Richa Global Exports Pvt. Ltd., New Delhi V. ACIT (CPC), Bangalore

ITA 2303/DEL/2012

• Counselvise Citation: 230320114 RSA 2012
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 17-07-2012
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VEENA JOSHI
• Keywords: Deemed to accrue or arise in india; Retrospective amendment
• Section: 234B; 115JB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2303/DEL/2012 ASSESSMENT YEAR : 2010-2011 M/S RICHA GLOBAL EXPORTS ACIT, PVT. LTD., A-41, (CPC), MAYAPURI INDL AREA, VABGALORE. NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AADCR AADCR AADCR AADCR- -- -0255 0255 0255 0255- -- -L LL L APPELLANT BY : SHRI KVSR KRISHNA, ADVOCATE. RESPONDENT BY : SMT. VEENA JOSHI, DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 27.2.2012. THE GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS GROSSLY ERRED: A) IN ALLOWING CREDIT OF MAT OF THE PREVIOUS YEAR U/S 11 5JAA AT ` .56,05,585/-. (PL. SEE SL. NO.22 OF INTIMATION) ONLY AS AGAINST THE SUM OF ` .63,51,128/- PAID AS PER SCHEDULE PART B OF TTI OF ITR 6 OF PREVIOUS YEAR RESULTING IN NOT A LLOWING THE CREDIT OF MAT U/S 115 JAA AT ` .5,60,559/- AND ` .1,84,984/- BEING THE AMOUNT OF SURCHARGE AND EDUCAT ION ITA NO2303/DEL/2012 2 CESS (PART B OF TTI OF ITR 6 OF PREVIOUS YEAR) WHICH W ERE PAID IN THE PREVIOUS YEAR AND CREDIT OF THE SAME HAS TO BE ALLOWED ALONG WITH THE SUM OF ` .56,05,585/- IN THIS YEAR FOR WHICH RECORDS ARE AVAILABLE WITH THE DEPARTMENT. B) FOR THE PURPOSE OF CALCULATING INTEREST U/S 234B & 23 4C IGNORING FROM THE COMPUTATION THE AMOUNT OF SURCHARG E AND EDUCATION CESS ETC. UNDER MAT OF THE PREVIOUS YE AR PAID AT ` .5,60,559/- AND ` .1,84,984/-. C) AS A RESULT IN CREATING/CHARGING EXTRA DEMAND OF ` .8,74,195/- ( ` .8,62,225/- + ` .11,970/-) WHILE PROCESSING THE RETURN OF INCOME U/S 143(1) BY DOING/COMMITTING FOLLOWING MISTAKES:- SL.NO. REPORTING HEADS AS COMPUTED EXTRA U/S 143(1). AMOUNT CHARGED 21 TAX PAYABLE FOR THE 12939708 YEAR. 22 CREDIT U/S 115JAA 5605585 23 ADJUSTED TAX LIABILITY 12939708 24 SURCHARGE 1293971 560559 26 EC+ SECONDARY & HIGHER EDU. CESS. 427010 184984 32 234B 207972 91002 34 234C 259199 37650 874195/- 2. THAT THE LD CIT(A) HAS ERRED IN NOT ACCEPTING THE ASSE SSEES SUBMISSION THAT TAX HAS BEEN DEFINED IN SEC. 2(43) WHER E TAX MEANS INCOME TAX AND THE SAME SHOULD BE READ WITH FUR THER DEFINITION OF INCOME TAX GIVEN IN EXPLANATION-2 OF SEC. 115JB IN CHAPTER XIIB AND AS SUCH COMMITTED A MISTAKE IN NOT AL LOWING THE RELIEF FOR SURCHARGE AND EDUCATION CESS WHILE COMP UTING THE TAX FOR THE YEAR UNDER APPEAL. ITA NO2303/DEL/2012 3 3. APPELLANT CRAVES TO ADD, FILE, MODIFY AND OTHER GROU ND BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIL ED RETURN ELECTRONICALLY AND RECEIVED INTIMATION ORDER U/S 143 (1) DATED 15.3.2001 FROM ACIT, CPC, BANGALORE. THE ASSESSEE OBSERVED FROM T HE INTIMATION THAT IN ALLOWING CREDIT OF MAT OF PREVIOUS YEAR U/S 1 15JAA AGAINST THE CLAIM OF ` .63,51,128/-, THE CLAIM WAS ALLOWED ONLY FOR AN AMOU NT OF ` .56,05,585/-. THEREFORE, ASSESSEE NOTED THAT THERE WAS A SHORT FALL IN THE ALLOWANCE OF CREDIT OF MAT BY ` .7,45,543/- BEING THE AMOUNT OF SURCHARGE AND EDUCATION CESS AMOUNTING TO ` .5,60,559/- & ` .1,84,984/- RESPECTIVELY. THE ASSESSEE FURTHER OBSERVED THAT INTEREST U/S 234B & 234C WAS CALCULATED IGNORING FROM THE COMPUTATION, T HE AMOUNT OF SURCHARGE AND EDUCATION CESS WHICH WAS PAID DURING PREV IOUS YEAR ALONG WITH MAT. THEREFORE, THE ASSESSEE FILED AN APPEAL BEFORE LD CIT(A) AND PRAYED THAT DUE CREDIT OF MAT INCLUDING SURCHARGE & EDUCATION TAX SHOULD BE CONSIDERED U/S 115JAA AND IN SU PPORT RELIED UPON EXPLANATION 2 OF SECTION 115JB WHICH WAS INSERTED BY FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.2001. A FURTHER PRAYER WAS MADE FOR CALCULATION OF INTEREST U/S 234B & 234C A FTER GIVING PROPER CREDIT OF MAT INCLUDING SURCHARGE AND EDUCAT ION TAX. 3. THE LD AR FURTHER SUBMITTED BEFORE LD CIT(A) THAT CHAPTER XIIB HAS FOUR SECTIONS AND DEFINITION OF TAX IS GIVEN IN ONE SECTION I.E. 115JAA VIDE EXPLANATION (2) AND THEREFORE HE ARGUED THAT SAID EXPLANATION WOULD APPLY TO ALL THE FOUR SECTIONS WHIC H ARE COVERED UNDER CHAPTER-XIIB AND PARTICULARLY TO SECTION 115JA A. IN VIEW OF THE ABOVE, THE LD AR SUBMITTED THAT BENEFIT OF SURCHARGE AND EDUCATION PAID IN THE LAST YEAR BE GIVEN AS PART OF TAX CREDIT AND THE AMOUNT OF SURCHARGE AND EDUCATION CESS SHOULD NOT BE CONSIDERED AS A SEPARATE ITA NO2303/DEL/2012 4 LEVY. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS M ADE BY THE ASSESSEE DID NOT AGREE WITH THE ASSESSEE. THE RELEVANT POR TION OF LD CIT(A)S ORDER IS REPRODUCED BELOW:- I HAVE CAREFULLY CONSIDERED THE INTIMATION U/S 143(1 ) AND THE SUBMISSIONS MADE BY THE APPELLANT. THE PROVISIONS OF SECTI ON 115JAA DEALS WITH ALLOWABILITY OF TAX CREDIT IN RESPE CT OF TAX PAID ON DEEMED INCOME RELATING TO CERTAIN COMPANIES. THE SECTION ALLOWS ONLY CREDIT OF TAX PAID BY THE COMPANY IN ACC ORDANCE WITH THE PROVISIONS OF SECTION 115JAA. TAX HAS BEEN DEFINED IN SECTION 2(43) TO BE INCOME TAX CHARGEABLE UNDER THE PROVISIO NS OF THE ACT AND SURCHARGE AND EDUCATION CESS HAVE NOT BEEN INC LUDED IN THE DEFINITION OF TAX. WHEREVER THE LEGISLATURE WANT ED TO WIDEN THE DEFINITION OF TAX IT HAS DONE IT SPECIFICALLY FOR EXAMPLE IN EXPLANATION 2 TO SECTION 115JB, THE INCOME TAX HAS B EEN SPECIFICALLY DEFINED TO INCLUDE SURCHARGE AS WELL AS ED UCATION CESS. THUS CREDIT OF SURCHARGE AND EDUCATION CESS ARE NO T ADMISSIBLE FOR CLAIM OF CREDIT AS PER PROVISIONS OF THE SECTION 115JAA. