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TMI Blog2016 (3) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... the Id. Assessing officer has erred in law and on facts in computation of the eligible MAT credit available of Rs. 3,90,62,234 without including surcharge and education cess while arriving at the amount of total tax payable under the normal provisions of the Income Tax Act, 1961 and under sec. 115JB of the Act. 2. Without prejudice to the Ground 1 above, that on the facts and circumstances of the case, the Id. Assessing officer has erred in computation of the tax liability (excluding interest u/s234C of the Act) by increasing the tax liability with surcharge and education cess and then granting the MAT credit instead of granting the MAT credit and then increasing the balance tax liability with surcharge and education cess. 4. The CIT(A) has rejected ground No. 1 of the assessee by observing as under: "4.5 The decision of the ITAT is squarely applicable to the issue in appeal. Following the decision of the ITAT in the case of Richa Global Exports Pvt. Ltd., it is held that surcharge and education cannot be taken into account for the purpose of set off of brought forward MAT credit." 5. The CIT(A) also dismissed ground No. 2 of assessee by making following observations: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Ground 1 above, the Ld. CIT(A) has erred in computation of the tax liability (excluding interest under section 234C of the Act) by increasing the tax liability with surcharge and education cess and then granting the MAT credit instead of granting the MAT credit and then increasing the balance tax liability with surcharge and education cess. 3. Erred in disregarding the judicial precedent in the case of K. Srinivasan vs CIT (1972) 83 ITR 346 (SC) submitted by the Appellant which has held that the term 'tax' includes surcharge and education cess. 4. Having accepted the income returned by the Appellant, the Ld. Assessing Officer/ Ld. CIT (A) erred in levying interest under section 234C of the Act at Rs. 68,878 as against the correct amount of interest under section 234C of the Act of Rs. 37,042 returned by the Appellant. 5. The Ld. CIT(A) has erred in confirming the tax demand of Rs. 32,06,697 raised on the Appellant under section 156 of the Act, hence, the same is unjustified, bad in law and should be completely vacated. The Appellant also submits that each of the above grounds is independent and without prejudice to the other grounds of appeal preferred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d education cess) arrived at in the intimation is the same as the returned tax liability (excluding surcharge and education cess). Therefore, as there has been no change in the assessed tax liability, the surcharge calculated in the intimation suffers from error and needs rectification. (c) Calculation of Education cess 7.4 Ld. AR submitted that as per intimation intimation, the education cess has been calculated at Rs. 40,52,063 as against the education cess of Rs. 28,21,602. Ld. AR also submitted that the assessed tax liability (excluding surcharge and education cess) arrived at in the intimation is the same as the returned tax liability (excluding surcharge and education cess). Therefore, as there has been no change in the assessed tax liability, the education cess calculated in the intimation suffers from error and needs rectification. (d) Interest under section 234C of the Act 7.5 Ld. AR submitted that in the intimation issued under section 143(1) of the Act, interest under section 234C of the Act is levied at Rs. 68,878 as against Rs. 37,042 computed by assessee. This deviation in interest is due to consideration of the MAT credit before surcharge & education cess. 7.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, credit in respect of the taxes so paid for such assessment year shall be allowed on the difference of the tax paid under section 115JB and the amount of tax payable by the company on its total income computed in accordance with the other provisions of the Act. In other words, MAT credit shall be computed as under: MAT credit available = Tax paid u/s 115JB - Tax payable on the total income under normal provisions of the Act. 9.1 The amount of tax credit so determined shall be allowed to be carried forward and set off in a year when the tax becomes payable on the total income computed under the regular provisions. However, no carry forward shall be allowed beyond the tenth assessment year immediately succeeding the assessment year in which the tax credit becomes allowable. The set off in respect of the brought forward tax credit shall be allowed for any assessment year to the extent of the difference between the tax on the total income and the tax which would have been payable under section 115JB for that assessment year. 9.2 In other words, MAT credit will be allowed only in that previous year in which tax payable on the total income as per normal provisions of the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are regulated by CBDT. Assessing Officer cannot overlook these formats and (interpret it in his own method of calculating tax credit while making assessment u/s 143(1) of the Act.) proceed to calculate the MAT credit to compute assessment u/s 143(1) applying different methods when the proper and correct method as proposed by CBDT in ITR-6. The Assessing Officer is expected to follow the ITR-6 format to complete the assessment u/s 143(1) or 143(3) of the Act. 9.5 Let us also analyse the case law of Richa Global Exports Pvt. Ltd. which was applied by CIT(A), the Delhi ITAT opined that section 115JAA applied only to income tax, not of income tax as increased by surcharge and education cess. We are of the view that the Apex court decision in the case of K. Srinivasan (supra) may not have been brought to the knowledge of the ITAT, Delhi. Moreover, the explanation 2 of section 115JB is applicable to calculate tax liability u/s 115JB and the same explanation should also be applied for giving credit u/s 115JAA. The tax liabilities calculated u/s 115JB by applying the explanation 2, the tax liability so computed are remitted by the assessee and then the same was carried forward for futur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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