Income Tax Appellate Tribunal - Jaipur
Eastern Jewels Pvt. Ltd, Jaipur vs Acit, Jaipur on 7 June, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA. No. 163/JP/2017
fu/kZkj.k o"kZ@Assessment Years : 2011-12
M/s Eastern Jewels Pvt. Ltd. cuke ACIT,
Jaipur Vs. Circle-2, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACE3394G
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj l@
s Assessee by : Shri Rajeev Sogani (CA)
jktLo dh vksj ls@ Revenue by : Smt. Poonam Rai (DCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 07/06/2018
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 14/06/2018
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)- 01, Jaipur dated 14.12.2016 pertaining to assessment year 2011-12 wherein the assessee has challenged the action of ld. CIT(A) in confirming the action of the Assessing Officer in restricting the MAT credit of AY 2010-11 to Rs. 6,59,098/- as against Rs. 10,41,894/- claimed by the assessee company.
2. Briefly stated, the facts of case are that in its return of income, the assessee has claimed MAT credit of Rs. 10,41,894/- u/s 115JAA 2 ITA No. 163/JP/2017 M/s Eastern Jewels Pvt. Ltd., Jaipur vs. ACIT, Jaipur pertaining to AY 2010-11. The AO however restricted the MAT credit to Rs. 6,59,098/- as claim by the assessee in its return of income for A.Y 2010-11 and secondly, the AO held that the MAT credit so worked out by the assessee, it has included surcharge and education cess which is not to be included for calculating the MAT credit as only tax is to be allowed to be carried forward as MAT credit and not surcharge and education cess as contemplated u/s 115JAA of the Act.
3. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) has returned a finding that as regards the quantum of carried forward MAT credit is concerned, where there was some mistake in carrying forward the MAT credit pertaining to AY 2010- 11, the proper course of action for the appellant would have been to revise its return of income for the AY 2010-11 and carry forward the correct amount of MAT Credit. Secondly, the ld. CIT(A) relied on the decision of Hon'ble Allahabad High Court in case of CIT vs. Vacment India [2015] 55 taxmann.com 314 and confirmed the action of the AO in restricting the MAT credit to Rs. 6,59,731/-. Now, the assessee is in appeal before us.
4. Firstly, it was submitted by the ld. AR that the assessee has moved an application u/s 154 for AY 2010-11 for rectifying the quantum of MAT credit and the AO has since accepted that the assessee company is eligible to carry forward MAT credit of Rs. 10,41,894/- pertaining to AY 2010-11 vide its order dated 12.02.2018. It was further submitted that the Hon'ble Supreme Court in case of CIT vs. K. Srinivasan [1972] 83 ITR 346 has held that the words "income-tax"
would include surcharge and additional surcharge. Therefore, the tax 3 ITA No. 163/JP/2017 M/s Eastern Jewels Pvt. Ltd., Jaipur vs. ACIT, Jaipur paid and tax payable as per section 115JAA(2A) would include both surcharge and education cess and the MAT credit claimed by the assessee company is correct. Further, reference was drawn to the Coordinate Bench decision in case of ACIT vs. Smt. Zahida Bano (ITA No. 579/JP/2013 dated 15.05.2017) where the aforesaid decision of the Hon'ble Supreme Court has been followed. Further, the ld. AR referred to the decision of Hon'ble Calcutta High Court in the case of Srei Infrastructure Finance Ltd. vs. DCIT [2016] 395 ITR 291 (Cal) wherein the earlier decision of the Hon'ble Allahabad High Court in case of CIT v. Vacment India [2014] 369 ITR 304 (All) has been distinguished and it has been held that both the surcharge and education cess are part of income tax.
5. The question of law which came up for consideration before the Hon'ble Calcutta High Court (supra) was whether on the facts and in the circumstances of the case and in law, the Tribunal was right in confirming the set-off of MAT Credit under section 115JAA brought forward from earlier years against tax on total income including surcharge and education cess instead of adjusting the same from tax on total income before charging such surcharge education cess" and the relevant findings are contained as under:-
"...7. We have not been impressed by the submissions advanced by Mr. Khaitan for the following reasons:-
(b) We are inclined to think that both surcharge and cess are part of the income tax though payable in addition to the Income Tax calculated at the rate provided in Section 115JB.4 ITA No. 163/JP/2017
M/s Eastern Jewels Pvt. Ltd., Jaipur vs. ACIT, Jaipur
8. We are supported in our view by Sub-section (1), the second proviso to Sub-section (3); Sub-section (11) and Sub-section (12) of Section (2) of the Finance Act, 2008, which provides as follows:-
........
Second proviso to Sub-section (3):-
........
All the provisions quoted above speak about income tax being increased by the amount of surcharge and cess. Can it in that case be contended that surcharge is anything other than Income Tax? We think the answer is 'no'.
9. 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 answere 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, so such, of the opinion that the view taken by the learned Tribunal is a correct view.
......
No elaborate reasoning is, as such required to show why are we unable to follow the judgment of the Allahabad High Court in the case of Vacment India (supra)?
5 ITA No. 163/JP/2017M/s Eastern Jewels Pvt. Ltd., Jaipur vs. ACIT, Jaipur ..........
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 affirmative and against the assessee....."
6. Further, the reliance was placed on the decisions of Coordinate Bench in the case of Virtusa (India) (P) Ltd. vs. DCIT (2016) 157 ITD 1160 (Hyd) and in the case of Bhagwati Oxegen Ltd. vs. ACIT (2017) 51 CCH 0368 Kol Trib. It was accordingly submitted that the assessee has rightly claimed the MAT credit well within the four corners of provisions of section 115JAA. The relief may kindly be granted by allowing the MAT credit to the extent of Rs. 10,41,894/- as against Rs. 6,59,098/- allowed by the Assessing Officer.
7. The ld. DR is heard who has relied on the order of the lower authorities.
6 ITA No. 163/JP/2017M/s Eastern Jewels Pvt. Ltd., Jaipur vs. ACIT, Jaipur
8. We have heard the rival contentions and perused the material available on record. The limited issue under consideration is whether for the purposes of computing the MAT credit u/s 115JAA of the Act, whether tax include surcharge and education cess or not.
9. In this regard, we refer to the provisions of section 115JB of the Act and in particular Explanation - 2 wherein the amount of income tax has been defined to include surcharge and education cess and the same is reproduced as under:-
"[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."
10. In the instance case, as per the order of the AO passed under section 154 of the Act dated 31.3.2010 for AY 2010-11, it has been stated that the assessee company has paid MAT u/s 115JB amounting to Rs 40,15,518 and given that tax under normal provisions comes to Rs 29,70,947, the MAT credit of Rs 10,44,571 is allowed to be carried 7 ITA No. 163/JP/2017 M/s Eastern Jewels Pvt. Ltd., Jaipur vs. ACIT, Jaipur forward u/s 115JAA of the Act. Further, in view of explanation 2 to section 115JB, there is no dispute that the tax includes surcharge and education cess. In any case, the decision of the Hon'ble Calcutta High Court in case of Srei Infrastructure Finance Ltd (supra) supports the case of the assessee company.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 14/06/2018.
Sd/- Sd/-
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(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 14/06/2018.
*Ganesh Kr.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s Eastern Jewels Pvt. Ltd., Jaipur
2. izR;FkhZ@ The Respondent- ACIT, Circle-2, Jaipur
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File { ITA No. 163/JP/2017} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar