2018 (5) TMI 1879 - AT - Income Tax

Computation of deduction u/s.10AA - deduction by reducing exclusions in the export turnover from the total turnover - HELD THAT - Hon ble Supreme Court s decision in the case of HCL Technologies Ltd. Ors. 2018 (5) TMI 357 - SUPREME COURT wherein it is held that the expenses excluded from export turnover have to be excluded from the total turnover also. Otherwise any other interpretation makes the formula unworkable and absurd. In view of that the corresponding grounds of the Revenue s appeal are dismissed. Disallowance made with regard to the surcharge and the education cess for the purpose of MAT credit - CIT(A) allowing the surcharge and cess also for the purpose of MAT credit - HELD THAT - Hon ble Supreme Court in the case of CIT vs. K.Srinivasan 1971 (11) TMI 2 - SUPREME COURT held that the legislative history of the Finance Acts as also the practice indicates that the term income-tax as employed in s. 2 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Art.271 of the constitution - appeal filed by the Revenue is dismissed.

Summary

Issues:

1. Computation of deduction u/s.10AA for AY 2013-14.
2. Allowance of MAT claim entitlement.
3. Disallowance of surcharge and education cess for MAT credit.

Issue 1: Computation of deduction u/s.10AA for AY 2013-14

The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-6, Chennai, regarding the deduction claimed by M/s. Infastech Fastening Technologies India Pvt. Ltd. u/s.10AA for the AY 2013-14. The AO reduced the loss on foreign exchange and foreign travel expenses from the export turnover but refused to reduce them from the total turnover. The Ld.CIT(A) allowed the assessee's appeal, following the decision of ITAT Chennai in a similar case. The Revenue challenged this decision, arguing that the deductions should not be reduced from the total turnover. However, the Tribunal dismissed the Revenue's appeal, citing a Supreme Court decision that expenses excluded from export turnover must also be excluded from the total turnover to avoid an unworkable interpretation.

Issue 2: Allowance of MAT claim entitlement

The assessee claimed MAT claim entitlement from AY 2012-13, seeking credit for surcharge and education cess along with the tax paid u/s.115JB. The AO allowed only the tax portion for credit and disallowed the surcharge and education cess. The Ld.CIT(A) upheld the assessee's claim. The Revenue contended that surcharge and education cess should not be included for MAT credit, citing a different ITAT decision. However, the Tribunal rejected this argument, relying on a Supreme Court decision that clarified the inclusion of surcharge and additional surcharge within the term "income-tax." Consequently, the Tribunal dismissed the Revenue's appeal, upholding the Ld.CIT(A)'s decision.

In conclusion, the Appellate Tribunal ITAT Chennai dismissed the Revenue's appeal against the order of the Ld.CIT(A) regarding the computation of deduction u/s.10AA and the allowance of MAT claim entitlement for the AY 2013-14. The Tribunal's decision was based on legal precedents and interpretations to ensure a fair and consistent application of tax laws.