DCIT, CHENNAI V. Indian Syntans Investments Corporate Private Limited, CHENNAI

ITA 13/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4665 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 03-01-2017
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: B RAMAKRISHNAN FCA
• Keywords: Question of law
• Section: 143(3); 115JB; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.13/MDS./2017 / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -2(2), ROOM NO.512, WANAPARTHY BLOCK, CHENNAI 600 034. VS. M/S.INDIAN SYNTANS INVESTMENTS CORPORATE PVT LTD ., NEW NO.12, 3 RD MAIN KASTURBA NAGHAR, ADYAR, CHENNAI 600 011. [PAN AAACI 1775 K ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : MR.A.V.SREEKANTH, JCIT, D.R /RESPONDENT BY : MR.B.RAMAKRISHNAN,FCA / DATE OF HEARING : 21 .03.2017 !' / DATE OF PRONOUNCEMENT : 01 .05 .2017 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-6,CHENNAI DATED 28.10.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. ITA NO.13/MDS./2017 :- 2 -: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS. 1 THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPE ALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.1. THE CIT(A) ERRED IN ALLOWING THE SURCHARGE AND CESS ALSO FOR THE PURPOSE OF MAT CREDIT. 2.2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE DECIS ION OF THE HONBLE ITAT IN THE CASE OF RICHA GLOBAL EXPORTS (P.) LTD. 25 TAXMANN.COM 1 (DELHI) [2012) WHEREIN IT WAS HELD THAT SURCHARGES AND EDUCATION CESS ARE NOT PART OF MAT CREDIT. 2.3. HE RELIED UPON DECISION OF THE HONBLE ALLAHBA D HIGH COURT IN THE CASE OF VACMENT INDIA IS DISTINGUISHABLE FROM THAT OF THE CASE ON HAND. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN DISPUTE FOR ASSESSMENT YEAR 20 11-12 CAME BEFORE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VACMENT INDIA REPORTED IN 369 ITR 304(ALLAHABAD) WHEREIN HELD THAT:- 5. THE ONLY QUESTION WHICH IS RAISED PERTAINS TO T HE COMPUTATION OF TAX IN ACCORDANCE WITH THE MODALITIES WHICH ARE PRESCRI BED IN THE RELEVANT FORM, ITR-6. IN SO FAR AS IS MATERIAL, THE RELEVANT ENTRIES IN THE FORM (PART B-TTI) ARE AS FOLLOWS : 3 GROSS TAX PAYABLE (ENTER HIGHER OF 2C AND 1) 4 CREDIT UNDER SECTION 115JAA OF TAX PAID IN EARLIE R YEARS (IF 2C IS MORE THAN 1) (7 OF SCHEDULE MATC) 5 TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA [(3 -4)] 6 SURCHARGE ON 5 7 EDUCATION CESS, INCLUDING SECONDARY AND HIGHER ED UCATION CESS ON (5+6) 8 GROSS TAX LIABILITY (5+6+7) ITA NO.13/MDS./2017 :- 3 -: 6. THE AFORESAID ENTRIES LEAVE NO MANNER OF AMBIGUI TY IN REGARD TO THE METHOD OF COMPUTATION OF TAX LIABILITY. ENTRY 3 REQ UIRES COMPUTATION OF THE GROSS TAX PAYABLE. UNDER ENTRY 4, CREDIT IS REQUIRED TO BE GIVEN UNDER SECTION 115JAA OF THE ACT OF THE TAX PAID IN EARLIER YEARS. ENTRY 5 REQUIRES A COMPUTATION OF THE TAX PAYABLE AFTER C REDIT UNDER SECTION 115JAA OF THE ACT. THE MATTER IS PLACED BEY OND DOUBT BY THE PARENTHESIS, WHICH INDICATES THAT TAX PAYABLE UNDER ENTRY 5 IS TO BE ARRIVED AT BY DEDUCTING THE CREDIT UNDER SECTION 11 5JAA OF THE ACT (UNDER ENTRY 3) FROM THE GROSS TAX PAYABLE (UNDER E NTRY 4). THE SURCHARGE IS COMPUTED ON THE AMOUNT REFLECTED IN EN TRY 5. 