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TMI Blog2009 (4) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... 34B or 234C should be first deducted and thereafter tax credit under Section 115JAA should be given? - "Held Yes" - T.C.(A) Nos.887 of 2004 and others - - - Dated:- 9-4-2009 - JUSTICE K. RAVIRAJA PANDIAN and JUSTICE P.P.S. JANARTHANA RAJA T.C.(A) Nos. 887 of 2004, 2246, 2248, 2277, 2305, 2322, 2323, 2341, 2484, 2495, 2606, 2614, 2615, 2635, 2656, 2706, 2707, 2713 2722 of 2006, 10, 22, 112, 269, 270, 382, 400, 410, 485, 488, 517, 627, 646, 647, 684, 686, 717, 729, 871, 949, 1006 to 1008 1162 of 2007, 81 to 84, 244, 245, 356, 543, 578, 1450, 2126, 2213, 2215 2441 of 2008 Mrs. Pushya Sitaraman, in all TCs Senior Standing Counsel for IT assisted by Mr. J. Narayanasamy, for appellant. Mr. Venkatnarayanan, for respondents in T.C.Nos.887/04, 2246, 2277, 2323, 2606, 2615, 2656 of 2006, 10, 410, 717, 1006 to 1008 of 2007, 81 to 84, 245, 356, 543 578 of 2008. Mr. N. Quadin Hoseyn, for respondent in TC.2305/06. Mr. V. S. Jayakumar, for respondent in T.C.2322/06 Mr. M. P. Senthilkumar for M/s Philip George, for respondent in T.C.2484 2495/06 244/08. Mr. R. Shankaranarayanan, for respondent in T.C.2614/06. Mr. N. Srinivasan, for respondent in T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting year ended on 31.03.2002. The asessee filed its return of income on 31.10.2002 admitting a taxable income of Rs.32,90,54,720/- and the tax payable thereon was determined at Rs.11,76,77,896/- including the interest under Section 234B and 234C of the Act. The assessing officer processed the return under Section 143(1) by intimation dated 21.02.2003 accepting the income returned. While computing the tax, the assessing officer has not adjusted the carry forward MAT credit available to the assessee before charging interest under Section 234B of Rs.1,17,64,830/- and under Section 234C of Rs.56,31,754/- and consequently raised a tax demand of Rs.1,64,86,519/- and further, the assessing officer had not given credit for TDS of Rs.4,49,527/-. Aggrieved by that order, the assessee has filed an appeal before the Commissioner of Income Tax (Appeals) contending that the provision of Section 115JAA had to be applied first as it is a tax credit or prepaid taxes with the Government available to the assessee for set off, before applying the provisions of Section 234 B and 234 C of the Act. The Commissioner, while dismissing the appeal, held as follows: "The appellant's submissions have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these batch of cases, the validity of Rules and Form-I have not been challenged. The authorities working under the statute are bound by the Rules. She further contended that Section 234B provides for charge of interest for defaults in payment of advance tax. The assessee is liable to pay advance tax under Section 208 of the Act. When the assessee fails to pay such tax or advance tax paid by the assessee under Section 210 is less than 90% of the "assessed tax", the assessee shall be liable to pay interest at the prescribed rate on the "assessed tax" or on the difference between the "assessed tax" and the advance tax paid. The "assessed tax" is defined in Explanation 1 after Section 234B(1) that the tax determined under Section 143(1) or upon a regular assessment as reduced by the Tax deducted at source (TDS). Prior to the amendment, the explanation did not have any reference to MAT credit. In order to arrive at the figure of "assessed tax", the only permissible deduction from the tax computed on total income as determined under Section 143(1) or upon a regular assessment is only the amount of tax deducted at source. As per Section 234C, the interest payable under the provision is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 234C of the Act. After considering the representation, law was amended with effect from 01.04.2007 and the same is applied from the assessment year 2007-2008. It comes into effect only prospectively and not retrospectively. She further contended that Section 140A deals with "self assessment" and it speaks of deduction of only TDS amount. There is no mention of MAT credit. Therefore, she submitted that the order passed by the Tribunal is not in accordance with law and the same has to be set aside. 5. The learned counsel appearing for the Assessee/Respondent submitted that the liability to pay interest under Section 234B can only be computed after the liability to pay advance tax is calculated, which in turn, depends on the tax payable on the current income. He further contended that the tax credit is a nature of advance tax with the department and hence, the same has to be set off against the tax payable only. It is also further contended that as per sub-Section 4 of 115JAA of the Act, tax credit shall be allowed at the stage at which the tax has become payable. It is further contended that the assessee is entitled to take into account the MAT credit under Section 115JAA, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court have already been raised before the Delhi High Court and the Delhi High Court has also considered the matter in detail and allowed in favour of the assessee. The said judgment squarely applies to the present case and therefore the same has to be followed. In such circumstances, the order passed by the Tribunal is in confirmity with law and the same has to be confirmed. 