TaxTMI 
TaxTMI 
2010 (11) TMI 700
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....IT) in invoking the provisions of section 263 of the I T Act. 2.1 The assessee in its alternate ground has also challenged the order of the DIT(IT) on merit challenging his order in holding that interest cannot be granted on refund u/s 244A to the extent of MAT credit set off u/s 115JAA(5) by placing reliance on the proviso to sec. 115JAA(2). 3 Facts of the case, in brief, are that in the instant case the order u/s 143(3) was passed on 31.3.2005. Subsequently, the said order was rectified vide orders u/s 154 of the Act on 18.5.205 and 22.3.2006 respectively. In the order u/s 154 of the Act dated 22.3.2006, the Assessing Officer allowed, among other things, MAT credit of Rs.76,68,62,132/- and also granted interest u/s 244....
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....d various decisions relied before him and held that debatable issue does not call for rectification/s 154 of the Act. Further, the decision of the Tribunal in the case of ACIT vs Candy Industries P Ltd which is in favour of the assessee has not been accepted by the department. However, no appeal has been filed due to smallness of the tax effect. He accordingly held that the order u/s 154 of the act dated 22.3.2006 passed by the Assessing Officer to the extent of allowing interest u/s 244A of the Act in respect of MAT credit being erroneous and prejudicial to the interest of revenue is set aside and directed the Assessing Officer to withdraw the interest allowed. 4 The ld counsel for the assessee referring to the decision of the Ho....
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....nditions i.e. the order is erroneous and that it is prejudicial to the interest of revenue must be satisfied. Referring to the decision of the Hon'ble Bombay High Court in the case of Apar Industries Ltd (supra), he submitted that tax paid u/s 115JA as compared to u/s 115JAA is advance tax refunded by the department for set off for tax liability for future years and the assessee is entitled to adjust the MAT credit first before charging of interest u/s 234B and 234C and the assessee is also entitled for interest u/s 244A on the refund given to it. He accordingly submitted that the Assessing Officer has taken the correct view in granting interest u/s 244A of the Act on MAT credit and the DIT(IT) was not justified in assuming jurisdiction u/s....
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....idered the various decisions cited before us. In the instant case, we find on the basis of the petition u/s 154 of the I T Act the Assessing Officer allowed among other things MAT credit of Rs.76,68,62,132/- and also granted interest u/s 244A amounting to Rs.22,41,96,965/-. According to the DIT(IT) because of the MAT credit allowed by the Assessing Officer as a pre-paid tax, the same resulted in excess allowance of interest u/s 244A to the extent of Rs.1763.78 lacs for which the order is erroneous and prejudicial to the interest of revenue. 5.1 We find that the issue now stands fully covered in favour of the assessee by the decision of the jurisdictional High Court in the case of Apar Industries Ltd (supra) where it has been held ....
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....ent as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income Parliament substituted Explanation 1 to sec. 234B by the Finance Act of 2006. The amendment which was brought in to force with effect from Arpil1, 2007, now specifically contemplates that for the purposes of the sec. "assessed tax" would be reckoned after taking due account of the tax credit allowed to be set off in accordance with the provisions of sec. 115JAA. CBDIT Circular no.14 of 2006 dated 28.12.2006 furbishes an explanation of the circumstances that led to the substitution of Explanation 1 by ....
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.... Held, dismissing the appeal, that for the assessment years 1998-99, 1999- 20 and 2000-01 in computing interest payable u/s 234B, minimum alternate tax credit had to be taken into account." 5.2 In view of the ratio laid down by the jurisdictional High Court in the above cited case, we are of the considered opinion that the MAT credit in the instant case has been correctly set off before the advance tax and TDS. Therefore, the order of the Assessing Officer cannot be held to be erroneous. 5.3 It has been held by various judicial pronouncements that for invoking the provisions of sec. 263, the twin conditions i.e. order must be erroneous and it must be prejudicial to the interest of revenue have to be satisfied. ....