SAVITA OIL TECHNOLOGIES LTD., MUMBAI V. ACIT, CC 8(4), MUMBAI

ITA 3066/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8495 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2015
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: SHIV PRAKASH
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI AMIT SHUKLA (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.3066/MUM/2015 (ASSESSMENT YEAR: 2010-11) M/S SAVITA OIL TECHNOLOGIES LTD, 66/67, NARIMAN BHAVAN NARIMAN POINT, MUMBAI-21 VS THE ACIT, CENT.CIR.8(4),MUMBAI PAN : AAACS7934A (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SHIV PRAKASH RESPONDENT BY SHRI M.C. OMI NINGSHEN DATE OF HEARING : 18-01-2017 DATE OF ORDER : 07-02-2017 O R D E R PER ASHWANI TANEJA, AM: THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF CO MMISSIONER OF INCOME-TAX (APPEALS)-50, MUMBAI (HEREINAFTER CALLED CIT(A)] DATED 28-02- 2015 PASSED AGAINST THE ASSESSMENT ORDER U/S 143(3) DATED 30 TH MARCH, 2013 FOR A.Y. 2010-11 ON THE FOLLOWING GROUNDS:- 1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-50 HAS GROSSLY ERRED IN CONFIRMING THE WO RKING OF TAX PAYABLE DONE BY THE ASSESSING OFFICER BY WRO NGLY ALLOWING THE CREDIT OF TAX PAID U/S 115JAA AFTER CH ARGING SURCHARGE AND EDUCATION CESS, WHEREAS THE SAME SHOU LD HAVE BEEN DONE BEFORE THE SAID CHARGES IN ACCORDANC E WITH 2 I.T.A. NO.3066/MUM/2015 THE METHOD OF COMPUTATION PROVIDED IN THE ITR-6 FOR THE ASSESSMENT YEAR UNDER REFERENCE. THE WORKING OF TAX PAYABLE AS DONE BY THE APPELLANT, BEING IN CONFORMI TY WITH THE METHOD OF COMPUTATION PRESCRIBED IN THE RELEVANT FORM FOR THE SAME, SHOULD HAVE BEEN ALLOWE D AS SUCH. 2. THE SOLITARY ISSUE RAISED BY THE ASSESSEE BEFORE US IS THAT WHILE GRANTING MAT CREDIT AVAILABLE U/S 115JAA OF TAX PAI D AS PER THE PROVISIONS OF MAT IN EARLIER YEARS SHOULD BE GRANTED ALONG WIT H SURCHARGE AND EDUCATION CESS AS AGAINST THE ACTION OF AO GRANTING CREDIT OF MERELY TAX AMOUNT. 3. DURING THE COURSE OF HEARING, LD. COUNSEL OF THE A SSESSEE SUBMITTED THAT FAIRNESS AND EQUITY DEMANDS THAT THE PROVISION S OF THE ACT SHOULD BE INTERPRETED IN SUCH A MANNER THAT THERE SHOULD NOT BE UNJUST ENRICHMENT OF THE REVENUE AT THE COST OF THE TAXPAYER. THE LAW PROVIDES THAT WHATEVER EXCESS AMOUNT TAX IS PAID ON ACCOUNT OF MA T AS COMPARED TO THE AMOUNT OF TAX PAYABLE UNDER THE NORMAL PROVISIO NS OF THE ACT, IT IS ELIGIBLE FOR CARRY FORWARD FOR DEDUCTING FROM THE A MOUNT OF TAX LIABILITY OF SUBSEQUENT YEARS WHENEVER TAX WILL BE PAYABLE UNDER THE NORMAL PROVISIONS OF THE ACT IN THE SUBSEQUENT YEARS. UND ER THESE CIRCUMSTANCES, IF THE TAX PAYABLE UNDER MAT IS FURTHER INCREASED B Y EDUCATION CESS AND SURCHARGE, THEN WHILE MAKING ITS CARRY FORWARD AND SET OFF ALSO THE AMOUNT OF SURCHARGE AND EDUCATION CESS SHOULD BE IN CLUDED. HE PLACED RELIANCE ON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS VACMENT INDIA 369 ITR 304 (ALL) AND CALCUTTA HIGH COURT IN THE CASE OF M/S SREI INFRASTRUCTURE FINANCE LTD VS DCIT (G.A . NO. 115 OF 2016 (ITAT NO.245 OF 2016) DT 12 TH AUGUST, 2016. PER CONTRA, THE LD. DR FAIRLY SUBMITTED THAT NEITHER THE WORKING SUBMITTED BY THE ASSESSEE WAS CORRECT 3 I.T.A. NO.3066/MUM/2015 IN ACCORDANCE WITH LAW AND FACTS OF THE CASE NOR TH AT OF THE AO AS IS GIVEN IN THE ASSESSMENT ORDER. 