2015 (1) TMI 1446 - AT - Income Tax

Calculation of credit of MAT u/s 115JAA - MAT credit deduction from the tax payable and Surcharge and Education Cess to be calculated thereon - HELD THAT - As decided in WYETH LIMITED 2015 (1) TMI 1299 - ITAT MUMBAI as relying on M/S. VACMENT INDIA AGRA 2014 (10) TMI 787 - ALLAHABAD HIGH COURT as taken into account the order of entries in the form ITR-6 for the A.Y. 2011-12 in the said case and held that as per form ITR-6, the MAT credit has to be given against the gross tax payable exclusive of surcharge /cess and only after the MAT credit tax liability, the surcharge and cess has to be calculated for the purpose of working out the grand tax liability. Merit and substance in the alternative contention of the assessee that if the MAT credit is taken into account without including the surcharge and education cess then the surcharge and education cess on the tax liability has to be calculated only after allowing the MAT credit. Alternatively, the amount of MAT credit should also include surcharge and education cess for the purpose of allowing the credit against the tax liability inclusive of surcharge and education cess. MAT as well as normal tax before allowing the MAT credit has to be taken on parity either exclusion of surcharge and education cess or inclusive of surcharge and education cess or inclusive of surcharge and education cess - Direct the AO to allow the MAT credit against the tax liability payable before surcharge and education cess or alternatively the amount of MAT credit should also be inclusive of surcharge and education cess and then allow the credit against the tax payable inclusive of surcharge and education cess. - Decided against revenue

Summary

Issues:
Interpretation of MAT credit against tax liability inclusive of surcharge and education cess.

Analysis:
The Appellate Tribunal ITAT MUMBAI addressed the issue of MAT credit deduction against tax payable and calculation of surcharge and education cess in the case for the A.Y. 2011-12. The Tribunal referred to a similar case involving Wyeth Limited Vs. ACIT and the judgment of the Allahabad High Court in the case of CIT Vs. Vacment India. The Tribunal emphasized the importance of entries in form ITR-6 for the A.Y. 2011-12, stating that MAT credit should be deducted against the gross tax payable exclusive of surcharge/cess. The Tribunal also considered the alternative contention that if MAT credit is calculated without including surcharge and education cess, then the surcharge and education cess on the tax liability should be calculated only after allowing the MAT credit. The Tribunal concluded that MAT credit should be allowed against the tax liability payable before surcharge and education cess or the amount of MAT credit should include surcharge and education cess for allowing credit against the tax payable inclusive of surcharge and education cess.

The Tribunal upheld the order of the CIT(A) on this issue, citing consistency with a previous Tribunal order. The Tribunal found no error or illegality in the CIT(A)'s decision regarding the interpretation of MAT credit against tax liability inclusive of surcharge and education cess. Therefore, the appeal of the revenue was dismissed by the Tribunal.

In conclusion, the Appellate Tribunal ITAT MUMBAI clarified the interpretation of MAT credit against tax liability inclusive of surcharge and education cess for the A.Y. 2011-12, based on the entries in form ITR-6 and previous judicial precedents. The Tribunal's decision emphasized the correct methodology for calculating MAT credit and the subsequent surcharge and education cess, ensuring consistency in tax liability computation.