2015 (11) TMI 1262 - AT - Income Tax

MAT - whether credit u/s 90 would be given on tax liability under the provisions of Sec.115JB? - CIT(A) allowed claim - Held that - The income on which tax has been paid abroad was included in book profit for the purpose of Sec.115JA. It was held that once taxable income was determined either under the normal provisions of the Act or as per Sec.115JB, subsequent portion relating to computation of the tax has to be governed by the normal provision of the Act. It also held that there was no provision in the Act, debarring granting of credit for tax paid abroad in case income is computed u/s 115JA. It was further held that the assessee could not be denied the set off of tax relief against the tax liability determined u/s 115JA. - Decided against revenue

Summary

Issues:
1. Allowance of relief to assessee u/s 90 of the IT Act while computing tax liability under Sec.115JB.

Analysis:
The appeal filed by the revenue challenges the allowance of relief to the assessee under section 90 of the IT Act while computing tax liability under section 115JB of the IT Act, 1961. The revenue argues that taxes under section 115JB are distinct from regular taxes computed under other provisions of the Act, thus contending that the assessee should not be granted a rebate for taxes paid in a foreign country. On the contrary, the assessee, supported by the learned AR, relies on a decision of a Co-ordinate Bench in a similar case, emphasizing that the relief was rightly granted by the CIT(A).

The key question before the Tribunal is whether credit under section 90 of the IT Act should be allowed on tax liability under Minimum Alternate Tax (MAT) provisions of the Act. The Tribunal notes a similar issue addressed by the Mumbai Bench in a previous case. The Co-ordinate Bench in the referenced case had ruled that once the taxable income on which tax was paid abroad was included in the 'book profit' for the purpose of section 115JA, the subsequent computation of tax should be governed by the normal provisions of the Act. It was also held that there is no provision debarring the granting of credit for tax paid abroad when income is computed under section 115JA. The Tribunal concurred with the earlier decision, emphasizing that the assessee cannot be denied the set off of tax relief against the tax liability determined under section 115JA.

The CIT(A) had granted relief to the assessee based on the same reasoning as the Co-ordinate Bench in the referenced case. The Tribunal finds no valid grounds to interfere with the decision of the CIT(A) and subsequently dismisses the appeal filed by the revenue. The order was pronounced in open court on 1st October 2015.