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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri J.Sudhakar Reddy & Shri S.S. Viswanethra Ravi
ORDER Shri S.S.Viswanethra Ravi, JM:
This appeal by the Revenue is against the order dated 14-07-2014 of CIT(A),I, Kolkata for the assessment year 2009-10.
None appeared on behalf of the Revenue. There was no petition for adjournment either. Hence, we proceed to dispose off this appeal ex-parte quo the revenue
The only issue in this appeal that is to be decided is whether the CIT-A is justified in allowing MAT Credit before levy of surcharge and education cess, in the facts and circumstances of the case.
Brief facts of the case are that the assessee is a company and engaged in manufacturing of ballpen tips. The assessee filed its return declaring total income of Rs. 2,54,98,745/-. Notices u/s 143(3) and 142(1) were issued. In response to which, the AR of the assessee appeared to prosecute its case. The AO determined the tax on normal provisions at Rs.50,99,749/- and found tax as per section 115JB of the Act is less than the normal provisions of the Act. Accordingly, the MAT credit has been given after levy of surcharge and education cess vide his order dt. 30-12-2011 passed u/s. 143(3) of the Act
Aggrieved, the assessee preferred an appeal before the CIT-A and contended that the AO was wrong in charging surcharge on the gross tax (before MAT credit) instead of net tax. The assessee has placed reliance on the proposition of law in the order in the case of Universal Medicare P.Ltd of the Co-ordinate Bench, ITAT Mumbai. The CIT-A considering the facts of the case with that of the facts in the case of Universal Medicare (supra) of Mumbai Tribunal allowed the MAT credit before charging of surcharge and education cess. Relevant finding of the CIT-A is reproduced herein below:-
5. The Ld AR has submitted that the scheme for the computation of tax as prescribed by the ITR-6 for the relevant assessment year 2009-10 clearly shows the chronology: compute the gross tax payable (column 3), then reduce MAT credit u/s 115JAA (column 4) to determine the tax payable after credit u/s 115JAA (column 5); and then, add surcharge (column 6) and education cess (column 7) to determine the gross tax liability (column 8). The Ld AR also placed reliance in the case of Universal Medicare (P) Ltd vs ACIT in wherein identical issue was decided by the Hon'ble Bench of the ITAT, Mumnbai. In that case, the Hon'ble Tribunal has held as under:
Ground No. 6 relate to levying surcharge and educational cess before adjusting MAT credit. It is pertinent to mention that this issue has not been discussed in the assessment order. However, the same has been raised before the Ld CIT(A). The claim of the assessee is that MAT credit should first be reduced from the tax payable and thereafter on the residual amount the surcharge and educational cess be levied. It is relevant to note that in the Income Tax Return form-ITR-6, column no. 4, the assessee is required to fill the credit u/s 115JAA of tax paid in earlier years and after which on the balance tax payable, the assessee has to fill the surcharge and educational cess at column no. 8 and 10 for the purpose of arriving at the gross tax liability. Also, the ITAT in the case of Richa Global Exports (P) Ltd V ACIT in has held there is no need to give separate credit of education cess and surcharge while giving credit of MAT. What is required is that in the year when such credit is given, education cess and surcharge should be computed after giving credit of MAT to the tax computed on the assessed income in the same way as 'in the case of interest under sections 2348 and 234C. The nature of MAT is like pre- paid taxes and, therefore, it should be treated alike for the purposes of computing education cess and surcharge also.
In view of that matter, we find merits in the contention of the assessee that MAT credit should first be reduced from the tax payable and thereafter on the residual amount the surcharge and educational cess be levied. We order and direct accordingly. Ground No. 6 is allowed.
6'. I have considered the submissions of the assessee and also the material placed on record. I find merit in the submission that MAT credit has to be first allowed before charging the surcharge and education cess. The contention of the assessee is in line with the scheme for the computation of tax as prescribed by the ITR-6 for the relevant assessment year. The issue is also covered directly by the decision of the Hon'ble ITAT, Mumbai in the case of Universal. Medicare (P) Ltd vs ACIT in (supra). Accordingly, the AO is directed to follow the columns of the ITR-6 for the relevant assessment year; and, charge the surcharge and education cess after allowing the MAT credit. Ground no 2 is allowed. “
From the above, we find that the ld.CIT-A has followed the proposition of law laid down by the Mumbai Bench of ITAT on this issue. Hence, we find no infirmity in his order.
In view of the above, we hold that MAT credit shall be reduced first from the tax payable and add surcharge and education cess thereafter. In view of the above, we uphold the order of the CIT-A. The ground raised by the revenue is dismissed.
In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 29-05-2017
Sd/- Sd/- J.Sudhakar Reddy S.S. Viswanethra Ravi Accountant Member Judicial Member
Dated : 29-05-2017 PP(Sr.P.S.)
Copy of the order forwarded to:
Appellant – The DCIT, Cir-11 P-7 Chowringhee Sq,Kol-69. 2 Respondent – M/s. CRI Limited 333 Garia Main Road, Mahamayatala, Near Child School, Kol-84. 3. The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata