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July 26, 2022

Income taxable at normal slab rates for income of estate of deceased assessee

by CA Shivam Jaiswal in Income Tax, Legal Court Judgement

Income taxable at normal slab rates for income of estate of deceased assessee

Facts and Issues of the case

The assessee is an Estate of Late Harkishin Bhojraj Chanrai where Shri Ishwar Thadani and Shri Mansukhram Mahtani are two executors. Return of income was filed at a total income of Rs.12,85,261/- by stating Permanent Account Number of the assessee as an ‘Association of Persons’ i.e. AABAE0681R. As the estate is of the deceased persons, Assessee computed the tax liability of the assessee as per normal tax slab rates. Accordingly, on total income of Rs.12, 88,260/-, assessee computed the tax liability of Rs.2,06,937/-.

The Central Processing Centre, Bangalore (the learned Assessing Officer) assessed the total income of the assessee at returned income, however, tax liability of the Assessee was computed at Maximum Marginal Rate at Rs.4, 01,937/- instead of Rs.2, 06,937/-.

Observations by the Court

The Court has considered rival contentions and perused orders of lower authorities. It is an undisputed fact though the assessee has filed its return of income declaring an income of Rs.1, 288,261/– in the status of association of person of estate of a diseased individual. The tax liability is required to be computed as per the normal tax as applicable to an Association of person. This fact has been agreed by the learned CIT-A also. However, the relief was not granted because assessee could not file reply for the reason that password and login ID of the assessee for disabled. Even otherwise, when the CIT appeal agrees with the contention that the tax should be charged at the normal slab rates, submission of the assessee should not have made any difference. We fully agree with the contention of the learned authorised representative that the income is required to be charged as per the normal slab rates as per  the provisions of Section 168 (1) (b) of the act with respect to the first schedule of The Finance Act 2019. Accordingly, we direct the learned assessing officer to tax the income of the assessee as per normal slab rates and not at maximum marginal rate. Accordingly, the appeals of the assessee are allowed.

Conclusion

The tax liability on income of estate of deceased assessee is not computed on maximum marginal rate. It is taxable at normal slab rates.

Estate-of-Late-Harkishin-Bhojraj-Chanrai-Vs-DCIT-CPC-ITAT-Mumbai

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