Commissioner of Income Tax vs Shiva Texyarn Limited

K. Raviraja Pandian, J.—The appeal has been preferred by the revenue against the order of the Income Tax Appellate Tribunal, Madras

''D'' Bench, Chennai, dated 5.5.2008 passed in ITA No. 2089/Mds/2006.

The material facts culled out from the statement of facts in the memorandum of grounds of appeal are as follows:

The assessee private limited Company filed return of income for the assessment year 2004-2005 on 1.11.2004 declaring an income of Rs.

1,10,31,970/-. The return was processed u/s 143(1) on 31.3.2005. The assessing officer denied the assessee claim of tax credit of Rs. 8,46,276/-

made u/s 115JAA(4) and (5) of the Income Tax Act, 1961 which the assessee had paid on book profits in assessment year 1999-2000. The

assessing officer denied the relief on the ground that there was no specific provision of the Act to give credit for MAT on the gross tax payable.

Aggrieved by the same, the assessee filed appeal before the Commissioner of Income Tax (Appeals), who allowed the assessee''s claim following

the order passed by Tribunal in the case of Chemplast Sanmar Limited, wherein it was held that MAT credit should be adjusted first before

adjusting TDS and advance tax. On further appeal by the Department to the Tribunal, the Tribunal relying on the decision of Chemplast Sanmar

Limited reported in 83 TTJ(Chennai) Page 427 which held that MAT credit should be given in precedence of TDS and advance tax dismissed the

appeal filed by the Department. Aggrieved by the order of the Tribunal, the revenue filed the present appeal by formulating the following questions

of law:

Whether on the facts and circumstances of the case, the Income Tax Tribunal is right in holding that charging of interest u/s 234B and C after

considering the MAT credit available to the assessee was proper?

Whether on the facts and in the circumstances of the case, the Income Tax Tribunal is right in law in not considering the judgment of the Madras

High Court reported in 263 ITR 307?

Whether on the facts and in the circumstances of the case, the Income Tax Tribunal is right in holding that for the purpose of computing interest

credit u/s 115JAA should be set off and interest can be imposed only on net liability?

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 other questions 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 to the one considered by the Division Bench. Following the Division Bench Judgment cited

supra, the appeal is dismissed since the questions of law have already been answered in favour of the assessee.