Normal Income Tax Slab Rates applicable to Estate of Deceased Assessee: ITAT [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that normal income tax slab rates apply to the estate of a deceased assessee.

The assessee is an Estate of Late Harkishin Bhojraj Chanrai. As the estate is of the deceased persons, the assessee computed the tax liability as per normal tax slab rates. Accordingly, on a total income of ₹12,88,260/-, the assessee computed the tax liability of ₹2,06,937/-. The Assessing Officer assessed the tax liability at a Maximum Marginal Rate of ₹4,01,937/- instead of ₹2,06,937/-.

On appeal, the CIT (A) confirmed the taxation of income of the assessee at the maximum marginal rate alleging that the assessee did not respond to the request to show the documents by which executors of the estate were appointed. The aggrieved assessee filed an appeal before the ITAT.

The counsel for the appellant submitted that Mr. Ishwar Thadani and Mr. Mansukh Ram mahtani are the executors of the estate of Late Mr. Harkishin Bhojraj Chanrai and the AOP was formed on 4th November 2016. The appellant’s counsel further submitted that as there are two executors under provisions of Section 168(1) (b) of the Act, the income has to be charged to tax as per normal slab rates applicable to an Individual assessee as per Para A of Part I of The First Schedule of The Finance Act 2019.

The Coram of Mr. Prashant Maharishi, AM, and Ms. Kavitha Rajagopal, JM has observed that the assessee has filed its return of income declaring an income of ₹ 1,288,261/– in the status of association of person (AOP) of the estate of a deceased individual. The tax liability is required to be computed as per the normal tax as applicable to an Association of Person as per paragraph A of part I of the first schedule of the finance act, 2019.

The Tribunal has held that “we direct the assessing officer to tax the income of the assessee as per normal slab rates and not at a maximum marginal rate”.

Ms. Rajni Ram and Mr. Himanshu Sharma appeared on behalf of the appellant and the respondent respectively.

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