MAT credit shall be granted inclusive of Surcharge and Cess
Facts of the case:
The assessee during the concerned Assessment Year i.e., A.Y. 2014-15 while computing the tax on total income has set off the Surcharge and Cess paid earlier while paying tax under section 115JB of the Act.
The assessing officer repudiated to set-off the surcharge and cess paid earlier while computing the tax liability, resulting in short grant of MAT credit and therefore the assessee raised the issue in respect of computation of set-off of MAT credit under section 115JAA of the Act.
Contention of the Assessee:
The assessee contended that the word “Income-tax” would include surcharge and additional surcharge as held by the Hon’ble Apex Court in the case of CIT v. K. Srinivasan and therefore the same shall be allowed to be set off from the tax liability.
Furthermore, the assessee quoted that in the case of Srei infrastructure Finance Ltd., v. DCIT, the Calcutta High Court held that MAT credit under section 115JAA of the Act brought forward from earlier years is to be set off against tax on total income including surcharge and education cess instead of adjusting the same from tax on total income before charging such surcharge and cess.
The asessee was of the view that the entire component of taxes including surcharge and cess shall have to be considered for calculating the MAT credit u/s 115JAA of the Act.
Contention of the Department:
The department was of the view that the education cess and surcharge paid earlier is not alowed to be setoff on the basis of judgement of ITAT delhi in case of Richa Global.
Decision of the ITAT:
On the basis of facts and circumstances of the case and considering the earlier judgments of Hon’ble Calcutta High Court and Hon’ble Madras High Court, ITAT held in the favor of the assessee. The tribunal directed the Assessing Officer to allow set off of MAT credit inclusive of surcharge and education cess and recompute the tax payable accordingly.
