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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SMT.ANNAPURNA GUPTA & SHRI T.R. SENTHIL KUMAR
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The present appeal has been filed by the assessee against the order passed by the ld.Commissioner of Income Tax(Appeals)-2, Rajkot (in short referred to as ld.CIT(A) dated 1.4.2019 passed under section 250(6) of the Income Tax Act, 1961 ("the Act" for short) pertaining to the Asst.Year 2012-13.
The assessee has raised the following grounds:
“The grounds of appeal mentioned hereunder are without prejudice to one another.
ITA No.127/Rjt/2019 2 The Id. Commissioner of Income-tax (Appeals)-2, Rajkot (hereinafter referred to as the "CIT(A)"] was erred on facts as also in law in dismissing the appeal ex-parte without considering submission filed by the appellant. The Id. CIT(A)erred on facts as also in law in allowing set-off of accumulated tax credit u/s.115JAA of Act at Rs. 4,88,578/-only as against the actual claim of the appellant at Rs.5,03,235/- as per the return of income filed. The Action of AO in not allowing the set-off of accumulated tax credit u/s.115JAA of the Act to the extent of Rs.14,657/- is totally unjustified and uncalled for. Your Honour's appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal. 3. Brief facts of the case, as pointed out by the ld.counsel for the assessee before us was that the assessee is a private limited company engaged in the business of manufacturing ceramic tiles. It had filed return of income for the impugned year under section 139(1) of the Act declaring total income at Rs.40,47,780/- and returned book profits for tax under section 115JB of the Act at Rs.39,23,2003/-. Due taxes werepaid on the returned income computed as per the normal provisions after claiming set off of credit of taxes paid under MAT brought forward from Asst.Year 2010-11of Rs.5,03,235/-,as per section 115JAA of the Act,. However, while processing the return under section 143(1) of the Act by the CPC, Bangalore, the credit of brought forward MAT under section 115AA of the Act was not given by the CPC in its intimation dated 15.7.2013. Accordingly, an application claiming rectification of the mistake apparent from record was filed by the assessee under section 154 of the Act. In response to the same, the AO allowed credit of carry forward MAT credit only to the extent of Rs.4,88,578/- as against Rs.5,03,235/- claimed by the assessee. Aggrieved by the same, the assessee carried the matter in appeal before the ld.CIT(A) who dismissed the assessee’s appeal for non- prosecution and also on merits on the ground that no arguments and evidences were filed by the assessee to show as to how the order
ITA No.127/Rjt/2019 3 passed under section 154 of the Act was incorrect. Aggrieved by this order of the ld.CIT(A) the assessee is now before us , raising the above grounds.
Vis-à-vis the ground nos.1 & 4, they are general in nature and need no adjudication. Vis-à-vis ground no.2, that the ld.CIT(A) had dismissed the assessee’s appeal ex parte without considering the submissions filed by the assessee, it was contended by the ld.counsel for the assessee that on the last date of hearing i.e. 26.3.2019, the assessee did file written submissions before the ld.CIT(A),copy of which was also placed before us at page no.1 to 9 and without considering the same, the ld.CIT(A) had passed an ex parte order.
On the meritsof the case, raised in ground no.3 before us, the ld.counsel for the assessee contended that the difference of MAT credit not allowed to the assessee,t o the extent of Rs.14,657/-,the same related to surcharge and cess components of the MAT taxes paid in earlier years. He pointed out that the AO had computed the MAT credit allowable to the assessee as per provision of section 115JAA(5) of the Act only considering the normal tax components and excluded surcharge and cess from the same. He contended that the ITAT, Hyderabad Bench in the case of M/s.Virtusa (India) P.Ltd. Vs. DCIT, ITA No.146/Hyd/2015 order dated 4.3.2016 hadheld that tax credit component as per 115JAA of the Actwas to be computed including surcharge and cess in the same. The ld.counsel for the assessee therefore contended that the rectification application filed by the assessee for claiming the balance credit of taxes under section 115JB amounting to Rs.14,657/- therefore needs to be allowed. In this regard, he drew our attention to the facts relating to the computation of MAT under section 115JB as under:
ITA No.127/Rjt/2019 4 A. He first pointed out that MAT credit related to tax paid under section 115JB of the Act for Asst.Year 2010-11 on account of tax on book profits for the said year exceeding the taxes to be paid as per normal provisions. He drew our attentionto the PB Page No.23 & 25 being the computation of income for Asst.Year 2010-11 and to PB Page No.22 being the acknowledgment of return of income of the said year. He pointed out that while taxes computed as per the normal provision amounted to Rs.94,401/-, that as computed under section 115JB of the Act on the Book Profits amounted to Rs.11,68,460/- , both including surcharge and cess therein. He pointed out from the computation of income that gross total income asper the normal provision was Rs.3,14,670/- on which taxes payable worked out Rs.94,401/- while the book profits under section 115JB of the Act amounted to Rs.75,62,847/- and taxeson the same worked out at 15% of the book profits at Rs.11,34,427/- plus education cess Rs.22,689/-, and secondary & higher education cess of Rs.11,344/-, thus total tax of Rs.11,68,460/-. Accordingly surplus of tax paid under 115JB as opposed to that payable under normal provision, amounting to Rs.10,40,026/- ,was carried forward for set off in subsequent years as MAT credit as per the provisions of section 115JAA(5) of the Act .
