Commissioner of Income Tax, Coimbatore vs A.B.T. Industries Ltd.

K. Ravichandrabaabu, J.—The Revenue is on appeal against the order of the Income Tax Appellate Tribunal in respect of the assessment

year 2001-2002. The assessee is a company. The assessment was completed u/s 143(1) of the Income Tax Act on 24.2.2003. The Assessing

Officer, while completing the assessment gave credit for TDS amount of Rs. 14,07,235/- only, as against the claim of the assessee for total TDS of

Rs. 29,86,639/- The assessee through their letter dated 9.5.2003 informed the assessing Officer that the income pertaining to the TDS credit have

been offered for tax in the assessment year 2001-02 and claimed MAT credit before charging surcharge on Income Tax. The claim of the assessee

was considered by the assessing Officer by passing order u/s 154 of the Income Tax Act. The assessing Officer found that the claim for MAT

credit can be considered only after charging the surcharge on Income Tax. Accordingly, he passed the revised assessment order thereby ordering

refund of Rs. 12,91,037/-, however without granting interest u/s 244A on the ground that the refund has arisen as a result of giving MAT credit

only. Aggrieved against the said order, the assessee went on appeal before the Commissioner of Income Tax (Appeals) by contending that

surcharge should have been calculated after deducting MAT credit and interest u/s 244A should have been granted. The first appellate authority

while rejecting the claim of the assessee with regard to charging of surcharge after deduction of MAT credit, had however directed the Assessing

Officer to calculate the interest u/s 244A and grant the same. As against the order of the first appellate authority, the Revenue went on appeal

before the Tribunal.

By following its earlier decision made in the case of (2004) 83 TTJ 427 , the Tribunal dismissed the appeal filed by the Revenue. Aggrieved

against the same, the present tax case appeal is filed by the Revenue by raising the following substantial question of law:-

Whether on the facts and circumstances of the case, the Tribunal ought to have appreciated the fact that the refund had arose on account of the

MAT credit and the same could only be carried forward to set off and refund of MAT credit cannot be granted as per section 115JAA(5) and

consequently, interest on such refund u/s 244A cannot be granted?

It is submitted by the learned counsel appearing for the Revenue that the dispute involved in this case is as to whether the assessee is entitled to

interest u/s 244A. learned counsel further submitted that the Assessing Officer had given MAT credit to the tune of Rs. 14,39,653/- towards the

total tax liability of Rs. 31,35,255/-. Consequently, he has also given credit to TDS to the tune of Rs. 29,86,639/- and accordingly ordered for

refund of Rs. 12,91,037/-. As the refund was made as a result of giving MAT credit, the Assessing Officer had rightly rejected the claim of interest

u/s 244A.

Per contra, the learned counsel appearing for the assessee submitted that as per the decision of the Supreme Court reported in (2011)

Commissioner of Income Tax, Chennai Vs. Tulsyan NEC Ltd., MAT credit has to be given first and thereafter interest is to be computed.

Therefore, the learned counsel contended that even after giving MAT credit, the tax liability payable by the assessee is lesser than the TDS amount

credit given and therefore the balance amount ordered to be refunded should also carry interest u/s 244A.

Heard the learned counsel appearing for either side.

We have perused the order of the Assessing Officer made u/s 154, wherein he has given MAT credit u/s 115JA to the tune of Rs. 14,39,653/-

towards to the total tax liability of Rs. 31,35,255/-. Thereafter, he has also given credit to TDS payment made by the assessee to the tune of Rs.

29,86,639/-. Thus, it made him to make an order of refund of Rs. 12,91,037/- to the assessee. From the said order of the Assessing Officer, it is

very clear that the refund was not made only due to the grant of MAT credit and on the other hand it is in pursuant to the TDS credit also to the

tune of Rs. 29,86,639/-. Therefore, the reasoning of the Assessing Officer is factually incorrect in refusing to grant interest u/s 244A. When the

said order of the Assessing Officer was challenged by the assessee before the first appellate authority, it appears, two grounds were raised viz., (i)

surcharge should have been calculated after deducting MAT credit and (ii) interest u/s 244A should have been granted.

The first appellate authority rejected the claim of the assessee, insofar as the first ground is concerned, by holding that the MAT credit is to be

treated on par with TDS payment and therefore surcharge cannot be calculated after giving credit to MAT credit. However, insofar as the claim of

interest u/s 244A is concerned, the first appellate authority found that refund had arisen out of the excess TDS payment and therefore the assessee

is entitled to interest u/s 244A. He has also specifically found that the proviso to Section 115JAA(2) was not applicable to the facts of the case.

Accordingly, he directed the Assessing Officer to calculate the interest u/s 244A and grant the same.

It is seen that as against the said order of the first appellate authority, only the Revenue went on appeal before the Tribunal. When we perused

the order of the Tribunal, we could see that the Tribunal considered only the issue in respect of giving MAT credit before set off of TDS and

advance tax from the tax payable by the assessee. No doubt, such issue is now settled in view of the decision made by the Apex Court reported in

(2011) Commissioner of Income Tax, Chennai Vs. Tulsyan NEC Ltd., wherein the Apex Court has held that the MAT credit admissible in terms

of section 115JAA of the Income Tax Act, 1961, has to be set off against the assessed tax payable, before calculating interest under Sections

234A, 234B and 234C. It is further held therein that if an assessee is entitled to a tax credit as a consequence of the assessee making payment of

tax u/s 115JA(1) in year one, then, the set off such tax credit follows as a matter of course once the conditions mentioned u/s 115JAA are fulfilled

and the grant of such credit is not dependent upon determination by the Assessing Officer. Thus, the Apex Court decided the issue in favour of the

assessee therein. The decision of the Madras High Court reported in (2009 (2009) 120 ITD 182 was also affirmed by the Apex Court in the said

decision. Thus, in view of the decision of the Apex Court, as discussed supra, the issue with regard to grant of MAT credit has already been

settled. Therefore, the only grievance of the Revenue before the Tribunal could be against the order of the first appellate authority directing the

Assessing Officer to grant interest u/s 244A. The Tribunal, on the other hand, has rejected the Revenue''s appeal by following its earlier order

reported in (2004) 83 TTJ 427 . There is absolutely no discussions, whatsoever, with regard to the interest payments u/s 244A except by

extracting a paragraph from the order of the Tribunal in Chemplast Sanmar Ltd. case.

It appears that the Tribunal had concentrated only on the issue as to whether giving credit for MAT before set off of TDS and advance tax from

the tax payable by the assessee is correct or not. The Tribunal adverted its attention to the Chemplast Sanmar Ltd., case to answer the said issue

and consequently rejected the Revenue''s appeal. The grounds of appeal raised in this appeal by the Revenue also indicate that the issue before the

Tribunal was only with regard to interest payable u/s 244A and not with regard to the adjustment of MAT credit.

Even though the Tribunal dismissed the appeal filed by the Revenue as against the order of the first appellate authority, such order of dismissal

was not in reference to the issue with regard to payment of interest u/s 244A. Under these circumstances, we would have normally remitted the

matter back to the Tribunal to reconsider the issue. However, we are not resorting to do so as we have already pointed out that the refund had

arisen not as a result of giving MAT credit alone as observed by the Assessing Officer, but had arisen out of the excess TDS payment made by the

assessee. Therefore, the assessee is entitled to interest u/s 244A. The first appellate authority has rightly considered the said issue and directed the

Assessing Officer to grant the same. Consequently, there is no necessity for remitting the matter to the Tribunal. On the other hand, we are of the

view that dismissal of this appeal would give quietus to the matter. Considering all these facts and circumstances, we find no merits in this appeal

and accordingly reject the same by answering the question of law accordingly. No costs.