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Income Tax Appellate Tribunal, “F”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
These are the appeals filed by the assessee against the order of CIT(A)-38, Mumbai for the Assessment Years 2002-03, 2006-07 & 2011-12 in the matter of order passed u/s.143(3) r.w.s.153A / 254 of the IT Act. 7549/Mum/2013 (A.Y. 2002-03 and 2006- 07):- 2. Common grounds of appeal in both the years pertains to disallowance of deduction u/s.14A read with Rule 8D. Rival contentions have been 7550/Mum/2013 M/s. 63 Moons Technologies Ltd., (Formerly Financial Technologies India Ltd.,) heard and record perused. The brief facts of the case are that the assessee company is engaged in the development of various software products on the basis of research made by the company. In the case of the assessee, assessments u/s.153A r.w.s. 143(3) of the Act for A.Yrs.2002-03 & 2006-07 were completed on 09.04.2009 making disallowance u/s.14A read with Rule 8D of the Act amounting to Rs.8,20,329/- and Rs.70,22,947/- respectively. The assessee preferred appeal before the CIT(A) and the Ld. CIT(A), by placing reliance upon the decision of Hon'ble ITAT, Special Bench, Mumbai in the case of M/s. Daga Capital Management, directed the Assessing Officer to re-compute the correct amount of disallowance in the light of the directions given in the appellate order. Against the decision of the Ld. CIT(A), the assessee preferred further appeal before the Hon'ble ITAT. The Hon'ble ITAT set aside the issue to the file of the Assessing Officer for fresh consideration. Subsequently, the assessments u/s. 143(3) r.w.s, 153A r.w.s. 254 of the Act were completed by the Assessing Officer by making disallowance u/s.14A of the Act amounting to Rs.9,87,416/- and Rs.12,67,549/- for A.Yrs.2002-03 & 2006-07 respectively. We found that in the set aside proceedings by disregarding the actual calculation given by the assessee for disallowance of expenditure actually incurred for earning exempt income with reference to the number of employees placed in the building so required and other expenditure reasonably attributable to such 7550/Mum/2013 M/s. 63 Moons Technologies Ltd., (Formerly Financial Technologies India Ltd.,) expenses, AO computed disallowance at 3% of the exempt income which was confirmed by the CIT(A).
3. Learned AR appearing on behalf of the assessee filed a chart which indicates that as per the working of the AO for disallowance u/s.14A, the same worked out to be much less in the Assessment Year 2004-05 and 2005-06 whereas it is higher in the Assessment Years 2002-03 and 2006- 07 as compared to the disallowance offered by assessee. In the Assessment Years 2004-05 and 2005-06 as per AO’s working, the disallowance works out was lower, AO has confirmed the higher disallowance offered by the assessee, whereas in the Assessment Years 2002-03 and 2006-07, the AO has made disallowance of 3% of exempt income by disregarding the actual calculation given by the assessee.
Assessee is in further appeal before us.
We had carefully gone through the working given by the assessee for disallowance of expenditure under the head salary, repairs and maintenance, rent, telephone, fax charges and electricity charges attributable to earning of exempt income. Statement of disallowance u/s.14A at various stages is as under:-
Disallowance Disallowance Disallownce confirmed by Disallowance Disallowance made by the made by AO CIT(A) which was in dispute in proposed by AO made in fresh assessee in first round first round of appeal before @3% of exempt assessment Hon’ble ITAT income order on set aside 2002-03 96,604 8,20,329 5,51,445 9,87,416 9,87,416 2004-05 1,16,000 12,85,727 5,11,356 16,176 1,16,000 2005-06 1,43,935 43,89,805 23,07,434 94,403 1,43,935 2006-07 3,86,830 70,22,947 35,69,495 12,67,549 12,67,549 7550/Mum/2013 M/s. 63 Moons Technologies Ltd., (Formerly Financial Technologies India Ltd.,) 5. Keeping in view the totality of facts and circumstances of the case vis-à-vis, reasonings given by assessee for disallowance of various expenditure incurred for earning exempt income, we restrict the disallowance for A.Y.2002-03 to Rs.1,83,208/- in place of Rs.96,604/- offered by the assessee and in the A.Y.2006-07 to Rs.7,73,660/- in place of expenditure offered for disallowance by assessee at Rs.3,86,830/-. We direct accordingly. (A.Y.2011-12) 6. In this appeal, assessee is aggrieved for allowing credit of MAT u/s.115JAA after levying surcharge and Education Cess on the gross tax payable. It was argued by learned AR that the Learned Commissioner of Income Tax (Appeals) failed to appreciate that the Government itself had provided the ITR-6 for A.Y 2011-12 in which similar calculation is provided as to working of tax liability and adding surcharge and cess after giving credit of MAT u/s. 115JAA, as per which the assessee had calculated the tax liability.
The learned AR prayed that Credit of MAT u/s. 115JAA of Rs. 10,19,75,012/- to be allowed before levying surcharge and education cess and any other relief may deem fit.
Learned AR also placed on record the order of the Allahabad High Court in case of Vacment India 369 ITR 304 wherein it was held that credit nu/s.115 JAA was deductable from gross tax payable and computation of surcharge should be on the net amount. Very fairly 7550/Mum/2013 M/s. 63 Moons Technologies Ltd., (Formerly Financial Technologies India Ltd.,) learned AR also filed decision of Bombay Tribunal in case of Classic Shares & Stocks Broking Services Ltd., dated 23rd July 2010 wherein issue was decided against the assessee.
On the other hand, learned CIT(DR) relied on the decision of the Bombay Tribunal in case of Classic shares & Stock Broking Services Ltd., and also on the decision of the Delhi Tribunal in case of Richa Global Exports Pvt. Ltd. ,wherein it was held that amount of surcharge and education cess cannot be included in the amount of MAT credit u/s.115JAA.
We have considered rival contentions and deliberated on the judicial pronouncements referred by the learned AR and DR during the course of hearing before us and found that Hon’ble Calcutta High Court has recently decided the issue in 289 CTR 412 as under:
■ The view taken by the Tribunal is a correct view. The Tribunal had relied on the judgment of the Apex Court in the case of CIT v. Tulsyan Nec Ltd. [2011] 330 ITR 226/196 Taxman 181/[2010] 8 taxmann.com 228. ■ The assessee had drawn inspiration from a mistake in the form of the income-tax return. Identical mistake was also involved in the case of Tulsyan Nec. Ltd. (supra). But that was a mistake with regard to the calculation of interest. [Para 11] ■ There can be no quarrel with the aforesaid view. But the same has no application to this case because the form for the relevant year, which provided inspiration to the assessee to take this point, did in fact seek to control or derogate from the sections quoted above. That form, as a matter of fact, was erroneous. That form has subsequently been corrected. Had it not been a case of a wrong form, the corrected form would in that case be contrary to law. Both the forms, viz. the one which was prevalent at the relevant period of time and which was corrected for the assessment year 2012-13, could not be the correct forms. If the Form of 2012-13 was correct, and the Form of 2008-09 was wrong, and naturally contrary to law. [Para 12] ■ Therefore, the Tribunal was right in confirming the set off of MAT Credit
7550/Mum/2013 M/s. 63 Moons Technologies Ltd., (Formerly Financial Technologies India Ltd.,)