Commissioner of Income Tax vs Ucal Fuel Systems Limited

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

''C'' Bench, Chennai, dated 16.11.2007 passed in ITA No. 2192/Mds/2006 relating to the assessment year 2002-2003.

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

For the assessment year 2002-2003 the assessing officer calculated the interest payable under Sections 234B and 234C and gave credit for the

MAT thereafter. Aggrieved by the order of the assessing officer the assessee filed an appeal before the Commissioner of Income Tax (Appeals),

who directed the assessing officer to give MAT credit before computation of interest payable u/s 234B and 234C of the Act. Aggrieved by the

said order, the revenue filed appeal to the Income tax Appellate Tribunal, which followed the decision of (2004) 83 TTJ 427 on the issue of

whether MAT credit can be given before charging interest u/s 243B and 243C of the Act and held in favour of the assessee and followed the

proposition that for the purpose of computing the interest the tax payable after the MAT setoff should only be taken into consideration. Aggrieved

by the order of the Income Tax Tribunal, the revenue has filed this appeal by formulating the following questions of law:

Whether in the facts and circumstances of the case, the Appellate Tribunal was right in ignoring the fact that the above issue had already been

allowed to become final by the assessee when the assessee has not chosen to agitate the issue in the earlier stages?

Whether in the facts and circumstances of the case, the Tribunal was right in holding that 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?

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 and the

Division Bench has answered in favour of the assessee and against the revenue by observing as follows:

7.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.

The questions of law in this appeal are identical to the one considered by the Division Bench. Therefore, following the Division Bench Judgment

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