ACIT, Circle 11(1), Pune V. M/s. Kalyani Global Engineering Pvt. Ltd., Pune

ITA 304/PUN/2013

• Counselvise Citation: 30424514 RSA 2013
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 31-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Deemed to accrue or arise in india
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.304/PN/2013 (ASSESSMENT YEAR 2008-09) ACIT, CIRCLE-11(1), PUNE .. APPELLANT VS. M/S. KALYANI GLOBAL ENGINEERING PVT. LTD., S.NO.49, INDUSTRY HOUSE, OPP : KALYANI STEEL, MUNDHWA, PUNE 411036. .. RESPONDENT PAN NO. AABCK1781A ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI S.P. WALIMBE DATE OF HEARING : 17-02-2014 DATE OF PRONOUNCEMENT : 19-02-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 19-11-2012 OF THE CIT(A)-I, PUNE RELATING TO ASSESSMENT YEAR 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING BREAK ASSE MBLIES, WIND MILL PARTS, UNDERTAKING PROJECT EXECUTION ON TURN-K EY BASIS, TRANSPORTATION AND LOGISTICS MANAGEMENT AND RENDERI NG GENERAL ENGINEERING SERVICES. IT FILED ITS RETURN OF INCOM E ON 29-09-2008 DECLARING TOTAL INCOME OF RS.34,61,40,080/-. IT AL SO DECLARED BOOK PROFIT OF RS.49,08,62,185/- AS PER PROVISIONS OF SE CTION 115JB OF THE I.T. ACT. THE ASSESSING OFFICER COMPLETED THE ASSE SSMENT ON 27-12- 2 2010 DETERMINING THE TAXABLE INCOME AT RS.34,81,24, 690/- AS PER THE REGULAR PROVISIONS OF THE I.T. ACT AND BOOK PROFIT AT RS.49,28,46,884/- AS PER THE PROVISIONS OF SECTION 115JB OF THE I.T. ACT. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED A NOTICE U/S.154 OF THE I.T. ACT ON THE GROUND THAT THERE IS A MISTAKE IN CALCULATION OF INCOME TAX (INCLUDING SURCHARGE & EC) OF RS.5,62,89 ,260/- AFTER ALLOWING MAT CREDIT OF RS.5,47,55,805/- ON ASSESSED INCOME OF RS.34,81,24,690/- WHICH IS NOT IN ORDER. THE CORRE CT CALCULATION OF INCOME TAX WORKS OUT TO RS.6,35,71,777/- ON ASSESSE D INCOME OF RS.34,81,24,690/-. THIS HAS RESULTED IN SHORT LEVY OF TAX OF RS.72,82,517. 2.1 REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE THE ASSESSING OFFICER RECTIFIED THE ORDER U/S.154 OF THE I.T. ACT BY CALCULATING THE TAX AS UNDER : 3. BEFORE THE CIT(A) IT WAS SUBMITTED THAT AS PER THE INCOME TAX RETURN FORM THE TAX LIABILITY ON TOTAL INCOME, SURCHARGE AND EDUCATION CESS HAS TO BE CALCULATED ON THE TAX PAYA BLE AFTER MAT CREDIT U/S.115JAA. IT WAS SUBMITTED THAT THE ASSES SEE HAS ACCORDINGLY CALCULATED THE SURCHARGE AND EDUCATION CESS AFTER MAT CREDIT. IT WAS SUBMITTED THAT IN THE RETURN OF INC OME FOR A.Y. 2007- THE MISTAKES BEING APPARENT FROM RECORD, RECTIFIED U/S.154 OF THE ACT AS UNDER : 1 ASSESSED INCOME 34,81,24,690 2 TAX @ 30%+SC. 10% +EC.3% 11,83,27,582 3 LESS : MAT CREDIT ALLOWED 5,47,55,805 4 TAX PAYABLE ON ASSESSED INCOME 6,35,71,777 3 08 THE MAT CREDIT OF RS.16,91,37,851/- WAS