2013 (12) TMI 316 - HC - Income Tax

Interest under Section 234B and C on the MAT credit - Held that - Following Commissioner of Income Tax Vs. Tulsyan Nec Ltd. 2010 (12) TMI 23 - Supreme Court of India - Once the conditions mentioned in Section 115-JAA are fulfilled, the grant of such credit is not dependent upon determination by the AO - The ultimate amount of tax credit to be allowed will be dependent upon the final determination of the total income for the first assessment year - There is no provision under Section 115-JAA which postpones the right of the assessee to claim set-off to the determination of the total income by the AO in the first assessment year - Entitlement/right to claim set-off is different from the quantum/quantification of that right - When the AO determines the tax payable he has to give credit for all taxes paid either by way of deduction at source, advance tax, self-assessment tax or tax paid otherwise which would include or which cannot exclude tax credit under Section 115-JAA(1) - Decided against Revenue.

Summary

Issues:
- Impugning order under Section 260A of the Income Tax Act, 1961 regarding charging of interest under Section 234B and C on MAT credit under Section 115JAA.

Analysis:
The High Court heard an appeal by the Revenue challenging the order passed by the Income Tax Appellate Tribunal concerning the charging of interest under Sections 234B and C on the Minimum Alternate Tax (MAT) credit under Section 115JAA for the assessment year 2003-04 related to National Fertilizers Limited. The Court noted that the issue was settled in favor of the assessee based on the Supreme Court's decision in Commissioner of Income Tax Vs. Tulsyan Nec Ltd. The Supreme Court's ruling emphasized that the entitlement to claim set-off of MAT credit is not dependent on the AO's determination but rather on meeting the conditions specified in Section 115JAA. The Court highlighted that the right to set-off arises from tax payment under Section 115JA(1), while the quantification of this right depends on the final determination of total income for the first assessment year. Additionally, the Court pointed out that the AO must give credit for all taxes paid, including tax credit under Section 115JAA(1), when determining the tax payable. Consequently, the Court dismissed the appeal, affirming the position in light of the legal principles established by the Supreme Court.

This judgment clarifies the procedural aspect of claiming MAT credit under Section 115JAA and emphasizes that the entitlement to set-off such credit is independent of the AO's actions. The Court's analysis underscores that the right to claim set-off arises from the payment of tax under Section 115JA(1) and can be considered while estimating the liability to pay advance tax. Moreover, the judgment highlights the significance of giving credit for all taxes paid, including tax credit under Section 115JAA(1), when determining the final tax liability. By referencing the Supreme Court's decision, the High Court provides a comprehensive explanation of the legal framework governing the utilization of MAT credit and the role of the assessing officer in this context. The dismissal of the appeal signifies the application of established legal principles and upholds the rights of the assessee in claiming the set-off of MAT credit in accordance with the statutory provisions.