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Judgment
K. Raviraja Pandian, J.—The revenue on appeal against the order of the Income Tax Appellate Tribunal, Madras ''A'' Bench, Chennai,
dated 15.09.2006 passed in ITA No. 1536/Mds/2005. The assessment year is 2001-02.
The assessee is a private limited company engaged in the business of export of software. The assessee filed a return for the assessment year
2001-02 admitting a total income of Rs. 1,04,19,758/-. The assessing officer accepted the return of income, adjusted the advance tax, but allowed
the MAT credit u/s 115JAA of the Income Tax Act only after levying interest u/s 234B and 234C of the Act. On appeal by the assessee, the
Commissioner of Income Tax (Appeals), following the decision of the Tribunal in the case of M/s. Chemplast Sanmar Ltd., directed the assessing
officer to give the MAT credit before charging interest under Sections 234B and 234C of the Act. The revenue filed an appeal to the Tribunal. The
Tribunal, following its own order in M/s. Chemplast Sanmar Ltd., held the issue in favour of the assessee. Thus, the revenue is before us.
The appeal was admitted by this Court on the following substantial questions of law:
Whether in the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to adjust the MAT credit before
charging interest u/s 234B and 234C of the Act?
Whether on the facts and circumstances of the case the MAT credit can be given priority of set off against tax payable, contrary to the scheme
of Schedule G of Form 1?.
We heard the arguments of the learned Counsel for the appellant and perused the materials available on record.
The very same issues have been considered by the Division Bench of this Court in T.C.A. Nos. 887 of 2004 etc. batch on 09.04.2009. In
respect of the first question of law, the Division Bench has answered in favour of the assessee and against the revenue by observing as follows by
concurring with CIT v. Jindal Experts Ltd. (2009) 222 CTR 8 (Del):
In respect of the first question of law, the arguments advanced by the counsel on either side are the same as the one advanced before the Delhi
High Court cited supra. The Delhi High Court has considered the relevant provisions and dealt with the matter in detail and held that the credit u/s
115JAA should be given effect to before charging of interest u/s 234A, 234B and 234C of the Act. We are in agreement with the reasoning given
by the Delhi High Court. The learned Counsel appearing for the revenue has not produced any materials or given compelling reasons to take a
contrary view with that of the Delhi High Court. In such circumstances, we answer the first question in favour of the assessee and against the
revenue.
In respect of the 2nd question of law, the Division Bench has observed as follows:
In the present case, the intention of the legislature is to give tax credit to tax and not to the tax and interest. Once the intention is clear, the
revenue cannot rely on the Form-I to say that the MAT credit u/s 115JAA should be given only after tax and interest. Further we have answered
the first question of law in favour of the assessee i.e. the MAT credit u/s 115JAA should be given effect to before charging the interest u/s 234B
and 234C. Rule 12(1)(a) and Form-I cannot go beyond the provisions of the Act. Form-I cannot lay down the order of priority of adjustment of
TDS, advance Tax, MAT credit u/s 115JAA which is contrary to the provisions of the Act. The order passed by the Tribunal is in accordance
with law and we do not find any error or illegality in the order of the Tribunal so as to warrant interference. Accordingly, we answer the questions
2 and 3 also in favour of the assessee and as against the Revenue.
Thus both the questions of law have been answered against the revenue in favour of the assessee.
Following the Division Bench Judgment in T.C.(As) Nos. 887 of 2004 etc. batch dated 09.04.2009 referred to supra, and for the reasons
stated therein, the appeal is dismissed.