TMI Blog2017 (9) TMI 1807X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 do not find any merit in the alternative plea of the assessee, therefore the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come COM1 Tax Payable on deemed total Income under section 115JB (7 of Schedule MAT) 1 1 Tax payable on total 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Total Taxes Paid (10a+10b+10c+10d) 10e 11 Amount payable (Enter if 9 is greater than 10e, else enter 0) 11 12 Refund (If 10e is greater than 9, also give the bank account details in Schedule-BA) 12 9.4 It can be seen from aforesaid computation prescribed in ITR-6 being income tax form prescribed for filing return of income that assessee is required to first compute gross tax payable being higher amount of two figures i.e. (i) tax payable on deemed total income u/s 115JB and (ii) tax payable on total income as per normal provisions of the Act 9.5 From such gross amount, credit u/s 115JAA is required to be reduced and only on such net amount, surcharge and education cess is required to be computed. 9.6 The appellant company has computed tax liability as per provisions of the Act and formula prescribed in ITR-6 referred supra. Thus, in my considered view, the Assessing Officer was not justified in computing tax liabi ..... 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, 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-half per cent of such income-tax where the total income exceeds one crore rupees. (11) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by the applicable 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 , calculated at the rate of two per cent of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance universalised quality basic education : (12) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by the applicable 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 answered in the affirmative and in favour of the revenue. In view of the nature of the point involved the parties are left to bear their own costs in this court. The appeal by certificate is dismissed. We have noticed that on the identical issue the hon ble High Court of Calcutta has decided the matter in favour of the Revenue in the case of Srei Infrastructure Finance Pvt. Ltd. vs. DCIT, Circle-11(2) [2017] 395 ITR 291(Calcutta). The relevant part of the pronouncement is reproduced as under:- 3. The question raised by the assessee has its route in the form of Income Tax Return. In other words, the assessee, we are inclined to think, was probably inspired to raise the issue by the form of income tax return for the assessment year 2008-09, the relevant portion whereof reads as follows:- Computation of tax liability on total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the form was changed, which reads as follows:- Computation of tax liability 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g provisions for the levy of additional income-tax) of, this Act] in respect of the total income of the previous year [***] of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. On the basis of Sub-section (1) of Section 4, Mr. Khaitan contended, that the Central Act can only provide the rate or rates of applicable income tax. It cannot also provide for payment of surcharge and cess which is not contemplated by the Income Tax Act. The surcharge and cess have been imposed by the Finance Act and, therefore do not amount to income tax. 5.2 He then drew our attention to section 115JAA. He relied upon Sub-sections (1A), (2A), (4), (5) and (6). (1A) Where any amount of tax is paid under sub-section (1) of section 115JB by an assessee, being a company for the assessment year commencing on the 1st day of April, 2006 and any subsequent assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section. (2A) The tax credit to be allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence of the tax paid for any assessment year under section 115JB and the amount of tax payable by the assessee on his total income computed in accordance with the other provisions of the Act. By the expression computed in accordance with the other provisions of the Act what is meant is the normal computation. 5.3 Mr. Khaitan, on the basis of the aforesaid provisions contended that section 115JB provides for payment of income tax at the rate of 10% and section 115JAA provides for credit computed on the basis of tax paid and tax payable. He contended that tax paid has to be the tax calculated under Sub-section (1) of Section 115JB and payable has to be assessed on the basis of normal computation without taking into account any surcharge because surcharge is not chargeable under the provisions of the Income Tax Act. 6. In support of his submission he relied upon Clause 43 of section 2 which provides a definition of the word tax and does not contain any reference to any surcharge or cess. Finally, he submitted that the surcharge or the cess does not alter the rate of tax. His submissions may be summarized as follows:- (a) Surcharge and cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be called the Education Cess on income-tax , calculated at the rate of two per cent of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance universalised quality basic education. Sub-section (12). 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 , calculated at the rate of one per cent of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance secondary and higher education.' The underlined portions of the statute indicated above may be collated as follows:- (a) Sub-section (1) of Section 2 of the Finance Act, 2008 provides inter alia as follows:- .. such tax as reduced by the rebate of income tax calculated under Chapter VIII-A of the Income tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income tax Act) shall be increased by a surcharge (b) Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Khaitan may be right in contending that the point raised in this appeal did not fall for consideration by Their Lordships in that judgement. The question which Their Lordships were considering was whether interest under Sections 234A, 234B and 234C has to be added to the amount of tax before granting credit under Sections 115JA and 115JAA? Their Lordships answered that question in the negative. The reason is very obvious. In determining the liability of the assessee the first step has to be determination of tax payable. The Income Tax Act contemplates selfassessment by the assessee and quarterly payment of tax in advance and the rest with the filing of the return. Interest can be realised only for the amount in default. Interest cannot be charged for an amount which has already been paid or for which the assessee is entitled to a credit. Before any question of realising interest may arise the amount of liability on account of income tax has to be ascertained. In ascertaining the liability, necessarily the amounts of surcharge and cess have to be taken into account. Once that is done the amount of tax payable has been ascertained. Then the question arises for giving credit for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not drawn nor was it contended that the corrected form is contrary to law. Both the forms, viz. the one which was prevalent at the relevant period of time and which was corrected for the assessment year 2012-13, could not be the correct forms. If the form of 2012-13 was correct, then the form of 2008-09 was wrong, and naturally contrary to law. 13. We, as such, answer the question in the affirmative and against the assessee. We have observed that the ld. CIT(A) has decided the matter on the basis from no. ITR-6 by presuming that income tax payable is to be arrived at by deducting the credit under section 115JAA of the act (under entry 3) from the gross tax payable (under entry 4). We are not inclined with decision of the Ld.CIT(A) in view of specific provision of the Finance Act, 2010 which has been elaborated as supra in this order. The rate of income tax and surcharge are charged from year to year as prescribed in the Finance Act. We are of the considered view that the Finance Act is a part of the Income Tax Act for the purpose of determining the rate of income tax to be charged from year to year. The provision of section 2(1) of the Finance Act 2010 read as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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