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Income Tax Appellate Tribunal, “G”
Before: SHRI PAWAN SINGH, JM & SHRI S. RIFAUR RAHMAN, AM
आदेश / O R D E R Per S. Rifaur Rahman, Accountant Member: The present Appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals) - 22 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 27.09.18 for
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Assessment Year (in short AY) 2016-17 on the ground that computation of tax u/s 115JB and not granting MAT credit u/s 115JAA including surcharge and cess as claimed by the assessee.
The brief facts of the case are that the assessee filed its return of income on 26/08/2017 against the intimation dated 28.07.17 was passed u/s 143(1) of the Act by CPC, Bangalore. In intimation u/s 143(1), the department has not granted MAT credit u/s 115JAA to the extent of Rs. 1,28,21,526/- claimed by the assessee and the CPC has allowed only to the extent of Rs. 1,11,14,361/-.
Aggrieved by the above order, assessee preferred appeal before Ld. CIT(A) and made before him the following submissions:-
"The Appellant filed its Return of Income for Assessment Year 2011-2012, determining its tax liability as per the provisions of Section 115JB amounting to Rs.59,87,222/- against NIL normal income. For Assessment Year 2012-2013 the Appellant paid tax under MAT of Rs.3,08,91,337/- against NIL normal income, thereby having total MAT credit
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entitlement to the tune of Rs.3,68,78,559/-. The Appellant submits that scrutiny assessments had taken place for both Assessment Year i.e. Assessment Years 2011-12 and 2012-13, wherein the income of the Appellant was assessed under section 143(3) under MAT, and accordingly tax was computed as per the provision of Section 115JB. Under the provisions of Chapter XII-B, the Appellant was entitled to carry forward MAT credit under section 115JAA.
For the current Assessment Year, the Appellant computed its tax liability as per regular provisions of Income tax to the tune of Rs.4,49,51,633/-, Further, the tax liability computed by the Appellant as per the provisions of Section 115JB were Rs.3,11,30,107/-. Since the tax liability computed as per regular provisions was higher as compared to MAT, the Appellant was entitled to claim and set off MA T credit of earlier years as per the provisions of Section 115JAA. The total MAT credit entitlement available to the appellant is Rs.3,68,78,559/- (Rs.59,87,222/- for Assessment Year 2011-12 and Rs.3,08,91,337/- for Assessment Year 2012-13. However, the Appellant was entitled to set-off only Rs. 1,28,21,526/- under section 115JAA, being the difference of the tax liability
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computed as per regular provisions and as per Section 115JB,
Further, in no intervening Assessment Year, has the Appellant set off the abovementioned MAT credit.
The Appellant disclosed its MAT credit entitlement in Form ITR-6. CPC Bangalore granted completed MAT credit for Assessment Year 2011-12. But, for Assessment Year 2012-13, CPC, Bangalore short granted MAT credit of Rs.17,07,165/- even though the same was available to the Appellant and disclosed in Form ITR-6, It is, therefore, submitted that there was no reason for CPC, Bangalore to deny MAT Credit pertaining to Assessment Year 2012-13. The Appellant submits that the Assessing Officer be directed to grant the said MAT Credit of Rs.17,07,165/- out of the total MAT credit of Rs.3,08,91,337/- and reduce the tax payable to Rs.3,11,30,107/- and oblige."
After considering the submission of assessee, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:-
4.3 I have considered the matter. Sub-section (5) of section 115JAA provides that set off in respect of brought forward tax credit shall be allowed for any
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assessment year to the extent of the difference between the tax on the total income and the tax which would have been payable under the provisions of sub-section (1) of section 115JA [or section 115JB, as the case may be] for that assessment year. Perusal of the intimation sheet u/s 143(1) shows that the tax payable on total income excluding surcharge and cess is Rs. 3,80,99,544/- and the tax payable u/s 115JB is Rs.2,69.85.183/-. The appellant is, therefore, eligible for set off of brought forward MAT credit of Rs. 1,11,14,361/-. This amount has been correctly granted by CPC while processing the return u/s 143(1) of the Act. The appellant's grounds of appeal are accordingly dismissed.
Aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us.
