2009 (4) TMI 32 - HC - Income Tax

MAT credit - Assessing Officer has calculated the interest payable u/s 234B and 234C without considering the MAT credit u/s 115JAA paid in the earlier years - held that assessee is entitled to adjust the MAT credit before charging interest u/s 234B and 234C - Whether the MAT credit can be given priority of set off against tax payable, contrary to the scheme of Schedule G of Form 1 held that 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 under Section 115JAA which is contrary to the provisions of the Act appeal of revenue is dismissed

Summary

Issues Involved:
1. Interpretation of provisions related to MAT credit under Section 115JAA for interest calculation under Section 234B and 234C of the Income Tax Act.
2. Determination of the priority of set off for MAT credit against tax payable as per Schedule G of Form 1.

Analysis:
1. The case involved an appeal by the revenue against the order of the Income Tax Appellate Tribunal regarding the calculation of interest payable under Sections 234B and 234C for the Assessment Year 2000-01. The Assessing Officer had not considered the MAT credit under Section 115JAA while calculating the interest, leading to a dispute. The Commissioner of Income Tax (Appeals) directed the Assessing Officer to allow the MAT credit before calculating the interest, following a Tribunal decision. The Tribunal dismissed the revenue's appeal, prompting the revenue to file the present appeal questioning the entitlement of the assessee to adjust the MAT credit before charging interest under Sections 234B and 234C. The High Court, in line with a Delhi High Court decision, ruled in favor of the assessee, emphasizing that the credit under Section 115JAA should be given effect before charging interest, thus rejecting the revenue's arguments.

2. The second issue revolved around the priority of set off for MAT credit against tax payable, contrary to the scheme of Schedule G of Form 1. The Division Bench, considering the legislative intent to give tax credit to tax rather than tax and interest, held that the MAT credit should be given effect before charging interest. It was noted that Form 1 could not dictate the order of priority of adjustment, as it should align with the provisions of the Act. Consequently, the High Court upheld the Tribunal's order, ruling in favor of the assessee and against the revenue on both questions of law. The High Court's decision aligned with the Division Bench's judgment, leading to the dismissal of the appeal based on the identical nature of the issues considered.

This comprehensive analysis highlights the key legal interpretations and decisions made by the High Court regarding the issues raised in the appeal, providing a detailed understanding of the judgment's implications and outcomes.