TaxTMI 
TaxTMI 
2009 (4) TMI 61
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....244/08. Mr. R. Shankaranarayanan, for respondent in T.C.2614/06. Mr. N. Srinivasan, for respondent in T.C. 2707/06. Mr. R. Srinivasan For respondent in T.C.2722/06, 270 & 871/07. Ms. Dr. Anita Sumanth, for respondent in T.C.2706/06, 112, 382 & 405/07. Mr. T. N. Seetharaman, for respondent in T.C.269/07. Mr. S. A. Balasubramaniam, for respondent in T.C.400/07. Mr. A. S. Chandrasekaran, for respondent in T.C.517/07. Mr. J. Balachander, for respondent in T.C.684 & 729/09. Mr. C. Manishankar, for respondent in T.C.1162/07. JUDGMENT The judgment of the court was delivered by P.P.S. JANARTHANA RAJA, J. - In this batch of cases, the questions raised for consideration are one and the same. Therefore, they are taken up together and disposed of by a common judgment. 2. The questions of law raised for consideration are as follows: "1. Whether on the facts and in the circumstances of the case, 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? 2. Whether on the facts and in the circumstances of the case, the Inc....
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....he Commissioner, while dismissing the appeal, held as follows: "The appellant's submissions have been considered. The order of priority of adjustment of TDS, advance tax and tax credit under Section 115JAA have not been spelt out in the Act. One has to take recourse to the Income Tax Rules 1962, for this purpose. Rule 12(1)(a) of the Income Tax Rules 1962 lays down that in the case of a company, the return of income required to be furnished shall be in Form No.1. Schedule G to Form No.1 lays down the manner of computing the total tax payable by the assessee. It also gives the order in which TDS, Advance Tax and tax credit under Section115 JAA, shall be given effect to. Form No.1 has been substituted by Income Tax (19th Amendment) Rules 2001 with effect from 17.8.2001. Therefore, there is no ambiguity with effect from 17.8.2001 that interest under Section 234B or 234C shall be first deducted and thereafter tax credit under Section 115JAA shall be given." Aggrieved by that order, the assessee has filed further appeal before the Income Tax Appellate Tribunal. The Tribunal allowed the appeal and directed the assessing officer to give set off of the MAT credit of Rs.8,64,72,445/- ....
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....nly the amount of tax deducted at source. As per Section 234C, the interest payable under the provision is to be computed with reference to "tax due on returned income". The said expression defined in Explanation after section 234C(1) would mean the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on the first day of April immediately following the financial year in which the advance tax is paid or payable, as reduced by the amount of TDS on any income which is subject to deduction or collection and which is taken into account in computing such total income. Here too, according to the revenue, the only reduction permissible is TDS. It is only after amendment of the provision with effect from 01.04.2007, the tax credit under Section 115JAA has to be given before charging interest under Section 234A, 234B and 234C. The Revenue has also relied on a circular No.14/2006 of the Central Board of Direct Taxes, which contains the "Explanatory Notes on provisions relating to Direct Taxes" under the Finance Act, 2006 and the relevant portion of the circular reads as follows: "38.2. It has been represented from ....
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.... further contended that the assessee is entitled to take into account the MAT credit under Section 115JAA, when it computes tax payable under Section 209 i.e. the tax payable on the current income less the MAT credit available. It is vehemently contended that under Section 234B and 234C of the Act, the interest can only be computed after the tax credit under Section 115 JAA is set off against the tax payable. As per provision of 234B(2) of the Act, any tax paid by the assessee under Section 140A or otherwise should be taken into consideration. The word "or otherwise" includes the tax credit available with the department i.e. whatever manner the tax is paid, shall be taken note of in calculating the interest. The learned counsel further contended that the interest leviable under Section 234A and 234B are only compensatory in nature and not a penal one and it is only by way of compensation in respect of the tax withheld and since, MAT credit was available at the beginning of the year and had to set off against the tax payable, no loss has been caused to the revenue, and therefore, there is no question of charging any interest thereon by way of compensation. To support the above claim....
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....ew with that of the Delhi High Court. In such circumstances, we answer the first question in favour of the assessee and against the revenue. 8. In respect of question Nos.2 and 3, the learned counsel appearing for the revenue vehemently contended that the Act does not prescribe the order of priority of adjustments of tax deducted at source, advance tax and tax credit under Section 115JAA of the Income Tax Act. Therefore, one has to take recourse to the Income Tax Rules 1962 for the said purpose. Rule 12(1)(a) of the Income Tax Rules, 1962 prescribed that in the case of a company, the return of income required to be furnished shall be in Form No.I. Schedule G of Form No.1 lays down the manner of computing the total tax payable by the assessee. It also specified the order in which tax deducted at source, Advance tax and tax credit under Section 115JAA shall be given effect to. Later the Form was amended with effect from 17.08.2001. Therefore, there is no dispute that the tax credit under Section 115JAA shall be given effect only after determining tax and interest. The Commissioner of Income Tax rightly rejected the contention of the assessee and dismissed the appeal. On appeal, th....
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.... of section 115JA (or section 115JB, as the case may be) for that assessment year." It can be seen from the above section that the statute intends to allow set off in respect of brought forward tax credit (MAT credit) and it has to be allowed to the extent of the difference between the tax on its total income and the tax which would have been payable under the provisions of sub-section (1) of section 115JA. It may be seen that in this section the legislature has used the word 'tax' and not 'tax and interest under sections 234B and 234C of the Act'. In such circumstances it is to be inferred that the intention of the legislature is to allow set off of the MAT credit from the 'tax' and not from the total amount including 'tax and interest'. Had it been the intention of the legislature it would have been specifically stated in the section itself. By exercising the delegated authority the Central Board of Direct Taxes has framed the forms for filing the returns of income for the companies and while framing form No.1 the delegated authority, namely, the CBDT, has included Schedule G (statement of tax) to Form No.1. While drafting this schedule the Board has given the order of prefere....
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.... -- 3. 7.5% of adjusted book profit as computed in Schedule-I-6 810 -- 4. Tax payable (higher of 2 and 3 above) 825 -- 5. Surcharge(on 4 above) 828 -- 6. Tax plus surcharge 829 -- 7. Relief u/s 90 -- 91 -- 826 -- 8. Balance tax payable (6-7) 840 -- 9. Prepaid taxes (A) Tax deducted/collected at source: (Attach certificate(s)): S.No. Under section No. of certificates Amount (a) -- (b) -- Total of (a) to ...........) 870 -- (B) Advance tax (Attach challans) Upto 15/6 Upto 15/9 16/9 to 15/12 16/12 to 15/02 16/03 to 31/03 Total 856 857 859 860 860 862 Amount(Rs.) 1 Date2 Name of Bank (C) Other prepaid taxes, if any Please specify and attach proof) 876 --- 10. Balance tax payable (8-9) 877 -- 11. ....
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.... between Rule and the substantial provision of the Act, the Rule must pave way to the provision of the Act. Further the delegating authority must exercise power strictly within the limit of the authority. Even though the rule making power is conferred on the said authority, and the rules made are in excess of such delegated power, the rules would be void even if the Act provides that they shall have effect as though enacted in the Act. 11. In the case of ASSAM COMPANY LIMITED AND ANOTHER VS. STATE OF ASSAM AND OTHERS reported in (2001) 248 ITR 567, the Supreme Court has considered the scope of the rules and held as follows:` " It is an established principle that the power to make rules under an Act is derived from the enabling provision found in such Act. Therefore, it is fundamental that a delegate on whom such power is conferred has to act within the limits of the authority conferred by the Act and it cannot enlarge the scope of the Act. A delegate cannot override the Act either by exceeding the authority or by making provision which is inconsistent with the Act. Any rule made in exercise of such delegated power has to be in consonance with the provisions of the Act, ....
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....les and Form P.5, the rule making authority have exceeded the power conferred on it by the Land Reforms Act." 15. In the case of AHMEDABAD URBAN DEVELOPMENT AUTHORITY VS. SHARADKUMAR JAYANTIKUMAR PASAWALLA AND OTHERS reported in AIR 1992 Supreme Court 2038, the Supreme Court has held as follows: After giving our anxious consideration to the contentions raised by Mr.Goswami, it appears to us that in a fiscal matter it will not be proper to hold that even in the absence of express provision, a delegated authority can impose tax or fee. In our view, such power of imposition of tax and/or fee by delegated authority must be very specific and there is no scope of implied authority for imposition of such tax or fee. It appears to us that the delegated authority must act strictly within the parameters of the authority delegated to it under the Act and it will not be proper to bring the theory of implied intent or the concept of incidental and ancillary power in the matter of exercise of fiscal power." 16. In the case of KUNJ BEHARI LAL BUTAIL AND OTHERS VS. STATE OF H,P. AND OTHERS reported in AIR 2000 Supreme Court 1069, the Supreme Court has held as follows: "We are also of t....