2016 (5) TMI 485 - AT - Income Tax

Tax credit of MAT disallowed - Held that - By applying the ratio of the judgment in case of K. Srinivasan (1971 (11) TMI 2 - SUPREME Court) and provisions contained under Explanation (2) of section 115JB, we are of the consider view that the CIT (A) has erred in not giving the due credit of MAT u/s 115JAA of the Act as MAT includes surcharge on MAT as well as education cess and the same was undisputedly paid by the assessee during the year under assessment. Consequently, the impugned order is set aside.

Summary

Issues:
Claim of Minimum Alternate Tax (MAT) credit under section 115JAA of Income Tax Act, 1961.
Allowability of MAT credit.
Charging of interest under section 234B and 234C of Income Tax Act, 1961.

Analysis:
1. The appellant, a company, sought to set aside the order confirming the rectification under section 154 of the Income-tax Act, 1961, regarding the MAT credit claim for the Assessment Year 2010-11. The appellant claimed that the CIT (A) erred in not allowing the MAT credit as per the return of income. The appellant also challenged the charging of interest under sections 234B and 234C of the Act. The Tribunal heard both parties and reviewed the documents and orders passed by the revenue authorities.

2. The CIT (A) dismissed the claim of the appellant regarding MAT credit, stating that the credit claimed by the appellant was not allowable under the Act. The appellant had claimed a higher credit amount than what was allowed by the CPC. The Tribunal noted that the appellant's claim included surcharge and education cess on the total MAT amount, which the CIT (A) disallowed.

3. The Tribunal referred to a previous judgment by the Apex Court and Explanation 2 of section 115JB of the Act to determine the entitlement of the appellant to the MAT credit. The Tribunal held that the CIT (A) erred in not granting the due credit of MAT under section 115JAA, which includes surcharge and education cess. The Tribunal set aside the impugned order and allowed the appeal for statistical purposes.

4. The Tribunal's decision was based on the interpretation of relevant provisions and previous judicial decisions. The appellant's claim for MAT credit was upheld, emphasizing that MAT includes surcharge and education cess, as clarified in Explanation 2 of section 115JB. The Tribunal's ruling favored the appellant's position on the MAT credit issue, leading to the appeal being allowed.

5. In conclusion, the Tribunal's detailed analysis of the MAT credit claim under section 115JAA highlighted the importance of considering surcharge and education cess in determining the allowable credit amount. The judgment provided clarity on the interpretation of relevant tax provisions and set a precedent for similar cases involving MAT credit disputes.