2010 (1) TMI 896

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....ing for the appellant-revenue and Sri A. Kumar, counsel appearing for the respondent-assessee.   2. The facts leading to the appeal are the following. The assessment for the assessment year 2002-03 was completed under section 115JAA on book profit and the assessee had remitted tax liability computed for that year. Under the said assessment, the assessee gets a tax credit of Rs. 18,98,136 to be carried over to the next year, if that year's regular assessment leads to liability for tax. For the assessment year 2003-04 regular assessment was completed determining tax liability at Rs. 47.5 lakhs. After setting-off the MAT credit carried from the immediately preceding year, 2002-03, and after adjusting the pre-paid taxes, a refund was gr....

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....bunal wrongly declared assessee's eligibility for interest on refund of tax credit adjusted under MAT scheme. Counsel for the respondent-assessee on the other hand contended that once tax credit is given the same partakes the character of tax payment along with pre-paid taxes including advance tax paid, tax deducted at source, etc. and therefore, the assessee is entitled to interest on entire refund amount under section 244A of the Act. In order to consider the controversy we have to necessarily refer to section 115JAA of the Act, which is extracted hereunder with sub-section (2) and proviso thereof:-   "115JAA. Tax credit in respect of tax paid on deemed income relating to certain companies:-   (1) ** ** **   (2) Th....

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....see was not liable to pay. The benefit of carried forward and set off of tax so paid is a benefit available to the assessee by virtue of the specific provision contained in sub-section (2). It was up to the Legislature to deny interest payable under section 244A on tax credit adjustment allowed leading to refund payable to the assessee. The proviso to section 115JAA(2) expressly bars grant of interest on tax credit refunded. The only provision for interest on refund is section 244A of the Act and so much so, in our view, the interest referred to in the proviso to section 115JAA(2) can be only the interest on refund to which the assessee is otherwise eligible under section 244A of the Act. When there is express bar against granting of intere....