TaxTMI 
TaxTMI 
2018 (10) TMI 1836
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....ct, includes surcharge and Cess also besides 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 ....
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....he Act Rs. 9,98,521/- Total tax liability of the assessee including tax Rs. 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 b....
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....DCIT Vs. Godrej Oil Palm Ltd. ITA No. in ITA No. 5098/Mum/2013 dealt with the issue whether surcharge and Education cess should be levied 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 t....
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....ofit as shown in the P&L Account for the relevant previous year prepared under sub section (2) as increased by :- a) the amount of income tax paid or payable and the provisions thereof: b) xxxxx 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....
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.... allowed to him in accordance with the provisions of this section.] . . . (2A) The tax credit to be allowed under sub-section (1A) shall be the difference of the tax paid for any assessment year under sub-section (1) of section 115JB and the amount of tax payable by the assessee on his total income computed in accordance with the other 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 sect....
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....e 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. Thus the specified rate of tax u/s 115JB of the Act is 10% of the book profits. The second proviso to clause 3 of the Finance act, states that the amount of income tax so computed shall be increased by a surcharge.The said proviso is reproduced hereunder: "Provided further that in respect of any income chargeable to tax under sections 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 ....
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....ted by the Government of India and distributed between the Union and the States in the manner provided in cl. (2). Art. 269 deals with taxes levied and collected by the Union but assigned to the States. The provisions of Art. 268 which is the first one under the heading "Distribution of revenue between the Union and the States" relate to duties levied by the Union but collected and appropriated by the States. Thus, these articles deal with the levy, collection and distribution of the proceeds of the taxes and duties mentioned 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. S....
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....h reads as under:- Explanation 2 to section 115JB Explanation 2.-For the purposes of clause (a) of Explanation 1, the amount of income-tax shall include- (i) any tax on distributed profits under section 115-O or on distributed income under section 115R; (ii) any interest charged under this Act; (iii) surcharge, if any, as levied by the Central Acts from time to time; (iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and (v) Secondary and Higher Education Cess on income-tax, 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....
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....pany for any assessment year, credit in respect of the taxes so paid for such assessment year shall be allowed on the difference of the tax paid under section 115JB and the amount of tax payable by the company on its total income computed in accordance with the other provisions of the Act. In other words, MAT credit shall be computed as under: MAT credit available = Tax paid u/s 115JB - Tax payable on the total income under normal provisions of the Act. 9.1 The amount of tax credit so determined shall be allowed to be carried forward and set off in a year when the tax becomes payable on the total income computed under the regular provisions. 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....