Surcharge on income tax applicable only on income exceeding ₹50 Lakhs and not to be considered for MMR if income is below the limit: ITAT Kolkata
In Badamtam Welfare Trust vs DDIT (ITA No. 1919/KOL/2024; Date of Judgement 31/12/2024], Kolkata ITAT has held that surcharge on income tax is applicable only to income exceeding ₹50 lakh and not to be considered for MMR if income is below the limit.
Let us have a Short Overview of the case:
Badamtam Welfare Trust was registered in Kolkata to provide financial support for medical expenses, education, training, and charitable donations.
It was assessed as an AOP and was not registered under sect 12A/12AA of the Act. For AY 2023-2024, the Trust filed its income tax return declaring an income of ₹1,27,100.
While the AO accepted the declared income, an error was made in calculating the tax liability, which was increased to ₹56,171 by incorrectly adding a surcharge of ₹14,108 and additional cess of ₹565. The CIT(A) dismissed the appeal.
The assessee argued before the Tribunal that the surcharge was not applicable since the income was ₹1,27,095, well below the ₹50 lakh threshold for an AOP. It was also stated that the surcharge applies only to non-residents, specified funds, and FIIs, which did not include the assessee.
For AY 2022-23, a similar surcharge was deleted by the CIT(A). Citing it, the assessee requested deletion of surcharge and correct calculation of tax liability.
The Tribunal noted that the income declared in the return was ₹1,27,095. The dispute centered on the levy of surcharge and interest under section 234F. The Additional/Joint Commissioner of Income Tax (A)[Addl./JCIT(Appeals)] had argued that the tax should be calculated using the maximum marginal rate, which includes a surcharge as per section 2(29C) of the Act.
The tribunal explained that the surcharge applies only to income exceeding Rs. 50 lakhs, as outlined in the Finance Bill, 2022. Since the declared income in this case was far below that threshold, the surcharge was not applicable. It concluded that income tax shall be charged at maximum marginal rate in terms of S.164.
For levying the surcharge, it is necessary that the slab of income, which is chargeable to tax is exceeding ₹.50 lakhs and above.
ITAT concluded that the AO’s decision to impose surcharge was incorrect and directed the AO not to levy any surcharge on the income tax.
The Copy Of the order is as under:
