Commissioner of Income Tax vs Forbes Gokak Ltd. (formerly FAL Industries Ltd.)

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

dated 15.09.2006 passed in ITA No. 317/Mds/05.

It is submitted by the learned Counsel for the appellant that the assessee company has been merged with Forbes Gokak Ltd. Counsel for the

respondent also agrees with this fact. Both the counsel submit that instead of adjourning the matter for filing a petition by the assessee for

amendment of cause title, on consensus, this Court may pass an order directing the Registry to amend the cause title by changing the name of the

respondent. Hence, Registry is directed to amend the cause title by changing the name of the respondent to M/s. Forbes Gokak Ltd., Perungudi,

Chennai 600 096.

The facts of the case are : The assessee filed its return of income for the assessment year 1998-99 admitting a total income of Rs. 1,60,28,800/-

and the assessment was completed. Subsequently, assessment was revised giving effect to the order of the Commissioner of Income Tax

(appeals). While revising the assessment, the assessing officer allowed the MAT credit to the tune of Rs. 13,75,376/- after giving credit for TDS

and advance tax. The assessee appealed against the order of assessment to the Commissioner of Income Tax (Appeals), who, relying on the

decision of the Income Tax Appellate Tribunal in the case of M/s. Chemplast Sanmar Ltd., directed the assessing officer to give MAT credit first

before the adjustment of TDS and advance tax. The revenue took the matter on appeal to the Tribunal. The Tribunal dismissed the appeal by

relying on its own decision in the case of M/s. Chemplast Sanmar Ltd. The present appeal is against that order of the Tribunal, by the revenue.

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 of 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?.

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 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.