue before the Hon'ble Courts. Thus, in our view, the view expressed by the coordinate benches in decisions referred to in Paragraph 10(supra) ition 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 Finance Act under the heading 'surcharge on income tax' appearing in Paragraph A, Part 1, First Schedule, applicable to the relevant assessment year. Hence, reference is decided in favour of the assessee. The records may be returned back benches for deciding the appeals accordingly.” Respectfully following the decision of the Hon’ble Special Bench, we are inclined to hold that the surcharge in the present case ought to have been levied based on the slab rates and not on round of appeal of the assessee are accordingly In the result, the appeal filed by the assessee is allowed. /06/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "