2021 (6) TMI 58 - AT - Income Tax

Allowance of MAT credit u/s. 115JAA (2A) exclusive on surcharge and education cess resulting in short credit - HELD THAT - In the case of Srei Infrastructure Finance Ltd. Vs. DCIT, Circle-11(2), Kolkata 2016 (8) TMI 967 - CALCUTTA HIGH COURT has held that MAT credit u/s. 115JA had to be allowed before making addition of surcharge and cess and MAT credit u/s. 115JA brought forward from earlier years is to be set off against tax on total income after taking into account amount of surcharge and cess. ITAT Kolkata in the case of Bhagwati Oxygan Ltd. vs. ACIT 2017 (12) TMI 786 - ITAT KOLKATA held that payment of entire tax including surcharge and cess eligible for MAT credit u/s. 115JB of the Act. It is also observed that assessee has not debited surcharge and cess in the profit and loss account. In the light of the above facts and findings of the various judicial pronouncements as cited supra in this order, we consider that ld. CIT(A) is not justified in disallowing the claim of MAT credit of the assessee pertaining to the surcharge and cess which was already paid by the assessee as part of book profit u/s. 115JB(A) of the Act. Accordingly, this appeal of the assessee is allowed.

Summary

Issues:
Allowance of MAT credit under section 115JAA (2A) exclusive of surcharge and education cess resulting in short credit.

Analysis:
The appeal arose from the order of the CIT(A) confirming the allowance of MAT credit u/s. 115JAA (2A) exclusive of surcharge and education cess, resulting in a short credit of ?1,90,167. The assessee claimed MAT credit of ?16,20,001 but was allowed only ?14,29,834 in the intimation u/s. 143(1) of the Income Tax Act, 1961. The Assessing Officer granted short credit due to excluding surcharge and education cess. The CIT(A) dismissed the appeal, citing a Delhi ITAT judgment. The assessee relied on the Supreme Court decision in CIT vs. Shrinivasan, stating that "tax" includes surcharge. The Hyderabad ITAT decision in Virtusa (India) (P.) Ltd. supported including surcharge and cess in MAT credit computation.

The ITAT analyzed the provisions of section 115JAA, which allows credit for taxes paid u/s. 115JB(1) on the difference between tax paid u/s. 115JB and tax payable on total income. Referring to the Supreme Court decision and the Virtusa case, the ITAT held that MAT credit should include surcharge and cess. It distinguished the Delhi ITAT judgment in Richa Global Exports Pvt. Ltd. The ITAT also considered decisions in Consolidated Securities Pvt. Ltd. and Nice Bombay Transport Pvt. Ltd., emphasizing that MAT credit inclusive of surcharge and cess should be allowed. The Calcutta High Court and ITAT Kolkata decisions further supported allowing MAT credit before adding surcharge and cess.

In conclusion, the ITAT allowed the appeal of the assessee, stating that the CIT(A) was unjustified in disallowing the claim of MAT credit for surcharge and cess already paid by the assessee. The judgment emphasized the inclusion of surcharge and cess in MAT credit computation, aligning with various judicial pronouncements.