2006 (7) TMI 549 - AT - Income Tax

Summary

Issues:
1. Whether interest under sections 234B & 234C of the Income-tax Act, 1961 should be charged after setting off MAT credit.

Analysis:
The appeal pertains to the assessment year 2000-01, where the revenue challenged the order of the CIT(A) directing the charging of interest under sections 234B & 234C after setting off MAT credit. The Assessing Officer initially calculated interest without considering the MAT credit, leading to a notice for rectification under section 154. The assessee argued that as per section 115JAA, MAT credit should be allowed before charging interest under sections 234B & 234C. The CIT(A) accepted this argument, prompting the revenue to file the appeal.

Upon hearing both sides, the Tribunal noted that the issue was previously decided in favor of the assessee by the Bench. It was established that the order could not be rectified under section 154 for debatable issues. The Tribunal emphasized that the tax credit should be set off before calculating the interest payable, as per the provisions of section 115JAA. The Tribunal found the issue debatable and concluded that the Assessing Officer's order could not be rectified under section 154.

The Tribunal examined the appellate order and concurred with the CIT(A)'s detailed analysis of the relevant provisions of law. The CIT(A) correctly interpreted that the set off of MAT credit is allowable against the tax amount before charging interest under sections 234B & 234C. The Tribunal agreed that the demand raised by the revenue post rectification was incorrect. Therefore, the Tribunal upheld the CIT(A)'s order and dismissed the revenue's appeal, confirming that the set off of MAT credit should precede the calculation of interest under sections 234B & 234C.

In conclusion, the Tribunal's decision affirms that the interest under sections 234B & 234C should be charged after setting off MAT credit, as per the provisions of section 115JAA. The Tribunal's thorough analysis of the relevant legal provisions led to the dismissal of the revenue's appeal, upholding the CIT(A)'s order.