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2017 (12) TMI 786 - AT - Income TaxDetermining the MAT credit u/s 115JAA - Non granting credit for surcharge and cess while computing the tax credit u/s 115JAA - Held that - It is not in dispute that the surcharge and cess portion was not paid by the assessee along with the tax portion. The bifurcation of the total payment of taxes by way of tax, surcharge and cess is only for the administrative convenience of the Union of India in order to know the purpose for which the said portion of amounts are to be utilized for their intended purposes. Hence the bifurcation is only for utilization aspect and does not change the character of payment in the form of taxes from the angle of the assessee. As far as assessee is concerned, it had simply discharged the statutory dues comprising of tax, surcharge and cess to the Union of India and hence if paid in excess, would be eligible for either refund or adjustment as contemplated u/s 115JAA of the Act. If the version of the ld CITA is to be accepted, then it would result in an situation wherein if the assessee is entitled for refund, he would not be entitled for refund on the surcharge and cess portion. This cannot be the intention of the legislature and it is already well settled that the tax is to be collected only to the extent as authorized by law in terms of Article 265 of the Constitution and the department cannot be unjustly enriched with the surcharge and cess portion of the amounts actually paid by the assessee. - Decided in favour of assessee.
Issues:
1. Whether the Ld. CIT(A) was justified in not granting credit for surcharge and cess while computing the tax credit u/s 115JAA of the Act. Analysis: The appeal was against the order of the Ld. CIT(A) regarding the tax credit computation under section 115JAA of the Income Tax Act, 1961. The assessee, a private limited company, had filed its return of income for the assessment year 2011-12, disclosing total income and tax liability under normal provisions and section 115JB of the Act. The Centralized Processing Centre, Bangalore, processed the return and determined the total income and tax under both provisions. The dispute arose as the CPC ignored the surcharge and cess portion while calculating the MAT credit under section 115JAA, leading to a demand payable by the assessee. The Ld. CIT(A) upheld the CPC's decision, stating that only income tax should be considered for tax credit under section 115JAA, excluding surcharge and cess. The Ld. CIT(A) referred to relevant legal provisions and a similar decision by the ITAT Delhi Bench. The assessee appealed, arguing that surcharge and cess are part of tax, relying on the Supreme Court decision in a related case. The ITAT Kolkata analyzed conflicting decisions and legal provisions. The Co-ordinate Bench of Hyderabad Tribunal's decision supported including surcharge and cess in tax for calculating MAT credit u/s 115JAA, aligning with the Supreme Court's interpretation. The ITAT Kolkata further referred to an amendment in Section 234B, emphasizing the legislature's intention to consider the entire tax, including surcharge and cess, for MAT credit calculation. The ITAT Kolkata concluded that the legislative intent was to allow credit for the entire tax, including surcharge and cess, under section 115JAA, ensuring no unjust enrichment for the department. The ITAT Kolkata allowed the assessee's appeal, emphasizing that the payment of tax, surcharge, and cess constituted statutory dues to be considered for refund or adjustment under section 115JAA. The grounds raised by the assessee were upheld, and the appeal was allowed in favor of the assessee. In conclusion, the ITAT Kolkata's detailed analysis resolved the issue in favor of the assessee, aligning with the interpretation that surcharge and cess should be included in tax for calculating MAT credit under section 115JAA, ensuring fair treatment and compliance with legal provisions.
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