Bhagwati Oxygen Ltd., Kolkata V. DC/ACIT, Circle - 8, Kolkata, Kolkata

ITA 240/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1014 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 18-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Principle of natural justice
• Section: 143(3); 234B; 115JB; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A NO. 240/KOL/201 6 ASSESSMENT YEAR : 2011-1 2 BHAGWATI OXYGEN LTD. -VS- ACIT(CPC), BANGALORE ( DC/AC CIR-8, KOLKATA) [PAN: AAACJ 7788 D] (APPELLANT) (RESPONDENT ) FOR THE APPELLANT : SHRI MIRAJ D. SHAH , FOR THE RESPONDENT : SHRI ARINDAM BHATTACHARJ EE, ADDL. CIT DATE OF HEARING : 13.11.2017 DATE OF PRONOUNCEMENT : 15.11.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL IS DIRECTED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-15, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NO.389/CIT(A)-15/14-15/CPC/CIR-8/R&T/KOL DATED 30.1 1.2015 AGAINST THE INTIMATION UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IN CPC/1112/I6/1111738773 DATED 09.01.2012 BY THE CEN TRALIZED PROCESSING CENTER, INCOME TAX DEPARTMENT, POST BAG NO. 2, ELECTRONIC C ITY, POST OFFICE, BANGALORE- 560100. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN NOT GRANTING THE CREDIT FOR SURCHARGE AND CESS WHILE COMPUTING THE TAX CREDIT U/S 115JAA OF THE ACT, IN THE FACTS AND CIRCUMSTANC ES OF THE CASE. 2 ITA NO.240/KOL/2016 BHAGWATI OXYGEN LTD. A.YR.2011-2 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY AND HAD ELECTRONICALLY FILED ITS RETURN OF INCOME FOR THE A SSESSMENT YEAR 2011-12 DISCLOSING TOTAL INCOME OF RS. 1,41,26,460/-. THE ASSESSEE COMPUTED THE TAX LIABILITY AT RS. 46,92,789/- INCLUDING SURCHARGE AND CESS UNDER THE NORMAL PROV ISIONS OF THE ACT. 3.1 THE ASSESSEE COMPUTED THE BOOK PROFIT U/S 115JB OF THE ACT AT RS. 92,42,889/- AND DETERMINED THE TAX PAYABLE THEREON AT RS. 17,13,632 /- INCLUDING SURCHARGE AND CESS. 3.2. THE ASSESSEE COMPUTED THE MAT CREDIT U/S 115JA A OF THE ACT TO BE ADJUSTED IN FUTURE YEARS AT RS. 29,79,157/- ( 46,92,789 17,13 ,632). 4. THIS RETURN WAS PROCESSED U/S 143(1) BY CENTRALI ZED PROCESSING CENTRE, BANGALORE (IN SHORT CPC) WHEREIN THE TOTAL INCOME UNDER NOR MAL PROVISIONS OF THE ACT WAS DETERMINED AT RS. 1,41,27,460/- AND TAX @ 30% THERE ON WAS DETERMINED AT RS. 42,38,238/-. 4.1. IN THE SAID INTIMATION U/S 143(1) THE BOOK PRO FIT U/S 115JB OF THE ACT WAS DETERMINED AT RS. 92,42,889/- AND TAX @ 18% WAS DET ERMINED AT RS. 16,63,720/-. 4.2. ACCORDINGLY, THE CPC IN THE INTIMATION U/S 143 (1) OF THE ACT DETERMINED THE MAT CREDIT U/S 115JAA OF THE ACT AT RS. 25,74,518/- (42 38238 1663720). 