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TMI Blog2015 (6) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... nsofar as priority is concerned, MAT credit should be taken into account and thereafter credit should be given to Advance Tax paid and TDS etc. The Supreme Court rejected the contention of the Department that even if there is a MAT Credit balance, the assessee is required to pay the Advance Tax and if he fails to pay, interest under Section 234 would be chargeable, thereby, making it clear that MAT credit should be first given effect to. The Supreme Court having thus cleared the position of law that priority should be given first on the adjustment of MAT Credit, we have no hesitation to hold that the order of the Tribunal is in consonance with the statutory provision of law as propounded by the Supreme Court in the above-said decision. - Decided against revenue. - Tax Case (Appeal) No.1468 of 2007 - - - Dated:- 1-6-2015 - R. Sudhakar And K. B. K. Vasuki,JJ. For the Appellant : Mrs. Hema Muralikrishnan Standing Counsel for Income Tax For the Respondent : Mr. R. Venkat Narayanan JUDGMENT (Judgment of the Court was delivered by R. Sudhakar,J.) This Tax Case (Appeal) filed by the Revenue as against the order of the Income Tax Appellate Tribunal was ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e refund already granted. Aggrieved by the said order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who allowed the appeal holding as follows: 4.2. I have considered the appellant's submission. MAT Credit is nothing but the assessee's credit lying with the government available to the assessee for adjustment against the tax due from the assessee in the subsequent ear. The moment tax becomes payable by the assessee in subsequent year on normally computed income, the tax credit brought forward is to be automatically adjusted against such income tax by virtue of the provision of Section 115JAA(4). Therefore, the assessee is not to be expected to pay the advance tax to the extent of MAT credit brought forward from the preceding years. Only the balance tax liability remaining, if any, after such set off, is payable by the assessee as advance tax. To expect otherwise will lead to two credits [MAT and Advance Tax Payment] against one tax liability. Further, as there is no express provision to show the working of MAT credit and there is an ambiguity in the provision with regard to the tax payments made under the MAT C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Income Tax Act on the refund determined at ₹ 6,52,517/- after adjusting TDS and Advance Tax of ₹ 21,35,401/-. The Deputy Commissioner of Income Tax was of the view that interest on the refund amount could not be granted as per proviso under Section 115JAA (2) of the Income Tax Act. Aggrieved by the same, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The order of the Deputy Commissioner of Income Tax was upheld by the very same Commissioner of Income Tax (Appeals), who granted relief in favour of the assessee in the earlier round of litigation. The said order of the Commissioner of Income Tax (Appeals) reads as follows: 3. The Assessing Officer has correctly determined that as per proviso to Section 115JAA(2), no interest shall be payable on the tax credit allowed under sub-section (1). Hence interest u/s.244A has not be granted on the refund of ₹ 6,52,517/- which is only consequential to the credit given u/s.244A on the refund of ₹ 6,52,517/- has been correctly rejected. I find no reason to interfere with the order of the assessing officer. The appellant's ground fails. 7. Aggrieved by the same, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the merits of the case, for better appreciation, we extract hereunder the relevant provisions, namely, Section 115JA (1) and (2) and proviso: 115JA. Deemed income relating to certain companies. (1) Not withstanding anything contained in any other provisions of this Act, where in the case of an assessee, being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1997, but before the 1st day of April, 2001 (hereafter in this section referred to as the relevant previous year), is less than thirty per cent. of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent. of such book profit. (2) Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant pre vious year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956) : Provided that while preparing profit and loss account, the depreciation shall be calculated on the same method and rates which hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30-37, is fluid/inchoate and subject to final determination only on adjudication of assessment either under section 143(1) or under section 143(3). The fact that the amount of tax credit to be allowed or to be set off is not frozen and is ambulatory, does not take away/destroy the right of the assessee to the amount of tax credit. 14. In the above-said case before the Supreme Court, the Assessing Officer, while determining the interest payable under Section 234B and C, computed the short fall of tax payable without taking into account the set off of MAT Credit. Hence, the Supreme Court came to the conclusion that insofar as priority is concerned, MAT credit should be taken into account and thereafter credit should be given to Advance Tax paid and TDS etc. The Supreme Court rejected the contention of the Department that even if there is a MAT Credit balance, the assessee is required to pay the Advance Tax and if he fails to pay, interest under Section 234 would be chargeable, thereby, making it clear that MAT credit should be first given effect to. For better clarity, we extract the relevant portion of the decision of the Supreme Court hereunder: 8. We have discussed hereinab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(1) provides that where a return is made under section 139 and if any tax or interest is found due on the basis of such return after adjustment of any TDS, any advance tax, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation will be sent to the assessee specifying the amount so payable and such intimation shall be deemed to be a notice of demand under section 156 and all the provisions of the Act shall apply thereto. This section itself makes it clear that whilst the Assessing Officer determines the tax payable he has to give credit for all taxes paid either by way of deduction at source, advance tax, self-assessment tax or tax paid otherwise which would include or which cannot exclude tax credit under section 115JAA(1). However, the question before us is of priority of adjustment for the MAT credit. In this connection, it is important to bear in mind that the credit allowed is the excess of the normal tax liability over the MAT liability in the subsequent years....... 9. The issue which crops up for decision is how should the advance tax be calculated when the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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