2021 (1) TMI 634 - AT - Income Tax

Set off of MAT credit u/s.115JAA - interest u/s.234C of the Act was also charged by the ld. AO for the deficit in tax - Difference in figure arose because of the fact the assessee computed the difference in tax payable under normal provisions of the Act and tax payable u/s.115JB after including surcharge and education cess to be part of the tax AND AO computed the same ignoring surcharge and education cess from the tax portion - HELD THAT - Purpose of computation of MAT credit u/s.115JAA tax portion has to be inclusive of surcharge and education cess and accordingly, the computation made by the assessee in its return of income in respect of MAT credit is correct. We find that assessee being a company had filed its return of income in ITR-6 (i.e. prescribed form) under schedule for MAT credit (Schedule MATC), the assessee is precluded from filling up any figure as they are automatically picked from yet another schedule in the same ITR form i.e. 1d of Part-BTT1 and 5 of part-B-TT1, wherein the figures mentioned thereon, represent tax payable under normal provisions and u/s.115JB of the Act respectively, which is admittedly inclusive of surcharge and education cess. Hence, there is absolutely no scope for ignoring surcharge and education cess for the purpose of computing MAT credit u/s.115JAA of the Act. It is a well known fact that the ITR return form is a form prescribed by CBDT and the revenue is bound to follow the same. We find lot of force in the argument advanced by the ld. AR and accordingly, allow the grounds raised by the assessee. With regard to MAT credit u/s.115JAA and direct the ld. AO to accept the working given by the assessee as per the return of income. Charging of interest u/s.234C of the Act should always be on returned income and not on assessed income as it is a settled law. Accordingly grounds raised by the assessee allowed.

Summary

Issues involved:
Set off of MAT credit u/s.115JAA of the Income Tax Act, 1961.

Analysis:
The appeal in ITA No.5346/Mum/2017 for A.Y.2012-13 concerns the set off of MAT credit u/s.115JAA of the Act. The assessee, engaged in providing remote infrastructure management services, filed its return of income for the A.Y.2012-13, declaring total income under normal provisions and u/s.115JB of the Act. The assessment accepted the returned income but calculated MAT credit differently than claimed by the assessee, leading to a dispute. The key issue revolves around the computation of MAT credit, specifically the inclusion of surcharge and education cess in the tax portion.

To address the dispute effectively, a table outlining the tax calculations under normal provisions and MAT was presented. The contention arose due to the difference in tax payable under normal provisions and u/s.115JB of the Act, considering surcharge and education cess. The assessee argued that the tax portion for MAT credit computation should include surcharge and education cess, as per the return of income.

The Tribunal referred to a Supreme Court case holding that "tax" includes surcharge, and education cess is a recent statutory addition. It concluded that for MAT credit calculation u/s.115JAA, the tax portion must encompass surcharge and education cess. The Tribunal noted that the ITR form prescribed by CBDT includes figures inclusive of surcharge and education cess, leaving no room to exclude them for MAT credit computation.

Consequently, the Tribunal upheld the assessee's argument, directing the AO to accept the working provided by the assessee for MAT credit calculation. Additionally, the Tribunal allowed the grounds raised against charging interest u/s.234C on assessed income, emphasizing that interest should be levied on returned income. Ultimately, the appeal of the assessee was allowed, with the order pronounced on 23/11/2020 in the open Court.