WYETH LTD, MUMBAI V. ASST CIT LARGE TAXPAYERS UNIT, MUMBAI

ITA 6682/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87823 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 05-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-10-2011
• Court: TRIBUNAL
• Department Lawyers: MILIN THAKORE SHRI R N DSOUZA
• Keywords: Question of law
• Section: 244A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.6682/MUM/2011 ASSESSMENT YEAR: - 2007-08 WYETH LIMITED LEVEL 6&7, PLATINA PLOTI NO. C-59, G-BLOCK, BANDRA-KURLA COMPLEX, BANDRA (EAST) MUMBAI 400 098. MAHARASHTRA VS.` THE ASSISTANT COMMISSIONER OF INCOME TAX, LARGE TAXPAYERS UNIT, WORLD TRADE CENTRE I, 28 TH FLOOR, CUFFE PARADE MUMBAI 400 005. APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 20.07.2011 OF CIT(A) FOR THE A.Y. 2007-08. THE ASSESSEE HAS RAISE D FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSISTANT COMMISSIONER OF INCOME-TAX - LARGE TAXPAYERS UNIT, MUMBAI ('ACIT') OF SETTING OFF THE AMOUNT OF MINIMU M ALTERNATE TAX (MAT) CREDIT UNDER THE PROVISIONS OF SECTION 115JAA OF TH E INCOME-TAX ACT, 1961 (THE ACT) OF RS. 1,83,39,173 AGAINST THE TOTAL TAX LIABI LITY COMPUTED AFTER INCLUDING SURCHARGE AND EDUCATION CESS. 2. THE LEARNED COMMISSIONER (APPEALS) ERRED IN NOT ACCEPTING THE APPELLANT'S CONTENTION THAT THE LEARNED ACIT IN ARRIVING AT THE FINAL TAX LIABILITY OUGHT TO HAVE GRANTED MAT CREDIT AND OUGHT TO HAVE LEVIED TH E APPLICABLE SURCHARGE AND EDUCATION CESS ON THE BALANCE TAX AFTER THE DEDUCTI ON OF THE MAT CREDIT. ASSESSEE BY SHRI MILIN THAKORE REVENUE BY SHRI R. N. DSOUZA DATE OF HEARING 05.01.2015 DATE OF PRONOUNCEMENT 09.01.2015 WYETH LIMITED 2 | P A G E 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT ACCEPTING THE APPELLANT'S ALTERNATIVE AND WITHOUT PREJUDICE CONTE NTION THAT IF THE LEARNED ACIT PROVIDED THE SET OFF OF MAT CREDIT AGAINST THE TAX LIABILITY WHICH IS INCLUSIVE OF SURCHARGE AND CESS, THEN THE MAT CREDIT SHOULD ALSO BE CORRESPONDINGLY INCREASED BY SURCHARGE AND CESS. INTEREST UNDER SECTION 244A 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT DIRECTING THE LEARNED ACIT TO GRANT THE INTEREST SHORT GRANTED UN DER SECTION 244A OF THE ACT AMOUNTING TO RS. 18,35,731. 2. GROUND NO. 1 TO 3 IS REGARDING MAT CREDIT AGAINST THE TAX LIABILITY INCLUSIVE OF SURCHARGE AND CESS. THE LIMITED ISSUE BEFORE US IS WHETHER THE MAT CREDIT SHOULD BE GIVEN AGAINST THE TAX LIABILITY BEFORE SURCHARGE AN D CESS OR THE MAT CREDIT SHOULD BE GIVEN AGAINST THE TAX LIABILITY INCLUSIVE OF SURCHA RGE AND CESS. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT A S PER ITR-6. THE MAT CREDIT HAS TO BE GIVEN BEFORE SURCHARGE ON THE TAX LIABILITY. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HONBLE HIGH COURT OF A LLAHABAD IN THE CASE OF CIT VS. VACMENT INDIA (369 ITR 304) AND SUBMITTED THAT THE HONBLE HIGH COURT AFTER CONSIDERING THE FORM ITR-6 AND THE ORDER OF VARIOUS ENTRIES FOR COMPUTATION OF TAX LIABILITY HELD THAT THE MAT CREDIT SHOULD BE GIVEN FROM THE GROSS TAX PAYABLE AND SURCHARGE/CESS HAS TO BE COMPUTED ONLY ON THE AMOUN T OF TAX PAYABLE AFTER MAT CREDIT. HE HAS ALSO REFERRED SECTION 115JAA AND SU BMITTED THAT THE MAT CREDIT HAS TO BE ALLOWED IN ACCORDANCE WITH THE PROVISIONS OF THI S SECTION. ALTERNATIVELY, THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE AM OUNT OF MAT SHOULD ALSO BE ENHANCED BY THE SURCHARGE AND CESS THEN THE CREDIT BE GIVEN AGAINST THE TAX LIABILITY WHICH IS INCLUSIVE OF SURCHARGE AND CESS. 3. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT AS PER SECTION 4 OF THE INCOME TAX ACT, THE TAX INCLUDES ANY LEVY, SURCHARG E OR CESS, THEREFORE, FOR THE WYETH LIMITED 3 | P A G E PURPOSE OF MAT CREDIT, THE TAX LIABILITY HAS TO BE CONSIDERED INCLUSIVE OF SURCHARGE AND CESS. HE HAS RELIED UPON THE ORDERS OF AUTHORIT IES BELOW. 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THE AUTHORITIES BELOW HELD THA T THE MAT CREDIT IS ALLOWABLE AGAINST THE TAX LIABILITY INCLUSIVE OF SURCHARGE AN D CESS AND NOT THE TAX PAYABLE BEFORE THE SURCHARGE AND CESS. THE ASSESSEE HAS RELIED UPO N THE JUDGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VACMENT INDIA (349 ITR 304) WHEREIN THE HONBLE HIGH COURT WHILE CONSIDERING THE QUESTION OF SURCHARGE A ND EDUCATION CESS ON TAX PAYABLE HAS BEEN CALCULATED BEFORE ALLOWING THE CREDIT OF M AT U/S 115JAA HELD IN PARA 5 TO 7 AS UNDER:- 5. THE ONLY QUESTION WHICH IS RAISED PERTAINS TO T HE COMPUTATION OF TAX IN ACCORDANCE WITH THE MODALITIES WHICH ARE PRESCRIBED IN THE RELEVANT FORM, ITR-6. IN SO FAR AS IS MATERIAL, THE RELEVANT ENTRIES IN T HE FORM (PART B-TTI) ARE AS FOLLOWS: 3. GROSS TAX PAYABLE (ENTER HIGHER OF 2C AND 1) 4. CREDIT UNDER SECTION 115JAA OF TAX PAID IN EARLI ER YEARS (IF 2C IS MORE THAN 1) (7 OF SCHEDULE MATC) 5. TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA [3 -4] 6. SURCHARGE ON 5 7 EDUCATION CESS, INCLUDING SECONDARY AND HIGHER ED UCATION CESS ON (5+6) 8. GROSS TAX LIABILITY (5+6+7) 6 THE AFORESAID ENTRIES LEAVE NO MANNER OF AMBIGUIT Y IN REGARD TO THE METHOD OF COMPUTATION OF TAX LIABILITY. ENTRY 3 REQUIRES COMP UTATION OF THE GROSS TAX PAYABLE. UNDER ENTRY 4, CREDIT IS REQUIRED TO BE GI VEN UNDER SECTION 115JAA OF THE ACT OF THE TAX PAID IN EARLIER YEARS. ENTRY 5 REQUI RES A COMPUTATION OF THE TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA OF THE AC T. THE MATTER IS PLACED BEYOND DOUBT BY THE PARENTHESIS, WHICH INDICATES THAT TAX PAYABLE UNDER ENTRY 5 IS TO BE 'ARRIVED AT BY DEDUCTING THE CREDIT UNDER SECTION 1 15JAA OF THE ACT (UNDER ENTRY 3) FROM THE GROSS TAX PAYABLE (UNDER ENTRY 4). THE SURCHARGE 'IS COMPUTED ON THE AMOUNT REFLECTED IN ENTRY 5. 