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TMI Blog2024 (10) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that such MAT credit will not be allowable to the assessee if it had failed to carry forward the same in the return of income filed by the assessee in the particular assessment year in which such MAT credit is claimed. In this case, after giving appeal effect, vide order u/s 250/143(3) the total income as per the normal provisions of the Act was determined on which tax liability was determined payable and, therefore, as per the provisions of sub-section 4 of section 115JAA, the tax credit amounting available under MAT to the assessee was eligible for set off against the tax determined under the normal provisions of the Act and thereafter to allow the carry forward of balance MAT credit to the assessee for set off in future in accordance with the provisions as laid down u/s 115JAA of the Act. We, therefore, hold that the action of the AO in not allowing to set off the tax liability computed under the normal provisions with the MAT credit (brought forward) available with the assessee and to allow the carry forward of the balance MAT credit u/s 115JAA in the order u/s 250/143(3) and the consequent rejection of the rectification application by an order is not justified and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 115JAA of the Act aggregating to Rs. 11,38,46,270/- in the order u/s 250 r.w.s 143(3) of the Act, dated 26.07.2022 for A.Y. 2016-17. In this case, the assessment for A.Y. 2016-17 was completed u/s 143(3) of the Act on 28.12.2018 at a total income of Rs. 31,50,30,377/- against the returned income of Rs. NIL. 3.1. Against the said order, the assessee filed an appeal before the Ld. CIT(A), which was decided by an order dated 28.06.2022 allowing substantial relief to the assessee. In consequence to the said order of the Ld. CIT(A), the Assessing Officer passed an order u/s 250/143(3) dated 26.07.2022 determining total income of Rs. 23,73,890/-, in which tax liability of Rs. 7,33,534/- was determined, which was not set off by the AO with the available MAT credit, amounting to Rs. 11,45,79,804/- accumulated since AY 2010-11 to AY 2015-16. In this regard, the assessee filed a rectification application dated 09.09.2022 requesting the AO to allow the MAT credit u/s 115JAA of the Act. The AO rejected the above claim of the assessee by passing an order dated 10.11.2022 on the ground that the assessee itself had not claimed any credit of MAT u/s 115JAA of the Act in the original return fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computing the Tax demand u/s 156 r.w.s. 154, allowed the MAT credit of Rs. 11,45,79,804 to the assessee in the AY 2016-17 itself. Consequently, the net tax liability of the assessee was reduced to Rs. 3,52,72,760/- - 144 & 147 28.06.2021 Being aggrieved by the original assessment order passed u/s 143(3) of the Act for the AY 2016-17, the assessee filed an appeal to the CIT(A), who granted major relief to the assessee by modifying and restricting the total amount of addition to Rs. 27,90,144/- u/s 36(1)(iii) and 37 of the Act The ld. CIT(A) in his order, did not give any direction to the AO regarding the issue of MAT credit. 151-213 26.07.2022 An appeal effect order was passed by the Id. AO u/s 250 r.w.s 143(3) of the Act, wherein the Id. AO did not set off the tax liability of Rs. 7,33,534/- computed under the normal provisions with the MAT Credit (brought forward) available with the assessee and to carry forward the balance MAT credit aggregating to Rs. 11,38,46,270/-. 214,216 & 220 09.09.2022 Against the aforesaid appeal effect order u/s 250 r.ws. 143(3) dated 26.07.2022, the assessee filed a rectification application u/s 154 of the Act requesting the Id. AO to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka State Co-operative Federation Ltd. [2021] 128 taxmann.com 1 (Karnataka HC) 11. PCIT, Central 2 Kolkata v. Ankit Metal & Power Ltd. [2019|416 ITR 591(Calcutta) The Department is duty bound to compute the correct tax liability as per Article 265 of the Constitution of India. Further department cannot take advantage of the ignorance of an assessee as to his rights as per CBDT Circular No: 14 (XL-35) dated April 11, 1955. 12. Nirmala L. Mehta v. A. Balasubramaniam CIT [2004] 269 ITR 1/1391 Taxman 394 (Bombay HC) 13. CIT v. Shelly Products [2003] 261 ITR 367/129 Taxman 271 (SC) 14. Central Board of Direct Taxes Circular No: 14 (XL-35) dated April 11, 1955 15. Parekh Bros. v. CIT [1984] 150 ITR 105 (Kerala HC) 16. Dattatraya Gopal Shette v. CIT [1984] 150 ITR 460 (Bombay HC) 17. Vijay Gupta Vs CIT; [2016] 68 taxmann.com 131 (Delhi HC) 4.2 Based on the above case laws, the Ld. AR submitted that the Ld. CIT(A) erred in dismissing the appeal of the assessee on the ground that the assessee had failed to claim the MAT credit in the original ITR and had not filed revised return to make the claim. Further, it was also submitted by the assessee that the said MAT credit of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Act and the carry forward of amount of tax credit determined under sub section (2A) of this section and the extent and the timing of the set off available is dealt in Section 115JAA of the Act. On careful perusal, it is seen that the provisions of section 115JAA of the Act is a complete code in itself. The provisions of Section 115JAA are reproduced as under: [115JAA. Tax credit in respect of tax paid on deemed income relating to certain companies.--(1) Where any amount of tax is paid under sub-section (1) of section 115JA by an assessee being a company for any assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section. [(1A) Where any amount of tax is paid under sub-section (1) of section 115JB by an assessee, being a company for the assessment year commencing on the 1st day of April, 2006 and any subsequent assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section.] [(2) The tax credit to be allowed under sub-section (1) shall be the difference of the tax paid for any assessment year under sub-section (1) of section 115JA a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) Where as a result of an order under sub-section (1) or subsection (3) of section 143, section 144, section 147, section 154, section 155, sub-section (4) of section 245D, section 250, section 254, section 260, section 262, section 263 or section 264, the amount of tax payable under this Act is reduced or increased, as the case may be, the amount of tax credit allowed under this section shall also be increased or reduced accordingly. [(7) In case of conversion of a private company or unlisted public company into a limited liability partnership under the Limited Liability Partnership Act, 2008 (6 of 2009), the provisions of this section shall not apply to the successor limited liability partnership. Explanation.--For the purposes of this section, the expressions "private company" and "unlisted public company" shall have the meanings respectively assigned to them in the Limited Liability Partnership Act, 2008 (6 of 2009).]] 6.1 Sub section-1(A) of section 115JAA of the Act lays down that where any amount of tax is paid under sub-section (1) of section 115-JB by an assessee, being a company for the assessment year commencing on the 1st day of April, 2006 and any subsequent ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermined payable and, therefore, as per the provisions of sub-section-4 of section 115JAA, the tax credit amounting to Rs. 11,45,79,804/- available under MAT to the assessee was eligible for set off against the tax determined under the normal provisions of the Act and thereafter to allow the carry forward of balance MAT credit to the assessee for set off in future in accordance with the provisions as laid down u/s 115JAA of the Act. We, therefore, hold that the action of the AO in not allowing to set off the tax liability of Rs. 7,33,534/- computed under the normal provisions with the MAT credit (brought forward) available with the assessee and to allow the carry forward of the balance MAT credit u/s 115JAA of the Act aggregating to Rs. 11,38,46,270/-in the order u/s 250/143(3) of the Act dated 26.07.2022 and the consequent rejection of the rectification application dated 09.09.2022 by an order dated 10.11.2022 is not justified and the same is reversed. We, therefore, set-aside the order of the Ld. CIT(A) and direct the AO to allow set off the tax liability of Rs. 7,33,534/- computed under the normal provisions determined vide order u/s 250/143(3) of the Act dated 26.07.2022 with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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