The Commissioner of Income-tax, Chennai v. Saint Gobain Glass India Limited
[Citation -2020-LL-1013-84]

Citation 2020-LL-1013-84
Appellant Name The Commissioner of Income-tax, Chennai
Respondent Name Saint Gobain Glass India Limited
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 13/10/2020
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags substantial question of law • fringe benefit tax • consolidated fund • education cess • tax liability • total income • tax payable • mat credit • surcharge
Bot Summary: 716 of 2018 JUDGMENT Order of the Court was made by T.S.SIVAGNANAM, J. This appeal has been filed by the Revenue under Section 260 A of the Income Tax Act, 1961, challenging the order dated 31.05.2018 passed by the Income Tax Appellate Tribunal, Madras, 'B' Bench Chennai in I.T.A.No. The assessee contended that the tax liability discharged during the assessment year 2009-10 was based on Section 115JB of the Act, as the tax calculated under the MAT provisions was higher than the tax calculated as per normal provisions of income tax and that this resulted in a MAT credit to the extent the tax liability under the MAT provisions higher than the tax liability under normal tax provisions to be carried forward for adjustment during the subsequent assessment years. A useful reference may be made to Section 2 of the Finance Act and it would suffice to refer to Sub-Section and Sub-Section, which state that subject to the provisions of SubSections and, income-tax shall be charged at the rates specified in Part I of the First Schedule and such tax shall be increased by a surcharge for purposes of the Union calculated in either case in the manner provided therein. The Hon'ble Supreme Court took note of the distinction made by the High Court in the case and held that the distinction made by the High Court that the surcharges are levied only under the Finance Act and income tax under the Act may not hold good. If we have a look at paragraph 4 of the said circular, the Board states that for the purposes of the said Circular, tax effect shall be tax including applicable surcharge and cess. Though the case on hand is not hit by the monetary limit according to Mr.T.R.Senthilkumar, learned Senior Standing Counsel on a perusal of the said circular, it is evidently clear that consistently, the understanding of the Board was that tax includes applicable surcharge and cess. In the said decision it was held that the MAT Credit under Section 115 JAA has brought forward from the earlier orders 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 a surcharge and education cess.


T.C.A.No.716 of 2018 IN HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.10.2020 CORAM HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.716 of 2018 Commissioner of Income Tax, Chennai. Appellant Versus M/s.Saint Gobain Glass India Limited, Plot No.A-1, Sipcot Industrial Park Sriperumbudur, Kanchipuram District 602105 PAN : AABCS4338M Respondent Prayer:- Tax Case Appeal filed under Section 260-A of Income Tax Act, 1961, against order of Income Tax Appellate Tribunal, Madras 'B' Bench, dated 31.05.2018 made in I.T.A.No.2549/Mds/2017 relating to Assessment Year 2011-12. For Appellant : M/s.R.Hemalatha Senior Standing counsel For Respondent : Mr.Venkatanarayanan For M/s.Subbaraya Aiyar Padmanabhan 1/10 http://www.judis.nic.in T.C.A.No.716 of 2018 JUDGMENT [Order of Court was made by T.S.SIVAGNANAM, J.] This appeal has been filed by Revenue under Section 260 of Income Tax Act, 1961 ('the Act' for brevity), challenging order dated 31.05.2018 passed by Income Tax Appellate Tribunal, Madras, 'B' Bench ('the Tribunal' for brevity) Chennai in I.T.A.No.2549/Mds/2017 for Assessment Year 2011-12. appeal was admitted on 18.12.2018 on following Substantial Questions of Law: 1. Whether reasoning and finding of Tribunal is right in confirming that MAT credit under Section 115JAA includes surcharge and education cess instead of excluding surcharge and education cess? 2. We have heard M/s.R.Hemalatha, learned Senior Standing counsel for appellant / Revenue and Mr.Venkatanarayanan, learned counsel for M/s.Subbaraya Aiyar Padmanabhan, appearing for respondent / assessee. 3. Identical question was considered by us in case of Principal Commissioner of Income Tax-6 Vs. M/s.Scope International Pvt. Ltd., in T.C.A.No.369 of 2019 dated 19.06.2019. operative portion 2/10 http://www.judis.nic.in T.C.A.No.716 of 2018 of judgment reads as follows: 4. short issue, which falls for consideration in this appeal, is as to whether order passed by Commissioner of Income Tax (Appeals)-15, Chennai-34 [for short, CIT(A)], in ITA.No.439/2013-14 dated 28.9.2017 as confirmed by Tribunal in impugned order requires interference and as to whether any substantial question of law arises for consideration. 