2015 (12) TMI 971 - HC - Income Tax

High Court Upholds Tribunal Decision on Tax Credit and Depreciation Calculation

The High Court dismissed the revenue's appeal, upholding the Tribunal's decision on both issues. The court affirmed the set off of tax credit under ... Set off of tax credit under section 115J (correct provision is Section 115JAA) for the purpose of calculation of interest under section 234B - Held that:- The matter is no longer res integra. The Apex Court in Tulsyan Nec Limited's case (2010 (12) TMI 23 - Supreme Court of India) considering identical issue held that the Assessing Officer is required to give benefit of tax credit available under Section 115JAA of the Act and determine the interest payable under Section 234B of the Act thereafter. Issues Involved:1. Set off of tax credit under Section 115JAA for the purpose of calculation of interest under Section 234B.2. Calculation of depreciation with reference to the Written Down Value (WDV) computed as a result of an order under Section 250(6) for the assessment year 1998-99.Detailed Analysis:Issue 1: Set off of tax credit under Section 115JAA for the purpose of calculation of interest under Section 234BThe appellant-assessee challenged the computation of interest under Section 234B without setting off the brought forward tax credit available under Section 115JAA. The Tribunal had allowed the set off, which was contested by the revenue.The High Court referenced the Supreme Court's decision in CIT vs. Tulsyan Nec Limited, which established that the Assessing Officer must give the benefit of tax credit available under Section 115JAA and determine the interest payable under Section 234B thereafter. The relevant provisions under Section 115JAA, introduced by the Finance Act, 1997, allow for the carry forward and set off of credit available in respect of tax paid under Section 115JA. The right to claim this credit crystallizes as soon as the tax is paid by the assessee under Section 115JA, and this credit is allowable for a period of five succeeding assessment years.The Supreme Court's interpretation emphasized that the tax credit should be allowed as a matter of course once the conditions in Section 115JAA are met and that this entitlement is not dependent on the determination by the Assessing Officer. The quantum of the tax credit, however, is subject to final determination upon adjudication of the assessment.The CIT(A) and the Tribunal had directed the Assessing Officer to compute the interest under Section 234B after reducing the tax credit available under Section 115JAA, which was affirmed by the High Court. The High Court also noted that the judgment in Joint CIT vs. M/s Rolta India Limited, cited by the revenue, dealt with a different issue regarding the liability for interest under Section 234B when book profits were computed under Sections 115J/115JA.Issue 2: Calculation of depreciation with reference to the WDV computed as a result of an order under Section 250(6) for the assessment year 1998-99The second issue was whether depreciation should be worked out with reference to the WDV computed as a result of an order passed under Section 250(6) for the assessment year 1998-99. The High Court noted that this question was already covered by its decision dated 8.9.2015 in ITA No.426 of 2010 (CIT, Jalandhar I, Jalandhar vs. M/s Max India Limited), which was decided against the revenue.Conclusion:The High Court dismissed the appeal by the revenue, affirming the Tribunal's decision on both issues. The substantial questions of law were answered accordingly, with the court upholding the set off of tax credit under Section 115JAA for the purpose of calculating interest under Section 234B and confirming the calculation of depreciation with reference to the WDV as per the order under Section 250(6).