TaxTMI 
TaxTMI 
2016 (8) TMI 967
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.... and education cess instead of adjusting the same from tax on total income before charging such surcharge and education cess." From the judgment of the learned Tribunal itself it is evident that the Allahabad High Court had answered the issue in favour of the assessee. But the learned Tribunal took a different view. We, therefore, thought it fit to admit the appeal and to hear it out on merits. The question raised by the assessee has its route in the form of Income Tax Return. In other words, the assessee, we are inclined to think, was probably inspired to raise the issue by the form of income tax return for the assessment year 2008-09, the relevant portion whereof reads as follows:- Computation of tax liability on total income 1 Tax Payable on deemed total Income under section 115JB (7 of Schedule MAT) 1 2 Tax Payable on total income in item 11 of Part B-TI a Tax at normal rates 2 a b Tax at special rates (11 of Schedule-SI) 2 b c Tax Payable on Total Income in item 11 of Part B-TI (2a + 2b) 2c 3 Gross tax payable (en....
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....r. Khaitan relied upon the judgment of the Allahabad High Court in the case of CIT Vs Vacment India reported in [2014] 369 ITR 304 (All), the Division Bench, in that case, solely on the basis of the form of the Income Tax Return prescribed for the year 2008-09 which continued to hold the field up to the year 2011-12, answered the issue as follows:- "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 matter is placed beyond doubt by the parenthesis, which indicates 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." Mr. Khaitan drew our attention to Sub-section 1 of Section 4 of the Income Tax Act as it was at the relevant period of time which reads as follows:- "Where any Central ....
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....section 154, section 155, sub-section (4) of section 245D, section 250, section 254, section 260, section 262, section 263 or section 264, the amount of tax payable under this Act is reduced or increased, as the case may be, the amount of tax credit allowed under this section shall also be increased or reduced accordingly.]" He wanted us to compare the aforesaid provisions of section 115JAA with subsection 1 of section 115JB, which is as follows:- "Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, [2007], is less than [ten per cent] of its book profit, [such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of [ten per cent]]" He submitted that section 115JB provides for payment of income tax at the rate of 10%. The sub-section 1 does not provide for any payment on account of surcharge or cess. Similarly, se....
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....s:- "(1) Subject to the provisions of sub-section (2) and (3), for the assessment year commencing on the 1st day of April, 2008, income-tax shall be charged at the rates specified in Part I of the First Schedule and such tax as reduced by the rebate of income-tax calculated under Chapter VIII-A of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act) shall be increased by a surcharge for purposes of the Union calculated in each case in the manner provided therein." Second proviso to Sub-section (3):- "Provided further that in respect of any income chargeable to tax under sections 115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 115BBC, 115E and 115JB or fringe benefits chargeable to tax under section 115WA of the Income-tax Act, the amount of income-tax computed under this sub-section shall be increased by a surcharge, for purposes of the Union, calculated." "Sub-section (11). The amount of income-tax as specified in subsections( 1) to (10) and as increased by a surcharge, for purposes of the Union, calculated in the manner provided therein, shall be further increased by an additional surcharge, for purposes of the Union, to be cal....
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....hink the answer is 'no'. It is true that sub-section 1 of section 4 of the Income Tax Act provides for rate or rates of Income Tax to be stipulated by the Central Act. If the legislature chooses to realise part of the amount by way of tax and part of it by way of surcharge and cess thereon rather than providing for a higher rate to realise the intended amount of tax, can it be said that the rate of income tax is what appears to have been provided without taking into account the surcharge and the cess? The answer we think again is an emphatic 'no'. The reason behind increase of income tax by the amount of surcharge and cess has been spelt out on the basis whereof it can be said that the intention is that part of the amount realized by way of income tax is earmarked for being spent in education and higher education. We are, as such, of the opinion that the view taken by the learned Tribunal is a correct view. The learned Tribunal has relied on the judgement of the Apex Court in the case of CIT vs. Tulsyan Nec Ltd., reported in [2011] 330 ITR 226 [SC]. Mr. Khaitan may be right in contending that the point raised in this appeal did not fall for consideration by Their Lordships in th....