2019 (5) TMI 1127 - AT - Income Tax

MAT Credit u/s 115JAA - Inclusion of surcharge and educational cess while adjusting MAT credit - HELD THAT - As decided in K. SRINIVASAN 1971 (11) TMI 2 - SUPREME COURT held that the legislative history of the Finance Acts, as also the practice indicates that the term income-tax as employed in Section 2 includes surcharges also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Art. 271 of the Constitution. - Decided against revenue

Summary

Issues:
Appeal against CIT (A)'s order regarding MAT credit adjustment for surcharge and cess under section 115JAA.

Analysis:
1. Issue 1: Adjustment of MAT credit for surcharge and educational cess
The assessee appealed against the rejection of its rectification application by the CPC regarding the inclusion of surcharge and educational cess while adjusting MAT credit under section 115JAA. The CIT (A) directed the AO to include surcharge and cess payable on basic tax for both assessment years, relying on relevant decisions. The Revenue filed appeals against these orders, arguing that the inclusion of surcharge and cess in MAT credit was erroneous. The Revenue contended that tax payable should be computed by deducting MAT credit from gross tax payable, and section 115JAA does not specify the inclusion of surcharge and cess. Additionally, the Revenue cited a decision from the Delhi Bench of the Tribunal and an appeal pending before the Madras High Court. The Departmental Representative supported the Revenue's stance, seeking to set aside the CIT (A)'s orders.

2. Issue 2: Judicial interpretation and reliance on precedents
In response, the Authorized Representative of the assessee referenced a Tribunal decision that highlighted the inclusive nature of surcharge within the term "income-tax." The Authorized Representative argued that the CIT (A)'s decision aligns with this interpretation and should be upheld. After considering the arguments, the Tribunal found no merit in the Revenue's submissions. Citing previous Tribunal orders, including one specific case, the Tribunal dismissed the Revenue's appeals, affirming the CIT (A)'s decision to include surcharge and cess in MAT credit adjustment under section 115JAA.

3. Conclusion
The Tribunal, after hearing both parties, upheld the CIT (A)'s decision to include surcharge and educational cess in MAT credit adjustment under section 115JAA. By dismissing the Revenue's appeals, the Tribunal affirmed the direction given by the CIT (A) to the AO for both assessment years. The decision was based on the interpretation of relevant legal provisions and precedents, emphasizing the inclusive nature of surcharge within the tax framework. The judgment was pronounced on 17th May 2019 in Chennai.