6. Heard the learned counsel appearing on either side and perused the materials available on record. 7. In respect of the first question of law, the arguments advanced by the counsel on either side are the same as the one advanced before the Delhi High Court cited supra. 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. In such circumstances, we answer the first question in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the provision of the statute may be better carried out into effect and not with a view to neutralising or contradicting those provisions ( East Asiatic Co. (India) Ltd. Vs. State of Madras , (1956) 7 STC 299, 314 (Mad.), The rule-making authority cannot, in exercise of its rule making power, destroy a substantive right created by a provision of the statute ( A.H.M. Allaudin Vs. Addl. ITO , (1964) 52 ITR 900, 904(Mad.) or alter, affect or abrogate a legislative provision in any other statute ( Revula Subba Rao Vs. CIT ) (1951) 20 ITR 337, 346(Mad.) nor can give any greater power to an authority than what is granted in the Act itself ( Basudeb Hota Vs. State of Orissa, (1958) 9 STC 663 (Orissa). 6.10. In this case on hand we have to first go through the provisions of section 115JAA regarding adjustment of tax credit. Sub-section (5) of section 115JAA reads as under:- "set off in respect of brought forward tax credit shall be allowed for any assessment year to the extent of the difference between the tax on his total income and the tax which would have been payable under the provisions of sub-section (1) of section 115JA (or section 115JB, as the case may be) for that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AA, we are inclined to allow the claim of the assessee by directing the Assessing Officer to give set off of the MAT credit of Rs.8,64,72,445/- first before the charging of interest under Sections 234B and 234C of the Income-tax Act, 1961." 9. Section 139(1) contemplates that the assessee being a company has to file return in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Rule 12(1(a) of the Income Tax rules 1962 prescribes that the assessee being a company should file a return of income in Form-I. The said Form No.I prescribes the manner in which the computation has to be made. Schedule G deals with statement of tax and the same is prescribed in the order in which the tax deduction at source, advance tax and credit under Section 115JAA should be given effect to and same reads as follows: SCHEDULE G. STATEMENT OF TAXES Code Amount Code Amount 1. Tax on total income (a) At normal rates (b) At Special rates 801 -- 2. Tax on total income (1(a)X1(b)) 802 -- 3. 7.5% of adjusted book profit as computed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the control of the Central Government, by notification in the Gazette of India, make rules for the whole or any part of India for carrying our the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters:- ...... (p) any other matter which by this Act is to be, or may be, prescribed. " From reading of the above provision, it is clear that the Section authorised the Central Board of Direct Taxes to make rules for whole of India or part of India for carrying out the purposes of this Act and also it is subject to the control of the Central Government. Sub Section 2 enumerates some of the important matters, which have been provided by Rules. It is well accepted principle that the rule cannot affect control, enlarge or detract or derogate from the full operative effect of the provision of section. If any rule purports to do so, it would be void and ultra vires and further the rule must be consistent or in conformity with the Act. If there is conflict between Rule and the substantial provision of the Act, the Rule must pave way to the provision of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows: "It has been rightly observed that the Rules were meant only for the purpose of carrying out the provisions of the Act and they could not take away what was conferred by the Act or whittle down its effect." 13. In the case of VEENA KUMARI TANDON VS. NEELAM BHALLA AND OTHERS reported in (2007) 13 Scale 26, the Supreme has held as follows: "It is now a well settled principle of law that a Legislative Act shall prevail over the subordinate legislation. Bye-Laws must, therefore, conform to the provisions of the Act and cannot act in derogation thereof. " 14. In the case of ADDITIONAL DISTRICT MAGISTRATE (REV.) DELHI ADMINISTRATION VS. SIRI RAM reported in 2000 AIR SCW 2205, the Supreme Court has held as follows: "It is well recognised principle of interpretation of a statute that conferment of rule making power by an Act does not enable the rule making authority to make rule which travels beyond the scope of the enabling Act or which is inconsistent therewith or repugnant thereto. From the above discussion, we have no hesitation to hold that by amending the Rules and Form P.5, the rule making authority have exceeded the power conferred on it by the Land R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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