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THIS TRIB UNAL. 5. AT THE OUTSET, THE LD AR ARGUED THAT LD CIT(A) HA S REFERRED TO SECTION 2(43) FOR MEANING OF TAX PAID WHICH INSTEAD SH OULD HAVE BEEN READ TOGETHER WITH EXPLANATION 2 TO SECTION 115JB TH E LD AR FURTHER ARGUED THAT DEFINITION OF TAX HAS BEEN GIVEN IN EXPL ANATION (2) TO SECTION 115JB ACCORDING TO WHICH TAX INCLUDES SURCHARG E AND EDUCATION CESS. HE FURTHER ARGUED THAT DEFINITION OF TAX U/S 115 JB AS PER EXPLANATION 2IS APPLICABLE TO ALL FOUR SECTIONS OF CHA PTER-XIIB. IN THIS RESPECT, THE LD AR FILED A COMPENDIUM ON ORDERS OF IT /WT BY DR. GIRISH ITA NO2303/DEL/2012 5 AHUJA WHICH AT QUESTION NO. 20.14 EXPLAIN THE CALCU LATION OF MAT UNDER DIFFERENT YEARS WHICH AS PER LD AR INCLUDED SURCHARGE AND EDUCATION TAX. HE FURTHER ARGUED THAT THE ASSESSING OFFICER HAS TA KEN A VERY NARROW MEANING OF TAX UNDER MAT AND IN FACT CORRECT FACT IS THAT TOTAL OUTGO OF TAX INCLUDING SURCHARGE SHOULD BE CONSIDERED FOR GIVING CREDIT U/S 115JAA. THE LD AR ARGUED FURTHER THAT INTEREST U/ S 234B & 234C SHOULD BE CALCULATED AFTER GIVING CREDIT OF MAT INCL UDING SURCHARGE AND EDUCATION TAX. RELIANCE WAS PLACED IN THE CASE OF CIT V. TULSYAN NE C LTD. AT 330 ITR 226. 6. ON THE OTHER HAND, LD DR ARGUED THAT THIS INTIMAT ION IS NOT MANUAL AND IS AN AUTOMATIC FROM CPC WHEREIN THE CALC ULATIONS ARE DONE AUTOMATICALLY THROUGH SOFTWARE. SHE FURTHER ARG UED THAT SECTION 115JAA & SECTION 115JB TALKS OF ONLY INCOME TAX AND N O WHERE SURCHARGE AND EDUCATION TAX IS INCLUDED FOR THE PURPO SE OF THESE SECTIONS. THEREFORE, SHE ARGUED THAT LD CIT(A) HAS RIGH TLY REJECTED THE APPEAL OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FOR UNDERSTANDING THE AMOUNT OF TAX CREDIT AVAILABLE U/S 115JAA FIRST O F ALL, IT IS NECESSARY TO UNDERSTAND THE MEANING OF INCOME TAX AS CONTEMPLA TED BY SECTION 115JB OF THE ACT. SECTION 115JB READS AS UNDER:- SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN CO MPANIES. SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN COM PANIES. SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN COM PANIES. SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN COM PANIES. 115JB. 115JB. 115JB. 115JB. (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, WHERE IN THE CASE OF AN ASSESSEE, B EING A COMPANY, THE INCOME-TAX, PAYABLE ON THE TOTAL INCOM E AS ITA NO2303/DEL/2012 6 COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DA Y OF APRIL, 2010, IS LESS THAN FIFTEEN PER CENT OF ITS BOOK PROFIT, SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RATE OF FIFTEEN PER CENT. (2) EVERY ASSESSEE, BEING A COMPANY, SHALL, FOR THE PURP OSES OF THIS SECTION, PREPARE ITS PROFIT AND LOSS ACCOUNT FOR T HE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF PAR TS II AND III OF SCHEDULE VI TO THE COMPANIES ACT, 1956 (1 OF 1956 )} THE ABOVE SECTION CLEARLY TALKS THAT SUCH BOOK PROFIT SHALL BE DEEMED TO BE TOTAL INCOME OF THE ASSESSEE AND TAX PAYABLE BY T HE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME TAX A T SPECIFIED RATE OF TAX WHICH WAS 15% FOR THE RELEVANT YEAR UNDER CON SIDERATION. THE SECTION DOES NOT TALK ABOUT THE INCOME TAX AS INCREASED BY SURCHARGE & EDUCATION TAX. IT TALKS ABOUT ONLY INCOME TAX. WHE REVER STATUTE HAS REQUIRED INCOME TAX TO INCLUDE SURCHARGE AND EDUCATI ON TAX, IT HAS SPECIFICALLY DONE IT LIKE IN EXPLANATION 2 TO SECTION 115JB. SIMILARLY