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TMI Blog2017 (9) TMI 1807X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be allowed to be set off in a year when tax become payable on the total income computed in subsequent year according to the rate of income tax including surcharge and education cess as per the provision of Finance Act which is a part of the Income Tax Act. We find there is no reason that surcharge and cess can be excluded from the determination of the tax in view of the specific provisions of the Finance Act, 2010 as elaborated supra in this order. CIT(A) to reduce credit u/s. 115JAA without including the surcharge and education cess simply on the basis of the ITR form no. 6 is erroneous. It was also mentioned that such nature of error occurred in the ITR form for assessment year 2008- 09 which was corrected in the subsequent year in the ITR form of assessment year 2012-13. It is held by the Hon ble High Court that the wrong form of ITR-6 was wrong and naturally contrary to law. After considering we considered that in ascertaining the liability of tax for the year under consideration the amount of surcharge and cess have to be taken into account before providing MAT credit u/s. 115JAA of the act. In view of above we are not inclined with the decision of the CIT(A) and we also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al income a Tax at normal rates 1a b Tax at special rates (11 of Schedule-SI) 1b c Tax Payable on Total Income (2a+2b) 1c 3 Gross tax payable (enter higher of 2c and 1) 3 4 Credit under section 115JAA of tax paid in earlier years (If 1 is more than (2c)(7 of Schedule MATC) 4 5 Tax payable after credit under section 115JAA [(3-4)] 5 2 Rebate 2 3 Balance Tax Payable (1-2) 3 4 Surcharge on 3 4 4 Education cess, including secondary and higher education cess on(3) 4 5 Gross tax liability (3+4) 5 6 Tax relief a Section 90 7a b Section 91 7b c Total (6a+6b) 6c 7 Net tax liability (5-6c) 7 8 Interest Payable a For default in furnishing the return (section 234A) 8a b For default in payment of advance tax (section 234B) 8b c For deferment of advance tax (section 234C) 8c d Total Interest Payable (8a+8b+8c) 8d 9 Aggregate liability (7+8d) 9 10 Taxes Paid TAXES PAID a Advance Tax (from Schedule-IT) 11a b TDS (column 7 of Schedle-TDS2) 11b c TCS (column 7 of schedule-TCS 11c d Self Assessment Tax (from Schedule-IT) 11d e Total Taxes Paid (10a+10b+10c+10d) 10e 11 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said income tax. We have heard both the sides and perused the judicial pronouncements and material on record placed by both the sides. We have noticed that sub-section (1) second proviso to sub-section (3), sub-section (11) and sub-section (12) of section 2 of the Finance Act, 2010 provides as under:- 2. "1) Subject to the provisions of sub-sections (2) and (3), for the assessment year commencing on the 1st day of April, 2010, income-tax shall be charged at the rates specified in Part I of the First Schedule and such tax shall be increased by a surcharge, for purposes of the Union, calculated in each case in the manner provided therein." "provided further that in respect of any income chargeable to tax under sections 115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 115BBC, 115E and 115JB of the Income-tax Act, the amount of income-tax computed under this sub-section shall be increased by a surcharge, for purposes of the Union, calculated,- (a) in the case of a domestic company, at the rate of ten per cent of such income-tax where the total income exceeds one crore rupees; (b) in the case of every company, other than a domestic company, at the rate of two and one-hal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it from the basic charge of a tax or duty for the purpose of distributing the proceeds of the same between the Union and the States. The proceeds of the surcharge are exclusively assigned to the Union. Even in the Finance Act itself it is expressly stated that the surcharge is meant for the purpose of the Union. It would appear that, since the Finance Act, 1943, up to the Finance Act, 1967, a provision was made for taxing the income under the head "Salaries" according to the provisions of the Finance Act of the preceding year rather than of the current year if the assessee had any income in addition to his income by way of salary. According to the Tribunal this was done because if the income under the head "Salaries" was to be assessed at the rates fixed by the Finance Act enacted for the current year it would entail considerable administrative work in the form of a refund or collection in the final assessment. Since by the Finance Act of 1967, this method or procedure was dropped we do not consider that much significance can be attached to this aspect. In the result we are unable to sustain the view of the High Court. The question that was referred must be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on total income 1 1 a Tax Payable on deemed total Income under section 115JB (7 of Schedule MAT) 1 a 1 b Surcharge on (a) above 1 b 1 c Education Cess on (1a + 1b) above 1 c 1 d Total Tax Payable u/s 115JB (1a+1b+1c) 1 d 2 Tax payable on total income in item 11 of Part B-TI a Tax at normal rates 2 a b Tax at special rates (11 of Schedule-SI) 2 b c Tax Payable on Total Income in item 11 of Part B-TI (2a + 2b) 2c 3 Surcharge on 2c 3 4 Education cess, including secondary and higher education cess on (2c+3) 4 5 Gross tax liability (2c+3+47) 5 6 Gross tax payable (higher of 5 and 1d) 6 7 Credit under section 115JAA of tax paid in earlier years (if 5 is more than 1d) (7 of Schedule MATC) 6 8 Tax payable after credit under section 115JAA [ (6-7)] 8 5. Mr. Khaitan relied upon the judgment of the Allahabad High Court in the case of CIT v. Vacment India [2014] 369 ITR 304/230 Taxman 18/55 taxmann.com 314, the Division Bench, in that case, solely on the basis of the form of the Income Tax Return prescribed for the year 2008-09 which continued to hold the field up to the year 2011-12, answered the issue as follows:- &quo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of