DCIT Corporate Circle 2(2), CHENNAI V. JRay McDermott Engineering Services Pvt. Ltd., CHENNAI

ITA 1371/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4429 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 24-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 115JB

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 1371/MDS/2018 / ASSESSMENT YEAR :2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(2), ROOM NO. 512, 5 TH FLOOR, WANAPARTHY BLOCK, 121, M.G. ROAD, CHENNAI 34. VS. M/S. JRAY MCDERMOTT ENGINEERING SERVICES PVT. LTD., RMZ MILLENIA BUSINESS PARK, 6 TH FLOOR, CAMPUS 3B, NO. 143, DR. MGR ROAD, PERUNGUDI, CHENNAI 600 0096. [PAN:AABCJ6787H] ( APPELLANT ) ( RESPONDENT) / APPELLANT BY : MS. RUBY GEORGE, CIT / RESPONDENT BY : NONE / DATE OF HEARING : 03.10.2018 /DATE OF PRONOUNCEMENT : 23.10.2018 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 13, CHENNAI DATED 05.01.2018 RELEVANT TO THE ASSESSMENT YEAR 2011-12. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO CONSIDER THE PAYMENT OF SURCHARGE AND EDUCATION CESS FOR THE PURPOSE OF MAT CREDIT. 2. IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS I.T.A. NO. 1371/CHNY/18 2 CLAIMED MAT CREDIT OF .1,86,40,748/- INCLUSIVE OF SURCHARGE AND CESS. HOWEVER, IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS GRANTED MAT CREDIT OF ONLY .1,30,06,509/- AND THE DIFFERENCES BETWEEN THE AMOUNT OF MAT CREDIT AS PER THE RETURN OF INCOME AND COMPUTATION OF THE ASSESSING OFFICER IS ON ACCOUNT OF NON-INCLUSION OF PAYMENT OF SURCHARGE AND EDUCATION CESS. 3. ON APPEAL, BY CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT THE COMPUTATION OF CREDIT AVAILABLE FOR CARRY FORWARD UNDER SECTION 115JAA OF THE ACT IN THE YEAR OF PAYMENT UNDER SECTION 115JB OF THE ACT MUST BE AFTER CONSIDERING THE SURCHARGE AND CESS LEVIED UNDER THE ACT, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO CONSIDER PAYMENT OF SURCHARGE AND CESS FOR THE PURPOSE OF MAT CREDIT AND THE CLAIM AND TO REVISE THE MAT CREDIT BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012-13 IN I.T.A. NO. 1723/MDS/2017. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND THE LD. DR CONTENDED THAT THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012-13 HAS NOT BEEN ACCEPTED AND PREFERRED FURTHER APPEAL BEFORE THE HONBLE MADRAS HIGH COURT AND PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE REVERSED. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE, I.T.A. NO. 1371/CHNY/18 3 RPAD ON RECORD. HENCE, WE PROCEED TO DECIDE THE APPEAL ON MERITS AFTER CONSIDERING THE SUBMISSIONS OF THE LD. DR. 6. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE COMPUTATION OF MAT CREDIT, THE ASSESSING OFFICER HAS EXCLUDED THE SURCHARGE AND CESS, WHICH HAS TO BE SET OFF AGAINST THE TAX LIABILITY FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. SIMILAR ISSUE WAS SUBJECT MATTER IN APPEAL FOR THE ASSESSMENT YEAR 2012-13 AND VIDE ITS ORDER IN I.T.A. NO. 1723/MDS/2017 DATED 30.10.2017, THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 6. THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS WITH REGARD EXCESS CLAIM OF MAT CREDIT UNDER SECTION 115JAA OF THE ACT. ON PERUSAL OF THE STATEMENT OF TOTAL INCOME FOR THE YEAR ENDED 31.03.2012, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED AN AMOUNT EQUIVALENT TO .3,20,05,495/- AS MAT CREDIT. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSEE HAS SUBMITTED THE DETAILS CALLED FOR. AFTER VERIFYING THE DETAILS, THE ASSESSING OFFICER, WHILE COMPUTING THE MAT CREDIT ELIGIBLE TO BE SET OFF, BY CONSIDERING THE EXCESS OF TAX PAYABLE UNDER THE NORMAL PROVISIONS OF THE MAT, WITHOUT CONSIDERING THE SURCHARGE AND EDUCATION CESS, COMPUTED THE TOTAL INCOME OF THE ASSESSEE. 6.1 ON APPEAL, BY FOLLOWING THE DECISIONS OF THE COORDINATE BENCHES OF THE TRIBUNAL IN THE CASE OF SAINT GOBIN GYPROC INDIA LIMITED IN ITA NO. 2122/MDS/2015 DATED 03.02.2016 AND ALSO IN THE CASE OF M/S. VALUE SOURCE TECHNOLOGIES IN I.T.A. NO. 449/MDS/2016 DATED 19.05.2016, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO CONSIDER PAYMENT OF SURCHARGE AND CESS FOR THE PURPOSE OF MAT CREDIT. 