2021 (7) TMI 207 - AT - Income Tax

Computation of set-off of MAT credit u/s 115JAA excluding surcharge and cess resulting short grant of MAT credit - HELD THAT - Format ITR 6 was amended from A.Y. 2012-13 wherein the tax liability in Part-B TTI both under normal provisions and under MAT provisions computed including surcharge and cess. MAT credit is computed automatically using the prescribed algorithm which is nothing but the balancing figure i.e. different between tax liability and MAT liability including surcharge and cess. Therefore, post A.Y. 2012-13 as the format of ITR-6 is so designed to compute MAT credit automatically using the prescribed algorithm i.e. difference between tax liability and MAT liability including surcharge and cess is a balancing figure. There cannot be any debate as to the exclusion of surcharge and cess. The observation of the Ld.CIT(A) that the issue is debatable one is not sustainable - majority of the decisions including the decisions of the Hon'ble Calcutta High Court and Hon'ble Madras High Court are in favour of the assessee and therefore it cannot be said that it is a debatable issue. In the circumstances, respectfully following the above said decisions allowing the grounds of appeal of the assessee, we direct the Assessing Officer to allow set off of MAT credit inclusive of surcharge and education cess and recompute the tax payable by the assessee for the year under consideration. - Decided in favour of assessee.

Summary

Issues:
Computation of set-off of MAT credit u/s 115JAA excluding surcharge and cess resulting in short grant of MAT credit.

Analysis:
The appeal was filed against the order of the Learned Commissioner of Income Tax (Appeals) for the assessment year 2014-15. The main issue revolved around whether MAT credit granted under section 115JAA of the Act should be inclusive of surcharge and cess. The assessee argued that the order passed under section 154 was not specifically to decide on the issue of whether MAT credit should include surcharge and cess. Several decisions were cited in favor of the assessee, including judgments from the Calcutta High Court, Madras High Court, and various Tribunals.

In the case of Srei Infrastructure Finance Ltd. v. DCIT, the Calcutta High Court held that MAT credit should be set off against tax on total income including surcharge and education cess. Similarly, the Madras High Court in M/s. Scope International Pvt. Ltd. held that MAT credit should include surcharge and education cess. The Hyderabad Tribunal in Virtusa (India) (P.) Ltd. also emphasized that tax should include surcharge and additional surcharge, aligning with the Supreme Court's decision. The Kolkata bench of the Tribunal and the Bombay Bench of the Tribunal also supported the inclusion of surcharge and cess in MAT credit calculations.

The Tribunal noted that the issue was not debatable, especially post the amendment in the format of ITR-6 from A.Y. 2012-13, which included surcharge and cess in tax liability calculations. The majority of decisions, including those of the Calcutta and Madras High Courts, favored the assessee's position. Therefore, the Tribunal directed the Assessing Officer to allow the set off of MAT credit inclusive of surcharge and education cess, leading to the allowance of the assessee's appeal.

In conclusion, the appeal was allowed, and the Assessing Officer was directed to recompute the tax payable by the assessee for the relevant year, considering MAT credit inclusive of surcharge and education cess.