4.3. THE ONLY DISPUTE THAT ARISES IN THIS ISSUE IS THAT CPC WHILE DETERMINING THE MAT CREDIT U/S 115JAA COMPLETELY IGNORED THE SURCHARGE PORTION AND CESS PORTION COMPUTED BY THE ASSESSEE , BOTH UNDER NORMAL PROVISIONS OF T HE ACT AS WELL AS UNDER COMPUTING THE TAX LIABILITY U/S 115JB OF THE ACT. IN VIEW OF THIS, THE ASSESSEE WAS FASTENED WITH A DEMAND PAYABLE. 3 ITA NO.240/KOL/2016 BHAGWATI OXYGEN LTD. A.YR.2011-2 3 5. AGAINST THIS INTIMATION, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE PLEADED THAT SU RCHARGE AND CESS ARE NOTHING BUT A COMPONENT OF TAX. IN SUPPORT OF THIS PROPOSITION, T HE ASSESSEE PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CI T VS. K. SRINIVASAN REPORTED IN 83 ITR 346 (SC) AMONG OTHER DECISIONS. THE LD. CIT(A) HOWEVER WAS NOT CONVINCED WITH THE ARGUMENT OF THE ASSESSEE AND UPHELD THE DEMAND RAISED BY THE CPC IN THE INTIMATION U/S 143(1) OF THE ACT BY OBSERVING AS UN DER: 4. DECISION I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS MADE BY THE AR OF THE ASSESSEE. HOWEVER, I AM NOT CONVINCED WITH THE ARGUMENTS. THE RATE AT WHICH INCOME TAX IS TO BE CALCULATED IS GIVEN IN PART III WHICH SAYS THAT IN THE CASE OF THE COMPANY, SAME IS TO BE CALCULATED @ 30%. THE SURCHARGE AND THE EDUCATIO N CESS ARE SEPARATELY MENTIONED THERE, WHICH ARE TO BE LEVIED OVER AND ABOVE THE IN COME TAX CALCULATED AT THE RATE GIVEN ABOVE, SECTION 2(43) OF THE ACT DEFINES TAX AS TAX IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 1965, AND ANY SUBSEQUENT YEAR MEANS INCOME TAX CHARGEABLE UNDER THE PROVISIONS OF THIS ACT AND IN RELATION TO ANY OTHER ASSESSMENT YEAR INCOME TAX AND SUPER TAX CHARGEABLE UNDER THE PROVISIONS OF THIS ACT PRIOR TO THE AFORESAID DATE [ AND IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 2006, AND ANY SUBSEQUENT ASSESSMENT YEAR INC LUDES THE FRINGE BENEFIT TAX PAYABLE UNDER SECTION 115WA]. THUS, IT IS CLEAR THAT WHILE WORKING OUT THE TAX CR EDIT U/S 115JAA, ONLY INCOME TAX IS TO BE CONSIDERED AND NOT THE SURCHARGE AND T HE EDUCATION CESS. HENCE, THE TAX CALCULATION IS HELD TO BE RIGHTLY DONE IN THIS CASE BY THE CPC. IT IS HELD IN A SIMILAR CASE BY HONBLE ITAT DELHI BENCH, IN THE CASE OF RICHA GLOBAL EXPORTS (P) LTD. 25 TAXMAN. COM 1(DEL) THAT AMOUNT OF SURCHARGE AND EDUCATION CESS CANNOT BE INCLUDED IN AMOUNT OF MAT CREDIT U/S 115JAA. IT IS HELD THAT TAX U/S 115JAA DOES NOT TALK ABOUT THE INCOME TAX A S INCREASED BY SURCHARGE AND EDUCATION CESS. IT TALKS ABOUT ONLY INCOME TAX. WHE REVER STATUTE HAS SOUGHT INCOME TAX TO INCLUDE SURCHARGE AND EDUCATION CESS, IT HAS SPE CIFICALLY DONE AS THE CASE OF EXPLN. 