2017 (11) TMI 1898

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....ter deducting the MAT credit u/s 115JAA from the tax on assessed income. 2. Ld. CIT(A) erred in ignoring the law that for the purpose of tax credit u/s 115JAA of the IT Act, tax does not include surcharge and education cess." 2. Assessee is a company, engaged in the business of Manufacturing of active Pharma Ingredients & Intermediates, filed its original return of income for the AY 2011-12 on 24/11/2011 declaring an income of Rs. 129,04,21,440/-, which was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny under CASS and a notice u/s 143(2) was issued dt. 07/09/2012. After due procedure, the AO passed the order u/s 143(3) r.w.s. 92CA(4) of the Act assessed the income of the assessee at Rs. 1,29,66....

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....on record. The issue is squarely covered in favour of the assessee by the decision of the coordinate bench of Hyderabad (supra) wherein the Bench has held as under: "9. Considered the submissions of both the counsels and material facts on the record. The provisions of section 115JB in brief are: every assessment year, two parallel computations are contemplated. One computation of total income in accordance with the normal provisions of the I.T. Act and another is the computation of book profit as stipulated u/s 115JB. If the income tax payable on the total income is less than 18.5% of the book profit computed u/s 115JB, then the book profit so computed shall be deemed to be the total income, then the book profit so computed shall b....

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....have been payable under section 115JB for that assessment year. 9.2 In other words, MAT credit will be allowed only in that previous year in which tax payable on the total income as per normal provisions of the income tax Act is more than tax payable under section 115JB and it shall be allowed to the extent of the following: Tax payable on total income under the normal provisions of the Act - tax payable under section 115JB = MAT credit to be allowed. 9.3 On careful reading, the sub-section 2A, the tax credit to be allowed shall be the difference of tax paid for any AY under sub-section (1) of 115JB and the amount of tax payable on his total income computed in accordance with the other provisions of this Act. The ....

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....p;1a 0   1b Surcharge on (a) above 1b 0   1c Education Cess on (1a+1b) above 1c 0   1d Total Tax Payable u/s 115JB (1a+1b+1c)MAT) 1d 0 2 Tax payable on total income     a Tax at normal rates 2a 0   b Tax at special rates (11 of Schedule-SI) 2b 0   c Tax Payable on Total Income (2a + 2b) 2c 0 3 Surcharge on 2c 3 0 4 Education Cess, including secondary and higher education cess on (2c + 3) 4 0 5 Gross tax liability (2c+3+4) 5 0 6 Gross tax payable (higher of 5 and 1d) 6 0 7 Credit under section 115JAA of tax paid in earlier years (if 5 is more than 1d) ( ....

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.... surcharge and cess. The MAT credit in row "7" are calculated automatically using the prescribed algorithm, this is nothing but balancing figure i.e., the difference between tax liability as per normal provisions and MAT provisions. Both the above tax liabilities are calculated with surcharge and cess. These are the standard format, which are expected to be followed by all the assessees and also important to note that the above format of ITR 6 was amended w.e.f. AY 2012-13 by CBDT. Moreover, this is more relevant for the department also. These formats are regulated by CBDT. Assessing Officer cannot overlook these formats and (interpret it in his own method of calculating tax credit while making assessment u/s 143(1) of the Act.) proceed to ....