FORM 29B WHICH IS FILED ALONG WITH RETURN OF INCOME WHERE MAT IS APPLICABLE AT POINT 14 IT STATES THAT THE AMOUNT OF I NCOME TAX PAYABLE BY THE COMPANY WOULD BE 15% OF COL. 12 I.E. BOOK PR OFITS, IT DOES NOT STATE SURCHARGE OR EDUCATION CESS. THEREFORE, IT EMERGE S THAT MAT PAYABLE U/S 115JB IS ONLY INCOME TAX AND DOES NOT INC LUDE SURCHARGE OR EDUCATION CESS. THEREFORE, IF ONLY INCOME TAX IS PAID UNDER THE PROVISIONS OF SECTION 115JB IT IS NATURAL THAT TAX CRE DIT U/S 115JAA WILL ONLY BE OF INCOME TAX AND NOT OF SURCHARGE AND EDUCA TION CESS. THIS POINT IS FURTHER CLARIFIED BY INTIMATION U/S 143(1) SE NT TO ASSESSEE WHEREIN TAX PAYABLE U/S 115JB HAS BEEN CALCULATED AS O NLY INCOME TAX ITA NO2303/DEL/2012 7 AND NO SURCHARGE OR EDUCATION CESS HAS BEEN INCLUDED IN THE AMOUNT OF INCOME TAX. 8. THE SUBMISSION OF LD AR THAT TAX INCLUDES SURCHARGE AND EDUCATION CESS AS PER EXPLANATION 2 OF SECTION 115JB IS CORRECT TO THE EXTENT THAT EXPLANATION 2 WAS INSERTED TO CLARIFY THE MEANING OF TAX AS CONTEMPLATED IN CLAUSE (A) OF EXPLANATION (1) WITH R ESPECT TO CALCULATION OF BOOK PROFIT WHICH IS READ AS UNDER:- EXPLANATION-1 FOR THE PURPOSE OF THIS SECTION BOOK PR OFIT MEANS THE NET PROFIT AS SHOWN IN THE P&L ACCOUNT FOR THE RELEVA NT PREVIOUS YEAR PREPARED UNDER SUB SECTION (2) AS INCREASED BY :- A) THE AMOUNT OF INCOME TAX PAID OR PAYABLE AND THE PR OVISIONS THEREOF: B) XXXXX C) XXXXX D) XXXXX E) XXXXX F) XXXXX THE ABOVE EXPLANATION 1 CLARIFIES THAT EXPLANATION 2 TO SECTION 115JB WAS INSERTED TO DEFINE THE MEANING OF TAX (WHICH OF C OURSE INCLUDES EDUCATION TAX AND SURCHARGE) FOR THE PURPOSE OF CALCU LATING BOOK PROFITS LIABLE TO TAX U/S 115JB AND IT CANNOT BE EXTE NDED TO SECTIONS 115JB OR SECTION 115JAA OF THE ACT. IN VIEW OF THE ABOVE PROVISIONS, WE ARE OF THE CONSIDE RED OPINION THAT TAX CREDIT U/S 115JAA WAS RIGHTLY GIVEN AND WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD CIT(A). ITA NO2303/DEL/2012 8 9. THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS REGARDI NG INTEREST U/S 234B & 234C, IT IS A MANDATORY PROVISION A ND IS CONSEQUENTIAL IN NATURE AND IN VIEW OF OUR ADJUDICAT ION ON GROUND 1 ABOVE, THE GROUND NO.2 IS ALSO DECIDED AGAINST THE ASSE SSEE. THE CASE LAW RELIED UPON BY ASSESSEE RELATES TO ADMISSIBILITY OF CR EDIT OF MAT TAX BEFORE CHARGING INTEREST U/S 234B & 234C WHICH IN THE PRESENT CASE HAS BEEN DONE CORRECTLY. THE ONLY DIFFERENCE IS THAT AMOUNT OF SURCHARGE AND EDUCATION TAX HAS NOT BEEN INCLUDED IN THE AMOUNT OF MAT CREDIT WHICH IS ALSO CORRECT AS PER OUR DISCUSSION A BOVE RELATING TO GROUND NO.1. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DAY O F AUGUST, 2012. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.31.8.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 17.7.2012 ITA NO2303/DEL/2012 9 DATE OF DICTATION 27.8.2012 DATE OF TYPING 28.7.2012 DATE OF ORDER SIGNED BY 31.8.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 31.8.2012 & SENT TO THE BENCH CONCERNED.