5. reference under Section 92CA(1) of Act was received from Assistant Commissioner of Income Tax Act, Company Circle VI(2), Chennai. Accordingly, notice under Section 92CA(2) of Act along with questionnaire was issued to assessee on 18.11.2011 calling for details of documents and information. assessee submitted their explanation and their authorized representative appeared before Assessing Officer and case was discussed. assessee is wholly owned subsidiary of M/s.Standard Chartered Bank, UK and is engaged in business of providing back end support to certain branches of bank spread across globe including India. Transfer Pricing Officer passed order on 03.10.2012, based on which, Assessing Officer completed assessment vide order dated 31.3.2013. As against order passed by Assessing Officer, assessee preferred appeal to CIT(A). In this appeal, we are concerned only about issue relating to MAT 3/10 http://www.judis.nic.in T.C.A.No.716 of 2018 credit not being given on surcharge and cess. 6. Before CIT(A), assessee contended that tax liability discharged during assessment year 2009-10 was based on Section 115JB of Act, as tax calculated under MAT provisions was higher than tax calculated as per normal provisions of income tax and that this resulted in MAT credit to extent tax liability under MAT provisions higher than tax liability under normal tax provisions to be carried forward for adjustment during subsequent assessment years. It was further contended that while calculating MAT credit, Assessing Officer considered only tax amount without considering surcharge and cess under normal tax provisions and MAT provisions and that this resulted in reduced amount of MAT credit. 7. In support of their contention, assessee placed reliance upon decision of Hon'ble Supreme Court in case of CIT Vs. K.Srinivasan [reported in (1972) 83 ITR 346]. It was further contended that while giving effect to carried forward MAT credit in tax calculation for assessment year 2012-13, Assessing Officer had correctly considered tax, surcharge and cess. 8. CIT(A), after taking note of submissions made by assessee, found same to be prima facie acceptable and further found that Assessing Officer did not 4/10 http://www.judis.nic.in T.C.A.No.716 of 2018 consider appellant's submission. Assessing Officer was directed to verify appellant's submission with reference to assessment record. Assessing Officer was further directed to allow appellant's claim for MAT credit, if assessee' submission was factually correct. Accordingly, appeal filed by assessee stood partly allowed. 9. Revenue challenged order passed by CIT(A) before Tribunal and it was contended before Tribunal that CIT(A) had no power to direct Assessing Officer to verify. Tribunal took note of decision of Hon'ble Supreme Court in case of K.Srinivasan and held that in exercise of its power, it is entitled to direct Assessing Officer to verify claim of assesse and thereafter allow claim with regard to MAT credit. Accordingly, Tribunal declined to interfere with order passed by CIT(A). 10. Revenue is before us contending that surcharge and cess should not be included and that decision in case of K.Srinivasan would not be applicable to facts of this case. Thus, argument advanced before us is that both CIT(A) as well as Tribunal ought not to have followed decision in case of K.Srinivasan, which was rendered in context of Section 2 of Act whereas Section 11JAA of Act was inserted subsequently with retrospective effect from 01.4.1997. 11. Section 2(43) of Act defines 'tax' in relation to 5/10 http://www.judis.nic.in T.C.A.No.716 of 2018 assessment year commencing on 1st day of April, 1965 and any subsequent assessment year to mean income-tax chargeable under provisions of this Act and in relation to any other assessment year income-tax and super-tax chargeable under provisions of this Act prior to aforesaid date and in relation to assessment year commencing on 1st day of April, 2006, and any subsequent assessment year includes fringe benefit tax payable under Section 115WA of Act. 12. Explanation (2)(iii) and (iv) to Section 115JB of Act states that for purposes of Clause (a) of Explanation 1 to Section 115JB of Act, amount of income tax shall include surcharge as levied by Central Acts from time to time and education cess on income-tax, if any, as levied by Central Acts from time to time. useful reference may be made to Section 2 of Finance Act and it would suffice to refer to Sub-Section (1) and Sub-Section (2), which state that subject to provisions of SubSections (2) and (3), income-tax shall be charged at rates specified in Part I of First Schedule and such tax shall be increased by surcharge for purposes of Union calculated in either case in manner provided therein. 