D.C.I.T., Central Circle, Agra V. M/s Vacmet India Limited, Agra

ITA 93/AGR/2014

• Counselvise Citation: 9320314 RSA 2014
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-05-2014
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH KUMAR
• Assessee Lawyers: SHRI
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO. 93/AGRA/2014 ASSTT. YEAR : 2011-12 D.C.I.T., CENTRAL CIRCLE, VS. M/S. VACMET INDIA LIMITED, AGRA. 4/117-2A, CIVIL LINES, CHURCH ROAD, AGRA. (PAN : AAACV 5120B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIRUDH KUMAR, CIT/DR RESPONDENT BY : SHRI PANKAJ GARGH, ADVOCATE DATE OF HEARING : 19.05.2014 DATE OF PRONOUNCEMENT OF ORDER : 22.05.2014 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, AGRA DATED 18.10.2013 FOR THE ASSESSMENT YEAR 2011- 12 CHALLENGING THE ORDER OF LD. CIT(A) IN DIRECTING THAT THE SURCHARGE AND EDUCATIO N CESS SHOULD BE LEVIED AFTER GIVING MAT CREDIT. 2. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A) AGAINST THE ORDER U/S 143(1)/154 PASSED BY THE CENTRALIZED PROCESSING CEN TRE (CPC), BANGALORE RAISING A DEMAND OF RS.10,92,766/- AFTER REJECTING THE APPL ICATION MADE BY THE ASSESSEE U/S ITA NO.93/AGRA/2014 2 154 FOR COMPUTATION OF TAX PAYABLE BY THE ASSESSEE WHICH ACCORDING TO THE ASSESSEE TO HAVE BEEN COMPUTED BY LEVYING SURCHARGE AND EDUC ATION CESS AFTER GIVING CREDIT FOR TAX WHICH TAX HAS ALREADY BEEN PAID BY THE ASSE SSEE (APPELLANT) COMPANY U/S 115JAA IN THE EARLIER YEARS. IN THE RECTIFICATION O RDER PASSED BY THE CPC, BANGALORE VIDE ITS ORDER DATED 12.07.2012, THEY HAV E ALLOWED THE ASSESSEE (APPELLANT) A CREDIT OF RS.88,20,712/- U/S 115JAA OUT OF GROSS TAX PAYABLE COMPUTED AT RS.23,04,52,425/-. BOTH THE AMOUNTS OF GROSS TAX PAYABLE AND CREDIT U/S 115JAA AS COMPUTED BY THE CPC, BANGALORE WAS SA ME AS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. HOWEVER, THERE IS A DIFFERENCE IN THE MANNER OF COMPUTATION OF SURCHARGE AND EDUCATION CESS. THE AS SESSEE (APPELLANT) HAS COMPUTED THE SURCHARGE AND EDUCATION CESS ON THE AM OUNT OF TAX PAYABLE WHICH HAS COME AFTER DEDUCTING THE CREDIT U/S 115JAA AT R S.88,20,712/- OUT OF AMOUNT OF GROSS TAX PAYABLE AT RS.23,04,52,425/-. HOWEVER, TH E CPC, BANGALORE WHILE COMPUTING THE SURCHARGE AND EDUCATION CESS HAS APPL IED THE RATE ON THE AMOUNT OF GROSS TAX PAYABLE AT RS.23,04,52,425/- AND THUS, AN EXCESS AMOUNT HAS BEEN COMPUTED COMING TO RS.10,92,766/- FOR WHICH, A DEMA ND NOTICE HAS BEEN ISSUED TO THE ASSESSEE (APPELLANT) AFTER PROCESSING OF RETURN U/S 143(1) AND THEREAFTER REJECTING ITS APPLICATION U/S 154. THE ASSESSEE CON TENDED BEFORE THE LD. CIT(A) THAT THE SURCHARGE AND EDUCATION CESS ON THE TAX PAYABLE HAS BEEN CALCULATED BEFORE ALLOWING CREDIT OF TAX PAID IN THE EARLIER YEARS U/ S. 115JAA, WHICH IS APPARENTLY ITA NO.93/AGRA/2014 3 WRONG AND HENCE THE AO HAS ERRED ON FACTS AS WELL A S ON LAW IN REJECTING THE APPLICATION U/S. 154 OF THE IT ACT. IT WAS BRIEFLY EXPLAINED IN THE WRITTEN SUBMISSIONS THAT THE TAX CREDIT U/S. 115JAA SHOULD BE ALLOWED FIRST AND THEREAFTER SURCHARGE AND EDUCATION CESS SHOULD BE CHARGED. THE ASSESSEE RELIED UPON THE ORDER OF ITAT, MUMBAI BENCH IN THE CASE OF UNIVERSAL MEDI CARE PVT. LTD. VS. ACIT IN ITA NO. 839/MUMBAI/2012 DATED 24.07.2013, IN WHICH IT WAS HELD AS UNDER : GROUND NO 6 RELATE TO LEVYING SURCHARGE AND EDUCAT IONAL CESS BEFORE ADJUSTING MAT CREDIT. IT IS PERTINENT TO MEN TION THAT THIS ISSUE HAS NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER. HOW EVER, THE SAME HAS BEEN RAISED BEFORE THE LD. CIT(A). THE CLAIM OF THE ASSESSEE IS THAT IS THAT MAT CREDIT SHOULD FIRST BE REDUCED FRO M THE TAX PAYABLE AND THEREAFTER ON THE RESIDUAL AMOUNT THE SURCHARGE AND EDUCATION CESS BE LEVIED. IT IS RELEVANT TO NOTE THAT IN THE INCOME TAX RETURN FROM ITR-6, COLUMN NO.4, THE ASSESSEE IS REQUIRED TO FIL L THE CREDIT U/S 115JAA OF TAX PAID IN EARLIER YEARS AND AFTER WHICH ON THE BALANCE TAX PAYABLE, THE ASSESSEE HAS TO FILL THE SURCHARGE AND EDUCATIONAL CESS AT COLUMN NO.8 AND 10 FOR THE PURPOSE OF ARRIVING AT T HE GROSS TAX LIABILITY. ALSO, THE ITAT IN THE CASE OF RICHA GLOB AL (P) LTD VS ACIT IN ITA NO.2303/DEL/2012 HAS HELD THERE IS NO NEED T O GIVE SEPARATE CREDIT OF EDUCATION CESS AND SURCHARGE SHOULD BE CO MPUTED AFTER GIVING CREDIT OF MAT TO THE TAX COMPUTED ON THE ASS ESSED INCOME IN THE SAME WAY AS IN THE CASE OF INTEREST UNDER SECTI ONS 234B AND 234C. THE NATURE OF MAT IS LIKE PRE-PAID TAXES AND, THERE FORE, IT SHOULD BE TREATED ALIKE FOR THE PURPOSES OF COMPUTING EDUCATI ON CESS AND SURCHARGE ALSO. IN VIEW OF THAT MATTER, WE FIND MERITS IN THE CONTE NTION OF THE ASSESSEE THAT MAT CREDIT SHOULD FIRST BE REDUCED FROM THE TA X PAYABLE AND THEREAFTER ON THE RESIDUAL AMOUNT THE SURCHARGE AND EDUCATION CESS BE LEVIED. WE ORDER AND DIRECT ACCORDINGLY. GROUND NO. 6 IS ALLOWED. 3. THE LD. CIT(A) CONSIDERING THE FACTS AND SUBMISS IONS OF THE PARTIES AND CONSIDERING THE COLUMNS MADE IN THE INCOME TAX RETU RN WAS OF THE VIEW THAT TAX ITA NO.93/AGRA/2014 4 CREDIT U/S. 115JAA SHOULD BE ALLOWED FIRST AND THER EAFTER SURCHARGE AND EDUCATION CESS SHOULD BE CHARGED AS PER COLUMN 5, 6 & 7 PROVI DED IN THE PART RELATING TO COMPUTATION OF TAX LIABILITY OF TOTAL INCOME OF ITR -6 AND THEN GROSS TAX LIABILITY OF THE ASSESSEE SHOULD BE ARRIVED AT AS PROVIDED IN CO LUMN NO. 8. THE FINDINGS OF LD. CIT(A) IN PARA 8 OF THE APPELLATE ORDER ARE REPRODU CED AS UNDER : 8. ON EXAMINATION OF THE PART OF THE ITR-6 RELATIN G TO COMPUTATION OF TAX LIABILITY ON TOTAL INCOME FOR TH E ASSESSMENT YEAR UNDER CONSIDERATION, IT CAN BE SEEN THAT CREDIT U/S 115JAA IS TO BE ALLOWED IN COLUMN 4 AND THEN THE AMOUNT OF TAX PAYA BLE AFTER GIVING OF THE CREDIT U/S 115JAA IS TO BE ARRIVED IN COLUMN 5 AND THEN SURCHARGE HAS TO BE COMPUTED ON THE AMOUNT MENTIONE D IN COLUMN 5 (TAX PAYABLE AFTER CREDIT U/S 115JAA) AND THEREAFTE R, THE EDUCATION CESS INCLUDING SECONDARY AND HIGHER EDUCATION CESS IS TO BE COMPUTED ON THE AMOUNT IN COLUMN 5 AND COLUMN 6 AND THEN THE GROSS TAX