2018 (5) TMI 1878 - AT - Income Tax

Deduction u/s 10AA - reducing exclusions in the export turnover from the total turnover - HELD THAT - On the issue of parity in computing the export turnover and total turnover the Ld.AR invited our attention to decision in the case of HCL Technologies Ltd. Ors. 2018 (5) TMI 357 - SUPREME COURT wherein it is held that the expenses excluded from export turnover have to be excluded from the total turnover also. Otherwise any other interpretation makes the formula unworkable and absurd. In view of that the corresponding grounds of the Revenue s appeal are dismissed. MAT Credit - disallowance made with regard to the surcharge and the education cess for the purpose of MAT credit - HELD THAT - As decided in case of CIT vs. K.Srinivasan 1971 (11) TMI 2 - SUPREME COURT - the legislative history of the Finance Acts as also the practice indicates that the term income-tax as employed in s. 2 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Art.271 of the constitution . - Decided against revenue

Summary

Issues:
1. Deduction under section 10AA for profits from export turnover.
2. MAT claim entitlement and credit under section 115JB.
3. Disallowance of surcharge and education cess for MAT credit.

Deduction under section 10AA for profits from export turnover:
The case involved the assessee, engaged in manufacturing electronic fasteners, claiming deduction under section 10AA for profits from export turnover. The AO reduced the loss on foreign exchange and foreign travel expenses from export turnover but refused to reduce them from the total turnover. The assessee also claimed MAT claim entitlement from the previous assessment year. The Ld.CIT(A) allowed the assessee's appeal, leading to the Revenue filing an appeal against this decision.

MAT claim entitlement and credit under section 115JB:
The AO, while giving credit under section 115JB, allowed only the tax portion and did not include the surcharge and education cess. The Ld.CIT(A) directed the AO to recompute the deduction by reducing exclusions in the export turnover from the total turnover. The Revenue disagreed with this decision, arguing that surcharge and education cess should not be included for MAT credit, citing a previous ITAT decision. The Tribunal dismissed the Revenue's appeal, upholding the Ld.CIT(A)'s decision based on the Supreme Court's interpretation and legislative history regarding surcharge and additional surcharge being part of income tax.

Disallowance of surcharge and education cess for MAT credit:
Regarding the disallowance of surcharge and education cess for MAT credit, the Ld.AR relied on a Supreme Court decision and argued against interference with the Ld.CIT(A)'s decision. The Tribunal found no merit in the submissions made by the Ld.AR and dismissed the Revenue's appeal, affirming the inclusion of surcharge and education cess for MAT credit based on legislative history and interpretation.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Ld.CIT(A)'s decision on deduction under section 10AA and the inclusion of surcharge and education cess for MAT credit. The judgments cited and legislative history played a crucial role in the Tribunal's decision-making process, ensuring consistency and compliance with legal provisions.