DCIT, CHENNAI vs. SAINT GOBAIN GYPROC INDIA LIMITED, CHENNAI

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

ITA No.2122/Mds/2015. :- 2 -:

The Revenue has raised only one substantive ground that 2. the Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to allow MAT credit u/s.115JAA of the Act and also that the Surcharge and Education cess included in the MAT credit.

The Brief facts of the case are that the assessee company 3. filed return of income electronically on 29.11.2013 admitting total income of �53,27,57,210/- under the normal provisions of computation of income and under provisions of Sec.115JB of the Act �55,30,38,040/-. Since, the tax liability under normal provisions was higher than Sec.115JB and calculated tax �17,28,53,077/- and claimed set off of MAT credit of �6,22,02,608/- including surcharge and education cess of earlier assessment years calculated u/s.115JAA of the Act. As per the return of income a refund of �6,96,410/- was due to the assessee. Further, the assessee has a carried forwarded MAT credit of �8,40,50,931/- pertaining to assessment years 2011-12 and 2012-13. Subsequent to filing of return of income, the case was processed u/s.143(1) of the Act by the ld. ACIT (CPC) Bangalore by order dated 01.08.2014. As per the intimation/order demand of �39,79,464/- was raised. The CPC officer has calculated tax liability under normal provisions and against MAT credit of �6,22,02,608/- claimed. The CPC has allowed credit to the extent of �5,75,15,126/-

ITA No.2122/Mds/2015. :- 3 -: were credit was granted only for the tax amount excluding the surcharge and education cess of MAT credit. Aggrieved, the assessee filed appeal before the Commissioner of Income Tax (Appeals) against the order of 143(1) alleging that the ACIT (CPC) has erred in making adjustment of tax liability in respect of set off of MAT credit u/s.143(1) and also MAT credit should be set off against tax payable under normal provisions before including surcharge and educational cess.

Further, carried forward MAT credit for the assessment year 2011-12 and 2012-13 has not been allowed. MAT credit shall be set off against future Tax liability of the assessee company.

In the appellate proceedings, the Commissioner of Income 4.

Tax (Appeals) considered the facts and the ld. Authorised Representative made groundwise submissions and also relied on the judicial decisions. The ld. Commissioner of Income Tax (Appeals) on the issue of dispute relied on the order of ITAT, Mumbai Bench in the case of Universal Medicare P. Ltd vs ACIT(LTU) in Dated. 24.07.2013. referred at page No.13 of Commissioner of Income Tax (Appeals) order as under:-

‘’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’’. Therefore, the ITA No.2122/Mds/2015. :- 4 -:

Assessing Officer is directed to allow MAT credit to the appellant’’.

Further, the Commissioner of Income Tax (Appeals) directed the Assessing Officer to allow setoff of MAT credit and allowed the grounds of the assessee. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the Department has assailed an appeal before the Tribunal.

Before us, the ld. Departmental Representative argued that 5.

Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to allow MAT credit under section 115JAA and also further erred that the surcharge and education cess be part of MAT credit for set off and prayed for set aside of the Commissioner of Income Tax (Appeals) order.

Contra, the ld. Authorised Representative submitted that the 6. provisions of Sec.115JB under the Act were MAT credit was considered set off against tax liability under normal provisions also includes element of surcharge and education cess. The Assessing Officer has no power to make segregation and allow tax credit. The Commissioner of Income Tax (Appeals) has considered the grounds, written submissions and judicial decisions and relied on the findings of the Mumbai Bench of the Tribunal and granted relief and prayed for dismissal of Revenue appeal.

ITA No.2122/Mds/2015. :- 5 -:

We heard the rival contentions of both the parties perused 7. the material on record and also judicial decision cited. The assessee company has claimed Mat credit set off against income tax on normal provisions which is allowable and such MAT credit can be carried forward also. Under the provisions of Sec. 115JB tax components also includes surcharge and education cess. The ld. Authorised Representative reiterated his submissions made before the appellate proceedings were relief was granted. Before us, the ld. Departmental Representative relied on the findings of the Assessing Officer and argued to set aside the appeal. In reply, the ld. Authorised Representative relied on the decision of ITAT, Mumbai Bench Wyeth Limited vs. ACIT in Dated 09.01.2015 which has endorsed the provisions of allowing MAT credit observed at page 4 in para 5 as under:-

‘’5. Thus it is clear that the Hon’ble High Court has taken into account the order of entries in the form ITR-6 for the A.Y. 2011-12 in the said case and held that as per form ITR-6, the MAT credit has to be given against the gross tax payable exclusive of surcharge /cess and only after the MAT credit tax liability, the surcharge and cess has to be calculated for the purpose of working out the grand tax liability. We also find merit and substance in the alternative contention of the assessee that if the MAT credit is taken into account without including the surcharge and education cess then the surcharge and education cess on the tax liability has to be calculated only after allowing the MAT credit. Alternatively, the amount of MAT credit should also include surcharge and education cess for the purpose of allowing the credit against the tax liability inclusive of surcharge and education cess. Therefore, the MAT as well as normal tax before allowing the MAT credit has to be taken on ITA No.2122/Mds/2015. :- 6 -: parity either exclusion of surcharge and education cess or inclusive of surcharge and education cess or inclusive of surcharge and education cess. Accordingly we set aside the orders of authorities below and direct the Assessing Officer to allow the MAT credit against the tax liability payable before surcharge and education cess or alternatively the amount of MAT credit should also be inclusive of surcharge and education cess and then allow the credit against the tax payable inclusive of surcharge and education cess’’. We respectfully following the above decision, upheld the order of the Commissioner of Income Tax (Appeals) and dismiss the Revenue appeal.

Order pronounced on Wednesday, the 3rd day of February , 2016 at Chennai.