CROMPTON GREAVES LTD,MUMBAI vs. DCIT CIR 6(2), MUMBAI

The Ld CIT (A) vide her order dated 29.5.2012 erred in law and on facts in confirming the action of the AO in carrying our rectification u/s 154 ignoring the facts that the order of the AO passed u/s 143(1) did not suffer from any mistake apparent from records and further erred in law and on facts in holding that the issue of levy of SC and EC was not debatable inspite of the fact that the said issue was highly debatable.

The Ld CIT (A) erred in law and on facts in confirming the order u/s 154 dated 5.2.2009 of the AO which was passed after issue of notice u/s 143(2) dated 18.9.2008 issued for assessment of total income whereby no rectification proceedings could have taken place u/s 154 pending the proceedings for assessment u/s 143(3) of the Act.

The Ld CIT (A) vide his order dated 29.5.2012 erred in law and on facts by confirming the order of the AO in increasing the quantum of surcharge and education cess by levying the same on an amount of tax without reducing such tax by the amount of credit u/s 115JAA of Rs. 16,14,06,703/- being MAT paid for AY 2006-07 and erred in law and on facts in not approving the action of the appellant of first reducing the basic tax by the said MAT credit and thereafter levying SC and EC as mandated by the ROI and the Act.” Vide letter dated 29th December, 2014, assessee also raised the following modified ground and the same reads as under:- “The Ld CIT (A) vide his order dated 29.5.2012 erred in law and on facts in confirming the false statement made by the AO that your appellant had agreed to the rectification proposed by the AO for re-computation of the surcharge and education cess and further erred in law and on facts in confirming the levy of SC and EC solely on the ground of an alleged consent which was never given as is established by an affidavit of CA Jagadish Ambardekar, the manager Taxation of the company who appeared during the proceedings and further erred in law and on facts in passing an order u/s 154 dated 5.2.2009 without giving an opportunity of hearing as required u/s 154(3) of the Act and once again erred in law and on facts in rectifying an order dated 12.11.2008 which order was passed behind the back of the appellant nor was it served on your appellant and the appellant claims that no such order was in existence and plead that the Ld AO be put to the strictest proof of the opportunity of hearing, passing of order and the service thereof.”

Insofar as is material, the relevant entries in the form (Part B-TTI) are as follows:-

Gross tax payable (enter higher of 2c and 1)

Credit under section 115JAA of tax paid in earlier years (if 2c is more than 1) (7 of Schedule MATC).

Tax payable after credit under section 115JAA [(3-4)]

Surcharge on 5

Education cess, including secondary and higher education cess on (5+6)

Gross tax liability (5+6+7)

The aforesaid entries leave no manner of ambiguity in regard to the method of computation of tax liability. Entry 3 requires computation of the gross tax payable. Under entry 4, credit is required to be given under section 115JAA of the Act of the tax paid in earlier years. Entry 5 requires a computation of the tax payable after credit under section 115JAA of the Act. The mater is placed beyond doubt by the parenthesis, which includes that tax payable under entry 5 is to be arrived at by deducting the credit under section 115JAA of the Act (under entry 3) from the gross tax payable (under entry 4). The surcharge is computed on the amount reflected in entry 5. 7. The Tribunal has noted that from the next assessment year, AY 2012-13, the position was materially altered, but in the present case, since the dispute related to AY 2011-12, the method of computation, as directed by the Commissioner (Appeals), was plainly in accordance with the methodology as provide in ITR-6. The Tribunal in confirming the order of the Commissioner (appeals) has, hence, not committed any error. The appeal will not given rise to any substantial question of law and is, accordingly, dismissed.”