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Income Tax Appellate Tribunal, B BENCH, MUMBAI
order : 18.01.2023 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Appellant has challenged the order, dated 27.06.2022, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „the CIT(A)‟] for the Assessment Year 2018-19 whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 31.03.2021, passed under Section 143(3) read with Sections 143(3A) & 143(3B) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟).
The Appellant has raised following grounds of appeal: Assessment Year: 2018-19 “(I) DISALLOWANCE OF MAT CREDIT U/S 115JAA OF RS. 30,07,048/-
(1) On the facts & circumstances and in law the learned CIT(A), NFAC, Delhi [referred to as “CIT(A)”] erred in dismissing claim of set-off of MAT credit for A.Y. 2017-18 of Rs. 30,07,048/- without appreciating that the learned Assessing Officer had disallowed the MAT credit without issuing any show-cause notice in this regard, which violated the principles of natural justice. (2) On the facts & circumstances and in law the learned CIT(A) erred in confirming disallowance of MAT Credit by erroneously holding, contrary to the facts, that tax under MAT u/s 115JB of the Act was higher than tax under normal provisions.
(3) On the facts and circumstances and in law and the learned CIT (A) failed to appreciate that the tax under the normal provisions was more than the MAT u/s. 115JB and hence the set-off under the provisions of section 115JAA of the Act ought to have been allowed. (4) On the facts and circumstances and in law, the learned CIT(A) failed to appreciate with reference to the impugned assessment order that the tax under the normal provisions of Rs.3,03,21,333/- was more compared to the tax, including surcharge and education Cess, of Rs.3,03,11,424/- on the Book Profit u/s. 115JB of the Act and hence, Your Appellant was entitled to the set-off of brought forward MAT Credit of Rs.30,07,048/- u/s. 115JAA of the Act. (5) On the facts and circumstances Your Appellant prays that the set-off of brought-forward MAT credit of Rs.30,07,048/- may be allowed under the provisions of section 115JAA of the Act.
(II) DISALLOWANCE OF PF AND ESIC PAYMENTS OF RS.1,51,079/- (1) On the facts and circumstances and in law the learned CIT (A) erred in confirming disallowance of PF & ESI 2 Assessment Year: 2018-19 contribution of Rs.1,51,079/- under the clarificatory amendments made in Finance Act 2021 to section 36(1)(va) and section 43B of the Act disregarding the fact that the PF & ESI contribution was paid well before the due date of filing of return of income for the year under consideration. (2) On the facts and circumstances and in law, the learned CIT (A) ought to have allowed in view of the judgment of the jurisdictional high court of Bombay in case of CIT Vs. Ghatge Patil Transport Ltd. [reported in 368 ITR 749] which held that employess‟s contribution to PF & ESI, if remitted within the due date prescribed u/s 139(1) of the Act for filing the income tax returns, would be allowed as deduction u/s 43B of the Act. (3) On the facts and circumstances, it is prayed that the claim of Your Appellant may be allowed.” The relevant facts, in brief, that assessment was framed on the 3. Appellant vide order dated, 31.03.2021, passed under Section 143(3) read with Section 143(3A) & 143(3B) of the Act. The Assessing Officer reiterated the disallowance of INR 1,51,079/- under Section 36(1)(va) of the Act in respect of employees‟ contribution to Provident Fund (PF) and Employees‟ State Insurance Corporation (ESIC) made in the case of the Appellant while processing return under Section 143(1) of the Act. Further, a disallowance of INR 71,000/- was also made under Section 35(2AB) of the Act. The assessed income of INR 10,10,71,110/- was less than the Book Profits of INR 14,20,29,764/-, the Assessing Officer computed tax liability under Section 115JB of the Act of the Act.
Being aggrieved, the Appellant preferred appeal before the 4. CIT(A) against the Assessment Order, dated 31.03.2021. Before CIT(A) it was contended by the Appellant that the Appellant was entitled to deduction of INR 1,51,079/- being employees 3 Assessment Year: 2018-19 contribution to ESIC/PF in view of the judgment of the Hon‟ble Bombay High Court in the case of CIT vs. Ghadge Patil Transport Ltd. : 368 ITR 749. It was also contended by the Appellant that the Appellant was entitled to claim credit in respect of Minimum Alternative Tax (MAT) of INR 30,07,048/- brought forward to the relevant previous year. Though the CIT(A) partly allowed the appeal, the aforesaid contentions were rejected by the CIT(A) vide order, dated 27.06.2022.
Being still aggrieved, the Appellant is before us against the 5. order dated 27.06.2022 passed by the CIT(A) rejecting the above contentions.
As regards Ground No. (I)(1) to (5), the Ld. Authorised Representative for the Appellant submitted that the Appellant was entitled to claim set off of MAT credit of INR 30,07,048/- carried forward from the Assessment Year 2017-18. Taking us through the computation sheet, he submitted that the authorities below failed to appreciate that tax liability under the normal provisions was more than the MAT under Section 115JB of the Act. Therefore, the Appellant was entitled to claim credit of MAT under Section 115JAA of the Act. Per contra, the Ld. Departmental Representative, relying upon the order passed by the Assessing Officer submitted that the assessed income of INR 10,10,71,110/- was less than Book Profits of INR 14,20,29,764/- computed under Section 115JB of the Act and therefore, the Assessing Officer was correct in assessing tax liability of the Appellant for the Assessment Year 2018-19 under MAT provisions.
We have heard the rival submissions and perused the material on record. On perusal of computation sheets enclosed with the 4 Assessment Year: 2018-19 Assessment Order it is clear that the total tax payable under Section 115JB of the Act was INR 3,03,11,424/- whereas tax under normal provisions was INR 3,03,21,333/-. After inclusion of surcharge of INR 28,49,774/- and education cess of INR 9,95,133/-, the gross tax liability under normal provisions stood at INR 3,41,66,240/-. However, credit under Section 115JAA of tax paid in earlier years was reflected as Nil. The contention of the Appellant is that the MAT credit of INR 30,07,048/- was available, however, the set off of the same has not been allowed by the Assessing Officer. Perusal of Assessment Order shows that the Assessing Officer has concluded that tax under MAT provisions was higher than tax under normal provisions. The aforesaid finding of the Assessing Officer is contrary to the material on record. According to Section 115JB of the Act income tax payable is to be compared with the specified percentage of Book Profits computed under Section 115JB of the Act. In the case before us the Assessing Officer as compared the assessed income with the Book Profits and thereby, arrived at the incorrect conclusion that income tax is payable under MAT provisions contained in Section 115JB of the Act. We hold that in the facts and circumstances of the present case the income tax for the Assessment Year 2018-19 would be payable under normal provisions and therefore, the Appellant would be entitled to claim set-off of the MAT credit as per the provisions of Section 115JAA of the Act. Accordingly, we direct the Assessing Officer to verify the records and re-compute the tax liability of the Appellant after granting the set off of MAT credit as available to the Appellant in terms of Section 115JB of the Act while passing order giving effect to the decision in the present appeal. In terms of the aforesaid directions, Ground No. (I)(1) to (5) is allowed. 5 Assessment Year: 2018-19
As regards Ground No. (II)(1) to (3) pertaining to disallowance of INR 1,51,079/- under Section 36(1)(va) of the Act in respect of employees‟ contribution to PF/ESIC, the Ld. Authorised Representative for the Appellant submitted that he did not wish to press the same. Accordingly, Ground No. (II)(1) to (3) raised by the Appellant are dismissed as not pressed.
In the result, the present appeal by the Assessee is partly allowed.
Order pronounced on 18.01.2023.