2009 (4) TMI 474 - AT - Income Tax

MAT credit Whether assessee is entitled for MAT credit for the assessment year under consideration - From the memo of income that out of the MAT credit available under s. 115JAA for the asst. yr. 1997-98 to the tune of Rs. 59,04,340, the balance sum of Rs. 14,69,706 was set off during the asst. yr. 2003-04 - According to section 115JAA the set off of tax credit cannot be allowed beyond the fifth assessment year immediately succeeding the assessment year in which tax credit becomes allowable - The carry forward is available for a total of six (1 5) years Appeal is dismissed

Summary

Issues: Interpretation of provisions of s. 115JAA regarding carry forward of MAT credit beyond the fifth assessment year.

The case involved an appeal by the Department against the order of the CIT(A) for the assessment year 2003-04. The Department contended that the assessee was not entitled to MAT credit for the assessment year under consideration based on Circular No. 763, which limited the benefit of carry forward of MAT credit to five assessment years succeeding the year in which MAT was paid. The AO noted that the tax credit for the assessment year 1997-98 could only be set off until the assessment year 2002-03 as per s. 115JAA(3). The dispute centered around the interpretation of the provision regarding the allowable years for carry forward of tax credit under s. 115JAA(3) of the Act.

The CIT(A) allowed the assessee's appeal, stating that the tax credit could be carried forward for five years succeeding the assessment year in which the credit became allowable under sub-s. (1) of s. 115JAA. The CIT(A) directed the AO to allow the tax credit for the assessment year 2003-04 based on this interpretation.

The Tribunal analyzed the provisions of s. 115JAA, emphasizing that the carry forward of tax credit should not be allowed beyond the fifth assessment year immediately succeeding the year in which the credit became allowable under sub-s. (1). The Tribunal noted that there was no ambiguity in the language of the provision. The Tribunal also highlighted a contradiction between the circular and the statutory provision, stating that statutory provisions prevail over circulars in case of contradictions, as per established legal principles.

Ultimately, the Tribunal upheld the CIT(A)'s order, dismissing the Department's appeal. The Tribunal concluded that the carry forward of MAT credit was allowable for a total of six years (one year of assessment plus five succeeding years), in line with the statutory provision of s. 115JAA(3). The decision was based on the principle that statutory provisions take precedence over circulars in case of any inconsistency.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, the interpretation of relevant legal provisions, and the final decision rendered by the Tribunal.