CARRIED FORWARD. ACCORDINGLY, IN THE RETURN FOR A.Y. 2007-08 THE ASS ESSEE HAD WORKED OUT THE MAT CREDIT CARRIED FORWARD BY COMPARING THE TOTAL TAX PAYABLE (BEFORE SURCHARGE AND CESS) AS PER REGULAR PROVISIONS AND TAX PAYABLE (AFTER SURCHARGE AND CESS) AS PER SECTI ON 115JB. REFERRING TO THE PROVISIONS OF SECTION 115JB IT WAS SUBMITTED THAT THE TAX @10% IS THE TAX BEFORE SURCHARGE AND CESS WHICH HAS TO BE COMPARED WITH THE TAX BEFORE SURCHARGE AND CESS AS PER REGULAR PROVISIONS OF THE I.T. ACT. 1961. THE TAX CREDIT F ORWARDED U/S.115JAA IS THE DIFFERENCE BETWEEN THE TAX PAYABL E BEFORE SURCHARGE AND EDUCATION CESS AS PER SECTION 115JB A ND TAX PAYABLE BEFORE SURCHARGE AND EDUCATION CESS AS PER REGULAR PROVISIONS. ACCORDINGLY, IN THE RETURN OF INCOME FOR A.Y. 2008- 09 THE ASSESSEE HAS CLAIMED CREDIT FOR MAT U/S.115JAA BY DEDUCTING THE MAT CREDIT (BEFORE SURCHARGE AND CESS) FROM THE TAX AS PER REGULAR PROVISIONS (BEFORE SURCHARGE AND CESS). THE PROVIS IONS OF SECTION 115JB WAS ELABORATELY EXPLAINED BEFORE THE CIT(A) A ND IT WAS SUBMITTED THAT THERE WAS NO MISTAKE APPARENT FROM R ECORD WHICH REQUIRED FOR RECTIFICATION U/S.154. RELYING ON VAR IOUS DECISIONS IT WAS SUBMITTED THAT SINCE THE ISSUE IS DEBATABLE, TH EREFORE, THE INITIATION OF RECTIFICATION PROCEEDINGS U/S.154 IS BAD IN LAW. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) HELD THAT THE ASSESSING OFFICER HAS INCOR RECTLY PASSED THE ORDER U/S.154 BY OBSERVING AS UNDER : 4 6. I HAVE CAREFULLY PERUSED ALL THE MATERIAL AVAILA BLE ON RECORD, THE SUBMISSIONS MADE BY THE APPELLANT AND THE LEGAL POSI TION WITH REFERENCE TO CHARGEABILITY OF MINIMUM ALTERNATE TAX (MAT) & MAT CREDIT. 6.1 CHAPTER XIIB DEALS WITH SPECIAL PROVISIONS RELATI NG TO CERTAIN COMPANIES I.E. MAT PROVISIONS. SECTION 115JB AND 115JA A ARE RELEVANT TO THE ISSUE IN APPEAL AND WERE INTRODUCED B Y FINANCE ACT 2000 W.E.F. 1,4.2001 AND FINANCE (NO.2) ACT 1996, W .E.F. 1.4.1997, RESPECTIVELY. THE SECTION 115JB PROVIDE FOR THE COMPU TATION OF DEEMED INCOME FOR THE PURPOSE OF BOOK PROFIT THAT IS TO BE BROUGHT TO TAX UNDER THE MAT PROVISION. SECTION 115JB IS REPR ODUCED BELOW FOR READY REFERENCE: 115JB' (1) NOTWITHSTANDING ANYTHING CONTAINED IN AN Y OTHER PROVISION OF THIS ACT, WHERE IN THE CASE OF AN ASSE SSEE, BEING A COMPANY, THE INCOME-TAX, PAYABLE ON THE TOTAL INCOM E AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEAR RELE VANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL, [[2011]], IS LESS THAN [[EIGHTEEN PER CENT]] OF ITS BO OK PROFIT, [SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INC OME OF THE ASSESSEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TO TAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RATE OF [[EIGHTEEN PER CENT]] ]. (2) EVERY ASSESSEE, BEING A COMPANY, SHALL, FOR THE PURPOSES OF THIS SECTION, PREPARE ITS PROFIT AND LOSS ACC OUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH TH E PROVISIONS OF PART II AND PART III OF SCHEDULE VI TO THE COMPANIES ACT, 1956 (1 OF 1956). 