2021 (8) TMI 1065 - AT - Income Tax

MAT credit on the difference between gross tax liability as per normal provisions and MAT provisions as claimed by assessee in ITR instead of base tax as per normal income and book profit u/s 115JB - as per revenue explanation 2 to section 115JB was inserted to define the meaning of tax for the purpose of calculating book profit liable to tax u/s 115JB and it cannot be extended to section 115JAA or section 115JB of the Act - HELD THAT - CIT(A) has allowed relief to the assessee and has held that while allowing the MAT credit, it is gross Income Tax including Surcharge and Education Cess which is required to be considered. - This issue is covered by the decision of SREI Infrastructure Finance Ltd 2016 (8) TMI 967 - CALCUTTA HIGH COURT thereby confirming the set off of MAT Credit u/s 115JAA brought forward from earlier years against tax on total income including surcharge and education cess instead of adjusting the same from tax on total income before searching surcharge and education cess. The Hon ble Calcutta High Court relied upon the decision of the Hon ble Apex Court in case of CIT Vs. Tulsyan Nec Ltd. 2010 (12) TMI 23 - SUPREME COURT . Thus, there is no need to interfere with the findings of the CIT(A). Hence, the appeal of the Revenue is dismissed.

Summary

Issues:
Allowance of MAT credit based on gross tax liability vs. base tax as per normal income and book profit u/s 115JB.

Analysis:

Issue 1: Allowance of MAT credit based on gross tax liability vs. base tax as per normal income and book profit u/s 115JB

The appeal was filed by the Revenue challenging the order passed by CIT(A) for assessment year 2016-17. The dispute revolved around the calculation of MAT credit, specifically whether it should be based on the difference between gross tax liability as per normal provisions and MAT provisions or base tax as per normal income and book profit u/s 115JB. The Revenue argued that MAT credit should be calculated based on base tax as per normal income and book profit u/s 115JB, citing a previous decision by ITAT Delhi in a specific case. However, the assessee contended that MAT credit should include Income Tax, Surcharge, and Education Cess. The CIT(A) partially allowed the appeal of the assessee, emphasizing that MAT credit should consider gross Income Tax, including Surcharge and Education Cess.

The assessee supported their argument by referring to various judgments, including Srei Infrastructure Finance Ltd. vs. DCIT and AMQ Agro India Pvt. Ltd. vs. Assistant Commissioner of Income Tax, which upheld the inclusion of Surcharge and Education Cess in MAT credit calculations. Additionally, the assessee highlighted that ITR Form No. 6, approved by CBDT for corporate assessee filings, explicitly considers Surcharge and Education Cess while calculating MAT credit. The assessee also pointed out that the judgment of Richa Global Exports Pvt. Ltd. by Delhi ITAT did not consider the Supreme Court's decision in K. Srinivasan v. CIT, making it per incuriam and not interpreting the law correctly.

The CIT(A) relied on the judgment of the Hon’ble Calcutta High Court in Srei Infrastructure Finance Ltd. and the Supreme Court's decision in CIT vs. Tulsyan Nec Ltd. to support the inclusion of Surcharge and Education Cess in MAT credit calculations. The AR argued that when two interpretations exist, the one favoring the taxpayer should be adopted, citing the case of Manish Maheshwari v/s ACIT. The AR further referenced recent judgments by the Hon’ble Madras High Court, emphasizing that MAT credit u/s 115JAA includes Surcharge and Education Cess, in line with the Supreme Court's decision in CIT vs. K. Srinivasan.

Ultimately, the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal based on the precedent set by the Hon’ble Calcutta High Court and the Supreme Court, affirming that MAT credit should encompass Income Tax, Surcharge, and Education Cess. The judgment highlighted the importance of following the interpretation that benefits the taxpayer when multiple views exist on an issue.

This detailed analysis provides a comprehensive overview of the legal judgment, focusing on the specific issue of MAT credit calculation and the conflicting interpretations presented by the Revenue and the assessee.