4. WE HAVE GONE THROUGH THE FACTS OF THIS CASE. WE HA VE BEEN CALLED UPON TO DECIDE IN THIS CASE THE CORRECT MANNER OF C OMPUTING TAX LIABILITY AND ALSO AMOUNT OF CREDIT AVAILABLE U/S 115JA KEEPI NG IN VIEW LEVY OF SURCHARGE AND EDUCATION CESS IN THE PROCESS. WE HA VE EXAMINED THE ENTIRE SCHEME OF THE ACT CONTAINING PROVISIONS WITH REGARD TO PAYMENT OF MAT U/S 115JB AS WELL AS AVAILABILITY OF CREDIT AVA ILABLE U/S 115JAA. IT IS NOTED THAT IT WAS HELD BY THE HONBLE ALLAHABAD HIG H COURT IN THE CASE OF CIT VS VACMENT INDIA, (SUPRA) THAT METHODOLOGY OF C OMPUTATION OF TAX LIABILITY AND GRANTING CREDIT OF MAT SHOULD BE SIMI LAR TO THE METHODOLOGY PROVIDED IN THE PRESCRIBED FORM OF FILING OF INCOME -TAX RETURN I.E. ITR-6. BUT SUBSEQUENTLY, HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S SREI INFRASTRUCTURE FINANCE LTD, SUPRA EXAMINED THIS ISSUE IN DETAIL AND HELD THAT COMPUTATION OF TAX LIABILITY AND SETTING OFF O F TAX CREDIT AVAILABLE SHOULD BE DONE IN ACCORDANCE WITH LAW AND NOT ON TH E BASIS OF INAPPROPRIATE FORM PRESCRIBED UNDER THE RULES INA DVERTENTLY. IT IS NOTED THAT HONBLE CALCUTTA HIGH COURT HAS HELD THAT FOR THE PURPOSE OF SECTION 115JB, SURCHARGE AND CESS ARE PART OF INCOME-TAX PA YABLE IN ACCORDANCE WITH PROVISIONS OF SECTION 115JB. THEREFORE, WHEN THE TAX IS PAID U/S 115JB ALONG WITH SURCHARGE AND CESS, THEN ENTIRE AM OUNT WOULD BE CONSIDERED FOR CARRY FORWARD OF THE CREDIT AVAILABL E U/S 115JAA AND ACCORDINGLY THE ENTIRE AMOUNT WOULD BE AVAILABLE FO R THE BENEFIT OF SET OFF IN THE SUBSEQUENT YEARS FROM THE AMOUNT OF GROSS TA X PAYABLE BY THE ASSESSEE. DURING THE COURSE OF HEARING BEFORE US, LD. COUNSEL SUBMITTED BEFORE US THREE TYPES OF WORK SHEETS WHEREIN TAX PA YABLE AFTER SETTING OFF 4 I.T.A. NO.3066/MUM/2015 AMOUNT OF CREDIT AVAILABLE U/S 115JAA WAS WORKED OU T IN THREE DIFFERENT METHODS. WE FIND THAT THE FOLLOWING WORKING SHOWS THE APPROPRIATE METHOD OF COMPUTING TAX LIABILITY AND SETTING OFF A MOUNT OF CREDIT AVAILABLE U/S 115JAA:- COMPUTATION OF TAX LIABILITY ON TOTAL INCOME AS PER INCOME- TAX ACT, 1961 1 TOTAL INCOME RS. 1,093,157,260 2 TAX PAYABLE ON TOTAL INCOME A TAX AT NORMAL RATES RS. 327,839,585 B TAX AT SPECIAL RATES - C TAX PAYABLE ON TOTAL INCOME RS. 327,839,585 3 SURCHARGE ON 2C RS. 32,783,959 4 EDUCATION CESS ON (2C+3) RS. 10,818,706 5 CREDIT UNDER SECTION 115JAA OF TAX PAID IN EARLIER YEARS A INCOME-TAX RS. 25,976,115 B SURCHARGE RS. 2,597,612 C EDUCATION CESS ON (5A + 5B) RS. 857,212 RS. 29,430,939 TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA RS. 342,011,311 DURING THE COURSE OF HEARING, THE LD. DR ALSO FAIRL Y SUBMITTED THAT IT WOULD BE A CORRECT METHOD OF COMPUTING TAX LIABILITY AND CREDIT AVAILABLE U/S 115JAA. IT IS NOTED FROM THE ABOVE WORKING THAT FI RST OF ALL TAX AMOUNT HAS BEEN COMPUTED ON THE TOTAL INCOME OF THE ASSESSEE. THEREAFTER SURCHARGE AND EDUCATION CESS HAS BEEN WORKED OUT UP ON THE TAX LIABILITY. THEN, FROM THE GROSS AMOUNT SO ARRIVED AT, THE AMOU NT OF CREDIT AVAILABLE U/S 115JB ON ACCOUNT OF INCOME-TAX, SURCHARGE AND E DUCATION CESS ( ALL 5 I.T.A. NO.3066/MUM/2015 COMBINED TOGETHER) HAVE BEEN DEDUCTED AND ACCORDING LY, NET TAX PAYABLE AFTER SETTING OFF CREDIT AVAILABLE U/S 115JB HAS BE EN WORKED OUT. IN OUR VIEW, THIS IS THE CORRECT METHOD OF COMPUTING TAX L IABILITY AS WELL AS CREDIT AVAILABLE U/S 115JAA. ACCORDINGLY, WE DIRECT THE A O TO VERIFY THE FACTS AS HAVE BEEN GIVEN IN THE AFORESAID WORKING AND COMPUT E THE TAX LIABILITY ACCORDINGLY AND ALLOW THE NECESSARY RELIEF TO THE A SSESSEE. 5. AS A RESULT, THIS APPEAL IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCL USION OF HEARING. SD/- SD/- (AMIT SHUKLA) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 7 TH FEBRUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , G-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES