TMI Blog2008 (11) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... on the appeal in ITA No. 2428/Mad/2005 has been recalled for fresh adjudication as the assessee was deprived of effective opportunity of hearing. 3. Before us the learned counsel for the assessee referred to the rectification order passed under s. 154 of the IT. Act and pointed out that the AO has given credit for MAT at Rs. 6,36,82,480. After giving credit for TDS and advance tax there was a net refund and no interest has been paid on such refund. He then referred to the decision of the CIT(A) wherein the issue raised before him regarding payment of interest under s. 244/244A was rejected on the basis of Circular No. 763, dt. 18th Feb., 1998 [(1998) 145 CTR (St) 38]. Then he referred to the circular and pointed out that what the circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon'ble Supreme Court in the case of Sandvik Asia Ltd. vs. CIT (2006) 200 CTR (SC) 505 : (2006) 280 ITR 643 (SC). 4. The learned Departmental Representative submitted that in earlier order of this Tribunal it was clearly held that no interest is payable in respect of MAT credit and even the Tribunal has followed the Circular No. 763 of the CBDT. She also referred to the circular and pointed out that once the refund arises on account of MAT credit then no interest is possible. She submitted that the Tribunal had passed a detailed order and, therefore, the same order should be upheld. 5. In the rejoinder, the learned counsel for the assessee submitted that the earlier order has been recalled and that is no more an order in the eyes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The relevant cl. (4) of para 45.4 reads as under: "(4) The credit allowed will not bear any interest." We agree with the submission of the learned counsel for the assessee that the only interpretation which could be given to the circular which has explained the proviso to s. 115JAA is that interest cannot be allowed for the intervening period. That is, if MAT is paid, for example, in the asst. yr. 2001-02 and the same is credited in the asst. yr. 2003-04 then for the intervening years of 2001-02 and 2002-03 no interest is payable on such MAT credit. However, for the year in which ultimately MAT credit is given and credit for other tax payments is also given then refund becomes due not because of MAT credit but because of the other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x which would have been payable under s. 115JA(1) for that assessment year. In the present case, there is no dispute regarding the amount of tax credit available for set off. Both sides agree that it is Rs. 12,78,561. The dispute is only with regard to the interpretation of sub-s. (4) of s. 115JAA which is reproduced as under: '(4) The tax credit shall be allowed set oft in a year when tax becomes payable on the total income computed in accordance with the provisions of this Act other than s. 115JA or s. 115JB, as the case may be.' The AO has taken the stand that if the TDS of Rs. 8,75,544 is adjusted against the tax payable of Rs. 42,97,006 then there is no balance tax payable against which the MAT credit could be set off. Implied in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chd) : 20054-ITAT-Chd. In para 18 of this order, it has been held that under s. 115JAA(4), the assessee is entitled to set off MAT credit against the tax payable and only the balance tax payable if any would be considered for the purpose of payment of interest under ss. 234B and 234C. We are in respectful agreement with these orders of the Tribunal and in any case they are binding on us being orders of Co-ordinate Benches. We may add that the MAT credit has to be allowed set off in the year in which tax becomes payable on the total income and set off would mean that at the very threshold of working out the tax payable the set off has to be made which implies that the MAT credit has to be adjusted first against the tax payable. It is only ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 584, dt. 16-3-2004 Rs. 1,38,10,976 RO No. 004588, dt. 31-3-2004 Rs. 1,40,10,532 ------------------ Balance refundable amount Rs. 6,36,82,480 ------------------ 8. From the above it becomes clear that the AO has himself allowed the MAT credit before the credit for TDS and advance tax. Thus, it is absolutely clear that refund is originating not because of MAT credit but because of TDS and advance tax and, therefore, the assessee has to be paid interest on such excess payment of TDS or advance tax. Though it is not clear from which order this MAT credit is coming from, for understanding of this issue, let us assume that credit is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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