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2018 (10) TMI 1900 - AT - Income TaxMAT credit u/s 115JAA - 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 - whether for the purposes of computing the MAT credit u/s 115JAA of the Act, whether tax include surcharge and education cess or not? - HELD THAT- 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 As decided in K. SRINIVASAN 1971 (11) TMI 2 - SUPREME COURT Surcharge is part of income tax. This issue has been dealt with by the coordinate bench/Jaipur Bench of the Tribunal 2019 (1) TMI 30 - ITAT JAIPUR and explanation-2 to section 115JB of the Act clearly states that tax includes surcharge and education cess. Thus, ground raised by the assessee as to whether income tax will include sur-charge and education cess so far as section 115JB and 115JAA are concerned, are allowed as indicated above.
Issues Involved:
1. Restriction of MAT credit for Assessment Year 2006-07. 2. Inclusion of surcharge and education cess in MAT credit under section 115JAA. Detailed Analysis: 1. Restriction of MAT Credit for Assessment Year 2006-07 The assessee appealed against the orders of the First Appellate Authority, Mumbai, which confirmed the action of the Assessing Officer (ACIT) in restricting the MAT credit for the Assessment Year 2006-07 to ?44,29,848 instead of ?49,70,291 as claimed by the assessee. The assessee argued that the application under section 154 of the Act was not considered properly. It was contended that tax includes surcharge and cess under sections 115JB and 115JAA. The assessee relied on the decisions in M/s Eastern Jewels Pvt. Ltd. vs ACIT and CIT vs K. Srinivasan. The Tribunal reproduced relevant portions from the Jaipur Bench's order in the case of M/s Eastern Jewels Pvt. Ltd. vs ACIT, which dealt with a similar issue of restricting MAT credit and the inclusion of surcharge and education cess. The Tribunal noted that the AO had restricted the MAT credit by excluding surcharge and education cess, but the CIT(A) had upheld the AO's decision based on the Allahabad High Court's ruling in CIT vs. Vacment India. 2. Inclusion of Surcharge and Education Cess in MAT Credit under Section 115JAA The Tribunal examined whether surcharge and education cess should be included in the computation of MAT credit under section 115JAA. The assessee argued that the Hon'ble Supreme Court in CIT vs. K. Srinivasan held that "income-tax" includes surcharge and additional surcharge. The Tribunal referred to the Calcutta High Court's decision in Srei Infrastructure Finance Ltd. vs. DCIT, which supported the inclusion of surcharge and education cess as part of income tax. The Tribunal also referred to Explanation 2 to section 115JB, which defines the amount of income tax to include surcharge and education cess. The Tribunal concluded that the tax includes surcharge and education cess, supporting the assessee's claim for the inclusion of these components in the MAT credit computation. Finally, the Tribunal allowed the assessee's appeal, holding that MAT credit should include surcharge and education cess as per section 115JB and 115JAA. Conclusion: The Tribunal allowed the appeal of the assessee, concluding that MAT credit should include surcharge and education cess as per the provisions of sections 115JB and 115JAA. The Tribunal relied on the Supreme Court's decision in CIT vs. K. Srinivasan and the Calcutta High Court's decision in Srei Infrastructure Finance Ltd. vs. DCIT to support its conclusion. The Tribunal dismissed the additional grounds raised by the assessee as not pressed.
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