13. Hon'ble Supreme Court, in case of K.Srinivasan, took note of legislative history of Finance Act as also practice to indicate that term "income tax" 6/10 http://www.judis.nic.in T.C.A.No.716 of 2018 as employed in Section 2 of Finance Act, which includes surcharge as also special and additional surcharge whenever provided which are also surcharges within meaning of Article 271 of Constitution. It was pointed out that word 'surcharge' has been used to either increase rates of income tax and super tax or to increase these taxes. It was also pointed out that according to Article 271, notwithstanding anything in Articles 269 and 270, Parliament may, at any time, increase any of duties or taxes referred to in those Articles by surcharge for purpose of Union and whole proceeds of any such surcharge shall form part of Consolidated Fund of India. Hon'ble Supreme Court took note of distinction made by High Court in case and held that distinction made by High Court that surcharges are levied only under Finance Act and income tax under Act may not hold good. Hon'ble Supreme Court explained term 'surcharge' to mean as charge in addition to or subject to additional or extra charge. 14. In our considered view, decision of Hon'ble Supreme Court in case of K.Srinivasan will apply with full force to assessee's case. Furthermore, if we refer to circular of Central Board of Direct Taxes in Circular No.3 of 2018 dated 11.7.2018, which fixed monetary limit for filing appeals by Department before Tribunals, 7/10 http://www.judis.nic.in T.C.A.No.716 of 2018 High Courts and Supreme Court, one gets fair idea as to what was understanding of term 'tax' by Board. If we have look at paragraph 4 of said circular, Board states that for purposes of said Circular, tax effect shall be tax including applicable surcharge and cess. 15. Though case on hand is not hit by monetary limit according to Mr.T.R.Senthilkumar, learned Senior Standing Counsel, yet, on perusal of said circular, it is evidently clear that consistently, understanding of Board was that tax includes applicable surcharge and cess. 16. For above reasons, we are of view that Revenue has not made out any case to interfere with order passed by Tribunal. As pointed out earlier, in assessee's own case, for assessment year 2012-13, relief has been granted to assessee and there is nothing on record to show that said order is either reversed or reopened. Hence, substantial questions of law raised are answered against Revenue. 17. Accordingly, above tax case appeal is dismissed. No costs. 4. M/s.R.Hemalatha, learned Senior Standing counsel referred to decision of High Court of Calcutta in case of Srei Infrastructure 8/10 http://www.judis.nic.in T.C.A.No.716 of 2018 Finance Ltd. Vs. Deputy Commissioner of Income-tax, Circle-11(2), Kolkata, [2016] 72 taxmann.com 239 (Calcutta) 5. In said decision it was held that MAT Credit under Section 115 JAA has brought forward from earlier orders is to be set off against tax on total income including surcharge and education cess instead of adjusting same from tax on total income before charging such surcharge and education cess. 6. We find factually said decision is different and cannot be applied to facts and circumstances of this case. Furthermore, in case of M/s.Scope International Pvt. Ltd., (cited supra), we had followed decision of Hon'ble Supreme Court of India in case of CIT Vs. K.Srinivasan [reported in (1972) 83 ITR 346]. As on date, decision in case of M/s.Scope International Pvt. Ltd., (cited supra) continue to hold field and therefore, we are inclined to follow same. 9/10 http://www.judis.nic.in T.C.A.No.716 of 2018 T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN, J. Kak 7. Thus, by following above decision, Tax Case Appeal is dismissed and Substantial Question of Law is answered against appellant / Revenue. No costs. (T.S.S.,J) (V.B.S.,J) 13.10.2020 Kak Index: Yes / No Internet: Yes / No Speaking Order/Non-Speaking Order To Income Tax Appellate Tribunal, 'B' Bench, Chennai. T.C.A.No.716 of 2018 10/10 http://www.judis.nic.in Commissioner of Income-tax, Chennai v. Saint Gobain Glass India Limited
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