7. THE TRIBUNAL HAS NOTED THAT FROM THE NEXT ASSESS MENT YEAR, THE ASSESSMENT YEAR 2012-13, THE POSITION WAS MATERIALL Y ALTERED BUT, IN THE PRESENT CASE, SINCE THE DISPUTE RELATED TO THE ASSESSMENT YEAR 2011-12, THE METHOD OF COMPUTATION, AS DIRECTED BY THE COMMISSIONER (APPEALS), WAS PLAINLY IN ACCORDANCE W ITH THE METHODOLOGY AS PROVIDED IN ITR-6. THE TRIBUNAL IN C ONFIRMING THE ORDER OF THE COMMISSIONER (APPEALS) HAS, HENCE, NOT COMMITTED ANY ERROR. THE APPEAL WILL NOT GIVE RISE TO ANY SUBSTAN TIAL QUESTION OF LAW AND IS, ACCORDINGLY, DISMISSED. 3.1 SIMILAR VIEW WAS TAKEN BY HYDERABAD TRIBUNAL I N ITA NO.146/HYD./2015 DATED 04.03.2016 FOR ASSESSMENT YE AR 2012- 13 HELD AS UNDER:- 9. CONSIDERED THE SUBMISSIONS OF BOTH THE COUNSELS AND MATERIAL FACTS ON THE RECORD. THE PROVISIONS OF SECTION 115J B IN BRIEF ARE: EVERY ASSESSMENT YEAR, TWO PARALLEL COMPUTATIONS AR E CONTEMPLATED. ONE COMPUTATION OF TOTAL INCOME IN ACCORDANCE WITH THE NORMAL PROVISIONS OF THE I.T. ACT AND ANOTHER IS THE COMPU TATION OF BOOK PROFIT AS STIPULATED U/S 115JB. IF THE INCOME TAX P AYABLE ON THE TOTAL INCOME IS LESS THAN 18.5% OF THE BOOK PROFIT COMPUT ED U/S 115JB, THEN THE BOOK PROFIT SO COMPUTED SHALL BE DEEMED TO BE THE TOTAL INCOME, THEN THE BOOK PROFIT SO COMPUTED SHALL BE D EEMED TO BE THE TOTAL INCOME AND THE COMPANY SHALL PAY TAX @ 18.5% THEREON. THE AMOUNT SO PAID AS THE MAT SHALL BE AVAILABLE TO THE CREDIT OF THE COMPANY TO BE SET OFF AS CONTEMPLATED U/S 115JAA WI THIN A PERIOD OF 10 AYS. SURCHARGE AT 5% SHALL BE LEVIED IF BOOK PRO FIT EXCEEDS 1 CRORE. EDUCATION CESS @ 3% SHALL BE ADDED ON THE AG GREGATE OF ITA NO.13/MDS./2017 :- 4 -: INCOME TAX AND SURCHARGE. AT THE SAME TIME, SECTION U5JAA PROVIDES THAT WHERE ANY AMOUNT OF TAX IS PAID UNDER SECTION 115JB(L) BY A COMPANY FOR ANY ASSESSMENT YEAR, CREDIT IN RESPECT OF THE TAXES SO PAID FOR SUCH ASSESSMENT YEAR SHALL BE ALLOWED ON T HE DIFFERENCE OF THE TAX PAID UNDER SECTION N5JB AND THE AMOUNT OF T AX PAYABLE BY THE COMPANY ON ITS TOTAL INCOME COMPUTED IN ACCORDA NCE WITH THE OTHER PROVISIONS OF THE ACT. IN OTHER WORDS, MAT CR EDIT SHALL BE COMPUTED AS UNDER: MAT CREDIT AVAILABLE = TAX PAID U/S II5JB - TAX PAY ABLE ON THE TOTAL INCOME UNDER NORMAL PROVISIONS OF THE ACT. 9.1 THE AMOUNT OF TAX CREDIT SO DETERMINED SHALL BE ALLOWED TO BE CARRIED FORWARD AND SET OFF IN A YEAR WHEN THE TAX BECOMES PAYABLE ON THE TOTAL INCOME COMPUTED UNDER THE REGULAR PROV ISIONS. HOWEVER, NO CARRY FORWARD SHALL BE ALLOWED BEYOND T HE TENTH ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE M/S VIRT USA (INDIA) PVT. LTD. ASSESSMENT YEAR IN WHICH THE TAX CREDIT BECOME S ALLOWABLE. THE SET OFF IN RESPECT OF THE BROUGHT FORWARD TAX CREDI T SHALL BE ALLOWED FOR ANY ASSESSMENT YEAR TO THE EXTENT OF THE DIFFER ENCE BETWEEN THE TAX ON THE TOTAL INCOME AND THE TAX WHICH WOULD HAV E BEEN PAYABLE UNDER SECTION II5JB FOR THAT ASSESSMENT