tax payable by the assessee on his total income computed in accordance with the other provisions of this Act: Provided that no interest shall be payable on the tax credit allowed under sub-section (1A) (4) The tax credit shall be allowed set-off in a year when tax becomes payable on the total income computed in accordance with the provisions of this Act other than section 115JA [or section 115JB, as the case may be]. (5) Set off in respect of brought forward tax credit shall be allowed for any assessment year to the extent of the difference between the tax on his total income and the tax which would have been payable under the provisions of sub-section (1) of section 115JA [or section 115JB, as the case may be] for that assessment year. (6) Where as a result of an order under sub-section (1) of sub-section (3) of section 143, section 144, section 147, section 154, section 155, sub-section (4) of section 245D, section 250, section 254, section 260, section 262, section 263 or section 264, the amount of tax payable under this Act is reduced or increased, as the case may be, the amount of tax credit allowed under this section shall also be increased or reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge and cess cannot be taken into account. (c) Similarly in calculating the amount of credit the amount of surcharge and cess paid by the assessee are to be excluded. 7. We have not been impressed by the submissions advanced by Mr. Khaitan for the following reasons:- (a) It was not disputed by Mr. Khaitan that the credit in this case under section 115JAA was not claimed by the assessee without taking into account the amount of surcharge and cess. Therefore, the submission, which Mr. Khaitan advanced, does not match with the facts and circumstances of this case. (b) We are inclined to think that both surcharge and cess are part of the income tax though payable in addition to the Income Tax calculated at the rate provided in Section 115JB. 8. We are supported in our view by Sub-section (1), the second proviso to Sub-section (3); Sub-section (11) and Subsection (12) of Section (2) of the Finance Act, 2008, which provides as follows:- "(1) Subject to the provisions of sub-section (2) and (3), for the assessment year commencing on the 1st day of April, 2008, income-tax shall be charged at the rates specified in Part I of the First Schedule and such tax as reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be increased by a surcharge,……." (c) Sub-section (11) of Section 2 of the Finance Act, 2008 provides, inter alia as follows:- "The amount of income tax as specified in Sub-sections (1) to (10) and as increased by a surcharge, for purposes of the Union, calculated in the manner provided therein, shall be further increased by an additional surcharge, for purposes of the Union, to be called the "Education Cess on income tax, ………….." (d) Sub-section (12) of Section 2 of the Finance Act, 2008 provides, inter alia as follows:- "The amount of income tax as specified in sub-sections (1) to (10) and as increased by a surcharge, for purposes of the Union, calculated in the manner provided therein, shall also be increased by an additional surcharge, for purposes of the Union, to be called the Secondary and Higher "Education Cess on income tax", …...". All the provisions quoted above speak about income tax being increased by the amount of surcharge and cess. Can it in that case be contended that surcharge is anything other than Income Tax? We think the answer is 'no'. 9. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of any addition on account of interest might arise. This was explained by Their Lordships. 11. It is also not correct to say that the judgment in the case Tulsyan Nec Ltd. [supra] has no application to the facts and circumstances of this case. In the case before us, the assessee has drawn inspiration from a mistake in the form of the income tax return. Identical mistake was also involved in the case of Tulsyan Nec Ltd. [supra]. But that was a mistake with regard to the calculation of interest and it is on this basis that the claim against the assessee was raised far in excess of what was payable by the assessee which was negatived by Their Lordships and they proceeded to hold as follows:- "Lastly, it is immaterial that the relevant form prescribed under the Income-tax Rules, at the relevant time (i.e. before April 1, 2007), provided for set off of the MAT credit balance against the amount of tax plus interest i.e. after the computation of interest under section 234B. This was directly contrary to a plain reading of section 115JAA(4). Further, a form prescribed under the rules can never have any effect on the interpretation or operation of the parent statute." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at the rates specified in Part I of the First Schedule and such tax shall be increased by a surcharge, for purposes of the Union, calculated in each case in the manner provided therein". We have not find any ambiguity in the aforesaid crystal clear provision of levying surcharge as provided in the Finance Act . We have not discerned any other specific provision in the act which reads that the MAT credit u/s. 115JAA has to be provided before computing surcharge and cess on the taxable income of the assessee. We have noticed that the tax on the total income of the assessee for the assessment year under consideration is determined at ₹ 25,46,74,428/- as against the same the assessee claimed that the same should be determined at ₹ 19,47,11,533/- on the ground that MAT credit to be provided before charging of surcharge and education cess. We are of the view that there is no provision in the act which provide this kind of special incentive of ₹ 5,99,62,895/- in the cases wherein the assesee has paid MAT in the preceding years. We find that the MAT credit u/s. 115JAA is only a tax credit which shall be allowed to be set off in a year when tax become payable on the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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