Commissioner of Income Tax vs Farida Shoes Ltd.

K. Raviraja Pandian, J.—The revenue is on appeal against the order of the Income Tax Appellate Tribunal, Madras ''A'' Bench, Chennai,

dated 06.06.2006 passed in ITA Nos. 125/Mds/2004.

The assessee filed its return of income for the assessment years 1999-2000. The assessing officer, in the proceedings u/s 154 of the Income Tax

Act, granted the MAT credit and calculated interest under Sections 234B and 234C of the Act. The assessee appealed against the order of

assessment to the Commissioner of Income Tax (Appeals), who dismissed the appeal on the ground that as per R.12(1)(1)(a) return of income

shall be in Form 1 and Schedule G gives the order of credit as TDS, Advance tax. The form 1 had been substituted with effect from 17.08.2001

and it was held that interest under Sections 234B and C had to be computed and thereafter MAT credit had to be granted. On further appeal to

the Tribunal, the Tribunal following its earlier order in the case of M/s. Chemplast Sanmar Ltd., and held that the assessee is entitled to adjust the

MAT credit first before charging of interest u/s 234B and 234C of the Act and allowed the appeal. The revenue is thus before us in this appeal.

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 MAT credit is to be set off from the tax payable

before setting off the tax deducted at source and advance tax paid?

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?

Whether on the facts and in the circumstances of the case, the interest u/s 234B and 234C had to be calculated after giving the MAT credit

against the tax payable on the basis of normal computation?

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. The

Division Bench has answered the issues 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 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 all the questions of law have been answered against the revenue in favour of the assessee.

Following the judgment of the Division Bench 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.