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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI ASHWANI TANEJA
Date of hearing : 18-01-2017 Date of order : 07-02-2017
O R D E R
Per ASHWANI TANEJA, AM:
This appeal has been filed against the order of Commissioner of Income-tax (Appeals)-50, Mumbai (hereinafter called CIT(A)] dated 28-02- 2015 passed against the assessment order u/s 143(3) dated 30th March, 2013 for A.Y. 2010-11 on the following grounds:-
1. “That the learned Commissioner of Income-tax (Appeals)-50 has grossly erred in confirming the working of tax payable done by the Assessing Officer by wrongly allowing the credit of tax paid u/s 115JAA after charging surcharge and Education cess, whereas the same should have been done before the said charges in accordance with ITR-6 for the assessment year under reference. The working of tax payable as done by the appellant, being in conformity with the method of computation prescribed in the relevant form for the same, should have been allowed as such.”
The solitary issue raised by the assessee before us is that while granting MAT credit available u/s 115JAA of tax paid as per the provisions of MAT in earlier years should be granted along with surcharge and education cess as against the action of AO granting credit of merely tax amount.
During the course of hearing, Ld. Counsel of the assessee submitted that fairness and equity demands that the provisions of the Act should be interpreted in such a manner that there should not be unjust enrichment of the Revenue at the cost of the taxpayer. The law provides that whatever excess amount tax is paid on account of MAT as compared to the amount of tax payable under the normal provisions of the Act, it is eligible for carry forward for deducting from the amount of tax liability of subsequent years whenever tax will be payable under the normal provisions of the Act in the subsequent years. Under these circumstances, if the tax payable under MAT is further increased by education cess and surcharge, then while making it’s carry forward and set off also the amount of surcharge and education cess should be included. He placed reliance on the judgment of Hon’ble Allahabad High Court in the case of CIT vs Vacment India 369 ITR 304 (All) and Calcutta High Court in the case of M/s Srei Infrastructure Finance Ltd vs DCIT (G.A. No. 115 of 2016 (ITAT No.245 of 2016) Dt 12th August, 2016. Per contra, the Ld. DR fairly submitted that neither the working submitted by the assessee was correct
AO as is given in the assessment order.
We have gone through the facts of this case. We have been called upon to decide in this case the correct manner of computing tax liability and also amount of credit available u/s 115JA keeping in view levy of surcharge and education cess in the process. We have examined the entire scheme of the Act containing provisions with regard to payment of MAT u/s 115JB as well as availability of credit available u/s 115JAA. It is noted that it was held by the Hon’ble Allahabad High Court in the case of CIT vs Vacment India, (supra) that methodology of computation of tax liability and granting credit of MAT should be similar to the methodology provided in the prescribed form of filing of income-tax return i.e. ITR-6. But subsequently, Hon’ble Calcutta High Court in the case of M/s Srei Infrastructure Finance Ltd, supra examined this issue in detail and held that computation of tax liability and setting off of tax credit available should be done in accordance with law and not on the basis of ‘inappropriate’ form prescribed under the rules inadvertently. It is noted that Hon’ble Calcutta High Court has held that for the purpose of section 115JB, surcharge and cess are part of income-tax payable in accordance with provisions of section 115JB. Therefore, when the tax is paid u/s 115JB along with surcharge and cess, then entire amount would be considered for carry forward of the credit available u/s 115JAA and accordingly the entire amount would be available for the benefit of set off in the subsequent years from the amount of gross tax payable by the assessee. During the course of hearing before us, Ld. Counsel submitted before us three types of work sheets wherein tax payable after setting off
115JAA was worked out in three different methods. We find that the following working shows the appropriate method of computing tax liability and setting off amount of credit available u/s 115JAA:-
COMPUTATION OF TAX LIABILITY ON TOTAL INCOME AS PER INCOME- TAX ACT, 1961 1 Total Income Rs. 1,093,157,260 2 Tax Payable on total income a Tax at normal rates Rs. 327,839,585 b Tax at special rates - c Tax payable on total Rs. 327,839,585 income 3 Surcharge on 2c Rs. 32,783,959 4 Education cess on Rs. 10,818,706 (2c+3) 5 Credit under section 115JAA of tax paid in earlier years a Income-tax Rs. 25,976,115 b Surcharge Rs. 2,597,612 c Education Cess on (5a Rs. 857,212 Rs. 29,430,939 + 5b) Tax payable after Rs. 342,011,311 credit under section 115JAA During the course of hearing, the Ld. DR also fairly submitted that it would be a correct method of computing tax liability and credit available u/s 115JAA. It is noted from the above working that first of all tax amount has been computed on the total income of the assessee. Thereafter surcharge and education cess has been worked out upon the tax liability. Then, from the gross amount so arrived at, the amount of credit available u/s 115JB on account of income-tax, surcharge and education cess ( all
115JB has been worked out. In our view, this is the correct method of computing tax liability as well as credit available u/s 115JAA. Accordingly, we direct the AO to verify the facts as have been given in the aforesaid working and compute the tax liability accordingly and allow the necessary relief to the assessee.
As a result, this appeal is partly allowed.
Order was pronounced in the open court at the conclusion of hearing.