DCIT CORPORATE CIRCLE 2(2), CHENNAI vs. INFASTECH FASTENING TECHNOLOGIES INDIA PVT. LTD., CHENNAI

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ITA 2794/CHNY/2017Status: DisposedITAT Chennai31 May 2018AY 2013-144 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that expenses excluded from export turnover must also be excluded from total turnover, citing a Supreme Court decision. It also held that surcharge and cess are part of income-tax for MAT credit purposes, relying on the legislative history and Supreme Court pronouncements.

What were the facts?

The assessee claimed deduction under Section 10AA for profits from an SEZ unit. The Assessing Officer reduced foreign exchange and travel expenses from export turnover but not total turnover, and disallowed surcharge and cess for MAT credit. The CIT(A) allowed the assessee's appeal.

What were the issues?

Whether expenses deducted from export turnover should also be deducted from total turnover for Section 10AA calculation, and whether surcharge and cess are includible for MAT credit.

Which sections of the Income-tax Act were involved?

Section 10AA,Section 115JB

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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN

For Appellant: Adv. :
For Respondent: Adv. :

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

1.

The Revenue filed this appeal against the order of the Commissioner of Income Tax (Appeals)-6, Chennai, in dated 19.09.2017 for the AY 2013-14.

2.

M/s .Infastech Fastening Technologies India Pvt. Ltd., the assessee, is engaged in the business of manufacturing and supply of electronic fasteners and installation products for telecommunication companies. It claimed deduction u/s.10AA of the profits, earned from the export of electronic at it SEZ, for the AY 2013-14. While computing the deduction u/s.10AA, the AO has reduced the loss on foreign exchange and foreign travel expenses from the export turnover, however, he has refused to reduce them from the total turnover. The assessee claimed MAT claim entitlement from the AY 2012-13 While giving credit from the tax paid u/s.115JB, the AO allowed the tax portion alone and did not allow the surcharge and the education cess. Aggrieved, the assessee filed an appeal before the Ld.CIT(A) and the Ld.CIT(A) allowed the assessee’s appeal .

3.

Aggrieved against the order of the Ld.CIT(A), the Revenue filed this appeal with the following grounds:

1 The Order of the learned Commissioner of Income Tax (Appeals) is contrary to the Law and facts of the case. 2.1 The CIT(A) erred in directing the AO to re-compute the deduction by reducing exclusions in the export turnover, from the total turnover as well by upholding the decision of ITAT Chennai in the case of M/s. Sak Soft Ltd reported in 313 ITR 353, which was not accepted by the department and pending for adjudication. 3.1. The CIT(A) erred in allowing the surcharge and cess also for the purpose of MAT credit. 3.2. The CIT(A) ought to have appreciated the decision of the Hon’ble ITAT in the case of Richa Global Exports (P.) Ltd. 25 taxmann.com I (Delhi) [2012] wherein it was held that Surcharge and education cess are not part of MAT credit. 4 For these and other grounds that may be adduced at the time of hearing, it is prayed that the Order of the learned Commissioner of Income Tax (Appeals) be set aside and that of the Assessing Officer be restored.

4.

The Ld. DR presented the case on the lines of the grounds of the appeal. On the issue of parity in computing the export turnover and total turnover, the Ld.AR invited our attention to para 20 of the Hon’ble Supreme Court’s decision in the case of HCL Technologies Ltd. & Ors. in Civil Appeal Nos.8489-8490 of 2013 dated 24.04.2018 wherein it is held that “the expenses excluded from export turnover have to be excluded from the total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd.” In view of that the corresponding grounds of the Revenue’s appeal are dismissed.

5.

In respect of the disallowance made with regard to the surcharge and the education cess for the purpose of MAT credit, the Ld.AR relied on the decision of the Hon’ble Supreme Court in the case of CIT vs. K.Srinivasan reported in 83 ITR 0346 (SC) and invited to the relevant portion of the head note as under -

“the legislative history of the Finance Acts, as also the practice indicates that the term “income-tax” as employed in s. 2 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Art.271 of the constitution”.

And submitted that the decision rendered by the Ld.CIT(A) does not require any interference.

5.1 We heard the rival submissions and find no merit in the submissions made by the Ld.AR. In view of that the corresponding grounds of the Revenue’s appeal are dismissed.

7.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the Open Court on May 31, 2018, at Chennai.

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