TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 1836
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....des the normal rate of tax as provided. We shall be dealing with the facts in the appeal in ITA No. 1619/Chd/2017 relating to assessment year 2008-09 and the decision rendered therein will apply mutatis-mutandis to the rest of the appeals also. 3. The brief facts relating to the issue are that the assessee had filed its return of income for the year under consideration declaring an income of Rs. 43,70,28,420/- under the normal provisions of the Act, whereas, the income chargeable to tax under the deeming provisions of section 115JB of the Act i.e. MAT provisions was declared at Rs. 55,23,56,116/-. The tax liability under the normal provisions without surcharge and education cess, came at Rs. 13,11,08,526/- i.e. @ of 30% of the normal income, whereas the tax liability without surcharge and cess under the deeming provisions of section115JB of the Act came to Rs. 5,52,35,612/- i.e. @ 10% of the book profits of Rs. 55,23,56,116/-, as per section115JB of the Act. Since the tax liability under the normal provisions exceeded that under the deeming provisions, the assessee determined its tax liability under the normal provisions without surcharge and cess at Rs. 13,11,08,526/-. Aga....
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.... 14,95,44,481/- Less : MAT Credit Rs. 4,62,95,497/- Balance tax payable Rs. 10,32,48,984/- Less: Pre-paid taxes Rs. 10,79,31,906/- Amount refundable to the assessee Rs. 46,82,922/- Rounded off to Rs. 46,82,920/- 4. The assessee moved an application u/s 154 of the Act stating therein that MAT credit had not been allowed correctly while giving effect to the order of the ITAT and that the MAT credit should have been included surcharge and cess. However, the Assessing officer rejected the application filed by the assessee. The matter was carried in appeal before the CIT(A) who allowed the assessee's appeal stating that identical issue had been decided in the case of the assessee in assessment year 2015-16 in favour of the assessee allowing MAT credit after including surcharge and cess therein. The CIT(A) also noted that the issue was covered in favour of the assessee by the decision of the ITAT in the case of M/s Vardhman Textiles Ltd., ITA No. 06/Chd/2015 and Vardhman Yarn & Threads Ltd., ITA No. 07/Chd/2015. 5. Aggrieved by the same, the Revenue has come in appeal before us raising the following ground:- "Whether upon thefacts and circumstances of the case, the Ld. CIT(....
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....after giving MAT credit or not which is also not the issue before us in the instant case. 16. With regard to the case of M/s Richa Global Export Private Ltd. ITA No. 2303/2012, we find that the case deals with whether the amount of MAT Credit under section 115JA would include surcharge and cess on the tax payable on the book profits which is the similar ground in the present appeal. 17. The Coordinate Bench of ITAT Delhi in its judgment dt. 31/08/2012 held as under: We have heard the rival submissions of both the parties and have gone through the material available on record. For understanding the amount of tax credit available u/s 115JAA first of all, it is necessary to understand the meaning of income tax as contemplated by section 115JB of the Act. Section 115JBreads as under:- "Special provision for payment of tax by certain companies. 115JB. (1) 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, 2010, is less than fiftee....
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.... c) xxxxx d) xxxxx e) xxxxx f) xxxxx The above explanation 1 clarifies that explanation 2 to section 115JB was inserted to define the meaning of tax (which of course includes education tax and surcharge) for the purpose of calculating book profits liable to tax u/s 115JB and it cannot be extended to sections 115JB or section 115JAA of the Act. In view of the above provisions, we are of the considered opinion that tax credit u/s 115JAA was rightly given and we do not find any reason to interfere in the order of Ld CIT(A). 18. Since we find the facts and circumstances of the case and the grounds before us to be adjudicated are squarely covered by the judgment by the coordinate bench, the appeal of the Revenue is hereby allowed 7. Ld. Counsel for the assessee, on the other hand, contended that the issue had been decided in favour of the assessee in a number of decisions as under: 1. Virtusa (India) Pvt Ltd Vs. DCIT (2016) 3 TMI 245 (Hyd) dated 4.3.2016 2 Wyeth Ltd Vs. ACIT,ITA No. 6682/2011 assessment year 2007-08 dated 9.1.2015 (Mumbai) 3 AMQ Agro India Pvt Ltd Vs. ACIT (2016) 5 TMI 485 (Delhi) dated 29.4.2016 4 Garware Wall Ropes Ltd v Addl. CIT and vic....
