MAT credit verification and disputed deduction claim led to recomputation of demand, but recovery stay was refused.

In a stay application, the ITAT Pune declined to suspend recovery of the outstanding tax demand because the merits of the disputed section 10B disallowance were still pending in appeal. The Tribunal noted that the assessee's claim for MAT credit under section 115JAA against tax paid under section 115JB had not yet been finally verified, and therefore directed the Assessing Officer to examine that claim and recompute the net outstanding demand accordingly. Stay on recovery was refused at that stage, but the demand was required to be reconsidered after MAT credit adjustment.

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Issues: Whether recovery of the outstanding tax demand should be stayed pending appeal in view of the assessee's claim for MAT credit and the disputed disallowance of deduction.

Analysis: The demand arose from an assessment under section 143(3) denying deduction under section 10B. The assessee also asserted entitlement to MAT credit under section 115JAA against tax paid under section 115JB, and contended that the net demand would reduce after such credit was verified. The Tribunal found that the availability and adjustment of MAT credit had not yet been finally determined and therefore directed the Assessing Officer to examine the claim and recompute the net outstanding demand accordingly. As the merit of the deduction dispute was left for adjudication in the appeal, the Tribunal declined to grant a stay on recovery at that stage.

Conclusion: The stay on recovery was not granted, but the assessee obtained a direction for consideration of MAT credit and recomputation of the demand.

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