2 TO SECTION 115JB. SIMILARLY, FORM 29B WHICH IS FIL ED ALONG WITH RETURN OF INCOME WHERE MAT IS APPLICABLE, IT STATES THAT AMOUNT OF I NCOME TAX PAYABLE BY THE COMPANY.; IT DOES NOT STATE ABOUT SURCHARGE OR EDU CATION CESS. FURTHER, THE ASSESSEES CONDITION THAT SUCH TAX CA LCULATION IS NOT POSSIBLE U/S 143(1) IS ALSO WITHOUT ANY BASIS. THE CONTROVERSY B EING CITED BY THE ASSESSEE IN CALCULATION OF THE TAX CREDIT IS OF HIS OWN CREATIO N AND BECAUSE OF TWISTING THE 4 ITA NO.240/KOL/2016 BHAGWATI OXYGEN LTD. A.YR.2011-2 4 INTERPRETATION OF OTHERWISE STRAIGHT MEANING OF SEC TION 115JAA. THUS, THIS CONTENTION OF THE ASSESSEE IS REJECTED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. 6. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US O N THE FOLLOWING GROUNDS: 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE APPELLATE ORDER PASSED WAS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE HENCE IS UNJUSTIFIED, UNWARRANTED AND UNCALLED FOR. 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ADJUSTMENT MADE IN THE INTIMATION U/S 143(1) OF THE I.T. ACT, 1961 IS BEYO ND THE SCOPE OF THE ACT. THUS, THE SAME IS BAD IN LAW. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE A DJUSTMENT IN RESPECT OF CREDIT U/S 115JAA OF THE I.T. ACT, 1961 MADE IN THE INTIMATION PASSED U/S 143(1) OF THE INCOME TAX ACT, 1961 WAS BEYOND THE SCOPE OF THE SAID SECT ION HENCE, THE SAID ORDER BE QUASHED. 4. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE A SSESSING OFFICER ERRED IN OVERCHARGING SURCHARGE AND THE ASSESSING OFFICER BE DIRECTED TO RECOMPUTED THE SAME AS PER LAW. 5. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE A SSESSING OFFICER ERRED IN UNDER ALLOWING CREDIT U/S 115JAA OF THE I.T. ACT, 1961 TH E ASSESSING OFFICER BE DIRECTED TO ALLOW THE CREDIT AS PER LAW. 6. FOR THAT THE INTEREST COMPUTED U/S 234B/C OF THE I.T. ACT, 1961 IS OVER CHARGES AND WRONGLY CALCULATED AND/OR IS NOT APPLICABLE TO THE ASSESSEES CASE HENCE, THE INTEREST BE DELETED AND/OR CORRECTLY COMPUTED. 7. THE APPELLANT CRAVES LEAVE TO PRESS NEW, ADDITIO NAL GROUNDS OF APPEAL, AMEND AND/OR MODIFY, WITHDRAW ANY OF THE ABOVE GROUNDS BE FORE OR AT THE TIME OF HEARING OF THE APPEAL. 7. THE LD. AR PLACED BEFORE US THE COPY OF THE HYDE RABAD TRIBUNAL IN THE CASE OF M/S VIRTUSE (INDIA) PVT. LTD. VS. DCIT, CIR-17(2), HYDE RABAD IN I.T.A. NO. 146/HYD/2015 DATED 04.03.2016 WHEREIN THE CO-ORDINATE BENCH OF H YDERABAD TRIBUNAL AFTER CONSIDERING THE DECISION OF DELHI TRIBUNAL (RELIED UPON BY LD CITA) AND BY PLACING 5 ITA NO.240/KOL/2016 BHAGWATI OXYGEN LTD. A.YR.2011-2 5 RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT I N THE CASE OF CIT VS. K. SRINIVASAN (SUPRA) OBSERVED THAT