6.2 AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND THE LD. DR HAS SUBMITTED THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF SAINT GOBIN GYPROC INDIA LIMITED IN ITA NO. 2122/MDS/2015 DATED 03.02.2016, WHICH WAS NOT ACCEPTED BY THE DEPARTMENT, FURTHER APPEAL HAS BEEN FILED IN THE HONBLE HIGH COURT OF MADRAS, WHICH IS STILL PENDING AND THUS PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE REVERSED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). I.T.A. NO. 1371/CHNY/18 4 6.3 WE HAVE HEARD RIVAL CONTENTIONS. IN SIMILAR FACTS AND CIRCUMSTANCES ON AN IDENTICAL ISSUE, BY CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. K. SRINIVASAN 83 ITR 0346 AND BY FOLLOWING THE MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF WYETH LIMITED VS. ACIT IN ITA NO.6682/MUM/2011, DATED 09.01.2015, IN THE CASE OF M/S. SAINT GOBAIN GYPROC INDIA LTD. (SUPRA), THE CO-ORDINATE BENCHES OF THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: WE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES PERUSED THE MATERIAL ON RECORD AND ALSO JUDICIAL DECISION CITED. THE ASSESSEE COMPANY HAS CLAIMED MAT CREDIT SET OFF AGAINST INCOME TAX ON NORMAL PROVISIONS WHICH IS ALLOWABLE AND SUCH MAT CREDIT CAN BE CARRIED FORWARD ALSO. UNDER THE PROVISIONS OF SEC. 115JB TAX COMPONENTS ALSO INCLUDES SURCHARGE AND EDUCATION CESS. THE LD. AUTHORISED REPRESENTATIVE REITERATED HIS SUBMISSIONS MADE BEFORE THE APPELLATE PROCEEDINGS WERE RELIEF WAS GRANTED. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE FINDINGS OF THE ASSESSING OFFICER AND ARGUED TO SET ASIDE THE APPEAL. IN REPLY, THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE DECISION OF ITAT, MUMBAI BENCH WYETH LIMITED VS. ACIT IN ITA NO.6682/MUM/2011, DATED 09.01.2015 WHICH HAS ENDORSED THE PROVISIONS OF ALLOWING MAT CREDIT OBSERVED AT PAGE 4 IN PARA 5 AS UNDER:- 5. THUS IT IS CLEAR THAT THE HONBLE HIGH COURT HAS TAKEN INTO ACCOUNT THE ORDER OF ENTRIES IN THE FORM ITR-6 FOR THE A.Y. 2011-12 IN THE SAID CASE AND HELD THAT AS PER FORM ITR-6, THE MAT CREDIT HAS TO BE GIVEN AGAINST THE GROSS TAX PAYABLE EXCLUSIVE OF SURCHARGE/CESS AND ONLY AFTER THE MAT CREDIT TAX LIABILITY, THE SURCHARGE AND CESS HAS TO BE CALCULATED FOR THE PURPOSE OF WORKING OUT THE GRAND TAX LIABILITY. WE ALSO FIND MERIT AND SUBSTANCE IN THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT IF THE MAT CREDIT IS TAKEN INTO ACCOUNT WITHOUT INCLUDING THE SURCHARGE AND EDUCATION CESS THEN THE SURCHARGE AND EDUCATION CESS ON THE TAX LIABILITY HAS TO BE CALCULATED ONLY AFTER ALLOWING THE MAT CREDIT. ALTERNATIVELY, THE AMOUNT OF MAT CREDIT SHOULD ALSO INCLUDE SURCHARGE AND EDUCATION CESS FOR THE PURPOSE OF ALLOWING THE CREDIT AGAINST THE TAX LIABILITY INCLUSIVE OF SURCHARGE AND EDUCATION CESS. THEREFORE, THE MAT AS WELL AS NORMAL TAX BEFORE ALLOWING THE MAT CREDIT HAS TO BE TAKEN ON PARITY EITHER EXCLUSION OF SURCHARGE AND EDUCATION CESS OR INCLUSIVE OF SURCHARGE AND EDUCATION CESS OR INCLUSIVE OF SURCHARGE AND EDUCATION CESS. ACCORDINGLY WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE MAT CREDIT AGAINST THE TAX LIABILITY PAYABLE BEFORE SURCHARGE AND EDUCATION CESS OR ALTERNATIVELY THE AMOUNT OF MAT CREDIT SHOULD ALSO BE INCLUSIVE OF SURCHARGE AND EDUCATION CESS AND THEN ALLOW THE CREDIT AGAINST THE TAX PAYABLE INCLUSIVE OF SURCHARGE AND EDUCATION CESS. WE, RESPECTFULLY FOLLOWING THE ABOVE DECISION, UPHELD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE REVENUE APPEAL. I.T.A. NO. 1371/CHNY/18 5 6.4 THE ABOVE DECISIONS OF THE CHENNAI BENCHES AS WELL AS MUMBAI BENCHES OF THE TRIBUNAL HAVE NOT BEEN REVERSED BY ANY HIGH COURT. FURTHER, THE ABOVE DECISIONS WERE ALSO FOLLOWED TO DECIDE SIMILAR ISSUE IN THE CASE OF VALUE SOURCE TECHNOLOGIES PVT. LTD. V. DCIT IN I.T.A. NO. 449/MDS/2016 DATED 19.05.2016. BY FOLLOWING THE ABOVE DECISIONS, THE LD. CIT(A) ALSO DIRECTED THE ASSESSING OFFICER TO CONSIDER PAYMENT OF SURCHARGE AND CESS FOR THE PURPOSE OF MAT CREDIT AND THUS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. THE LD. DR COULD NOT CONTROVERT THE ABOVE DECISION OF THE TRIBUNAL HAVING MODIFIED OR REVERSED. SINCE THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE ABOVE DECISION AND DIRECTED THE ASSESSING OFFICER TO REVISE THE MAT COMPUTATION BY INCLUDING PAYMENT OF SURCHARGE AND CESS, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). THUS, THE GROUND RAISED BY THE REVENUE STANDS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 23 RD OCTOBER, 2018 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 23.10.2018 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.