2014 (10) TMI 787 - HC - Income Tax

Method of computation of tax - Whether the Tribunal has erred in allowing the calculation of tax in violation of the provisions of the relevant Finance Act which prescribe calculation of tax as inclusive of cess and surcharge Held that - The Tribunal rightly upheld the order of the CIT(A) and directed the AO to compute the gross tax liability on the assessee in accordance with the method of computation provided in ITR-6 for the AY 2011-12 - the method of computation, as directed by the CIT(A) was plainly in accordance with the methodology as provided in ITR-6 thus, the order of the Tribunal is upheld Decided against revenue.

Issues:
1. Appeal by Revenue under Section 260A of the Income Tax Act, 1961 arising from an order of the Income Tax Appellate Tribunal dated 22 May 2014 for AY 2011-12.
2. Dispute regarding the calculation of tax inclusive of cess and surcharge.
3. Appeal filed by assessee before Commissioner (Appeals) against an order passed by ACIT-CPC, Bangalore.
4. Grounds of appeal raised before Commissioner (Appeals) by the assessee.
5. Commissioner (Appeals) allowing the appeal and directing the Assessing Officer to compute the gross tax liability.
6. Tribunal dismissing the appeal filed by the Revenue.
7. Question raised pertaining to the computation of tax in accordance with the modalities prescribed in ITR-6.

Analysis:
1. The appeal by the Revenue under Section 260A of the Income Tax Act, 1961 was based on a dispute regarding the calculation of tax inclusive of cess and surcharge. The question raised was whether the ITAT erred in allowing the calculation of tax in violation of the provisions of the relevant Finance Act. The dispute arose from an order passed by the ACIT-CPC, Bangalore, where a demand was raised on the assessee. The Commissioner (Appeals) allowed the appeal filed by the assessee and directed the Assessing Officer to compute the gross tax liability in accordance with the method of computation provided in ITR-6 for AY 2011-12.

2. The grounds of appeal raised before the Commissioner (Appeals) included the rejection of a rectification application under Section 154 of the IT Act, incorrect calculation of surcharge and education cess on tax payable, and the issue of credit of tax paid under Section 115JAA. The Commissioner (Appeals) found in favor of the assessee and directed the computation of tax liability as per the provisions of ITR-6.

3. The Tribunal, in its order, confirmed the decision of the Commissioner (Appeals) and dismissed the appeal filed by the Revenue. It was noted that the method of computation directed by the Commissioner (Appeals) was in accordance with the methodology provided in ITR-6 for AY 2011-12. The Tribunal highlighted that the dispute related to the specific assessment year and that the methodology applied was correct for that period.

4. The Tribunal emphasized that the method of computation was clear from the entries in ITR-6, leaving no ambiguity. The computation involved gross tax payable, credit under Section 115JAA for tax paid in earlier years, tax payable after credit under Section 115JAA, surcharge, and education cess. The Tribunal concluded that for AY 2011-12, the computation method directed by the Commissioner (Appeals) was appropriate and in line with the prescribed methodology.

5. The Tribunal highlighted that although the position was altered for the next assessment year, the methodology applied for AY 2011-12 was correct. Therefore, the appeal did not raise any substantial question of law, leading to its dismissal. The judgment concluded with no order as to costs, settling the matter regarding the computation of tax liability for the specified assessment year.

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