Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2019 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 185 - HC - Income TaxMAT credit computation u/s 115JAA - Inclusion of surcharge and cess in MAT credit by tribunal - Case of K. SRINIVASAN 1971 (11) TMI 2 - SUPREME COURT applicability to issue - HELD THAT - Explanation (2)(iii) and (iv) to Section 115JB of the Act states that for the purposes of Clause (a) of Explanation 1 to Section 115JB of the Act, the amount of income tax shall include surcharge as levied by the Central Acts from time to time and education cess on income-tax, if any, as levied by the Central Acts from time to time. The Hon'ble Supreme Court, in the case of K.Srinivasan, took note of the legislative history of the Finance Act as also the practice to indicate that the term income tax as employed in Section 2 of the Finance Act, which includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Article 271 of The Constitution. The Hon'ble Supreme Court took note of the distinction made by the High Court in the case and held that the distinction made by the High Court that the surcharges are levied only under the Finance Act and income tax under the Act may not hold good. The Hon'ble Supreme Court explained the term 'surcharge' to mean as the charge in addition to or subject to an additional or extra charge. The decision of the Hon'ble Supreme Court in the case of K.Srinivasan will apply with full force to the assessee's case. Furthermore, if we refer to the circular of the Central Board of Direct Taxes in Circular No.3 of 2018 dated 11.7.2018, which fixed the monetary limit for filing appeals by the Department before the Tribunals, High Courts and Supreme Court, one gets a fair idea as to what was the understanding of the term 'tax' by the Board. If we have a look at paragraph 4 of the said circular, the Board states that for the purposes of the said Circular, tax effect shall be tax including applicable surcharge and cess. Though the case on hand is not hit by the monetary limit according to Mr.T.R.Senthilkumar, learned Senior Standing Counsel, yet, on a perusal of the said circular, it is evidently clear that consistently, the understanding of the Board was that tax includes applicable surcharge and cess. For the above reasons, we are of the view that the Revenue has not made out any case to interfere with the order passed by the Tribunal. - Decided against the Revenue.
Issues:
1. Inclusion of surcharge and cess in MAT credit under Section 115JAA of the Income Tax Act. 2. Reliance on the decision of the Hon'ble Supreme Court in the case of CIT Vs. K.Srinivasan for a subsequent insertion of Section 115JAA with retrospective effect. Analysis: 1. The appeal was filed by the Revenue against the order of the Income Tax Appellate Tribunal regarding the inclusion of surcharge and cess in MAT credit under Section 115JAA. The Revenue contended that the Tribunal erred in following the decision in the case of K.Srinivasan, arguing that it was not applicable to the present case due to the subsequent insertion of Section 115JAA. The issue revolved around whether surcharge and cess should be considered in MAT credit calculations. The Tribunal upheld the order of the CIT(A), emphasizing the power to direct verification by the Assessing Officer. The High Court, after considering legislative history and the Finance Act, supported the Tribunal's decision, stating that the term "tax" includes surcharge and cess, as per the circular of the Central Board of Direct Taxes. 2. The second substantial question of law involved the reliance on the decision in the case of CIT Vs. K.Srinivasan, which was rendered in the context of Section 2 of the Act, for a subsequent insertion of Section 115JAA with retrospective effect. The High Court analyzed the legislative history and the interpretation of the term "surcharge" as explained by the Hon'ble Supreme Court in the case of K.Srinivasan. The Court concluded that the decision in K.Srinivasan applied to the present case, supported by the circular of the Central Board of Direct Taxes, which clarified that tax includes applicable surcharge and cess. The Court dismissed the Revenue's appeal, affirming the Tribunal's decision to include surcharge and cess in MAT credit calculations. In summary, the High Court upheld the Tribunal's decision, ruling in favor of including surcharge and cess in MAT credit calculations under Section 115JAA of the Income Tax Act. The Court relied on the legislative history, the interpretation of relevant provisions, and the circular of the Central Board of Direct Taxes to support its judgment, dismissing the Revenue's appeal.
|