6.2 THUS SECTION 115JB CLEARLY STATES AS TO CIRCUMSTANCE S IN WHICH BOOK PROFIT SHALL BE DEEMED TO BE TOTAL INCOME AND TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME TAX AT SPECIFIED RATES I.E. 10% IN THE PRESENT CASE FOR THE RELEVANT YEAR UNDER CONSIDERATION. THE SECTION DOES NO T TALK ABOUT THE INCOME TAX INCREASED BY SURCHARGE AND EDUCATION C ESS. WHEREVER STATUTE HAS REQUIRED INCOME TAX TO INCLUDE SU RCHARGE AND EDUCATION CESS, IT HAS SPECIFICALLY DONE SO AS IN EXPLANA TION 2 TO SECTION 115JB. SIMILARLY, FORM 29B WHICH IS FILED ALO NG WITH RETURN OF INCOME WHERE MAT IS APPLICABLE ON BOOK PROFIT STAT ES THAT THE AMOUNT OF INCOME TAX PAYABLE BY THE COMPANY WOULD B E 10% OF COL. 12 I.E. BOOK PROFIT AND DOES NOT SPEAK OF SURCHARGE OR EDUCATION CESS. THUS, SECTION 115JB DOES NOT PERMIT THE INCLUSION OF SUR CHARGE AND EDUCATION CESS WHILE CALCULATING MAT. SINCE ONLY INCO ME TAX IS PAID UNDER THE' MAT PROVISIONS OF SECTION 115JB, IT IS BUT N ATURAL THAT TAX CREDIT U/S 115JAA WILL BE ONLY OF INCOME TAX AND NOT SURCHARGE AND EDUCATION CESS. SO FAR AS EXPLANATION 2 TO SECTION 115J B IS CONCERNED, THE SAME WAS INSERTED ONLY TO CLARIFY THE M EANING OF TAX 5 AS CONTEMPLATED IN CLAUSE (A) OF EXPLANATION (1) OF SE CTION 115JB WITH RESPECT TO CALCULATION OF BOOK PROFIT. THIS CANN OT BE EXTENDED TO SECTION 115JB OR 115JAA OF THE ACT. 6.3 THIS VIEW IS FURTHER STRENGTHENED BY THE PRESCRIBE D FORM OF ITR 6 PART-B TTI WHICH IS PUBLISHED BY THE GOVERNMENT OF INDIA. THE SEQUENCE OF COLUMNS 3 TO 10, PERTAINING TO SET OFF OF MAT CREDIT, CLEARLY SHOWS THAT THE MAT CREDIT IS TO BE REDUCED FRO M THE GROSS TAX PAYABLE. SURCHARGE AND EDUCATION CESS ARE TO BE INCLU DED AFTER GIVING CREDIT TO SET OFF OF MAT CREDIT. COLUMNS 3 TO 10 READS AS UNDER : 3. GROSS TAX PAYABLE (ENTER HIGHER OF 2C AND 1) 4. CREDIT U/S.115JAA OF TAX PAID IN EARLIER YEARS (IF 1 IS MORE THAN 2C) (7 OF SCHEDULE MATC) 5. TAX PAYABLE AFTER CREDIT U/S.115JAA [(3-4)] 6. REBATE U/S.88E (4 OF SCHEDULE STTR) 7. BALANCE TAX PAYABLE (5-6) 8. SURCHARGE ON 7 9. EDUCATION CESS, INCLUDING SECONDARY AND HIGHER EDUCATION CESS ON (7+8). 10. GROSS TAX LIABILITY (7+8+9) ON PERUSAL OF THESE COLUMNS CAREFULLY, IT IS NOTICED T HAT THE STATUTORY FORM OF ITA 6, INDICATES MAT CREDIT TO BE SET OFF PURELY ON TAX PAYABLE AND ON THE BALANCE TAX SURCHAR GE AND EDUCATION CESS IS ADDED TO ARRIVE AT THE TOTAL TAX LIA BILITY. 