Allowed set off of MAT Credit inclusive of Surcharge, Education Cess

Last updated: 26 July 2021

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The Income Tax Appellate Tribunal (ITAT) in Mumbai ruled that Minimum Alternate Tax (MAT) credit should be allowed to be set off inclusive of surcharge and education cess. This decision overturns the respondent's exclusion of these components, which had led to a short grant of MAT credit for the appellant, M/s. Tata Motors Ltd. The tribunal directed a recomputation of the tax payable to reflect the full MAT credit.

Court :
ITAT Mumbai

Brief :
In M/s. Tata Motors Ltd. v. DCIT(LTU)-2 [ITA No. 2397/Mum/2019 decided on June 25, 2021], M/s. Tata Motors Ltd. ('the Appellant') filed an appeal against the order of Commissioner of Income Tax (Appeals)-1, Mumbai ('the Respondent') computing set-off of Minimum Alternate Tax ('MAT') credit under Section 115JAA of the Income Tax Act, 1961 ('the IT Act') excluding surcharge and cess resulting in short grant of MAT credit of Rs. 21,70,98,794/-.

Citation :
ITA No. 2397/Mum/2019 decided on June 25, 2021

In M/s. Tata Motors Ltd. v. DCIT(LTU)-2 [ITA No. 2397/Mum/2019 decided on June 25, 2021], M/s. Tata Motors Ltd. ('the Appellant') filed an appeal against the order of Commissioner of Income Tax (Appeals)-1, Mumbai ('the Respondent') computing set-off of Minimum Alternate Tax ('MAT') credit under Section 115JAA of the Income Tax Act, 1961 ('the IT Act') excluding surcharge and cess resulting in short grant of MAT credit of Rs. 21,70,98,794/-.

The Hon’ble ITAT, Mumbai relied on Srei infrastructure Finance Ltd., v. DCIT [395 ITR 291 (Calcutta)] and M/s. Scope International Pvt. Ltd. [TCA No. 588 of 2019 dated August 16, 2019] and directed the Respondent to allow set off of MAT credit inclusive of surcharge and education cess and recompute the tax payable by the Appellant for the year under consideration.

FAQ :

The main issue was whether the set off of Minimum Alternate Tax (MAT) credit should include surcharge and education cess, or exclude them.

The ITAT, Mumbai ruled in favour of M/s. Tata Motors Ltd., directing that MAT credit set off must include surcharge and education cess.

M/s. Tata Motors Ltd. was initially short-granted MAT credit amounting to Rs. 21,70,98,794/-.

The ITAT relied on the decisions in Srei Infrastructure Finance Ltd. v. DCIT and M/s. Scope International Pvt. Ltd.

The ITAT directed the respondent to allow the set off of MAT credit inclusive of surcharge and education cess and recompute the tax payable.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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