ACIT, CC-3(1), CHENNAI vs. M/S. BGR ENERGY SYSTEM LTD., CHENNAI

The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law.

Whether on the facts and in the circumstances of the case, the Id. CIT(A) was correct in holding that surcharge and education cess are to be included in MAT Credit u/s 115JAA of the Act? 3. Reliance is placed on the decision of the Hon'ble Tribunal of Delhi Bench in the case of M/s Richa Global Exports (P) Ltd vs ACIT CPC (25 Taxmann.com 1 (Del)). 2. Having heard rival submissions as well after going through various judicial pronouncements as placed before us, our adjudication would be as under.

The material on record would show that in an intimation issued to the assessee u/s. 143(1) of the Act on 05.08.2016, MAT credit claimed by the assessee u/s 115JAA for Rs.1,74,73,31,726/- was restricted to Rs.1,54,22,16,881/-. The said difference of Rs.20,51,14,845/- arose in view of the fact that credit for education cess and surcharge was excluded from MAT credit. Aggrieved, the assessee preferred appeal before Ld. CIT(A). 4. The Ld. CIT(A), after considering the ratio of various decisions including decision of Hon’ble Apex Court in CIT V/s K. Srinivasan (1972 83 ITR 346) wherein it was held that the term ‘tax’ would include surcharge, special surcharge and additional surcharge, decided the issue in assessee’s favor. The ratio of decision of Hon’ble Calcutta High Court in Srei Infrastructure Finance Ltd V/s DCIT (395 ITR 291) and various other decisions of various benches of Tribunal was also considered while deciding the issue. Aggrieved, the revenue is in further appeal before us. 5. We find that besides various judicial decisions as relied upon by Ld. CIT(A) while adjudicating the appeal, this issue is now settled in assessee’s favor by Hon’ble High Court of Madras in the case of Pr.CIT V/s Scope International Pvt. Ltd (TCA No. 369 of 2019 dated 19.06.2019) wherein Hon’ble Court, referring to the decision of the Hon'ble Supreme Court in the case of K. Srinivasan (supra), held as under: - 14. In our considered opinion, the decision of the Hon’ble Supreme Court in the case of K.Srinivasan will apply with full force to the assessee's case. Furthermore, if we refer to the circular of the Central Board of Direct Taxes in Circular No.3 of 2018 dated 11.7.2018, which fixed the monetary limit for filing appeals by the Department before the Tribunals, High Courts and Supreme Court, one gets a fair idea as to what was the understanding of the term 'tax' by the Board. If we have a look at paragraph 4 of the said circular, the Board states that for the purposes of the said Circular, tax effect shall be tax including applicable surcharge and cess.

Though the case on hand is not hit by the monetary limit according to Mr. T.R.Senthilkumar, learned Senior Standing Counsel, yet, on a perusal of the said circular, it is evidently clear that consistently, the understanding of the Board was that tax includes applicable surcharge and cess.

For the above reasons, we are of the view that the Revenue has not made out any case to interfere with the order passed by the Tribunal. As pointed out earlier, in the assessee's own case, for the assessment year 2012-13, relief has been granted to the assessee and there is nothing on record to show that the said order is either reversed or reopened. Hence, the substantial questions of law raised are answered against the Revenue.