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2023 (7) TMI 374 - AT - Income TaxMinimum alternate Tax (MAT) - Tax credit in respect of tax paid on deemed income relating to certain companies u/s 115JAA - Non-reference to surcharge and cess - manner in which tax credit u/s. 115JAA, of the tax paid u/s. 115JB, or the analogous sec. 115-JA, is to be allowed - whether inclusive or exclusive of the surcharge (and education cess), for the years for which sec.115JAA, reading as under, becomes applicable? - Special provisions relating to certain companies - HELD THAT:- Surcharge and cess, both levies on tax, could not be levied on the tax paid earlier, the credit in respect of which is being allowed, i.e., on the tax becoming payable under the regular provisions of the Act. There is, further, no question of set off of the surcharge/cess, as in the case of tax, in the absence of specific provisions in its respect. Accordingly, the tax credit is to be allowed against the tax per se, paid earlier. Surcharge and cess would therefore, if at all, become payable only on the balance tax. No amount of tax would accordingly suffer surcharge/cess twice. In fact, proceeding in the manner in which we have, i.e., allowing set off of tax strictly against the tax per se, is not only consistent with the relevant provision of the Act (sec.115JAA), as indeed the decision in Tulsyan NEC Ltd. [2010 (12) TMI 23 - SUPREME COURT] it also renders irrelevant the payment of surcharge/cess on the tax paid earlier. That is, it would be of no consequence inasmuch as the same stands suffered in relation to the tax paid for an earlier year, in which the same was attracted and, besides, there would be no occasion for the same being paid again. This, incidentally, also provides an answer to the complete non-reference to surcharge and cess, i.e., even by way of proviso or Explanation, in the provision allowing tax credit. Succinctly stated, surcharge and cess, irrespective of whether the same stand paid along with tax on ‘book-profit’ and, further, irrespective of the variation in its rate subsequently, would stand to be paid only for the year for which the tax is payable under the regular provisions of the Act, i.e., at an amount net of tax credit, and at the rate applicable for that year. Revenue (CPC) has admittedly applied surcharge and education cess on a tax credit u/s. 115JAA i.e., at 9.062%, or at a higher than applicable rate of 8.15%, resulting in an additional charge. As it appears, the levy of surcharge/cess while allowing tax credit, has not been on the amount of credit, but on Rs. 259.07 lacs, the tax payable under the regular provisions of the Act. Not only, thus, the issue cannot be said to be, as projected, one of tax credit at inclusive or exclusive of surcharge, the Revenue’s stand is inexplicable as the levy has to necessarily be at that obtaining for the current year, i.e., 8.15% or, as apparent, on a sum other than for which credit is being allowed. If it was required to, that where the same rate is adopted, the manner of allowing credit with reference to surcharge and cess incident thereon, becomes academic and of no consequence, a non-issue, as exhibited at para 2.8 of this order (Case 3A & 3B). A perfect example of much ado about nothing. The impugned demand is accordingly directed for deletion.
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