Appeal allowed, Assessing Officer to recalculate tax with MAT credit inclusive of surcharge and education cess.

The appeal was allowed, and the Assessing Officer was directed to recompute the tax payable by the assessee for the relevant year, considering MAT credit inclusive of surcharge and education cess.

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Issues:
Computation of set-off of MAT credit u/s 115JAA excluding surcharge and cess resulting in short grant of MAT credit.

Analysis:
The appeal was filed against the order of the Learned Commissioner of Income Tax (Appeals) for the assessment year 2014-15. The main issue revolved around whether MAT credit granted under section 115JAA of the Act should be inclusive of surcharge and cess. The assessee argued that the order passed under section 154 was not specifically to decide on the issue of whether MAT credit should include surcharge and cess. Several decisions were cited in favor of the assessee, including judgments from the Calcutta High Court, Madras High Court, and various Tribunals.

In the case of Srei Infrastructure Finance Ltd. v. DCIT, the Calcutta High Court held that MAT credit should be set off against tax on total income including surcharge and education cess. Similarly, the Madras High Court in M/s. Scope International Pvt. Ltd. held that MAT credit should include surcharge and education cess. The Hyderabad Tribunal in Virtusa (India) (P.) Ltd. also emphasized that tax should include surcharge and additional surcharge, aligning with the Supreme Court's decision. The Kolkata bench of the Tribunal and the Bombay Bench of the Tribunal also supported the inclusion of surcharge and cess in MAT credit calculations.

The Tribunal noted that the issue was not debatable, especially post the amendment in the format of ITR-6 from A.Y. 2012-13, which included surcharge and cess in tax liability calculations. The majority of decisions, including those of the Calcutta and Madras High Courts, favored the assessee's position. Therefore, the Tribunal directed the Assessing Officer to allow the set off of MAT credit inclusive of surcharge and education cess, leading to the allowance of the assessee's appeal.

In conclusion, the appeal was allowed, and the Assessing Officer was directed to recompute the tax payable by the assessee for the relevant year, considering MAT credit inclusive of surcharge and education cess.

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