2012 (10) TMI 802 - SCH - Income Tax

Whether the Department is entitled to charge interest under Section 234B of the Income Tax Act, 1961, on the assessee bringing forward the tax credit balance into the year of account relevant to Assessment Year 2001-2002 Following the judgement of court in case of CIT v. Tulsyan NEC Ltd 2010 (12) TMI 23 - SUPREME COURT OF INDIA Held that - It is immaterial that the relevant form prescribed under Income Tax Rules, at the relevant time (i.e. before 1.4.2007), provided for set off of MAT credit balance against the amount of tax plus interest i.e. after the computation of interest under Section 234B. This was directly contrary to a plain reading of Section 115JAA(4). Further, a form prescribed under the rules can never have any effect on the interpretation or operation of the parent statute. Mat credit allowed to be set off from advance tax before calculating interest - in favour of assessee - civil appeals filed by the Department are dismissed with no order as to costs.

Summary

The Supreme Court heard both sides in a batch of civil appeals and granted leave. A common question of law arose regarding charging interest under Section 234B of the Income Tax Act, 1961. The Court ruled in favor of the assessee based on a previous judgment, resulting in the dismissal of the civil appeals filed by the Department.