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TMI Blog2018 (8) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... AM: The captioned appeal has been filed at the instance of the Revenue against the order of the CIT(A)-2, Ahmedabad ( CIT(A) in short), dated 30.03.2016 arising in the assessment order dated 02.12.2014 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning assessment year 2012-13. 2. The grounds of appeal raised by the Revenue reads as under:- 1. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance u/s 36(1)(iii) of the Act amounting to ₹ 46,85,028/-. 2. The Ld. CIT(A) has erred in law and on facts in restricting the disallowance of ₹ 23,148 made u/s 14A to ₹ 8801/-. 3. The Ld. CIT(A) has erred in law and on facts in allowing MAT Credit of ₹ 1,69,59,061/-. 3. When the matter was called for hearing, the learned DR for the Revenue relied upon the order of the AO and submitted that CIT(A) has wrongly granted the relief on all the three counts as per the grounds of appeal. 4. The learned AR, on the other hand, submitted that ground no.1 concerns disallowance of ₹ 46,85,028/- under s.36(1)(iii) on the ground that the assessee has given interest free adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come is set off against the interest expenditure in tune with the decision of the Hon ble Gujarat High Court in the case of Pr.CIT vs. Nirma Credit Capital Pvt. Ltd. [2017] 85 taxmann.com 72 (Guj). The CIT(A) has correctly scaled down the disallowance of proportionate interest from ₹ 23,148/- to ₹ 8,801/-. We find that the issue is squarely covered in favour of the assessee by the decision of the Hon ble Gujarat High Court in the case of Nirma Credit Capital Pvt. Ltd. (supra). Thus, we find no infirmity in the order of the CIT(A) on this score. 8. In the result, ground no.2 of the Revenue s appeal is dismissed. 9. Ground no.3 concerns allowability of set off of MAT credit of ₹ 1,69,59,061/- (correct figure ₹ 35,59,296/- as transpired in the course of hearing). While it is the case of the assessee that it is eligible for claim of MAT credit under s.115JAA including education cess and surcharge paid earlier against tax liability of the current year. Per contra, it is the case of the AO that the surcharge and education cess are on different pedestal and are not covered by the definition of tax . The AO accordingly excluded the component of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.121/- minus ₹ 110/-) in subsequent years. The amount of tax credit of ₹ 11 has two components, viz., tax of ₹ 10 and surcharge etc. of ₹ 1. The parallel of the tax credit of ₹ 11 in the hypothetical situation is Rs.l.05 crore in the instant case, which as per the assessee has tax component of ₹ 95.83 lac and surcharge and cess etc. at ₹ 10.25 lac. The Id. AR could not place on record the veracity of such two figures and on a pointed query frankly agreed that the same can be examined by the AO. 5. We revert to the main question as to the stage at which deduction should be allowed for the tax credit. The Id. AR submitted that the tax component of ₹ 95.83 lac should have been allowed deduction from the amount of tax computed on total income at ₹ 2.96 crore immediately before the levy of surcharge and education cess etc. and the amount of ₹ 10.25 lac, being the component of surcharge and education cess etc. in the overall tax credit, should be reduced from the amount of surcharge and cess payable for the year under consideration. 6. Section 4 of the Act is a charging provision. Sub-section (1) of section 4 provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be done on the net amount of tax determined after reducing the amount of MAT tax credit from the amount of tax payable for the year in the same way as advance tax and TDS are reduced. A clue for this can be obtained from the language of section 140A of the Act dealing with Self assessment'. Subsection (1) of section 140A provides as under : Self-assessment. 140A. (1) Where any tax is payable on the basis of any return required to be furnished under section 115WD or section 115WH or section 139 or section 142 or section 148 or section 153A or, as the case may be, section 158BC, after taking into account,- (i) the amount of tax, if any, already paid under any provision of this Act; (ii) any tax deducted or collected at source; (iii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India; (iv) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section; and (v) any tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD, the assessee shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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