2019 (4) TMI 1152 - AT - Income Tax

Rectification u/s 254 - MAT credit u/s 115JAA - HELD THAT - Mistake apparent from record which was not considered by the Bench while adjudicating the appeal of the assessee. The assessee has again reiterated the same issue that income tax and surcharge are separate charges and stated that assessee would be entitled MAT credit of ₹ 111167334/- as against ₹ 98442398/- claimed by the assessee. After going through the Misc. Application of the asssessee in the light of the above findings we observe it is pertinent to mention that the power of rectification u/s 254(2) can be exercised only when the mistake which is sought to be rectified is an obvious patent mistake, which is apparent from the record and not a mistake which is required to be established by arguments and long drawn process of reasoning on points on which there may conceivably be two opinions. In view of the above and after considering the detailed findings of the Co-ordinate Bench in the case of the assessee, we do not find any merit in the Misc. Application of the assessee, therefore, the same is dismissed. Misc. Application of the assessee is dismissed.

Summary

Issues Involved:
1. Whether MAT credit should be allowed against tax before surcharge and education cess.
2. Whether the power of rectification under section 254(2) can be exercised for an apparent mistake.

Analysis:

Issue 1: MAT Credit Calculation
The assessee filed a miscellaneous application against the ITAT order, claiming that the MAT credit should be allowed against tax before surcharge and education cess. The assessee argued that the Finance Act specifies the rate of income tax inclusive of surcharge. The ITAT considered the submissions and legal provisions. The ITAT found that there is no provision in the act requiring MAT credit to be provided before computing surcharge and cess. The ITAT emphasized that surcharge and cess must be included in the tax calculation. Referring to a judgment of the Calcutta High Court, the ITAT held that MAT credit cannot be excluded from the determination of tax. The ITAT dismissed the assessee's claim, stating that there is no special incentive for excluding surcharge and cess from tax calculation.

Issue 2: Power of Rectification
The assessee's miscellaneous application sought rectification under section 254(2) of the act, claiming an apparent mistake in the ITAT's order. The ITAT analyzed the application and the previous order, finding no specific apparent mistake that was not considered during the appeal. The ITAT clarified that rectification can only be done for obvious patent mistakes, not issues requiring lengthy reasoning. Since no such mistake was found, the ITAT dismissed the miscellaneous application.

In conclusion, the ITAT upheld that MAT credit should be calculated after considering surcharge and education cess. Additionally, the ITAT clarified the limitations of rectification under section 254(2) for apparent mistakes. The miscellaneous application was dismissed based on these findings.