TaxTMI 
TaxTMI 
2017 (9) TMI 1807
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....on 111JB was determined at Rs. 17,18,54,839/-. The assessee has noticed from the intimation received u/s. 143(1) of the act that the tax liability has been determined after providing MAT credit for Rs. 4,61,81,503/- as against MAT credit of Rs. 8,28,19,589/- claimed by the assessee. Therefore, the assessee had applied for necessary rectification as per the provision of section 154 of the act. Subsequently, the assessing officer has passed Rectification order u/s. 154 of the act on 01-05-2012 and provided MAT credit of Rs. 8,28,19,589/- as claimed by the assessee. Thereafter, the assessee preferred appeal before the ld. CIT (A) against the order of the assessing officer on the ground that surcharge and education cess has been computed on the tax payable before reducing the MAT credit and claimed that same should have been computed after allowing the MAT credit. The ld. CIT(A) has allowed the appeal of the assessee by observing as under:- "9.3. It is seen that assessment year involved in present year is A.Y. 2010-2011 and appellant company is required to file its return of income in ITR-6 wherein computation of tax liability on total income at Part B-TTI was prescribed as un....
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...., surcharge and education cess is required to be computed. 9.6 The appellant company has computed tax liability as per provisions of the Act and formula prescribed in ITR-6 referred supra. Thus, in my considered view, the Assessing Officer was not justified in computing tax liability adopting formula different than as stated herein above. Considering the same, Assessing Officer is directed to first reduce basic tax liability by MAT credit u/s 115JAA of the Act and only on balance amount, surcharge and education cess is required to be computed. Thus, grounds of appeal raised by appellant are allowed." 4. During the course of appellate proceedings before us, ld. departmental representative has vehemently contended that the ld. CIT has committed error in holding that surcharge and education cess is to be computed after reduction of MAT credit u/s. 115JAA out of the gross tax payable in the case of the assessee. He has referred the provision of section 2(43) and section 4 of the act relating to charging of income tax. He has also contended that the Finance Act is a part of the Income Tax Act in which rate of income tax are mentioned in the chapter II. He has also placed rel....
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....n : (12) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by the applicable surcharge, for purposes of the Union, calculated in the manner provided therein, shall also be increased by an additional surcharge, for purposes of the Union, to be called the "Secondary and Higher Education Cess on income-tax", calculated at the rate of one per cent of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance secondary and higher education" We have also perused the decision of apex court in the case of CIT vs. K. Srinivasan 83 ITR 346 wherein the Hon'ble Supreme Court has held that the surcharge is to be treated as part of income tax. We reproduced the relevant part of the decision of the Hon'ble court as under:- "The meaning of the word "surcharge" as given in the Webster's New International Dictionary includes, among others, "to charge (one) too much or in addition................"; also "additional tax". Thus, the meaning of surcharge is to charge in addition or to subject to an additional or extra charge. If that meaning is applied to section 2 of the Finance Act, 1963, it woul....
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...., 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 (enter higher of 2c and 1) 3 4 Credit under section 115JAA of tax paid in earlier years (if 1 is more than 2c) (7 of Schedule MATC) 4 5 Tax payable after credit under section 115JAA [(3 - 4)] 5 6 Rebate under section 88E (4 of Schedule-STTR) 6 7 Balance Tax Payable (5-6) 7 8 Surcharge on 7 8 9 Education cess, including secondary and higher education cess on (7+8) 9 10 Gross tax liability (7+8+9) 1 0 Portion of the form set out herein above suggest that the credit under section 115JAA has ....
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....ntry 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." 5.1 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 Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and [subject to the provisions (including provisions for the levy of additional income-tax) of, this Act] in respect of the total income of the previous year [***] of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly." On the basis of Sub-section (1) of Section 4, M....
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....e 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, section 115JAA, in particular, the sub-sections quoted above provide for tax credit to be allowed to the extent of the difference of the tax paid for any assessment year under section 115JB and the amount of tax payable by the assessee on his total income computed in accordance with the other provisions of the Act. By the expression "computed in accordance with the other provisions of the Act" what is meant is the normal computation. 5.3 Mr. Khaitan, on the basis of the aforesaid provisions contended that section ....
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....oses 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 sub-sections(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 called the "Education Cess on income-tax", calculated at the rate of two per cent of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance universalised quality basic education." "Sub-section (12). The amount of income-tax as specified in sub-sections (1) to (10) and as increased by a surcharge, for purposes of the Union, calculated in the manner provi....
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....ding 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. 10. 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 v. Tulsyan Nec Ltd. [2011] 330 ITR226/196 Taxman 181/[2010] 8 taxmann.com 228. Mr. Khaitan may be right in contending that the point raised in this appeal did not fall for consideration by Their Lordships in that judgement. The question which Their Lordships were considering was whether interest under Sections 234A, 234B and 234C has to be added to the amount of tax before granting credit under Sections 115JA and 115JAA? Their Lordships answered that question in the negative.....
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....ctricals [1995] 215 ITR 114/81 Taxman 166. He relied upon the following view expressed at page 119:- "Though the rule cannot affect, control or derogate from the section of the Act, so long as it does not have that effect, it has to be regarded as having the same force as the section of the Act." 12. There can be no quarrel with the aforesaid view. But the same has no application to this case because the form for the relevant year, which provided inspiration to the assessee to take this point, did in fact seek to control or derogate from the sections quoted above. That form, as a matter of fact, was erroneous. That form has subsequently been corrected. Had it not been a case of a wrong form, the corrected form would in that case be contrary to law. Our attention was not drawn nor was it contended that the corrected form is contrary to law. Both the forms, viz. the one which was prevalent at the relevant period of time and which was corrected for the assessment year 2012-13, could not be the correct forms. If the form of 2012-13 was correct, then the form of 2008-09 was wrong, and naturally contrary to law. 13. We, as such, answer the question in the affir....