MAT credit: Whether credit for surcharge and education cess on brought forward MAT credit is available ?

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MAT credit: Whether credit for surcharge and education cess on brought forward MAT credit is available ?

Short Overview : Though case of SREI Infrastructure Finance Ltd. v. DCIT (2017) 395 ITR 291 (Cal) : 2016 TaxPub(DT) 3815 (Cal-HC) was similar with instant case, wherein credit for surcharge and education cess on brought forward MAT credit was granted, thus, order of Pr. CIT denying credit was quashed and the matter was remanded back to the PCIT.

PCIT did not grant credit for surcharge and education cess on brought forwarded MAT credit on the ground that term “Tax” as defined under MAT provisions in section 115JB for calculating book profit could not be extended to provisions for calculating carry forward and set-off of MAT credit. Surcharge and education cess did not fall within the category of income tax.

it is held that the PCIT, for the same assessment year, that was assessment year 2015-2016, had not considered order passed by CIT(A), wherein the CIT(A) partly allowed appeal of the assessee regarding credit for surcharge and education cess. While passing his order, the PCIT considered judgment in SREI Infrastructure Finance Ltd. Vs. DCIT [(2017) 395 ITR 291 (Cal) : 2016 TaxPub(DT) 3815 (Cal-HC)] but failed to distinguish why both the cases were found different from each other. Thus, the order was quashed and the matter was remanded back to the PCIT to consider and pass a reasoned order after giving an opportunity of hearing to the assessee.

Decision: Matter remanded.

Referred: SREI Infrastructure Finance Ltd. v. DCIT (2017) 395 ITR 291 (Cal) : 2016 TaxPub(DT) 3815 (Cal-HC).

IN THE CALCUTTA HIGH COURT

RAJARSHI BHARADWAJ, J.

Deepak Spinners Ltd. v. Dy. CIT

WP 308 of 2019

25 July, 2019

Petitioner by: J.P. Khaitan, Sr. Advocate, Ananda Sen, Advocate, A.P. Agarwala, Advocate

Respondents by: S.N. Dutta, Advocate, Radhamohan Roy, Advocate

ORDER

The Court: Learned Senior Counsel appearing for the petitioner submits that the petitioner is engaged in the business of manufacturing and exporting synthetic blended yarn as a Government Recognised Export House.

On 24-9-2015 the petitioner filed its original income tax return for the assessment year 2015-2016. ACIT (CPC) while processing the original return by order contained in intimation dated 29-7-2016 under section 143(1) of the Income Tax Act allowed MAT credit under section 115JAA but wrongfully and illegally did not grant credit for surcharge and education cess on brought forwarded MAT Credit. Against refusal to allow credit for surcharge and education cess, the petitioner filed appeal on 9-9-2016 under section 246A of the Income Tax Act. The appeal was partly allowed by Order, dated 1-9-2016 by the Commissioner (Appeals). While passing the appellate order the Commissioner (Appeals) has considered the judgment passed by the Division Bench of this Hon’ble High Court in SREI Infrastructure Finance Ltd. v. Dy. CIT (supra). In the meantime on 2-8-2016 the petitioner filed revised return under section 139 of the Income Tax Act. In the revised return The ACT (CPC) did not grant credit for the surcharge and education cess on brought forwarded MAT credit by intimation dated 19-6-2017 under section 143(1). But in this case, the petitioner filed revisional application instead of appeal under section 264 before the Principal Commissioner of Income Tax Kolkata-4, challenging the said intimation dated 19-6-2017. The learned Principal Commissioner being the respondent No. 2, without considering the Order, dated 1-9-2017 passed by the Commissioner (Appeals) and without relying on the Division Bench Judgment in SREI Infrastructure Finance Ltd. v. Dy. CIT reported in (2017) 395 ITR 291 (Cal) : 2016 TaxPub(DT) 3815 (Cal-HC) (supra) passed its order denying MAT credit against surcharge and cess. The learned Senior Counsel seeks quashing of such Order, dated 28-2-2019.

The learned Senior Counsel appearing for the Department submits that the term “Tax” as defined under MAT provisions in section 115JB for calculating book profit cannot be extended to provisions for calculating carry forward and set off of MAT credit. Surcharge and education cess do not fall within the category of income tax. Thus the intimation under section 143(1) does not include surcharge and education cess and the entitlement of credit shall be on income tax only excluding surcharge and education cess.

Heard both the parties. In my opinion, the respondent No. 2, being Principal Commissioner of Income Tax, for the same assessment year, that is assessment year 2015-2016, has not considered the order passed by the Commissioner (Appeals) on 1-9-2016. While passing his order on 28-2-2019, the respondent No. 2 considered the judgement in SREI Infrastructure Finance Ltd. v. Dy. CIT (supra) but failed to distinguish why both the cases are found different from each other.

For the above reasons, I quash the Order, dated 28-2-2019 and remand the matter back to the respondent No. 2 being Principal Commissioner of Income Tax, to consider and pass a reasoned order after giving an opportunity of hearing to the petitioner, preferably within a period of eight weeks from date.

WP No. 308 of 2019 is disposed of.

No order as to costs.

Urgent certified copy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities

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