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2004 (3) TMI 372 - AT - Income TaxAdjustment of MAT credit against the tax payable before charging interest under ss. 234B and 234C - Interpretation and application of Section 115JAA regarding MAT credit - HELD THAT - 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-s. (1) of s. 115JA. It may be seen that in this section the legislature has used the word tax and not tax and interest under ss. 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 . In our considered view this method of prescribing the order of priority of adjustment of TDS advance tax and MAT credit is totally against the intention of the legislature because the legislature by insertion of sub-s. (5) to s. 115JAA has intended to give set off of MAT credit against the difference between the tax on total income of the assessee and the tax which would have been payable under the provisions of sub-s. (1) of s. 115JA and not on the total amount of tax and interest under ss. 234B and 234C as understood by the rule-making authority. Hence in our considered opinion Sch. G to Form No. 1 is totally against the intention of the legislature which has been clearly prescribed in s. 115JAA. As has been already pointed out in the earlier paragraphs rules cannot be contrary to the provisions of sections or the intention of the legislature. Hence as we have already held that Sch. G to Form No. 1 is contrary to the provisions of s. 115JAA we are inclined to allow the claim of the assessee by directing the AO to give set off of the MAT credit of Rs. 8, 64, 72, 445 first before the charging of interest under ss. 234B and 234C of the IT Act 1961. Thus looking the point at issue both from logical and legal angles we are unable to uphold the orders of the first appellate authority in denying the claim of the assessee. In the result the appeal filed by the assessee is allowed.
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