2025 (8) TMI 591 - AT - Income Tax

Assessee entitled to set off accumulated MAT credit under Section 115JAA against normal tax liability

The ITAT Delhi allowed the assessee's appeal, directing the AO to grant MAT credit against the normal tax liability as claimed. The tribunal held that the ... Denial of MAT credit against the tax liability in question out of accumulated MAT credits available at the disposal of the assessee - assessee submitted that relief towards MAT credit u/s 115JAA against the normal tax liability need to be given and remaining amount to be carried forward for set off against the tax liability in subsequent years in accordance with law - HELD THAT:- On perusal of record placed before us, we find apparent merit in the plea of the assessee. As pointed out on behalf of the assessee, the assessee has claimed MAT credit against the tax liability as per the normal provisions of the Act. The action of the assessee seeking MAT credit to the extent of excessive liability under normal provisions over MAT liability u/s 115JAA of the Act is in accordance with law. The reasons given by the Ld.CIT(A) that the assessee is not entitled to MAT credit is without any legal foundation. We, accordingly, direct the AO to grant MAT credit as claimed. Appeal of the assessee is allowed. The appellant challenged the denial of MAT credit for AY 2021-22, claiming set off of INR 1,17,383/- from accumulated MAT credits against the normal tax liability. The appellant argued that the tax liability under normal provisions (INR 6,21,000/-) exceeded the MAT liability under section 115JA (INR 5,03,625/-), entitling it to credit for the difference under section 115JAA of the Income Tax Act, 1961. The CPC overlooked this claim during processing under section 143(1), and the rectification request under section 154 was denied without reasons. The first appellate authority dismissed the appeal on a basis contrary to law. The tribunal found merit in the appellant's plea, holding that the claim for MAT credit to the extent of the excess normal tax liability over MAT liability is 'in accordance with law.' The tribunal held that the first appellate order denying MAT credit lacked legal foundation and directed the Assessing Officer to grant the MAT credit of INR 1,17,383/- as claimed. Consequently, the appeal was allowed.