7 THE TRIBUNAL HAS NOTED THAT FROM THE NEXT ASSESSM ENT YEAR, THE ASSESSMENT YEAR 2012-13, THE POSITIORI WAS MATERIALLY ALTERED BUT, IN THE PRESENT CASE, SINCE WYETH LIMITED 4 | P A G E THE DISPUTE RELATED TO THE ASSESSMENT YEAR 2011-12, THE METHOD OF COMPUTATION, AS DIRECTED BY THE COMMISSIONER {APPEALS) WAS PLAI NLY IN ACCORDANCE WITH THE METHODOLOGY AS PROVIDED IN ITR-6. 'THE TRIBUNAL IN CONFIRMING THE ORDER OF THE COMMISSIONER (APPEALS) HAS, HENCE, NOT COMMITTED AN Y ERROR. THE APPEAL-WILL NOT GIVE RISE' TO ANY SUBSTANTIAL QUESTION OF LAW A ND IS, ACCORDINGLY, DISMISSED. 5. THUS IT IS CLEAR THAT THE HONBLE HIGH COURT HAS TAKEN INTO ACCOUNT THE ORDER OF ENTRIES IN THE FORM ITR-6 FOR THE A.Y. 2011-12 IN T HE SAID CASE AND HELD THAT AS PER FORM ITR-6, THE MAT CREDIT HAS TO BE GIVEN AGAINST THE GROSS TAX PAYABLE EXCLUSIVE OF SURCHARGE /CESS AND ONLY AFTER THE MAT CREDIT TAX L IABILITY, THE SURCHARGE AND CESS HAS TO BE CALCULATED FOR THE PURPOSE OF WORKING OUT TH E GRAND TAX LIABILITY. WE ALSO FIND MERIT AND SUBSTANCE IN THE ALTERNATIVE CONTENTION O F THE ASSESSEE THAT IF THE MAT CREDIT IS TAKEN INTO ACCOUNT WITHOUT INCLUDING THE SURCHARGE AND EDUCATION CESS THEN THE SURCHARGE AND EDUCATION CESS ON THE TAX LIABILI TY HAS TO BE CALCULATED ONLY AFTER ALLOWING THE MAT CREDIT. ALTERNATIVELY, THE AMOUNT OF MAT CREDIT SHOULD ALSO INCLUDE SURCHARGE AND EDUCATION CESS FOR THE PURPOSE OF ALL OWING THE CREDIT AGAINST THE TAX LIABILITY INCLUSIVE OF SURCHARGE AND EDUCATION CESS . THEREFORE, THE MAT AS WELL AS NORMAL TAX BEFORE ALLOWING THE MAT CREDIT HAS TO BE TAKEN ON PARITY EITHER EXCLUSION OF SURCHARGE AND EDUCATION CESS OR INCLUSIVE OF SUR CHARGE AND EDUCATION CESS OR INCLUSIVE OF SURCHARGE AND EDUCATION CESS. ACCORDIN GLY WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE MAT CREDIT AGAINST THE TAX LIABILITY PAYABLE BEFORE SURCHARGE AND EDUCATIO N CESS OR ALTERNATIVELY THE AMOUNT OF MAT CREDIT SHOULD ALSO BE INCLUSIVE OF SURCHARGE AND EDUCATION CESS AND THEN ALLOW THE CREDIT AGAINST THE TAX PAYABLE INCLUSIVE OF SURCHARGE AND EDUCATION CESS. 6. GROUND NO. 4 AND 5 IS REGARDING INTEREST U/S 244A . 7. THE COMPUTATION OF INTEREST GRANTED U/S 244A IS CONSEQUENTIAL TO GROUND NO. 1 TO 3. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTE D TO RECOMPUTE THE INTEREST U/S 244A AFTER GIVING MAT CREDIT AS PER OUR DIRECTIONS ON THE ISSUE. WYETH LIMITED 5 | P A G E 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUCNED IN THE OPEN COURT ON THIS 9 TH DAY OF JANUARY 2015. SD/- SD/- (RAJENDRA) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 14.01.2015 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI