MAT credit must be adjusted before interest computation; return forms cannot override the statutory order of tax credit adjustment.

MAT credit under Section 115JAA must be adjusted before interest is computed under Sections 234B and 234C, because the credit is intended to reduce tax liability and not tax plus interest. The Court also held that Rule 12(1)(a) and Form I cannot override the Act or alter the statutory order of adjustment of tax credits and tax payments. On that basis, the issues were answered in favour of the assessee and the revenue's appeal was dismissed.

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Issues: Whether MAT credit under Section 115JAA of the Income-tax Act, 1961 is to be given effect to before computing interest under Sections 234B and 234C, and whether the prescribed return form can alter the statutory order of adjustment of tax credits and tax payments.

Analysis: The Court followed the earlier Division Bench view that the legislative intent is to grant credit against tax liability and not against tax plus interest. It held that the credit under Section 115JAA must be adjusted before charging interest under Sections 234B and 234C. The Court further held that Rule 12(1)(a) and Form I cannot override the Act or prescribe a priority of adjustment contrary to the statutory scheme.

Conclusion: The questions were answered in favour of the assessee, and the revenue's appeal was dismissed.

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