Carried-forward MAT credit can suspend tax-demand recovery pending verification, rectification, and adjustment of admissible credit.

Carried-forward MAT credit claimed in a revised return may be adjusted against an outstanding tax and interest demand after verification of its quantum and availability and rectification of computational errors. Where the claimed credit prima facie exceeds the demand, recovery or further payment should not be enforced pending verification. The notes describe a six-month stay of recovery and direct adjustment of admissible MAT credit against the demand.

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Issues: Whether recovery of the outstanding tax and interest demand should be stayed where the assessee claimed sufficient carried-forward MAT credit to offset the demand.

Analysis: The revised return reflected carried-forward MAT credit substantially exceeding the outstanding tax and interest demand. No reason was apparent for non-adjustment of the claimed credit before raising the demand. Subject to verification of the quantum and availability of the credit and rectification of identified computational errors, the credit was prima facie sufficient to extinguish the demand; consequently, enforcement of the demand or insistence on further payment was not warranted.

Conclusion: The outstanding tax and interest demand was stayed for six months in favour of the assessee; the Assessing Officer was directed to verify and, if found admissible, adjust the MAT credit against the demand after permissible rectification.

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