2019 (1) TMI 30 - AT - Income Tax

Restriction of MAT credit - whether for the purposes of computing the MAT credit u/s 115JAA whether tax include surcharge and education cess or not? - Held that - In the instance case, as per the order of the AO passed u/s 154 dated 31.3.2010 for AY 2010-11, it has been stated that the assessee company has paid MAT u/s 115JB amounting to ₹ 40,15,518 and given that tax under normal provisions comes to ₹ 29,70,947, the MAT credit of ₹ 10,44,571 is allowed to be carried forward u/s 115JAA of the Act. Further, in view of explanation 2 to section 115JB, there is no dispute that the tax includes surcharge and education cess. In any case, the decision of the Hon ble Calcutta High Court in case of Srei Infrastructure Finance Ltd 2016 (8) TMI 967 - CALCUTTA HIGH COURT supports the case of the assessee company. - decided in favour of assessee.

Summary

Issues:
1. Restriction of MAT credit by Assessing Officer
2. Inclusion of surcharge and education cess in MAT credit calculation

Issue 1: Restriction of MAT credit by Assessing Officer

The appellant filed an appeal against the order of ld. CIT(A)-01, Jaipur regarding the restriction of MAT credit for AY 2010-11 to a lower amount than claimed. The Assessing Officer restricted the MAT credit to a lesser amount than claimed by the appellant, citing inclusion of surcharge and education cess in the calculation, which was disputed by the appellant. The ld. CIT(A) upheld the AO's decision, prompting the appellant to appeal to the ITAT Jaipur. The appellant argued that the AO had accepted an application for rectification of the MAT credit amount for AY 2010-11, acknowledging the correct MAT credit amount. The appellant also cited legal precedents, including a decision by the Hon'ble Supreme Court, to support their claim that surcharge and education cess should be included in the MAT credit calculation. The ITAT Jaipur, after considering the arguments and relevant legal provisions, allowed the appeal, stating that the tax under normal provisions includes surcharge and education cess, thereby supporting the appellant's claim for the higher MAT credit amount.

Issue 2: Inclusion of surcharge and education cess in MAT credit calculation

The core issue revolved around whether surcharge and education cess should be included in the calculation of MAT credit under section 115JAA of the Act. The appellant contended that the tax paid and payable, as per section 115JAA(2A), should encompass surcharge and education cess, citing legal interpretations and decisions in support of their argument. The ITAT Jaipur referred to Explanation 2 of section 115JB, which defines income tax to include surcharge and education cess, reinforcing the appellant's position. Additionally, the ITAT Jaipur highlighted a decision by the Hon'ble Calcutta High Court that supported the inclusion of surcharge and education cess in the tax calculation for MAT credit purposes. Ultimately, the ITAT Jaipur allowed the appeal, emphasizing that the tax amount for MAT credit calculation should indeed include surcharge and education cess, in line with the legal provisions and precedents cited by the appellant.

This comprehensive analysis of the legal judgment provides a detailed overview of the issues, arguments presented, legal interpretations, and the final decision rendered by the ITAT Jaipur.