TMI Blog2022 (1) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... ons including the decisions of the Hon'ble Calcutta High Court and Hon'ble Madras High Court are in favour of the assessee and therefore it cannot be said that it is a debatable issue. In the circumstances, respectfully following the above said decisions allowing the grounds of appeal of the assessee, we direct the Assessing Officer to allow set off of MAT credit inclusive of surcharge and education cess and recompute the tax payable by the assessee for the year under consideration.See Tata Motors Ltd. [ 2021 (7) TMI 207 - ITAT MUMBAI ] We note that the above case law fully applies here. We further note that the present case of the assessee is even on a better footing. The Ld.CIT(A) has dismissed the assessee s appeal without referring to any case law. The case law referred on the subject in favour of the assesee were duly referred before Ld.CIT(A) which are ignored. Hence, this bring us to a legal issue as to whether this adjustment u/s. 143(1) by the CPC, Bengaluru is legally sustainable. As apparent from the case law mentioned above, this issue is not amenable to any prima-facie adjustment as provided in section 143(1). Though, assessee has not raised this aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NO. CPC/C/1415/A6/1542732203 dated 10/03/2016. 5. The grounds raised by the assesee before the Ld.CIT(A) are as under:- GROUND NO I.- INCORRECT COMPUTATION OF ALLOWABLE MAT CREDIT UNDER SECTION 115JAA OF THE ACT 1. On the facts and circumstances of the case and in law, the AO erred in computing the MAT credit available to be set off under section 115JAA of the Act by excluding surcharge and educations cess. 2. The AO failed to appreciate and ought to have held that: Tax includes surcharge and education cess. Under the provisions of section 115JAA of the Act, MAT Credit is defined as the difference between the followinga. The tax paid for any assessment year under section 115J Band; b. The amount of tax payable by the assessee on his total income computed in accordance with the other provisions of this Act. In order to determine the aforesaid MAT Credit available for utilization, income-tax shall include both surcharge and education cess. 3. Without prejudice to above, if surcharge and cess has been excluded, then for the purpose of accuracy, MAT Credit as computed by the AO has to be first set off against tax payable withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the balance amount, surcharge and cess shall be computed. Virtusa (India) (P.) Ltd. vs. Deputy Commissioner of Income-tax (2016) 67 taxman.com 65 (Hyderabad- Trib.) wherein it was held that where assessee had relied on ITR-6 format to arrive at total liability as well as MAT credit calculations, the Assessing Officer could not overlook said format and proceed to calculate MAT credit to complete assessment under section 143(1) by applying different methods. In view of above, the Appellant most humbly submits that appropriate MAT credit be granted and appropriate relief be provided. 7. Despite noting the above Ld.CIT(A) did not bother to address the case laws mentioned. He held as under:- I have carefully gone through the facts of the case and also duly considered assessee's written submission in this regard. It is pertinent to note that for the purpose of calculating tax liability for the companies, the higher of the following will be taken; Tax liability computed by applying the normal provisions of Income Tax Act, 1961 and Companies Act, 2013, or i.e. Tax liability computed @ 15% + 4% higher education cess of the book profit. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TD 163] (iv). Virtusa (India) (P.) Ltd., v. DCIT [157 ITD 1160] (v). Bhagwati Oxygen Ltd., v. ACIT [167 ITD 645] (vi). SI Group India Pvt. Ltd., v. DCIT in ITA.No. 2348 2350/Mum/2017 dated 11.10.2018. (vii). M/s. Savita Oil Technologies Ltd., v. ACIT in ITA.No. 3066/Mum/2015 dated 07.02.2017. 4. In the case of Srei infrastructure Finance Ltd., v. DCIT (supra) the Hon'ble Calcutta High Court held that MAT credit u/s. 115JAA of the Act brought forward from earlier years is to be set off against tax on total income including surcharge and education cess instead of adjusting the same from tax on total income before charging such surcharge and cess. 5. In the case of M/s. Scope International Pvt. Ltd., (supra) the Hon'ble Madras High Court considering the decision of the Hon'ble Supreme Court in the case of CIT v. K. Srinivasan [83 ITR 346] held that MAT credit has to be given including the amount of surcharge and education cess. 6. The Hyderabad Bench of the Tribunal in the case of Virtusa (India) (P.) Ltd., v. DCIT (supra) taking note of the decision of the Hon'ble Apex Court in the case of CIT v. K. Srinivasan (supra) wherein the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining provisions with regard to payment of MAT u/s 115JB as well as availability of credit available u/s 115JAA. It is noted that it was held by the Hon'ble Allahabad High Court in the case of CIT vs Vacment India, (supra) that methodology of computation of tax liability and granting credit of MAT should be similar to the methodology provided in the prescribed form of filing of income-tax return i.e. ITR-6. But subsequently, Hon'ble Calcutta High Court in the case of M/s Srei Infrastructure Finance Ltd, supra examined this issue in detail and ITA NO. 2397/MUM/2019 (A.Y: 2014-15) M/s. Tata Motors Ltd., held that computation of tax liability and setting off of tax credit available should be done in accordance with law and not on the basis of 'inappropriate' form prescribed under the rules inadvertently. It is noted that Hon'ble Calcutta High Court has held that for the purpose of section 115JB, surcharge and cess are part of income-tax payable in accordance with provisions of section 115JB. Therefore, when the tax is paid u/s 115JB along with surcharge and cess, then entire amount would be considered for carry forward of the credit available u/s 115JAA and accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29,430,939 Tax payable after credit under section 115JAA Rs. 342,011,311 During the course of hearing, the Ld. DR also fairly submitted that it would be a correct method of computing tax liability and credit available u/s 115JAA. It is noted from the above working that first of ITA NO. 2397/MUM/2019 (A.Y: 2014-15) M/s. Tata Motors Ltd., all tax amount has been computed on the total income of the assessee. Thereafter surcharge and education cess has been worked out upon the tax liability. Then, from the gross amount so arrived at, the amount of credit available u/s 115JB on account of income-tax, surcharge and education cess (all combined together) have been deducted and accordingly, net tax payable after setting off credit available u/s 115JB has been worked out. In our view, this is the correct method of computing tax liability as well as credit available u/s 115JAA. Accordingly, we direct the AO to verify the facts as have been given in the aforesaid working and compute the tax liability accordingly and allow the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to allow ITA NO. 2397/MUM/2019 (A.Y: 2014-15) M/s. Tata Motors Ltd., set off of MAT credit inclusive of surcharge and education cess and recompute the tax payable by the assessee for the year under consideration. 11. We note that the above case law fully applies here. We further note that the present case of the assessee is even on a better footing. The Ld.CIT(A) has dismissed the assessee s appeal without referring to any case law. The case law referred on the subject in favour of the assesee were duly referred before Ld.CIT(A) which are ignored. Hence, this bring us to a legal issue as to whether this adjustment u/s. 143(1) by the CPC, Bengaluru is legally sustainable. 12. As apparent from the case law mentioned above, this issue is not amenable to any prima-facie adjustment as provided in section 143(1). Though, assessee has not raised this aspect, before Ld.CIT(A), there is no estoppel as to law. Hence, we hold that this adjustment was not liable to be made u/s. 143(1). Hence, the order is quashed on that account. On merits also, the issues stands covered. 13. In the result, assessee s appeal allowed. ITA NO.804/Mum/2021 for AY 2015-16 14. Grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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