2009 (12) TMI 102 - HC - Income Tax

Court Upholds MAT Credit Adjustment Over Interest; Statutory Provisions Prevail

The High Court upheld the assessee's right to adjust the MAT credit before charging interest under sections 234B & 234C, in line with previous ... Interest u/s 234B or 234C - Tax Credit - Whether in the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to adjust the MAT credit before charging interest u/s 234B & 234C - Whether on the facts and circumstances of the case the MAT credit can be given priority of set off against tax payable, contrary to the scheme of Schedule G of Form 1 – held that - the Income Tax Tribunal is right in law in holding that the carry forward MAT credit available to the assessee was to be adjusted first before charging interest under Sections 234B and 234C – decision of delhi high court in the matter of CIT vs. Jindal Experts Ltd., 2009 -TMI - 32986 - DELHI HIGH COURT followed - credit under Section 115JAA should be given effect to before charging of interest under Section 234A, 234B and 234C of the Act. We are in agreement with the reasoning given by the Delhi High Court. The learned counsel appearing for the revenue has not produced any materials or given compelling reasons to take a contrary view with that of the Delhi High Court - the intention of the legislature is to give tax credit to tax and not to the tax and interest. Once the intention is clear, the revenue cannot rely on the Form-I to say that the MAT credit under Section 115JAA should be given only after tax and interest. 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 Issues:1. Whether the assessee is entitled to adjust the MAT credit before charging interest u/s 234B & 234CRs.2. Whether the MAT credit can be given priority of set off against tax payable, contrary to the scheme of Schedule G of Form 1Rs.Analysis:Issue 1:The case involved an appeal against the order of the Income Tax Appellate Tribunal regarding the adjustment of Minimum Alternate Tax (MAT) credit before charging interest under sections 234B & 234C. The Revenue contended that the MAT credit was wrongly given during assessment, leading to a subsequent notice under Section 148 of the Act. The Assessing Officer added a sum to the assessment, which was disputed by the assessee. The Commissioner of Income Tax (Appeals) ruled in favor of the assessee, citing precedents like Chemplast Sanmar. The Tribunal also dismissed the Revenue's appeal based on previous judgments. The High Court, following a similar decision in a batch of cases, upheld the assessee's right to adjust the MAT credit before charging interest, in line with the Delhi High Court's ruling.Issue 2:Regarding the priority of set off for MAT credit against tax payable, the Division Bench held that the legislative intent was to provide tax credit to tax and not to tax and interest. The Court emphasized that Form-I could not dictate the order of priority of adjustment, as it should align with the provisions of the Act. Rule 12(1)(a) and Form-I could not override statutory provisions. The Court concluded that the MAT credit under Section 115JAA should be given precedence over tax and interest, dismissing the appeal in line with previous judgments favoring the assessee.In conclusion, the High Court dismissed the appeal, reiterating the precedence set in previous cases and upholding the assessee's rights in adjusting the MAT credit and setting the priority of set off against tax payable. The judgment emphasized adherence to statutory provisions over prescribed forms and ruled in favor of the assessee against the Revenue's contentions.