6.4 THIS VIEW HAS BEEN UPHELD BY THE IAT, NEW DELHI IN RICHA GLOBAL EXPORTS (P) LTD. [2012] 25 TAXMANN.COM 1 (DELHI). IN ANY CASE, BEING A DEBATABLE ISSUE, THE SAM E CANNOT BE RECTIFIED U/S.154 BY THE A.O. IN VIEW OF THE ABO VE, IT IS TO BE HELD THAT THE A.O. HAS INCORRECTLY PASSED THE ORDER U/S.154 RECTIFYING TAX CALCULATION OF GIVING MAT CREDIT AFT ER LEVY OF SURCHARGE AND EDUCATION CESS. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES O F THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) G ROSSLY ERRED IN HOLDING THAT THE MAT CREDIT OF RS. 72,82,517/- HA S TO BE SET OFF AGAINST THE TAX PAYABLE BEFORE INCLUDING SURCHARGE & EDUCATION CESS. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE AND APPLY THE RATIO OF THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS K SHRINIVASAN WHEREIN IT WAS HELD THAT THE WORD 'INCOME-TAX' IN TH E FINANCE ACT OF 6 1964 IN SUB-S. 2(A) 85 SUB-S.2(B) OF S.2 WOULD INCLUDE SURCHARGE AND ADDITIONAL SURCHARGE. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THE DECISION OF THE HON'BLE ITAT , MUMBAI IN THE CASE OF CLASSIC SHARES & STOCK BROKING SERVICES LTD, MUMBAI VS ACIT, MUMBAI. VIDE ORDER NO. 5869/MUM/2007 DTD. 23/ 07/2010 WHICH IS DIRECTLY ON THE ISSUE AND WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF SECTION 115JA (WHICH IS AN ANALOGOUS PROVISIO N) TAX AND THE SURCHARGE THEREON HAS TO BE CALCULATED FIRST AND T HEREAFTER TAX PAID SUCH AS ADVANCE TAX, SELF ASSESSMENT TAX AND TAX PAID UNDER MAT WILL HAVE TO BE DEDUCTED. 5. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED A T THE TIME OF THE HEARING, THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. FROM THE DECISIONS FILED BY BOTH SIDES FOR AND AGAINST THE A SSESSEE, WE ARE OF THE OPINION THAT THE ISSUE IN THE INSTANT CASE IS A DEBATABLE ONE. WE FIND THE HONBLE SUPREME COURT IN THE CASE OF ITO V S. VOLKART BROTHERS REPORTED IN 82 ITR 50 HAS HELD THAT A MIS TAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AN D NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIO NS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARE NT FROM THE RECORD. 6.1 SINCE THE ISSUE IN THE INSTANT CASE ON WHICH TH E AO HAS ISSUED NOTICE U/S.154 TO THE ASSESSEE IS A DEBATABLE ONE, THEREFORE, IN OUR OPINION, THE SAME CANNOT BE RECTIFIED U/S.154 OF TH E ACT BY THE AO. 7 IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAI LED REASONING GIVEN BY THE LD.CIT(A), WHILE HOLDING THAT THE AO HAS INC ORRECTLY PASSED AN ORDER U/S.154 RECTIFYING THE TAX CALCULATION OF GIVING MAT CREDIT AFTER SURCHARGE AND EDUCATION CESS, WE FIND NO INFI RMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, WE UPHOLD THE SAME AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 19-02-2014. SD/- SD/- (R.S.PADVEKAR ) ( R.K. PAN DA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 19 TH FEBRUARY 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, PUNE 4. THE CIT-I, PUNE 5. THE DR B BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE