TaxTMI 
TaxTMI 
2011 (2) TMI 1237
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....icines. For the assessment year 2001-02, return of income was filed on 31.10.2001 declaring loss of Rs.57,37,160/-. The return was selected for scrutiny under Section 143 and assessment order was passed on 27.02.2004 by disallowing the exemption under Section 10B. The matter was appealed to the Tribunal, which in turn set aside the said order and remanded back to the Assessing Officer. After such remand, the Assessing Officer while computing the income under regular provisions allowed MAT credit against tax payable before giving credit to TDS and other prepaid taxes. Aggrieved by the said order the Commissioner of Income Tax in pursuance to the powers conferred on him under Section 263 initiated suo motto proceedings for revision and found ....
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....e learned Counsel for the assessee supported the impugned order by placing reliance on the judgment of the Apex Court in the case of CIT vs. Tulsyan Nec Ltd., reported in ITR Vol 330 Page 228 where the question which arose for consideration before the Apex Court was regarding the priority of adjustment for the MAT credit. 7. After referring to Sections 115JA and 115JAA in the aforesaid judgment, it was held at para 5 as under:- "5. ....Thus, the tax credit allowable can be set off by the assessee while computing advance tax/self/assessment tax payable for years two to six limited to the difference between the tax payable on income computed under the normal provisions and tax payable on book profits in each of those years....
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....able for set off while calculating advance tax. This dichotomy was more spelt cut because Section 115JAA did not provide for payment of interest on the MAT credit. To avoid this situation, Parliament amended Explanation 1 to Section 234B by the Finance Act, 2006 with effect from April 1, 2007 to provide along with tax deducted or collected at source, the MAT credit under Section 115JAA also to be excluded while calculating assessed tax. 11. From the above, it is evident that any tax paid in advance/pre-assessed tax paid can be taken into account in computing the tax payable subject to one caveat, viz, that where the assessee on the basis of self computation unilaterally claims set off or the MAT credit, the assessee does so at its....
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....a plain reading of Section 115JAA(4). Further, a form prescribed under the rules can never have any effect on the interpretation or operation of the parent statute." 8. From the aforesaid judgment of the Apex Court and the provision of law makes it very clear that the MAT credit available to an assessee could be adjusted within a period of five years from the date of its accrual. The said credit should be set off while computing advance tax/self-assessment tax payable for the years two to six limited to the difference between the tax payable on income computed under the normal provisions and tax payable on book profits in each of those years, as per the assessee's own computation. 9. The MAT credit is to be set off first....