In a relief to the Tata Motors, the Income Tax Appellate Tribunal (ITAT), Mumbai Bench directed the Assessing Officer to set off of (MAT) credit inclusive of surcharge, education cess.
The assessee, M/s. Tata Motors Ltd. raised the issue in respect of computation of set-off of MAT credit u/s 115JAA of the Act excluding surcharge and cess resulting in short grant of MAT credit of Rs. 21,70,98,794/-.
In the case of Srei infrastructure Finance Ltd., v. DCIT the Calcutta High Court held that MAT credit under section 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.
In the case of M/s. Scope International Pvt. Ltd., the Madras High Court considered the decision of the Hon’ble Supreme Court in the case of CIT v. K. Srinivasan held that MAT credit has to be given including the amount of surcharge and education cess.
The Hyderabad Bench of the Tribunal in the case of Virtusa (India) (P.) Ltd., v. DCIT) taking note of the decision of the Apex Court in the case of CIT v. K. Srinivasan wherein the Apex Court held that the word “Income-tax” would include surcharge and additional surcharge”. The Tribunal held that the eligible MAT credit available to set off for the company during the captioned assessment year needs to be arrived at by comparing difference between the tax liability (inclusive of surcharge and cess) computed under normal provisions of the Act and the tax liability (inclusive of surcharge and cess) computed under the provisions of section 115JB of the Act.
The two member bench of Accountant Member M.Balaganesh and Judicial Member C.N.Prasad noticed that CIT(A) denied claim of the assessee for the reason that there is a contrary view taken by the Delhi Tribunal in the case of Richa Global [54 SOT 185] and therefore the issue is debatable.
The ITAT observed that this decision of the Delhi Bench of the Tribunal was rendered for A.Y. 2010-11. However, in the case on hand the assessment year involved is A.Y. 2014-15 and this decision of the Delhi Bench of the Tribunal is not applicable to the facts of the assessee’s case for the reason that the Format of ITR-6 prior to A.Y. 2012-13 was designed in such a manner that the tax liabilities in Part B-TTI (i.e. Total taxable income) both under normal provisions and under MAT provisions was computed without surcharge and cess and on the net amount (i.e. after grant of MAT credit) surcharge and cess was levied.
“In our view there cannot be any debate as to the exclusion of surcharge and cess. Therefore, the observation of the Ld.CIT(A) that the issue is debatable one is not sustainable. Further, we observe that the majority of the decisions 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,” the ITAT said.
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