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2017 (5) TMI 1650 - AT - Income TaxMaintainability of the appeal before the ITAT in view of CBDT Circular No. 21 of 2015 dated 10.12.2015 - whether the tax effect has to be computed taking into account the surcharge and education cess? - Held that:- On combined reading of section 2(43) of the Act which defines tax to means income-tax chargeable under the provisions of this Act, Section 4 which is a charging section which states that income-tax shall be charged only where the Finance Act enacts that income shall be charged for any assessment year at rate or ratesspecified therein and Clause 2 of the Finance Act 2005 which provides that 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, it is crystal clear that tax includes surcharge. Surcharge forms part of tax and is nothing else but tax. The surcharge therefore has to be included while computing the tax effect. Coming to the issue of whether education cess is part of tax and whether the same has to be included while working out the tax effect clause 2 (11) of the Finance Act clearly provides that education cess is an additional surcharge for the purposes of the Union and thus the ratio decidendi of the Hon’ble Supreme Court decision KERALA VERSUS K. SRINIVASAN [1971 (11) TMI 2 - SUPREME COURT] will equally apply to education cess and the same is part of tax. It is clear that surcharge and additional surcharge referred as education cess forms part of tax and are to be considered while working out the tax effect for determining threshold for filing the appeal by the Revenue in terms of CBDT Circular No. 21/2015 dated 10.12.2015. In the instant case, where the tax is so computed after including surcharge and education cess, the tax effect would come to ₹ 10,06,362/- which is above the prescribed limit of ₹ 10 lacs for filing the appeal before the ITAT. Hence the subject appeal filed by the Revenue is clearly maintainable.
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