2017 (3) TMI 806 - AT - Income Tax

Restricting the Minimum Alternative Tax ( MAT ) credit - confirmation of demand - scope and ambit of section 143(1) - application for rectification u/s. 154 - Held that - Section 143(1)(a) provides for adjustment to be made to the income or loss declared in the return, however same is circumscribed to arithmetical errors in the return, accounts or documents accompanying the return of income which can be rectified. What could be prima facie admissible or inadmissible has to be decided on the basis of information available in the return of income or the documents accompanying the said return of income and not from the other records. The record should pertain to the assessment year in question and not the earlier assessment years, as has been understood by the AO while denying the MAT credit to the assessee. In the return of income the assessee has sought MAT credit of ₹ 70,48,67,942/- which has been reduced to ₹ 34,38,72,162/- on the ground that assessment was made under the normal provisions of the Act for the A.Ys. 2006-07 to 2009- 10 and, therefore, no MAT credit is available to the assessee for these years. If the AO had this information on record, then it was incumbent upon the AO to select the return of income for scrutiny u/s. 143(2), because this was a record pertaining to earlier years on the basis of which he could have reason to believe that assessee s claim in the return of income qua the MAT credit was excessive. Thus, we hold that the AO could not tinker with the return of income under the scope and ambit of section 143(1), because there was no arithmetical error or any mistake to make any adjustment while processing the return of income. In any case, now it has already been brought on record that in the A.Ys 2006-07 to 2009-2010 the additions made under the normal provisions, which was the ground to make the adjustments by the AO, stands deleted and, therefore, the assessee s computation in those years would be made under the MAT provisions and consequently, the assessee would be eligible for MAT credit u/s. 115JAA. Accordingly, the ground raised by the assessee is allowed.

Summary

Issues:
Restriction of Minimum Alternative Tax (MAT) credit and confirmation of demand; Interest under section 234B and 234C of the Income-tax Act, 1961.

Analysis:

1. Restriction of MAT Credit and Confirmation of Demand:
The appellant contested the restriction of MAT credit under section 115JAA of the Income-tax Act, 1961, and the confirmation of demand by the Commissioner of Income-tax (Appeals) -17. The appellant argued that the MAT credit was erroneously restricted to a lower amount than claimed, resulting in a demand that needed to be rectified. The Assessing Officer (AO) initially denied the MAT credit for certain assessment years, leading to the demand. However, the Tribunal found that the AO's decision was based on information from earlier years where additions were later deleted, making the appellant eligible for MAT credit. The Tribunal held that the AO could not make adjustments beyond the return of income under section 143(1) and allowed the appellant's appeal.

2. Interest under Sections 234B and 234C:
The issue of charging interest under sections 234B and 234C of the Income-tax Act was also raised. The appellant argued against the levy of interest, contending that it was purely consequential to the MAT credit restriction issue. The Tribunal ruled in favor of the appellant on this issue as well, considering it linked to the main matter of MAT credit restriction. Consequently, the appeal of the assessee was allowed, and the charging of interest under sections 234B and 234C was also set aside.

In conclusion, the Tribunal's judgment addressed the appellant's grievances regarding the MAT credit restriction and demand confirmation, emphasizing the importance of adhering to the provisions of the Income-tax Act and ensuring correct application of tax credits. The decision highlighted the need for accurate assessment based on the information provided in the return of income and upheld the appellant's claim for MAT credit and relief from interest charges.