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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI P.M. JAGTAP, V.P & SHRI S. S. GODARA, JM
BEFORE SHRI P.M. JAGTAP, V.P & SHRI S. S. GODARA, JM आयकर अपीलसं./ ("नधा"रण वष" / Assessment Year: 2013-14) Wires & Fabricks (SA) Ltd. Vs. DCIT, Circle-3(1), Kolkata. 7, Chittaranjan Avenue, Laha Paint House, Kolkata – 700072. "थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAACW2586L (Appellant) .. (Respondent) Appellant by : Shri Rip Das, FCA Respondent by : Smt. Ranu Biswas, Sr. DR सुनवाई क" तार"ख/ Date of Hearing : 10/12/2019 घोषणा क" तार"ख/Date of Pronouncement : 31/12/2019 आदेश / O R D E R Per Shri S. S. Godara: This assessee’s appeal for assessment year 2013-14 arises against the Commissioner of Income Tax (A)-1, Kolkata dated 12.02.2019 passed in case No.10591/CIT(A)-1/ Kol/Circle-3(1)/2016-17 involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.
The assessee’s sole substantive grievance canvassed in the instant appeal challenges correctness of both the lower authorities’ action declining 115JAA MAT credit as prayed for in section 154 rectification proceedings. The CIT(A)’s detailed discussion on affirming the Assessing Officer’s action to this effect reads as under: “8. Grounds of Appeal No. 2 & 3 are being considered in a consolidated manner. It was the plea of the assessee that the A.O. should have considered the Schedule MATC of ITR6 in full. It is further noted that the ld. A.O. should have considered the provisions of Section 244A of the Income-tax Act, 1961 and allowed interest on refund determined due to excess payment of advance tax.
9. The matter had been remanded to the ld. A.O. who has submitted his response to the submissions made by the assessee. It was stated by him vide a report dated 23.01.2019- "In the instant case the assessment was completed under section 143(3) on 05.02.2016 with assessed income Rs.3,77,78,410/- without allowing the returned claimed MAT Credit of Rs.88,53,643/-. Thereafter, the rectification petition 09.08.2017 was received in this office regarding allowing the claimed MAT credit. In the said rectification order the MAT credit of Rs.78,29,961/- was allowed to the assessee instead claimed MAT credit of Rs.88,53,643/- on the basis of the detailed calculation made in the assessment order for the A.Y. 2014-15. The difference of Rs.10,23,682/- was disallowed on the basis that the said claimed MAT credit was included in surcharge and education cess. The section allows only credit of tax paid by the company in accordance with the provision of section 115JA. Tax has been defined in section 2(43) to be income tax chargeable under the provision of the Act and surcharge and education cess have not been included in the definition of Tax. However, the case law of Richa Global Export (P) Limited Vs. ACIT, in the ITAT Delhi Bench "F" [2012] in favour of revenue, clearly stated that the amount of surcharge and education cess cannot be included in the amount of MAT Credit under section 155JAA. Therefore, the difference amount of Rs. 10,23,682/-was disallowed in the rectification order dated 05.09.2017.
I have carefully gone through the decision of Richa Global Exports Pvt. Ltd. vs. A.C.I.T. (2012) 54 SOT 0185. This is a decision of a higher judicial forum and, therefore, binding on me. It is stated in Para 8 as under:- "8. The submission of Ld. AR that tax includes surcharge and education as per explanation 2 of section 115JB is correct to the extent that explanation 2 was inserted to clarify the meaning of tax as contemplated in clause (a) of explanation (1) with respect to calculation of book profit which is read as under: Explanation – 1 for the purpose of this section book profit means the net profit as shown in the P&L Account for the relevant previous year prepared under sub section (2) as increased by:- a) the amount of income tax paid or payable and the provisions thereof: b) xxxxx c) xxxxx d) xxxxx f) xxxxx The above explanation 1 clarifies that explanation 2 to section 115JB was inserted to define the meaning of tax (which of course includes education tax and surcharge) for the purpose of calculating book profits liable to tax u/s 115JB and it cannot be extended to sections 115JB or section 115JAA of the Act. Wires & Fabricks (SA) Ltd.
In view of the above provisions, we are of the considered opinion that tax credit u/s 115JAA was rightly given and we do not find any reason to interfere in the order of the Ld CIT(A)."
In any case, assuming that the assessee’s position is correct, an order u/s. 154 of the Income-tax Act, 1961 could not have been issued based on the argument of the assessee as the Apex Court in A.C.I.T. vs. Saurashtra Kutch Stock Exchange Ltd. 173 Taxmann 322 (SC). A 154 order cannot be made on a debatable issue.”
The above detailed discussion makes it clear that the CIT(A) has gone by this tribunal’s coordinate bench’s decision in Richa Global Exports Pvt. Ltd. (supra) that the amount of surcharge and education cess cannot be included in computing MAT credit u/s 115JAA of the Act. Learned Departmental Representative’s case accordingly is that once the tribunal’s coordinate bench’s decision has decided the issue in Revenue’s favour, the same assumes a debatable issue not rectifiable u/s 154 of the Act. The assessee on the other hand has reiterated its pleadings that the lower authorities have erred in law and on facts in denying the impugned MAT credit including education cess and surcharge.
We have given our thoughtful consideration to rival contentions. We first of all notice that this tribunal’s coordinate bench’s order in Bhagwati Oxygen Ltd. vs. ACIT [2017] 167 ITD 645 (Kolkata-Trib.) considers CIT vs. K. Srinivasan [1972] 83 ITR 346 as well as Virtusa (India) (P) Ltd. vs. Dy. CIT [2016] 67 taxmann.com 65 (Hyderabad) to conclude that MAT credit includes both surcharge as well as education cess. Latter coordinate bench’s decision also appears to have M/s Richa Global Exports(P) Ltd. (supra) as it is evident from the case file. It further transpires that hon’ble Allahabad high court’s judgment in CIT vs. Vacment India [2014] 369 ITR 304(Allahabad) has taken note of ITR-6 as well as the relevant entries in the form (Part-B-TTI) to conclude that section 115JAA computation includes education cess, includes secondary and higher education cess. All this leads to a conclusion that the issue of inclusion of surcharge and education cess for the purpose of section 115JAA MAT credit is no more debatable as it has been canvassed at the Revenue’s behest. We therefore accept the assessee’s sole Wires & Fabricks (SA) Ltd. substantive grievance and direct the Assessing Officer to grant MAT credit u/s 115JAA inclusion of surcharge and education cess.
The assessee’s appeal is allowed in above terms.
Order is pronounced in the open court on 31.12.2019. (P. M. Jagtap) (S. S. Godara) VICE-PRESIDENT JUDICIAL MEMBER कोलकाता /Kolkata; "दनांक/ Date: 31/12/2019 RS, Sr.PS