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....er provisions of this Act: 10. As per the above, sub section (1A) allows credit of taxes paid under the deeming provisions of section 115JB.The quantum of tax credit so allowed is set out in sub-section (2A) which states the same to be the difference of the tax paid u/s 115JB and the tax payable as per normal provisions i.e. credit to the extent of excess/surplus tax paid under the special provisions of section 115JB of the Act as compared to the normal tax payable by the assessee is allowed. Now, for the purpose of determining the MAT credit allowable to the assessee as per sub section (2A) of section 115JAA of the Act, it is important to determine two things - * Tax paid u/s 115JB of the Act and * Tax payable under the normal provisions of the Act. Tax" has been defined under section 2(43) of the Act as under: 2.In this Act, unless the context otherwise requires:- . . . ][(43) "tax" in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this A....
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....s 115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 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 subsection shall be increased by a surcharge for purposes of the Union, calculated,- Clause 11 of the Finance Act further increases the tax by an education cess. The said clause is reproduced hereunder: "(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", so as to fulfill the commitment of the Government to provide and finance universalised quality basic education, calculated at the rate of two per cent, of such income-tax and surcharge." Therefore the income tax levied u/s 115JB as specified by the Finance Act, is the tax rate as specified in the section increased by surcharge & education cess. It is pertinent to note that the Finance Act specifies that surcharge and cess "increase " the tax levied. It follows therefore that surc....
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....tioned therein between the Union and the States. The legislative power of Parliament to levy taxes and duties is contained in Arts. 245 and 246(1) read with the relevant entries in List I of the Seventh Schedule. 9. As mentioned before, the legislative entry 82 in List I relates to taxes on income other than agricultural income; income-tax, super-tax and surcharge would all fall under this entry. It is exercise of the legislative power conferred by that entry that the Union Parliament enacts the provision in the Finance Act each year relating to them. It is that Act which authorises these taxes to be charged and prescribes the rates at which they can be charged. Sec. 4 of the Act simply provides that 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 in accordance thereto and subject to the provisions of the Act. Sec. 95, which was omitted by the Finance Act of 1965, contained similar provision with regard to super-tax. Although under the Act s. 4 is the charging section yet income-tax can be charged only where the Central Act which, in the present case, will be the Fina....
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....ax, if any, as levied by the Central Acts from time to time. A bare perusal of the above would reveal that the said explanation also corroborates what has been stated by us above and what has been held by the Hon'ble Supreme Court in the case of K Srinivasan (supra) that taxes paid include surcharge and cess. As a natural corollary, tax paid under the normal provisions would also include surcharge and cess. Thus, what follows from the aforesaid discussion is that tax credit to be computed would be after inclusion of surcharge and cess for both the tax paid u/s 115JB of the Act and tax payable as per normal provisions of the Act. 13. We shall now be dealing with the question of point at which credit of MAT to be given .Section115JAA(4) of the Act deals with the same stating as under:- "115JAA. (1) ...... (4) The tax credit shall be allowed set-off in a year when tax becomes payable on the total income computed in accordance with the provisions of this Act other than section 115JA or section 115JB, as the case may be. As is clear from the above tax credit is to be allowed when tax becomes payable. Deriving from the definition of tax payable as to include surcha....
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....visions. However, no carry forward shall be allowed beyond the tenth assessment year immediately succeeding the assessment year in which the tax credit becomes allowable. The set off in respect of the brought forward tax credit shall be allowed for any assessment year to the extent of the difference between the tax on the total income and the tax which would 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 important word used is tax paid and as per the Hon'ble Apex Court decision in the case of K. Srinivasan (supra....