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2017 (5) TMI 1722 - AT - Income TaxMAT credit Computation - method of computation of tax liability - allowing the surcharge and cess for the purpose of MAT credit - whether Surcharges and education cess are not part of MAT credit? - HELD THAT - As decided in M/S. VACMENT INDIA AGRA 2014 (10) TMI 787 - ALLAHABAD HIGH COURT Entry 3 requires computation of the gross tax payable. Under entry 4 credit is required to be given under section 115JAA of the Act of the tax paid in earlier years. Entry 5 requires a computation of the tax payable after credit under section 115JAA of the Act. The matter is placed beyond doubt by the parenthesis which indicates that tax payable under entry 5 is to be arrived at by deducting the credit under section 115JAA of the Act (under entry 3) from the gross tax payable (under entry 4). The surcharge is computed on the amount reflected in entry 5. The Tribunal has noted that from the next assessment year the assessment year 2012-13 the position was materially altered but in the present case since the dispute related to the assessment year 2011-12 the method of computation as directed by the Commissioner (Appeals) was plainly in accordance with the methodology as provided in ITR-6. The Tribunal in confirming the order of the Commissioner (Appeals) has hence not committed any error. Also see M/S VIRTUSA (INDIA) PVT. LTD. VERSUS DCIT CIRCLE 17 (2) HYDERABAD 2016 (3) TMI 245 - ITAT HYDERABAD 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. - Decided against revenue
Issues Involved:
1. Dispute regarding the computation of tax liability for assessment year 2011-12. 2. Whether surcharge and cess should be considered for MAT credit. 3. Interpretation of Section 115JAA and the application of tax credit under different provisions. 4. Consistency in following the prescribed format for tax liability calculations. Analysis: Issue 1: Dispute regarding the computation of tax liability for assessment year 2011-12 The Allahabad High Court clarified the methodology for computing tax liability under ITR-6 for the assessment year 2011-12. The court emphasized the importance of following the prescribed entries in the form to determine gross tax payable, credit under section 115JAA, and surcharge. The court upheld the Commissioner (Appeals)'s order as compliant with the methodology provided in ITR-6 for that assessment year. Issue 2: Consideration of surcharge and cess for MAT credit The Hyderabad Tribunal in a separate case highlighted the provisions of Section 115JB and 115JAA for computing MAT credit. It explained that surcharge and education cess should be included in the tax credit calculation, as per the Supreme Court's decision. The Tribunal emphasized that MAT credit is determined by the difference between tax paid under Section 115JB and tax payable under normal provisions, including surcharge. The Tribunal stressed the importance of following the ITR-6 format, stating that the Assessing Officer must adhere to the prescribed methodology for calculating tax credit. Issue 3: Interpretation of Section 115JAA and tax credit application The Tribunal referred to the case law of Richa Global Exports Pvt. Ltd. and K. Srinivasan to clarify that tax credit under Section 115JAA includes surcharge. It emphasized that the tax liabilities calculated under Section 115JB should be considered for MAT credit calculation. The Tribunal emphasized the significance of applying Explanation 2 of Section 115JB while determining tax liability and credit under Section 115JAA. Issue 4: Consistency in following prescribed format for tax liability calculations The Mumbai Tribunal, in the case of DCIT Vs. M/s.Godrej Oil Palm Ltd., upheld the importance of consistency in following the ITR-6 format for tax liability calculations. The Tribunal emphasized that adherence to the prescribed format is crucial for accurate assessment and calculation of MAT credit. The Tribunal decided in favor of the assessee based on the consistent application of the prescribed format. In conclusion, the judgments highlighted the significance of following the prescribed methodology and format for computing tax liability and MAT credit. The decisions emphasized the inclusion of surcharge and cess in the tax credit calculation and the consistent application of the ITR-6 format for accurate assessments.
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