YEAR. 9.2 IN OTHER WORDS, MAT CREDIT WILL BE ALLOWED ON LY IN THAT PREVIOUS YEAR IN WHICH TAX PAYABLE ON THE TOTAL INC OME AS PER NORMAL PROVISIONS OF THE INCOME TAX ACT IS MORE THAN TAX P AYABLE UNDER SECTION 115JB AND IT SHALL BE ALLOWED TO THE EXTENT OF THE FOLLOWING: TAX PAYABLE ON TOTAL INCOME UNDER THE NORMAL PROVIS IONS OF THE ACT - TAX PAYABLE UNDER SECTION 115JB = MAT CREDIT TO BE ALLO WED. 9.3 ON CAREFUL READING, THE SUB-SECTION 2A, THE TAX CREDIT TO BE ALLOWED SHALL BE THE DIFFERENCE OF TAX PAID FOR ANY AY UNDER SUB- SECTION (I) OF 115JB AND THE AMOUNT OF TAX PAYABLE ON HIS TOTAL INCOME COMPU TED IN ACCORDANCE WITH ITA NO.13/MDS./2017 :- 5 -: THE OTHER PROVISIONS OF THIS ACT. THE IMPORTANT WOR D USED IS TAX PAID AND AS PER THE HONBLE APEX COURT DECISION IN THE CASE OF K. SRINIVASAN (SUPRA), THE TERM TAX INCLUDES SURCHARGE. 9.4 IT IS ALSO IMPORTANT TO EVALUATE SUB-SECTION (5 ) OF SECTION 115JAA. SET OFF IN RESPECT OF BROUGHT FORWARD TAX CREDIT SHALL BE ALLOWED FOR ANY AY TO THE EXTENT OF DIFFERENCE BETWEEN TAX ON HIS TOTAL I NCOME AND THE TAX WHICH WOULD HAVE BEEN PAYABLE U/S 115JB, AS THE CASE MAY BE FOR THAT AY. ON CAREFUL READING, THE TERM USED ARE TAX, NOT INCOME TAX OR ANY OTHER TERM. NEEDLESS TO SAY THE TERM TAX INCLUDES SURCHARGE. 9.5 THE SUB-SECTION (5) OF SECTION 115JAA ARE APPLI ED AS IT IS IN THE ITR 6. THE ITR-6 FORM IS DESIGNED AND APPROVED BY THE APEX BODY CBDT AND THIS FORM IS UNIVERSALLY USED BY ALL THE COMPANY ASSESSE ES. IN PART A OF THE ITR- 6, THE ASSESSEES ARE REQUIRED TO FILL THE BALANCE S HEET AND P&L A/C. FROM THE DATA OF PART A, ALL THE RELATED CALCULATIONS ARE CA RRIED OUT IN OTHER PARTS OF THE JTR-6 I.E. PART - B AND OTHER RELATED SCHEDULES . NONE OF THE COLUMNS IN THE PART B ARE MANUALLY ENTERED, THESE ARE AUTO F ILLS, AND THE DATES ARE EXTRACTED FROM PART A. IT IS PERTINENT TO ANALYSE THE TOTAL TAX LIABILITY CALCULATIONS DESIGNED BY THE CBDT FOR ASSESSMENT YE AR 2012-13. THEY ARE AS BELOW: PART B - TTI COMPUTATION OF TAX LIABILITY ON TOTAL INCOME TAX PAYABLE ON DEEMED TOTAL INCOME UNDER SECTION 115JB (7 OF ID TO TAL TAX PAYABLE U/S 115JB (IA+IB+IC)MAT) ID 0 2 TAX PAYABLE ON TOTAL IN COME COMPUTATION OF TAX LIABILITY 4 EDUCATIONAL CESS, INCLUDING SECONDA RY AND HIGHER EDUCATION CESS ON (2C + 3) 4O CREDIT UNDER SECTION 115JAA OF TAX PAID IN EARLIER YEARS (IF 5 IS MORE THAN ID) 8 TAX PAYABLE AFTER CREDIT U NDER SECTION 115JAA [(6 - 7)1 8 0 9 TAX RELIEF 11 INTEREST PAYABLE FOR DEFAUL T IN FURNISHING THE RETURN (SECTION FOR DEFAULT IN PAYMENT OF ADVANCE TAX FOR DEFERMENT OF ADVANCE TAX (SECTION 234C). 