Before us, Ld. AR of the assessee submitted that whether the MAT credit available to the assesse in this assessment year inclusive of surcharge. He brought to our notice calculation of MAT credit availed by the assessee which is at page no. 3 of the paper book. Further he brought to our notice intimation u/s 143(1) of the Act, which is placed at page no. 11 of the paper
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book and he brought to our notice the calculation adopted by the department which exclude the surcharge while giving MAT credit. He further submitted that in ITR-6 submitted by the assessee as per the MAT calculation in part-B are automatic and no manual entry is allowed for assessee to make any adjustment. He brought to our notice page no. 34-35 of the paper book, in which the MAT computation was computed in ITR-6 and MAT credit which is auto calculation. It clearly indicates that the method adopted in ITR-6 by the department are different than the calculation adopted by the CPC. In this regard, he relied upon the following case laws:-
Decision of Allahabad High Court CIT v/s Vacment India (369 ITR 304)
Decision of Mumbai Tribunal in Wyeth Limited v/s ACIT (ITA No. 6682 / Mum / 2011) dated 09th January, 2015
Decision of Mumbai Tribunal in DCIT v/s Godrej Oil Palm Limited (ITA No. 5098/Mum/2013) dated 14th January, 2015
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Decision of Hyderabad Tribunal in Virtusa India Private Limited v/s. DCIT - 157 ITD1160(Hyd.)
Decision of Chennai Tribunal in DCIT v/s Indian Syntans Investment Corporate Private Limited (ITA No. 13/Mds./2017) dated 01st May, 2017
Decision of Pune Tribunal in Dar Al-Handasah Consultants v/s ACIT (ITA No. 151 / PN / 2015) dated 30th November, 2016
From the above, he heavily relied on the decision of Hon’ble Allahabad High Court and Coordinated bench of ITAT Hyderabad and submitted that the surcharge should be included or excluded before calculating the tax liability. He further submitted that the tax liability will remain the same in both the above proposition.
On the other hand, Ld. DR relied on the findings of Ld. CIT(A) in para no. 4.3 of the order and also relied upon the orders passed by the revenue authorities.
Considered the rival contentions and the material placed on record, we notice from the record that the Coordinate Bench of ITAT, Hyderabad has decided the similar issue in the case of
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Virtusa (India) Pvt. Ltd. vrs. DCIT (ITA No. 146 of 2015), which is reproduced below:-
Considered the submissions of both the counsels and material facts on the record. The provisions of section 115JB in brief are: every assessment year, two parallel computations are contemplated. One computation of total income in accordance with the normal provisions of the I.T. Act and another is the computation of book profit as stipulated u/s 115JB. If the income tax payable on the total income is less than 18.5% of the book profit computed u/s 115JB, then the book profit so computed shall be deemed to be the total income, then the book profit so computed shall be deemed to be the total income and the company shall pay tax @ 18.5% thereon. The amount so paid as the MAT shall be available to the credit of the company to be set off as contemplated u/s 115JAA within a period of 10 AYs. Surcharge at 5% shall be levied if book profit exceeds 1 crore. Education cess @ 3% shall be added on the aggregate of income tax and surcharge. At the same time, section 115JAA provides that where any amount of tax is paid under section 115JB(l) by a company for any assessment year, credit in
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respect of the taxes so paid for such assessment year shall be allowed on the difference of the tax paid under section 115JB and the amount of tax 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.
9.1 The amount of tax credit so determined shall be allowed to be carried forward and set off in a year when the tax becomes payable on the total income computed under the regular provisions. However, no carry forward shall be allowed beyond the tenth assessment year immediately succeeding the assessment year in which the tax credit becomes allowable. The set off in respect of the brought forward tax credit shall be allowed for any assessment year to the extent of the difference between the tax on the total income and the tax which would have been payable under section 115JB for that assessment year.
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9.2 In other words, MAT credit will be allowed only in that previous year in which tax payable on the total income as per normal provisions of the income tax Act is more than tax payable under section 115JB and it shall be allowed to the extent of the following:
Tax payable on total income under the normal provisions of the Act – tax payable under section 115JB = MAT credit to be allowed.
9.3 On careful reading, the sub-section 2A, the tax credit to be allowed shall be the difference of tax paid for any AY under sub-section (1) of 115JB and the amount of tax payable on his total income computed in accordance with the other provisions of this Act. The important word used is tax paid and as per the Hon’ble Apex Court decision in the case of K. Srinivasan (supra), the term ‘tax’ includes surcharge.
9.4 It is also important to evaluate sub-section (5) of section 115JAA. “Set off” in respect of brought forward tax credit shall be allowed for any AY to the extent of difference between tax on his total income and the tax which would have been
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payable u/s 115JB, as the case may be for that AY. On careful reading, the term used are tax not income tax or any other term. Needless to say the term tax includes surcharge.
