Commissioner of Income Tax vs Raju Spinning Mills P. Ltd.

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

29.08.2008 passed in ITA No. 2103/Mds/07 in respect of the assessment year 2000-01.

The assessee is a Spinning Mill. For the Assessment Year 2000-01, the assessee filed its return of income, wherein the Assessing Officer has

calculated the interest payable u/s 234B and 234C without considering the MAT credit u/s 115JAA paid in the earlier years and thus completed

the assessment. On appeal, the Commissioner of Income Tax (Appeals) directed the Assessing Officer to allow the credit of MAT paid by the

assessee in the earlier years before calculating the interest u/s 234B and 234C of the Income Tax Act following the decision of the Tribunal in the

case of Chemplast Sanmar Pvt. Ltd reported in 83 TTJ 427 (Chennai). The Tribunal on further appeal at the instance of the revenue dismissed the

appeal. Aggrieved by the same, the revenue filed the present appeal by formulating the following 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?

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.

The questions of law in this case also are identical as the one considered by the Division Bench. Following the Division Bench Judgment cited

supra, the appeal is dismissed.