13 TAXES PAID TAXES PAID 14 AMOUNT PAYABLE (ENTER I F 12 IS GREATER THAN IE, ELSE ENTER O) 14 0 REFUND (IF IE IS GREATER THA N 12, ALSO GIVE THE BANK ACCOUNT DETAILS IN 9.6 THE TAX LIABILITIES FOR NORM AL PROVISIONS AS WELL AS MAT ARE CALCULATED WITH SURCHARGE AND CESS. THE MAT CRE DIT IN ROW 7 ARE ITA NO.13/MDS./2017 :- 6 -: CALCULATED AUTOMATICALLY USING THE PRESCRIBED ALGOR ITHM, THIS IS NOTHING BUT BALANCING FIGURE I.E., THE DIFFERENCE BETWEEN TAX L IABILITY AS PER NORMAL PROVISIONS AND MAT PROVISIONS. BOTH THE ABOVE TAX L IABILITIES ARE CALCULATED WITH SURCHARGE AND CESS. THESE ARE THE STANDARD FOR MAT, WHICH ARE EXPECTED TO BE FOLLOWED BY ALL THE ASSESSEES AND ALSO IMPORT ANT TO NOTE THAT THE ABOVE FORMAT OF ITR 6 WAS AMENDED W.E.F. AY 2012- 13 BY C BDT. MOREOVER, THIS IS MORE RELEVANT FOR THE DEPARTMENT ALSO. THESE FORMAT S ARE REGULATED BY CBDT. ASSESSING OFFICER CANNOT OVERLOOK THESE FORMA TS AND (INTERPRET IT IN HIS OWN METHOD OF CALCULATING TAX CREDIT WHILE MAKI NG ASSESSMENT U/S 143(1) OF THE ACT.) PROCEED TO CALCULATE THE MAT CREDIT TO COMPUTE ASSESSMENT U/S 143(1) APPLYING DIFFERENT METHODS WHEN THE PROPER A ND CORRECT METHOD AS PROPOSED BY CBDT IN ITR-6. THE ASSESSING OFFICER IS EXPECTED TO FOLLOW THE ITR-6 FORMAT TO COMPLETE THE ASSESSMENT U/S 143(1) OR 143(3) OF THE ACT. 9.5 LET US ALSO ANALYSE THE CASE LAW OF RICHA GLOBA L EXPORTS PVT. LTD. WHICH WAS APPLIED BY CIT(A), THE DELHI ITAT OPINED THAT S ECTION 115JAA APPLIED ONLY TO INCOME TAX, NOT OF INCOME TAX AS INCREASED BY SURCHARGE AND E4UCATION CESS. WE ARE OF THE VIEW THAT THE APEX CO URT DECISION IN THE CASE OF K.SRINIVASAN (SUPRA) MAY NOT HAVE BEEN BROUGHT T O THE KNOWLEDGE OF THE 1TAT, DELHI. MOREOVER, THE EXPLANATION 2 OF SECTION 115JB IS APPLICABLE TO CALCULATE TAX LIABILITY U/S 115JB AND THE SAME EXPL ANATION SHOULD ALSO BE APPLIED FOR GIVING CREDIT U/S 115JAA. THE TAX LIABI LITIES CALCULATED U/S 115JB BY APPLYING THE EXPLANATION 2, THE TAX LIABILITY SO COMPUTED ARE REMITTED BY THE ASSESSEE AND THEN THE SAME WAS CARRIED FORWARD FOR FUTURE MAT CREDIT. IN OUR VIEW, WHILE CALCULATING THE MAT CREDIT U/S 1 15JAA, THE SAME EXPLANATION 2 IN SECTION U5JB MUST BE APPLIED. 9.6 THE EARLIER JUDGMENTS IN THE CASES OF UNIVERSAL MEDICARE, VALMET INDIA AND W YETH LIMITED ARE DECIDED RELYING ON THE ITR - 6 AS APPLICABLE IN THOSE AYS. SIMILARLY, WE ALSO APPLY THE ITR 6 FORMAT AS A PPLICABLE TO AY 2012-13 AS STATED ABOVE. ASSESSEE HAS RELIED ON THE ITR - 6 FORMAT TO ARRIVE AT THE TOTAL LIABILITY AS WELL AS THE MAT CREDIT CALCULATI ONS AND PAID TAX ACCORDINGLY. IN OUR VIEW, THE ASSESSEE HAD FOLLOWED THE PROCEDUR E PROPERLY AND THE ASSESSING OFFICER HAD MADE THE CALCULATIONS APPLYIN G HIS OWN INTERPRETATION ITA NO.13/MDS./2017 :- 7 -: OR RELIED ON THE PROGRAMME, WE ARE NOT SURE WHETHER IT IS PROGRAMME HITCH OR THE INTERPRETATION OF ASSESSING OFFICER WAS NOT IN LINE WITH THE CALCULATIONS PROPOSED IN ITR-6. THEREFORE, WE DELETE THE ADDITIO N MADE. 3.2 SIMILAR VIEW WAS TAKEN BY THE CO-ORDINATE BENC H OF MUMBAI TRIBUNAL IN THE CASE OF DCIT VS. M/S.GODREJ OIL PALM LTD. IN ITA NO.5098/MUM/2013 VIDE ORDER DATED 14.01.2015 . 4. IN VIEW OF THE ABOVE CITED JUDGEMENTS, WE ARE I NCLINED TO DECIDE THE ISSUE IN FAVOUR OF ASSESSEE AND AGAIN ST THE DEPARTMENT. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STA NDS DISMISSED. ORDER PRONOUNCED ON 1 ST MAY, 2017, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 1 ST MAY, 2017. K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF