Assistant Commissioner of Income Tax LTU Circle-1, Bangalore V. M/s MIndtree Limited , Bangalore

ITA 168/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7522 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 10AA; 115JB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.168/BANG/2017 (ASST. YEAR 2012-13) THE ASST. COMMISSIONER OF INCOME TAX, LTU, BENGALURU. . APPELLANT VS. M/S MINDTREE LTD., GLOBAL VILLAGE, RVCE POST, MYSORE ROAD, BENGALURU. . RESPONDENT APPELLANT BY : MS. NEERA MALHOTRA, CIT RESPONDENT BY : SHRI TATA KRISHNA, ADVOCATE DATE OF HEARING : 27-9-2017 DATE OF PRONOUNCEMENT : 28-9-2017 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF COMMISSIONER OF INCOME-TAX (APPEAL) - 14, LTU, BANG ALORE DATED 28/4/2015 FOR ASST. YEAR 2012-13. 2. BRIEFLY STATED, THE RELEVANT FACTS OF THE CASE A RE AS UNDER:- 2.1 THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT, CONSULTANCY SERVICES AND PROVISION OF INTERNET ITA N O.168/B/17 2 ENABLING TECHNOLOGY, FILED ITS RETURN FOR ASST. YEA R 2012-13 ON 28/9/2012 DECLARING TOTAL INCOME OF RS.101,12,19,49 0/- AFTER CLAIMING DEDUCTION OF RS.147,80,38,833/- U/S 10AA O F THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 24/3/2015 W HEREIN THE INCOME UNDER THE NORMAL PROVISIONS WAS DETERMINED A T RS.101,66,39,840/- IN VIEW OF DISALLOWANCE OF A POR TION OF THE DEDUCTION CLAIMED U/S 10AA OF THE ACT AND DISALLOWA NCE OUT OF CLUB EXPENSES. BOOK PROFITS U/S 115JB OF THE ACT WERE COMPUTED AT RS.255,29,37,583/-. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 24/3 /2015 FOR ASST. YEAR 2012-13, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE CIT(A)-14, LTU, BANGALORE. THE LD CIT(A) DISPOSED OFF THE APPEAL, ALLOWING THE ASSESSEE PARTIAL RELIEF. 3.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CI T(A)-14, LTU, BANGALORE, HAS FILED THIS APPEAL, WHEREIN IT H AS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF LD. CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DECIDING THAT THE MAT CREDIT SHOULD INCLUDE SURCHARGE AND EDUCATION CESS. 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 3.2. THE SUM AND SUBSTANCE OF THE ISSUE RAISED IN R EVENUES APPEAL (SUPRA) IS THAT THE LD CIT(A) ERRED IN HOLDI NG THAT MAT ITA N O.168/B/17 3 CREDIT SHOULD INCLUDE SURCHARGE AND EDUCATION CESS. THE LD DR WAS HEARD IN SUPPORT OF THE GROUNDS RAISED. 3.3 PER CONTRA, THE LD AR FOR THE ASSESSEE SUBMITTE D THAT THERE WAS NO ERROR IN THE ORDER OF LD CIT(A) ON THIS ISSU E AS THIS ISSUE IS NO LONGER RES INTEGRA IN VIEW OF THE DECISION OF TH E HONBLE APEX COURT IN THE CASE OF CIT VS. TULSYAN NEC LTD., (330 ITR 226). THE LD AR ALSO PLACED RELIANCE ON THE DECISION OF T HE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SREI INFRASTRUCT URE FINANCE LTD., VS. DCIT (2016) 289 CTR 412 (CALCUTTA) AND OF THE I TAT DELHI BENCH IN THE CASE OF AMQ AGRO INDIA PVT. (ITA NO.66 6/DEL/2014 DATED 29/4/2016). 3.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUD ING THE JUDICIAL PRONOUNCEMENTS CITED. ON A PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT THE LD CIT(A) FOLLOWING THE DECISION OF T HE HONBLE APEX COURT IN THE CASE OF TULSYAN NEC LTD., (SUPRA) HAS ALLOWED THE ASSESSEES CLAIM THAT THERE SHOULD BE FULL GRANT OF MAT CREDIT I.E, INCLUDING SURCHARGE AND CESS. THE RELEVANT PORTION OF THE IMPUGNED ORDER OF THE CIT(A) AT PARA 8 AND 8.1 IS EXTRACTED HEREUNDER:- 8. THE AO DID NOT CARRY FORWARD THE SURCHARGE AND EDUCATION CESS COMPONENT ON MAT. THE APPELLANT POINTED OUT THAT THE DEFINITION OF 'TAX' U/S. 2(43) OF THE ITA SHOULD BE READ WITH EXPLANATION 2 TO SECTION 11 5JB WHICH STATES THAT 'TAX' INCLUDES ALL THE THREE COMPONENTS: TAX, SURCHARGE AND CESS. IT WAS ARGUED ITA N O.168/B/17 4 THAT THE SAME MEANING SHOULD APPLY TO ALL THE PROVISIONS OF MAT AND, HENCE, THERE SHOULD BE FULL GRANT OF MAT CREDIT I.E. INCLUDING SURCHARGE AND CE SS. RELIANCE WAS PLACED UPON ON THE 'SUPREME COURT'S DECISION IN THE CASE OF CIT V. TULSYAN NEC LTD.(330 ITR 226). 8.1 I AM IN AGREEMENT WITH THE ABOVE INTERPRETATION . THE AO IS DIRECTED TO RECOMPUTE ACCORDINGLY. THIS GROUND, THEREFORE, SUCCEEDS. 3.4.2 THE ITAT, DELHI BENCH IN THE CASE OF AMQ AGR O INDIA PVT. LTD., IN ITA NO.666/DEL/2014 DATED 29/4/2016 HAS CO NSIDERED THE IDENTICAL ISSUE AND AT PARA 7 TO 10 THEREOF HAS HEL D AS UNDER:- 7. NOW, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS 'AS TO WHETHER THE ASSESSEE IS ENTITLE D FOR THE CREDIT OF RS.43,58,319/-, BY CALCULATING SURCHA RGE AND EDUCATION CESS ON THE TOTAL AMOUNT OF RS.38,82,274/-.' 8. THIS ISSUE HAS BEEN DECIDED BY THE HON'BLE APEX COURT IN JUDGMENT CITED AS COMMISSIONER OF INCOME- TAX, KERALA VS. K. SRINIVASAN (1972) 83 ITR 346 AND THE OPERATIVE PART OF THE JUDGMENT IS REPRODUCED FOR RE ADY REFERENCE AS UNDER :- THE TERM 'INCOME-TAX' AS EMPLOYED IN SECTION 2 OF T HE FINANCE ACT, 1964, INCLUDES SURCHARGE AND ADDITIONA L ITA N O.168/B/17 5 SURCHARGE WHEREVER PROVIDED. THE SURCHARGE, THE SPECIAL SURCHARGE AND THE ADDITIONAL SURCHARGE FORM A PART OF INCOME-TAX AND SUPER-TAX. SUB-SECTION (2) OF SECTION 2 OF THE FINANCE ACT, 19 64, PROVIDES THAT, WHEN THE TOTAL INCOME OF AN ASSESSEE NOT BEING A COMPANY INCLUDES ANY INCOME CHARGEABLE UNDER THE HEAD 'SALARIES', INCOME-TAX AND SUPER-TAX PAYABLE BY THE ASSESSEE ON THE SALARY PORTION OF TH E TOTAL INCOME SHALL BE THE PROPORTIONATE AMOUNT PAYA BLE ACCORDING TO THE RATES PROVIDED IN THE FINANCE ACT, 1963. UNDER THE FINANCE ACT, 1963, INCOME-TAX SHALL BE INCREASE BY A SURCHARGE, SPECIAL SURCHARGE AND ADDITIONAL SURCHARGE, WHILE SUPER-TAX SHALL BE INCREASED BY A SURCHARGE AND SPECIAL SURCHARGE IN T HE MANNER PROVIDED IN THE SAID ACT. BUT SUB-SECTION (2 ) OF SECTION 2 OF THE FINANCE ACT, 1964, DID NOT MENTION ANY OF THESE SURCHARGES. THE ASSESSEE, WHOSE TOTAL INCO ME INCLUDED RS.42,900 UNDER THE HEAD' SALARIES ', CONTENDED THAT THE SALARY PORTION OF HIS TOTAL INCO ME WAS CHARGEABLE ONLY TO INCOME-TAX AND SUPER-TAX, AN D NOT TO ANY OF THE SURCHARGES: HELD, THAT IN ASSESSING INCOME-TAX AND SUPER-TAX ON THE SALARY RECEIVED BY THE ASSESSEE, IN ACCORDANCE WITH SECTION 2(2) OF THE FINANCE ACT, 1964, NOR MERELY THE INCOME-TAX AND SUPER-TAX AT THE RATES APPLICABLE UN DER ITA N O.168/B/17 6 THE FINANCE ACT, 1963, BUT THE SURCHARGES PRESCRIBE D THEREUNDER HAD TO BE CHARGED.' 9. EVEN OTHERWISE EXPLANATION 2 OF SECTION 1153B CATEGORICALLY CLARIFIES THAT THE AMOUNT OF INCOME-T AX SHALL INTER ALIA INCLUDE SURCHARGE, IF ANY AND EDUC ATION CESS ON INCOME-TAX ETC. FOR FACILITY OF REFERENCE, PROVISIONS CONTAINED UNDER EXPLANATION (2) OF SECTI ON 115JB ARE REPRODUCED AS UNDER:- '[EXPLANATION 2.-FOR THE PURPOSES OF CLAUSE (A) OF EXPLANATION 1, THE AMOUNT OF INCOME- TAX SHALL INCL UDE- (I) ANY TAX ON DISTRIBUTED PROFITS UNDER SECTION 11 5-0 OR ON DISTRIBUTED INCOME TINDER SECTION 115R; (II) ANY INTEREST CHARGED UNDER THIS ACT; (III) SURCHARGE, IF ANY, AS LEVIED BY THE CENTRAL A CTS FROM TIME TO TIME; (IV) EDUCATION CESS ON INCOME-TAX, IF ANY, AS LEVIE D BY THE CENTRAL ACTS FROM TIME TO TIME; AND (V) SECONDARY AND HIGHER EDUCATION CESS ON INCOME- TAX, IF ANY, AS LEVIED BY THE CENTRAL ACTS FROM TIM E TO TIME.] 10. BY APPLYING THE RATIO OF THE JUDGMENT IN CASE O F K. SRINIVASAN (SUPRA) AND PROVISIONS CONTAINED UNDER EXPLANATION (2) OF SECTION 1153B, WE ARE OF THE CONSIDER VIEW THAT THE CIT (A) HAS ERRED IN NOT GIV ING THE DUE CREDIT OF MAT OF RS.5,11,611/- U/S 115JAA O F THE ACT AS MAT INCLUDES SURCHARGE ON MAT AS WELL AS ITA N O.168/B/17 7 EDUCATION CESS AND THE SAME WAS UNDISPUTEDLY PAID B Y THE ASSESSEE DURING THE YEAR UNDER ASSESSMENT. CONSEQUENTLY, THE IMPUGNED ORDER IS SET ASIDE. 3.4.3 SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE CA LCUTTA HIGH COURT IN THE CASE OF SREI INFRASTRUCTURE FINANCE LT D., (2016) 289 CTR 412 (CALCUTTA); WHEREIN FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. TULSYAN NEC LTD., (2011) 330 ITR 226 (SC), THE HONBLE COURT HELD THAT MAT CREDI T IS TO BE ALLOWED AGAINST TAX ON TOTAL INCOME INCLUDING THE A MOUNT OF SURCHARGE AND CESS INSTEAD OF ADJUSTING THE SAME TA X ON TOTAL INCOME BEFORE CHARGING SUCH SURCHARGE AND EDUCATION CESS. 3.4.4 TAKING INTO CONSIDERING THE FACTS AND CIRCUMS TANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN TULSYAN NEC LTD., (SUPRA); OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SREI INFRASTRUCTURE FINANCE LT D., (SUPRA) AND OF THE ITAT, DELHI BENCH IN THE CASE OF AMQ AGRO INDIA PVT. LTD., (SUPRA),WE UPHOLD THE ORDER OF THE LD CIT(A) GRANTI NG THE ASSESEE MAT CREDIT U/S 115JB OF THE ACT AGAINST TAX ON TOT AL INCOME INCLUDING SURCHARGE AND CESS INSTEAD OF ADJUSTING T HE SAME ON TOTAL INCOME BEFORE CHARGING SUCH SURCHARGE AND EDUCATION CESS. CONSEQUENTLY, FINDING NO MERIT IN THE GROUNDS 1 TO 3 (SUPRA) RAISED BY REVENUE, WE DISMISS THE SAME. 4. IN THE RESULT, REVENUES APPEAL FOR ASST. YEAR 2012-13 IS DISMISSED. ITA N O.168/B/17 8 ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2017. SD/- SD/- (SUNIL KUMAR YADAV) (JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE DATED : 28/9/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5 .DR 6. GF BY ORDER SR. PRIVATE SECR ETARY, ITAT, BANGALORE.