2018 (12) TMI 603 - HC - Income Tax

Credit for brought forward MAT credit after calculating interest u/s 234-B and 234-C - whether Appellate Tribunal was right in law in holding that the question of payment of interest to the assessee would arise only if set off MAT credit is allowed against the advance tax payment and it should be treated on par with the Advance tax? - Held that - The Substantial Question of Law arising for consideration in this appeal has been answered against the Revenue in the case of Commissioner of Income Tax vs. Tulsyan Nec Ltd. 2010 (12) TMI 23 - SUPREME COURT OF INDIA . The Hon ble Supreme Court confirmed the decision in the case of CHEMPLAST SANMAR LTD 2009 (4) TMI 61 - MADRAS HIGH COURT . The Hon ble Supreme Court held that the MAT Credit admissible in terms of Section 115JAA has to be set off against the tax payable (assessed tax) before calculating interest under Sections 234A, 234B and 234C - Decided against revenue

Summary

Issues:
1. Interpretation of MAT credit in relation to advance tax payment.
2. Calculation of interest under Sections 234B and 234C of the Income Tax Act, 1961.
3. Applicability of Supreme Court judgments on MAT credit set off.

Interpretation of MAT Credit in Relation to Advance Tax Payment:
The appeal by the Revenue was against the order of the Income Tax Appellate Tribunal regarding the treatment of MAT credit in relation to advance tax payment for the Assessment year 2001-02. The Tribunal had directed that the MAT credit available should be treated on par with advance tax and advance TDS. The Revenue challenged this decision, arguing that the question of payment of interest to the assessee would arise only if set off MAT credit is allowed against the advance tax payment. However, the Supreme Court, in the case of Commissioner of Income Tax vs. Tulsyan Nec Ltd., clarified that MAT credit admissible under Section 115JAA must be set off against the tax payable before calculating interest under Sections 234A, 234B, and 234C of the Act. Consequently, the appeal by the Revenue was dismissed, and the Substantial Question of Law was answered against the Revenue.

Calculation of Interest under Sections 234B and 234C:
The Assessing Officer had given credit for brought forward MAT credit amounting to a specific sum after calculating interest under Sections 234B and 234C of the Act. The correctness of this order was challenged by the assessee before the Tribunal. The Tribunal, following the decision in the case of Chemplast Sanmar, directed that the Assessing Officer should calculate interest under Sections 234B and 234C of the Act after giving credit for the brought forward MAT credit. This decision was based on the understanding that MAT credit should be treated similarly to advance tax and advance TDS. However, the Supreme Court's clarification emphasized that MAT credit must be set off against the tax payable before calculating interest, as per the provisions of the Act.

Applicability of Supreme Court Judgments on MAT Credit Set Off:
The Substantial Question of Law in this case had already been addressed by the Supreme Court in previous judgments. The Supreme Court had confirmed the decision in the case of Chemplast Sanmar Ltd. and held that MAT credit admissible under Section 115JAA should be set off against the tax payable before calculating interest under Sections 234A, 234B, and 234C of the Act. In light of these precedents, the High Court dismissed the appeal by the Revenue and answered the Substantial Question of Law against the Revenue, aligning with the Supreme Court's interpretation of MAT credit set off.

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