SAYAJI INDUSTRIES LTD.,,AHMEDABAD vs. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1),, AHMEDABAD

The solitary ground of the appeal of the assessee is directed against the decision of ld. CIT(A) in confirming the allowance of MAT credit u/s. Page No. 2 Sayaji Industries Ltd. vs. Dy. CIT 115JAA (2A) exclusive on surcharge and education cess, resulting in short credit of Rs. 1,90,167/-

Against the order u/s. 143(1), the assessee has filed appeal before the ld. CIT(A) stating that it has claimed MAT credit of Rs. 16,20,001/- u/s. 115JAA of the Act in the return of income. However, while processing the retune of income u/s. 143(1) the MAT credit of only Rs. 14,29,834/- was allowed. The Assessing Officer in its appeal before the ld. CIT(A) has mentioned that the Assessing Officer in the intimation u/s. 143(1) of the Act has allowed MAT credit excluding surcharge and education cess thereby it has been granted short credit by Rs. 1,90,167/-. The ld. CIT(A) has dismissed the appeal of the assessee after referring judgment of Delhi ITAT in the case of Richa Global Exports Pvt. Ltd. vs. ACIT (2012) 54 SOT 185/225 taxmann.com 01 (Del).

During the course of appellate proceedings[ before us the ld. counsel has placed reliance on the decision of Hon’ble Supreme Court in the CIT vs. Shrinivasan 83 ITR 346 stating that the term tax include surcharge. The ld. counsel has also placed reliance on the decision of Hyderabad ITAT in the case of Virtusa (India) (P.) Ltd. 67 taxmann.com 65 contending that the decision of Richa Global rendered in 2010-11 was distinguished in this case and held that MAT credit should be computed inclusive of surcharge and Page No. 3 Sayaji Industries Ltd. vs. Dy. CIT cess in view of ITR 6 format. The ld. counsel has also submitted that format of assessment year 2012-13 was amended by CBDT and as per the amended format book profit including surcharge and education cess is automatically picked up by the utility from schedule part B-TTI. On the other hand the ld. Departmental Representative has supported the order of lower authority.

Heard both the sides and perused the material on record. In the return of income the assessee has claimed MAT credit of Rs. 16,20,001/- u/s. 115JAA of the Act. The return of income filed was processed by CPC and as per the intimation u/s. 143(1) of the Act the assessee has been given credit of only Rs. 14,29,834/- excluding of surcharge and education cess resulting in short credit of Rs. 1,90,167/- while allowing MAT credit u/s. 115JAA(2A) of the Act. In the earlier years, the assessee has paid tax on book profit u/s. 115JB of the Act and section 115JAA of the act provides that where any amount of tax is paid u/s. 115JB(1) by assessee for any assessment year, credit in respect of the taxes so paid shall be allowed on the difference of the tax paid u/s. 115JB and the amount of tax payable by the assessee company on its total income computed in accordance with the provision of act. The assessee has referred the case of CIT Vs. K. Srinivisan 83 ITR 346 (SC) wherein Hon’ble Supreme Court held that the term ‘tax’ includes surcharge. The Co-ordinate Bench of the ITAT Hyderabad in the case of Virtusa (India) (P.) Ltd. vs. Dy. CIT Cir-17(2) Hyderabad (2016) 67 taxmann.com 65 (Hyderabad-Trib) held that the section 115JAA provides that where any amount of tax is paid u/s. 115JB(1) by a company for any assessment year credit in respect of the taxes so paid for such assessment Page No. 4 Sayaji Industries Ltd. vs. Dy. CIT year shall be allowed on the difference of the taxes paid u/s. 115JB and the amount of taxe payable by the company on its total income computed in accordance with the other provisions of the Act. In other words, MAT credit shall be computed as under:- MAT credit available = Tax Paid u/s 115JB- Tax Payable on the total income under normal provisions of the act. In this case, the ITAT Hyderabad has also distinguished the decision of ITAT Delhi in the case of Richa Global (P) Ltd. vs. ACIT (2012) 54 SOT 185/25 taxmann.com at the Delhi. The relevant part of the decision is reproduced as under:- “9.6A Let us also analyse the case law of Richa Global Exports (P.) Ltd. Asstt. CIT [2012]. 54...SOT 185/25 taxmann. com l (Delhi) which was applied by CIT{A), the Delhi ITAT opined that section 115JA.A applied only to income tax, not of income tax as increased by surcharge and education cess. We are of the view that the Apex court decision in the case of K. Srinivasan (supra) may not have been brought to the knowledge of the ITAT, -Delhi. Moreover, the Explanation 2 of section 115JB is applicable to calculate tax liability u/s 115JB and the same Explanation should also be applied for giving credit u/s 115JAA. The tax liabilities calculated u/s 115JB by applying the explanation 2, the tax liability so computed are remitted by the assessee and then the same was carried forward for future MAT credit. In our view, while calculating the MAT credit u/s 115JAA, the same Explanation '2' in section 115JB must be applied.” We have also gone through the decision of ITAT in the case of Consolidated Securities Pvt. Ltd. Vs. ACIT (2018) 98 taxmann.com 418 (Del) wherein it is held MAT tax credit available from earlier years, inclusive of surcharge and education cess etc is to be reduced from amount of tax determined on total income of current year after added surcharge and education cess. In the case of Nice Bombay Transport Pvt. Ltd. Vs. ACIT (2019) 103 taxmann.com 338 (Del-Tri) has held that MAT credit inclusive of surcharge and education cess to be allowed as tax credit. The relevant part of the decision is reproduced as under:- “18. Now coming to [he disallowance of the MAT credit in respect of surcharge and cess to tune of Rs. 1089399/-, Assessee placed reliance of the Tribunal's decision reported in the case of Consolidated Securities Ltd v. Asstt. C1T [2018J 96 taxmann,comA18/l72 ITD 163 (Delhi - Trib.)

We, therefore, hold that the amount of the MAT tax credit, 'inclusive of surcharge and education cess etc., if any, should be reduced from the amount of tax determined on the total income after adding surcharge and education cess, etc. Only the resultant amount payable will suffer interest under the relevant provisions of the Act. Since the amount of MAT tax credit is uncertain, we set aside the impugned order and remit the matter to the file of the Ld. AO for ascertaining the correct amount of MAT tax credit available with the assessee inclusive of surcharge and education cess . . . if any, and then allow tax credit as indicated above. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in this regard." The aforesaid decision is applicable to the facts of the present case on all fours and by respectfully following the same, we set aside the impugned order and remit the matter to the file of the Ld. AO for ascertaining the correct amount of MAT tax credit available to the assessee including of surcharge/cess and then allow tax credit as indicated in the decision of the Consolidated Securities Ltd. (supra). In the result, the appeal filed by the Assessee stands partly allowed for statistical purposes.”

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 13-05-2021 Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT ACCOUNTANT MEMBER Ahmedabad : Dated 13/05/2021 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,