Law:

Section:

JUDGMENT 1. The appeal by the Revenue under section 260A of the Income-tax Act, 1961 arises from an order of the Income Tax Appellate Tribunal dated 22 May 2014. The assessment year to which the appeal relates is AY 2011-12. 2. The Revenue has formulated the following question of law in support of the appeal: "Whether the Hon'ble ITAT has erred in law as well as in the facts and circumstances of the case in allowing the calculation of tax in violation of the provisions of the relevant Finance Act which prescribe calculation of tax as inclusive of cess and surcharge." 3. In the present case, the assessee filed an appeal before the Commissioner (Appeals) against an order that was passed under section 143 (1) read with section 154 of the Act by the ACIT-Centralized Processing Centre (CPC), Bangalore, by which a demand of Rs. 10,92,766.00 was raised on the assessee. The following grounds of appeal were raised before the Commissioner (Appeals): "1. Because the rectification application filed under section 154 of the I.T. Act before CPC, Bangalore has been wrongly and illegally rejected. 2. Because surcharge and education cess on the tax payable has been calculated before allowing credit of tax paid in the earlier years under section 115JAA which is apparently wrong and hence, ACIT (CPC) has erred on facts and as well as on law in rejecting the application filed under section 154 of the I.T. Act. 3. Because without prejudice to the abovementioned grounds, if the credit of tax paid under section 115JAA is to be allowed after charging surcharge and education cess, then the credit which has been allowed of the taxes paid in the earlier year should also be inclusive of surcharge and education cess." 4. The Commissioner (Appeals) allowed the appeal filed by the assessee by an order dated 18 October 2013 and directed the Assessing Officer to compute the gross tax liability on the assessee in accordance with the method of computation provided in ITR-6 for the assessment year 2011-12. The Tribunal has dismissed the appeal filed by the Revenue by its order dated 22 May 2014. 5. The only question which is raised pertains to…

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