LIABILITY OF THE ASSESSEE HAS TO BE ARRIVED IN COLU MN 8 INCLUDING THE TAX PAYABLE AFTER CREDIT U/S 115JAA MENTIONED IN COLUM N 5 PLUS SURCHARGE MENTIONED IN COLUMN 6 AND EDUCATION CESS MENTIONED IN COLUMN 7. LOOKING TO THE ABOVE METHOD OF COMPUTATIO N OF TAX PAYABLE BY THE ASSESSEE AS PROVIDED IN ITR-6 FOR AY 2011-12 , IT IS VERY MUCH CLEAR THAT THE SURCHARGE AND EDUCATION CESS IS TO B E LEVIED AFTER REDUCING THE MAT CREDIT FIRST. THEREFORE, I AGREE W ITH THE LD. AR THAT THE TAX CREDIT U/S 115JAA SHOULD BE ALLOWED FIRST A ND THEREAFTER, SURCHARGE AND EDUCATION CESS SHOULD BE CHARGED AS P ER COLUMN 5, 6 AND 7 PROVIDED IN THE PART RELATING TO COMPUTATION OF TAX LIABILITY OF TOTAL INCOME OF ITR-6 AND THEN GROSS TAX LIABILITY OF THE ASSESSEE (APPELLANT) SHOULD BE ARRIVED AS PROVIDED IN COLUMN NO.8. HOWEVER, THE ABOVE POSITION HAS CHANGED FROM AY 2012-13 ONWA RDS. FROM ASSESSMENT YEAR 2012-13, SURCHARGE AND EDUCATION CE SS IS LEVIED BEFORE GIVING THE MAT CREDIT. SINCE THE ASSESSMENT YEAR UNDER CONSIDERATION IS AY 2011-12, IT IS DECIDED AS PER T HE AY 2011-12, IT IS DECIDED AS PER THE DECISION OF THE HONBLE ITAT MUM BAI IN CASE OF UNIVERSAL MEDICARE (P) LTD, MUMBAI VS ACIT MUMBAI (SUPRA), KEEPING IN VIEW THE FORM ITR-6 APPLICABLE FOR THE A Y 2011-12. THEREFORE, THE AO IS DIRECTED TO COMPUTE THE GROSS TAX LIABILITY OF THE ASSESSEE (APPELLANT) IN ACCORDANCE WITH THE METHOD OF COMPUTATION ITA NO.93/AGRA/2014 5 PROVIDED IN ITR-6 FOR AY 2011-12 AS DISCUSSED ABOVE AND ACCORDINGLY, THE APPEAL OF THE ASSESSEE (APPELLANT) HAS BEEN ALLOWED FOR STATISTICAL PURPOSES FOR RE-COMPUTATION OF TAX LIABILITY AS DIRECTED ABOVE. 4. THE LD. DR CONTENDED THAT THERE IS A CONTRADICTI ON IN THE COLUMNS PROVIDED IN THE IT RETURN AND THE FINANCE ACT. THEREFORE, TH E ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND ALSO SUBMITTED THAT THIS PROPOSITION IS NOT TAKE CARE BY ITAT, MUMBAI BENCH IN THE CASE OF UNIVERSAL MEDICARE PVT. LTD. ( SUPRA). ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE LD. CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE OR DER OF LD. CIT(A) IN ALLOWING THE APPEAL OF THE ASSESSEE. THE LD. CIT(A) HAS CORRECTL Y REFERRED TO THE COLUMNS MADE IN THE IT RETURN FOR THE PURPOSE OF CALCULATING THE TAX LIABILITY, WHICH IS SPECIFICALLY PROVIDED AND IS FOLLOWED CORRECTLY BY THE LD. CIT(A ). IT IS ADMITTED FACT THAT FROM NEXT ASSESSMENT YEAR 2012-13, THE POSITION WAS CHAN GED AS IS CONTENDED BY THE LD. DR. THEREFORE, DECISION OF MUMBAI BENCH OF THE TRIB UNAL IN THE CASE OF UNIVERSAL MEDICARE PVT. LTD. (SUPRA) SQUARELY APPLIES IN FAVO UR OF THE ASSESSEE. THE ISSUE IS, THEREFORE, COVERED IN FAVOUR OF THE ASSESSEE. THE C ONTENTIONS OF THE LD. DR DO NOT BORN OUT FROM THE RECORD AND IS AGAINST THE RETURN OF INCOME PRESCRIBED BY THE ITA NO.93/AGRA/2014 6 DEPARTMENT. THERE IS THUS NO MERIT IN THE DEPARTMEN TAL APPEAL. THE SAME IS ACCORDINGLY DISMISSED. 6. IN THE RESULT THE DEPARTMENTAL APPEAL IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY