Tribunal directs AO to allow MAT credit before interest calculation, verifies correct TDS credit

The Tribunal held that the Assessing Officer should allow the MAT credit of Rs. 12,91,616/- before calculating interest under Sections 234B and 234C, in accordance with the Supreme Court ruling in Tulsyan NEC Ltd. Additionally, the AO was directed to verify and allow the correct TDS credit of Rs. 4,36,617/-. As a result, the Tribunal allowed Ground No. 2 raised by the assessee and Ground No. 3 for statistical purposes.

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Issues Involved:
1. Confirmation of the order by the Commissioner of Income Tax (Appeals) regarding MAT credit.
2. Computation of interest under Sections 234B and 234C without considering MAT credit.
3. Incorrect TDS credit considered in the computation of assessed tax.

Issue-wise Detailed Analysis:

1. Confirmation of the Order by the Commissioner of Income Tax (Appeals) Regarding MAT Credit:
The main grievance of the assessee is that MAT credit of Rs. 12,91,616/- should be allowed from the 'assessed tax' before computing interest under Sections 234B and 234C. The Assessing Officer (AO) computed the interest without considering the MAT credit. The assessee argued that the computation of interest was not in accordance with Explanation 1(v) to Sub-Section (1) of Sections 234B and 234C, and also violated the Supreme Court decision in CIT Vs. Tulsyan NEC Ltd. The CIT(A) confirmed the AO's order, relying on the decision of the Karnataka High Court in M/s. Jindal Thermal Power Co. Ltd. and CBDT Circular No. 13/2001, which clarified that all companies are liable for payment of advance tax under Section 115JB, and consequently, interest under Sections 234B and 234C would be applicable.

2. Computation of Interest under Sections 234B and 234C Without Considering MAT Credit:
The AO noted that the Supreme Court decision in CIT vs. Kwality Biscuits Ltd. related to Section 115J, whereas the assessee was liable to pay tax under Section 115JB. The AO held that the assessee was liable to pay advance tax, and for failure to do so, interest under Sections 234B and 234C was rightly charged. The CIT(A) upheld this view, emphasizing that the AO had rightly levied interest based on the CBDT circular and the Karnataka High Court decision. However, the assessee's counsel argued that the issue was covered by the Supreme Court judgment in Tulsyan NEC Ltd., which held that MAT credit should be excluded while calculating assessed tax. The Delhi High Court in CIT vs. Salora International Ltd. also supported this view, stating that MAT credit should be allowed before charging interest under Sections 234B and 234C.

3. Incorrect TDS Credit Considered in the Computation of Assessed Tax:
The assessee claimed that the AO allowed TDS credit at Rs. 4,35,927/- instead of Rs. 4,36,617/-. The AO's computation of tax payable did not account for the correct TDS amount. The Tribunal directed the AO to verify and allow the correct TDS credit of Rs. 4,36,617/-.

Conclusion:
The Tribunal concluded that the AO should allow the MAT credit of Rs. 12,91,616/- before computing interest under Sections 234B and 234C, in line with the Supreme Court judgment in Tulsyan NEC Ltd. The AO was also directed to verify and allow the correct TDS credit of Rs. 4,36,617/-. Thus, Ground No. 2 raised by the assessee was allowed, and Ground No. 3 was allowed for statistical purposes.

Order Pronouncement:
The order was pronounced in the open court on 07/02/2018.

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