2009 (4) TMI 98 - HC - Income Tax

High Court Upholds Tribunal Decision on MAT Credit Adjustment & Interest Calculation

The High Court upheld the Tribunal's decision, ruling in favor of the assessee on all issues raised by the revenue regarding MAT credit adjustment, ... MAT credit - Whether the interest under Section 234 B and 234 C had to be calculated after giving the MAT credit against the tax payable on the basis of normal computation – held that assessee is entitled to adjust the MAT credit before charging interest u/s 234B and 234C – Whether the MAT credit can be given priority of set off against tax payable, contrary to the scheme of Schedule G of Form 1 AND Whether Tribunal was right in holding that MAT credit is to be set off from the tax payable before setting off the Tax deducted at Source and Advance tax paid – held that Rule 12(1)(a) and Form-I cannot go beyond the provisions of the Act. Form-I cannot lay down the order of priority of adjustment of TDS, advance Tax, MAT credit under Section 115JAA which is contrary to the provisions of the Act – appeal of revenue is dismissed Issues involved:1. Interpretation of MAT credit adjustment against tax payable.2. Priority of MAT credit set off against tax payable.3. Calculation of interest under Section 234B and 234C post MAT credit adjustment.Detailed Analysis:1. The case involved an appeal by the revenue against the order of the Income Tax Appellate Tribunal regarding MAT credit adjustment for the assessment year 2000-01. The Tribunal allowed the appeal in favor of the assessee, following its earlier order in a similar case. The revenue raised questions on the order, specifically on whether MAT credit should be set off before Tax Deducted at Source and Advance tax paid.2. The Division Bench of the High Court considered the questions raised by the revenue. In the case of the first question, the Court referred to a judgment of the Delhi High Court and agreed with its reasoning that MAT credit under Section 115JAA should be given effect before charging interest under Sections 234A, 234B, and 234C. The Court found no compelling reason to take a contrary view and ruled in favor of the assessee.3. Regarding the second and third questions raised by the revenue, the Division Bench emphasized that the intention of the legislature was to give tax credit to tax and not to tax and interest. The Court held that Form-I could not dictate the order of priority of adjustment of TDS, Advance Tax, and MAT credit under Section 115JAA, as it would be contrary to the provisions of the Act. The Court found the Tribunal's order in accordance with the law and dismissed the appeal, ruling in favor of the assessee on all questions raised by the revenue.In conclusion, the High Court upheld the Tribunal's decision, ruling in favor of the assessee on all issues raised by the revenue regarding MAT credit adjustment, priority of set off, and calculation of interest under Section 234B and 234C. The judgment aligned with the interpretation of the relevant provisions and previous judicial decisions, emphasizing the legislative intent behind the tax credit provisions.