2009 (12) TMI 46 - HC - Income Tax

Minimum Alternate Tax - MAT Credit u/s 115JA Interest u/s 234B and 234C MAT credit to be adjusted before charging interest u/s 234B and 234C held that - . The Delhi High Court has considered the relevant provisions and dealt with the matter in detail and held that the credit under Section 115JAA should be given effect to before charging of interest under Section 234A, 234B and 234C of the Act. We are in agreement with the reasoning given by the Delhi High Court. The learned counsel appearing for the revenue has not produced any materials or given compelling reasons to take a contrary view with that of the Delhi High Court - vs. Jindal Exports Ltd 2009 -TMI - 32986 - DELHI HIGH COURT decided in favor of assessee

Summary

Issues:
1. Whether the assessee is entitled to adjust the MAT credit before charging interest u/s 234B & 234C?
2. Whether the MAT credit can be given priority of set off against tax payable, contrary to the scheme of Schedule G of Form 1?

Analysis:

Issue 1:
The appeal questioned whether the assessee could adjust the Minimum Alternate Tax (MAT) credit before charging interest under sections 234B & 234C. The case involved a domestic company engaged in various businesses. The Assessing Officer computed interest under sections 234B and 234C, adjusting the MAT credit under Section 115JA. The Commissioner of Income Tax (Appeals) favored the assessee, following a precedent. The Tribunal upheld this decision. The High Court referred to a similar case involving Chemplast Sanmar Ltd. where the Tribunal's decision was challenged. The High Court, aligning with a Delhi High Court ruling, held that the MAT credit should be adjusted before charging interest under the mentioned sections. The Court dismissed the appeal against the revenue, affirming the precedence set in previous cases.

Issue 2:
The second issue raised whether the MAT credit could be prioritized over tax payable, conflicting with the scheme of Schedule G of Form 1. The Court cited previous judgments and emphasized that the intention was to give tax credit precedence over tax and interest. It was clarified that Form-I could not dictate the order of priority for adjustments, as it must align with the provisions of the Act. The Court concluded that the MAT credit under Section 115JAA should not be subject to tax and interest before adjustment. Following the Division Bench's decision, the Court dismissed the appeals, stating no grounds for deviation. The judgment highlighted that Form-I could not override the Act's provisions regarding the adjustment of TDS, advance tax, and MAT credit.

In summary, the High Court of Madras addressed the issues regarding MAT credit adjustment and priority against tax payable. The judgment reiterated the precedence set in previous cases, aligning with the Delhi High Court's ruling. It emphasized the correct order of adjustments and dismissed the appeals against the revenue, maintaining consistency with established legal interpretations and principles.