B. He thereafter contended that in the computationof income for the impugned year i.e.Asst.Year 2012-13, the tax payable as per normal provision and that under MAT was worked out as under:
Under normal provision Gross Total Income Rs.40,47,780/-
ITA No.127/Rjt/2019 5
Tax Payable on Rs.12,14,334/- Education Cess Rs.24,2787 Secondary & Higher Edn.Cess Rs.12,143/- Total Rs.12,50,764/- Under MAT provision Book Profit Rs.23,23,003/- Tax on BP @ 18.5% Rs.7,25,756- Education Cess Rs.14,515/- Secondary & Higher Edn. Cess Rs.7,258/- Total 7,47,529/-
Since the assessee was liable to pay higher of the taxes computed as per the normal provision as opposed to that computed as per section 115JB of the Act, the taxes paid was taken at Rs.12,50,764/- computed as per normal provisions of the Act including surcharge and cess, against which the assessee claimed credit of taxes paid under MAT in earlier year as per section 115AA of the Act of Rs.5,03,235/- including surcharge and cess.
He pointed out therefore that the assessee had computed MAT credited to be carried in the Asst.Year 2010-11 under section 115JAA by including surcharge and cess components of taxes in the same. He further pointed out that the AOhad allowed the tax credit by excluding surcharge and cess.
For the said purpose he drew our attention to the chart pointing out the same as under:
Particulars Ref As per Return As per Order of Income u/s.154 Total income 40,47,780 40,47,780 Tax under normal provision @ 30% 12,14,334 12,14,335 Add: Education Cess – 3% +36,430 A 12,50,764 12,14,334 Book Profit u/s.115JB of the Act 39,23,003 39,23,003 Tax on Book Profit @ 18.50% 7,25,756 7,25,756 Add: Education Cess – 3% +21,773 B 7,47,529 7,25,756
ITA No.127/Rjt/2019 6
Tax liability (higher of A & B 12,50,764 12,14,334 Less: Set off of MAT credit 115JAA A-B -5,03,235 -4,88,578 Tax Payable 7,47,529 7,25,756 Add: Education Cess – 3% + 36,430 Add: Interest +79,031 + 99,987 Less: TDS -91,615 -91,615 Less: Self assessment tax -7,34,950 -7,34,950 Tax Payable Nil 35,608
The ld.counsel for the assessee contended that in view of the issue being squarely covered in favour of the assessee by the decisionof the ITAT, Hyderabad Bench, in the case of M/s.Virtusa (India) P.Ltd.(supra) the assessee be allowed benefit of surcharge and cess components of the taxes credit to be adjusted against taxes payable for the year.
The ld.DR however supported the order of the AO.
We have heard rival contentions. We have also gone through the orders of the Revenue authorities. We have noted that the ld.CIT(A) dismissed the assessee’s appeal on the ground that there was no representation made by the assessee before him. The ld.counsel for the assessee has pointed out that on the last date of hearing, he did file written submissions to the ld.CIT(A). Be that so, we have noted the contentions of the ld.counsel for the assessee on merit also, and we find that rectification application filed by the assessee is to the effect that the assessee be allowed benefit of MAT credit as per section 115JAA(5) of the Act by including surcharge and cess in the tax credit so calculated. Precisely, this is the only issue on which the assessee has sought rectification of the intimation under section 143(1) of the Act.
We find merit in the contentions of the ld.counsel for the assessee. In a series of the decisions, the Hon’ble High Courts and the ITAT have held that the tax credit allowable under section
ITA No.127/Rjt/2019 7 115JAA of the Act is including surcharge and cess components of tax thereon. The cases holding so are as under, including M/s Virtusa (India) Pvt. Ltd (supra) relied upon by the Ld.Counsel for the assessee:
(i) Srei infrastructure Finance Ltd., v. DCIT [395 ITR 291 (Calcutta)] (ii) M/s. Scope International Pvt. Ltd., (TCA No. 588 of 2019) dated 16.08.2019 (Madras HC). (iii) Consolidated Securities Ltd., v. ACIT [172 ITD 163] (iv) (Virtusa (India) (P.) Ltd., v. DCIT [157 ITD 1160] (v) Bhagwati Oxygen Ltd., v. ACIT [167 ITD 645] (vi) SI Group India Pvt. Ltd., v. DCIT in ITA.No. 2348 & 2350/Mum/2017 dated 11.10.2018. (vii) M/s. Savita Oil Technologies Ltd., v. ACIT in ITA.No. 3066/Mum/2015 dated 07.02.2017. In view of the consistent judicial view as above, the denial of tax credit u/s 115JAA of the Act to the extent of surcharge and cess components in the same, we agree with the ld.counsel for the assessee, is a mistake apparent from the record and rectification sought to this extent is therefore upheld. The rectification application filed by the assessee is therefore directed to be allowed, and adjustment of tax credit to the extent of Rs.14,657/- as claimed by the assessee is directed to be granted. The appeal of the assessee is allowed.
In the result, appeal of assessee is allowed.
Order pronounced in the Court on 28th December, 2022 at Ahmedabad.
Sd/- Sd/- (T.R. SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad, dated 28/12/2022