TAX INCLUDES SURCHARGE AND CE SS AND ACCORDINGLY FOR COMPUTING THE MAT CREDIT U/S 115JAA OF THE ACT, BOTH SURCHARG E AND CESS SHOULD BE TAKEN INTO ACCOUNT. IN RESPONSE TO THIS, THE LD. DR VEHEMENTLY RELIED ON THE DECISION OF THE DELHI TRIBUNAL BY THE LD. CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FO R THE SAKE OF BREVITY. WE FIND THAT THE ISSUE UNDER DISPUTE HAS BEEN ADDRESSED AGAINST THE ASSESSEE BY THE DECISION OF DELHI TRIBUNAL IN THE CASE OF RICHA GLOBAL EXPORTS PVT. L TD. REPORTED IN 25 TAXMANN. COM 1 (DEL). WE FIND THAT THE ISSUE UNDER DISPUTE IS COVE RED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH OF HYDERABAD TRIBUNAL RELIED UPO N BY THE LD. AR (SUPRA). WE FIND THAT HYDERABAD TRIBUNAL AFTER CONSIDERING THE DECIS ION OF DELHI TRIBUNAL (SUPRA) AND AFTER CONSIDERING THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. K. SRINIVASAN REPORTED IN 83 ITR 346 (SC) HAD HELD THAT TAX INCLU DES SURCHARGE AND CESS AND ACCORDINGLY THE ENTIRE COMPONENT OF TAXES INCLUDING SURCHARGE AND CESS SHALL HAVE TO BE RECKONED FOR CALCULATING THE MAT CREDIT U/S 115JAA OF THE ACT. WE ALSO FIND THAT THE HONBLE APEX COURT HAD IN THE CASE REFERRED TO SUPR A, HAD HELD THAT MEANING OF WORD SURCHARGE IS NOTHING BUT AN ADDITIONAL TAX. IN OUR CONSIDERED OPINION, THIS UNDERSTANDING OF SURCHARGE AND CESS BEING INCLUDED AS PART OF THE TAX GETS FURTHER SANCTIFIED BY THE AMENDMENT WHICH HAS BEEN BROUGHT IN SECTION 234B OF THE ACT IN EXPLANATION 1 CLAUSE 5 WHILE DEFINING THE EXPRESSIO N ASSESSED TAX. FOR THE SAKE OF CONVENIENCE, THE SAID EXPLANATION 1 TO SECTION 234B IS REPRODUCED HEREUNDER: IN THIS SECTION, ASSESSED TAX MEANS THE TAX ON T HE TOTAL INCOME DETERMINED UNDER SUB-SECTION (1) OF SECTION 143 AND WHERE A REGULAR ASSESSMENT IS MADE, THE TAX ON THE TOTAL INCOME DETERMINED UNDER SUCH REGULAR ASSESSME NT AS REDUCED BY THE AMOUNT OF - (I) ANY TAX DEDUCTED OR COLLECTED AT SOURCE IN ACCORDAN CE WITH THE PROVISIONS OF CHAPTER XVII ON ANY INCOME WHICH IS SUBJECT TO SUCH DEDUCTION OR COLLECTION AND WHICH IS TAKEN INTO ACCOUNT IN COMPUTING SUCH T OTAL INCOME; 6 ITA NO.240/KOL/2016 BHAGWATI OXYGEN LTD. A.YR.2011-2 6 (II) ANY RELIEF OF TAX ALLOWED UNDER SECTION 90 ON ACCOU NT OF TAX PAID IN A COUNTRY OUTSIDE INDIA; (III) ANY RELIEF OF TAX ALLOWED UNDER SECTION 90A ON ACCO UNT OF TAX PAID IN A SPECIFIED TERRITORY OUTSIDE INDIA REFERRED TO IN TH AT SECTION; (IV) ANY DEDUCTION, FROM THE INDIAN INCOME TAX PAYABLE, ALLOWED UNDER SECTION 91, ON ACCOUNT OF TAX PAID IN A COUNTRY OUTSIDE INDIA; AND (V) ANY TAX CREDIT ALLOWED TO BE SET OF IN ACCORDANCE W ITH THE PROVISIONS OF SECTION 115JAA [OR SECTION 115JD]. FROM