9.5 The sub-section (5) of section 115JAA are applied as it is in the ITR ‘6’. The ITR-6 form is designed and approved by the apex body CBDT and this form is universally used by all the company assessees. In Part A of the ITR-6, the assessees are required to fill the balance sheet and P&L A/c. From the data of Part A, all the related calculations are carried out in other parts of the ITR-6 i.e. Part – B and other related schedules. None of the columns in the Part ‘B’ are manually entered, these are auto fills, and the datas are extracted from Part “A”. It is pertinent to analyse the total tax liability calculations designed by the CBDT for the AY 2012-13. They are as below:
Part B - TTI Computation of tax liability on total income COMPUTATION Tax Payable on deemed total Income under section 115JB (7 of LIABILITY 1 1a Schedule MAT) 1a 0 OF TAX 0 1b Surcharge on (a) above 1b 1c Education Cess on (1a+1b) above 1c 0 1d Total Tax Payable u/s 115JB (1a+1b+1c)MAT) 1d 0 2 Tax payable on total income
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0 a Tax at normal rates 2a b Tax at special rates (11 of Schedule-SI) 2b 0 c Tax Payable on Total Income (2a + 2b) 2c 0 3 Surcharge on 2c 3 0 0 4 Education Cess, including secondary and higher education cess on (2c + 3) 4 5 Gross tax liability (2c+3+4) 5 0 6 Gross tax payable (higher of 5 and 1d) 6 0 Credit under section 115JAA of tax paid in earlier years (if 5 is more than 1d) 7 ( 5 of Schedule MATC) 7 0 8 Tax payable after credit under section 115JAA [ (6 – 7)] 8 0 9 Tax relief a Section 90/90A(1B1 of Schedule TR) 9a 0 b Section 91(1B2 of Schedule TR) 9b 0 c Total (9a + 9b) 9c 0 0 10 Net tax liability (8 – 9c) 10 11 Interest payable For default in furnishing the return (section a 234A) 11a 0 For default in payment of advance tax b (section 234B) 11b 0 c For deferment of advance tax (section 234C) 11c 0 d Total Interest Payable (11a+11b+11c) 11d 0 0 12 Aggregate liability (10 + 11d) 12 13 Taxes Paid a Advance Tax (from Schedule-IT) 13a 0 TAXES PAID b TDS (column 7 of Schedule-TDS) 13b 0 c TCS (column 5 of Schedule-TCS) 13c 0 d Self Assessment Tax (from Schedule-IT) 13d 0 e Total Taxes Paid (13a+13b+13c + 13d) 13e 0 0 14 Amount payable (Enter if 12 is greater than 13e, else enter 0) 14 Refund (If 13e is greater than 12, also give the bank account details in 15 Schedule-BA) 15 0
9.6 The tax liabilities for normal provisions as well as MAT are calculated with surcharge and cess. The MAT credit in row “7” are calculated automatically using the prescribed algorithm, this is nothing but balancing figure i.e., the difference between tax liability as per normal provisions and MAT provisions. Both the
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above tax liabilities are calculated with surcharge and cess. These are the standard format, which are expected to be followed by all the assessees and also important to note that the above format of ITR 6 was amended w.e.f. AY 2012-13 by CBDT. Moreover, this is more relevant for the department also. These formats are regulated by CBDT. Assessing Officer cannot overlook these formats and (interpret it in his own method of calculating tax credit while making assessment u/s 143(1) of the Act.) proceed to calculate the MAT credit to compute assessment u/s 143(1) applying different methods when the proper and correct method as proposed by CBDT in ITR-6. The Assessing Officer is expected to follow the ITR-6 format to complete the assessment u/s 143(1) or 143(3) of the Act.
9.5 Let us also analyse the case law of Richa Global Exports Pvt. Ltd. which was applied by CIT(A), the Delhi ITAT opined that section 115JAA 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
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(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.
9.6 The earlier judgments in the cases of Universal Medicare, Valmet India and Wyeth Limited are decided relying on the ITR – 6 as applicable in those AYs. Similarly, we also apply the ITR 6 format as applicable to AY 2012-13 as stated above. Assessee has relied on the ITR – 6 format to arrive at the total liability as well as the MAT credit calculations and paid tax accordingly. In our view, the assessee had followed the procedure properly and the Assessing Officer had made the calculations applying his own interpretation or relied on the
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programme, we are not sure whether it is programme hitch or the interpretation of Assessing Officer was not in line with the calculations proposed in ITR-6. Therefore, we delete the addition made.
Therefore, respectfully following the aforesaid decision which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, we allow the grounds raised by the assessee.
In the net result the appeal filed by the assessee is allowed.
Order pronounced in the open court on 5th Feb 2020. Sd/- Sd/- (Pawan Singh) (S. Rifaur Rahman) न्याययकसदस्य / Judicial Member लेखासदस्य / Accountant Member मुंबई Mumbai;यदनांक Dated : 05.02.2020 Sr.PS. Dhananjay
आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant प्रत्यथी/ The Respondent 2. 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned यवभागीयप्रयतयनयि, आयकरअपीलीयअयिकरण, मुंबई/ DR, ITAT, 5.
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Mumbai 6. गार्डफाईल / Guard File आदेशधिुसधर/ BY ORDER, .उि/सहधयकिंजीकधर (Dy./Asstt.Registrar) आयकरअिीिीयअनर्करण, मुंबई/ ITAT, Mumbai