MAT credit computation includes surcharge and education cess when statutory scheme treats them as part of tax liability.

For MAT credit computation under Section 115JAA, "tax" includes surcharge and education cess where the statutory scheme treats them as part of the tax liability. Reading Section 2(43) with Section 115JB and the relevant Finance Act provisions, the HC held that the expression "tax" is not confined to basic income-tax alone when surcharge and cess form part of the charge. The CBDT circular also supported this construction. The contrary view was found inapplicable on the facts, and MAT credit was held to include surcharge and education cess, in favour of the assessee.

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Issues: Whether MAT credit under Section 115JAA of the Income-tax Act, 1961 is to be computed by including surcharge and education cess in the tax amount.

Analysis: The issue had already been considered in an earlier decision following the principle that the expression "tax" is not confined to basic income-tax alone where the statutory scheme and the Finance Act make surcharge and cess part of the charge. The statutory context of Section 2(43) and Section 115JB of the Income-tax Act, 1961, together with the understanding reflected in the CBDT circular, supported the view that surcharge and education cess form part of the tax computation for MAT credit purposes. The contrary view was found inapplicable on the facts.

Conclusion: MAT credit under Section 115JAA includes surcharge and education cess. The question was answered against the Revenue and in favour of the assessee.

Ratio Decidendi: For MAT credit computation, "tax" includes surcharge and education cess where the statutory scheme treats them as part of the tax liability.

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