THE AFORESAID PROVISIONS IT COULD BE INFERRED THAT THE LEGISLATURE WANTED TO TREAT THE PAYMENT OF ENTIRE TAXES (INCLUDING SURCHARGE AND CE SS) ELIGIBLE FOR MAT CREDIT U/S 115JAA WHILE CALCULATING THE INTEREST ON ASSESSED TAX U/S 234B OF THE ACT, MEANING THEREBY, THE ASSESSED TAX SHALL BE DETERMINED AFTER REDUCING THE ENTIRE MAT CREDIT U/S 115JAA OF THE ACT FOR THE PURPOSE OF CALCULATING IN TEREST U/S 234B OF THE ACT. WE FIND THAT THIS IS CLINCHING EVIDENCE OF THE INTENTION OF THE LEGISLATURE NOT TO DEPRIVE ANY CREDIT OF ANY PAYMENT OF SURCHARGE AND CESS MADE B Y THE ASSESSEE EITHER IN THE MAT OR UNDER THE NORMAL PROVISIONS OF THE ACT. IT IS NOT I N DISPUTE THAT THE SURCHARGE AND CESS PORTION WAS NOT PAID BY THE ASSESSEE ALONG WITH THE TAX PORTION. THE BIFURCATION OF THE TOTAL PAYMENT OF TAXES BY WAY OF TAX, SURCHARGE AND CESS IS ONLY FOR THE ADMINISTRATIVE CONVENIENCE OF THE UNION OF INDIA IN ORDER TO KNOW THE PURPOSE FOR WHICH THE SAID PORTION OF AMOUNTS ARE TO BE UTILIZED FOR THEIR INT ENDED PURPOSES. HENCE THE BIFURCATION IS ONLY FOR UTILIZATION ASPECT AND DOES NOT CHANGE THE CHARACTER OF PAYMENT IN THE FORM OF TAXES FROM THE ANGLE OF THE ASSESSEE. AS FAR AS ASSESSEE IS CONCERNED, IT HAD SIMPLY DISCHARGED THE STATUTORY DUES COMPRISING OF TAX, SU RCHARGE AND CESS TO THE UNION OF INDIA AND HENCE IF PAID IN EXCESS, WOULD BE ELIGIBL E FOR EITHER REFUND OR ADJUSTMENT AS CONTEMPLATED U/S 115JAA OF THE ACT. IF THE VERSION OF THE LD CITA IS TO BE ACCEPTED, THEN IT WOULD RESULT IN AN SITUATION WHEREIN IF THE ASSESSEE IS ENTITLED FOR REFUND, HE WOULD NOT BE ENTITLED FOR REFUND ON THE SURCHARGE A ND CESS PORTION. THIS CANNOT BE THE INTENTION OF THE LEGISLATURE AND IT IS ALREADY WELL SETTLED THAT THE TAX IS TO BE COLLECTED ONLY TO THE EXTENT AS AUTHORIZED BY LAW IN TERMS OF ARTICLE 265 OF THE CONSTITUTION AND THE DEPARTMENT CANNOT BE UNJUSTLY ENRICHED WITH THE SURCHARGE AND CESS PORTION OF THE 7 ITA NO.240/KOL/2016 BHAGWATI OXYGEN LTD. A.YR.2011-2 7 AMOUNTS ACTUALLY PAID BY THE ASSESSEE. WITH THESE O BSERVATIONS, WE HOLD THAT THE RELIANCE PLACED BY THE LD. AR ON THE DECISION OF HY DERABAD TRIBUNAL IS WELL FOUNDED AND SQUARELY APPLIES TO RESOLVE THE DISPUTE UNDER A PPEAL BEFORE US. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 15 .11.2017 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BALAGA NESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 15.11.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. BHAGWATI OXYGEN LTD., C/O, D.J. SHAH & CO, KALYA N BHAVAN, 2, ELGIN ROAD, KOLKATA- 700020 2. ACIT, CIRCLE-8, KOLKATA 3..C.I.T.- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S