9911796707
TMI Blog2023 (7) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... ax is paid under sub-section (1) of section 115JA by an assessee being a company for any assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section. (1A) Where any amount of tax is paid under sub-section (1) of section 115JB by an assessee, being a company for the assessment year commencing on the 1st day of April, 2006 and any subsequent assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section. (2) The tax credit to be allowed under sub-section (1) shall be the difference of the tax paid for any assessment year under sub-section (1) of section 115JA and the amount of tax payable by the assessee on his total income computed in accordance with the other provisions of this Act: Provided that no interest shall be payable on the tax credit allowed under sub-section (1). (2A) The tax credit to be allowed under sub-section (1A) shall be the difference of the tax paid for any assessment year under sub-section (1) of section 115JB and the amount of tax payable by the assessee on his total income computed in accordance with the other provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (MAT) u/c. XII-B, being u/s. 115-JA, and u/s. 115-JB thereafter. A minimum tax, based on 'book-profit', clearly defined, representing the profit as per the audited accounts, and sans any deduction, was adopted as the alternative tax base, either by deeming income with reference thereto (s. 115-JA/ upto 31/3/2000) or deeming tax payable with reference thereto (s.115-JB/ post 31/3/2000). However, as the tax incentives under Chapter VI-A would get phased out over time, the company's taxable income would once again stand to be determined with reference to the regular provisions of the Act. The tax paid earlier on book-profit under MAT was accordingly to be set off (s.115-JAA), so that a uniform basis for taxation obtains. This was also considered necessary as otherwise the benefit of deduction admissible under Chapter VI-A would stand in effect denied; the law taking away, what it gives with one hand, with the other. There is however no reference to surcharge (and cess) in the tax credit provisions, and which may have been paid, along with the book profit tax. This gives rise to the issue of the manner in which the tax credit is to be allowed. 2.2 Both the sides before us relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 (SC), tax andsurcharge/cess fall under the same legislative field, and thus have the same character, but, at the same time, the latter are levied on the income-tax, so that there is a basic difference between the two.As explained therein, the levy is for the purpose of the Union, not liable to be allocated to, or shared by, the Federation with the States, and for which the Union has the requisite power under Article 271 of CoI. The said decision, being by the Hon'ble Apex Court and, further, relied upon by the Hon'ble High Courts of Calcutta and Madras, it would, where applicable, settle the matter. However, its import, stated hereinbefore, does not throw any light on the issue at hand. 2.4 Without doubt, therefore, credit of tax u/s. 115JAA shall, in terms of the section, arise only where it stands paid for the said year/s. The same should, by extension, apply for surcharge and education cess as well. It is, however, not clear from the material on record if the assessee had paid surcharge (and education cess)for the year(s) in which tax had, in preference to the normal provisions of the Act, been paid by it on or with reference to the 'book-profit' as defined u/s. 115- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus have the same character as tax per se. This, since coopted on the statute per Explanation 3 to s. 40(a)(ii),however, would not by itself resolve the issue at hand, which entails the manner in which credit, where due, is to be allowed, with there being, in principle, no doubt that, being a part of tax, cannot be levied again, which is the import and effect of credit in respect of tax paid, on which aspect we observe no variation of opinion. Also, it needs to be emphasized that though bearing the same character, surcharge and cess being levies on the income-tax, there is an essential difference between the two. 2.6 The question that however arises is where the tax rate is not specified by the relevant Finance Act, as qua tax payable u/s. 115-JA, but by the Act itself, viz., ss.112, 112A, 113, 115JB, etc., would surcharge or cess apply? The issue, rather than being confined to sec.115JAA, spreads over a larger canvass, i.e., whether the surcharge and education cess would, where the assessee is liable to tax under any of the specified rates as per the special provisions of the Act, apply. Qua tax, without doubt, it is the special rate, as opposed to the general rate on the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 incomprehensible, if not also meaningless. As afore-stated, w.r.t. Art. 271 of the CoI, though bearing the same character, there is yet a basic difference between the two inasmuch as surcharge and cess are levies on tax. The matter stands also abundantly clarified by the Apex Court in CIT v. Tulysan NEC Ltd. [2011] 330 ITR 226 (SC) dilating on the provisions of s. 115-JAA,delineating the sum in respect of which credit is to be allowed at para 5 of it's Judgment, reproduced as under: '5. The relevant provisions under section 115JAA of the Act, introduced by the Finance Act, 1997, with effect from April 1, 1997, i.e., applicable for the assessment years 1997-98 and onwards, governing the carry forward and set off of credit available in respect of tax paid under section 115JA, show that when tax is paid by the assessee under section 115JA, then the assessee becomes entitled to claim credit of such tax in the manner prescribed. Such a right gets crystallized no sooner the tax is paid by the assessee under section 115JA, as per the return of income filed by that assessee for a previous year (say, year one). (See to section 115JAA(1)). The said credit gets limited to the tax differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without doubt, the said tax may have been subject to surcharge/cess where so specified under the relevant Finance Act and, accordingly, paid along with, discharging an assessee's liability u/s. 4(1) of the Act. Given this clear, basic position, we may now address the issue of the manner of allowing tax credit. As would be apparent, this position itself is the genesis of the controversy. This is as while surcharge (and cess) gets paid, along with the tax at the specified rate u/s. 115-JB (or for that matter u/s. 115-JA r/w s. 4(1) r/w the relevant Finance Act), the credit envisaged u/s. 115JAA is with reference to tax alone. That is, the Act itself unequivocally suggests allowance of tax credit sans surcharge or cess levied and paid thereon. There has been no uniform pattern in the tax return forms as well, which have varied from allowing credit at the stage of tax, to that at the stage of tax inclusive of surcharge. The same, i.e., the prescribed form, in any case, as explained in Tulysan NEC Ltd. (supra) (at pg. 238), cannot be determinative of the matter. This is understandable inasmuch as, as afore-noted, levy and collection of tax has to be strictly in terms of the relevant pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the negative, clearly an unfeasibility. We have deliberately kept a difference in the rates of surcharge (and education cess) between the two years so as to highlight the issue, as the same would get blurred or even obliterated where the said rate is the same across different years, and which would rather make it a non-issue in case it is so, which depiction (Case 3A) would incidentally also project the merit of the tax credit being at net of surcharge (Case 3B), as under: Case 3A Particulars GT TC NP Tax 200 100 100 Surcharge / Cess @ 5% 10 5 5 Total 210 105 105 Case 3B Particulars GT Credit NP Tax 200 100 100 Surcharge / Cess -- -- 5 Total 105 in focus our guiding principle, i.e., the manner of allowing tax credit whereby tax, or the same tax, does not suffer surcharge and education cess twice,it is clearly the third case (Case 3B) where the credit of tax is allowed against tax liability only, i.e., without including surcharge or cess, that surcharge (and cess) stand to be levied only on the net amount of tax payable for a subsequent year, i.e., net of tax credit u/s. 115-JAA and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in SREI Infrastructure Finance Ltd. (supra). The former in fact is the only decision which seeks to answer the question with reference to the computation formula as stated in the return of income, a parallel of which has been adopted in the instant order, so as to exemplify and illustrate its effect. 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. (supra), 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
