TMI Blog2008 (5) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... s under section 115JAA of the Act, 1961 of the taxes paid under KVSS 1998 by treating them as regular Income-tax. ( ii )On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow the credit of taxes paid under MAT for a period of five years though they were paid under KVSS." 2. The briefly stated facts relating to the controversy before us are as follows. The assessee-company is engaged in the export of computer software technical services. The assessee filed its return of income for the assessment year 1997-98 on 28-11-1997, in which deduction of Rs. 3,56,39,572 was claimed under section 80HHE of the Income-tax Act, 1961. The return was accepted by processing under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the tax element. He also directed the Assessing Officer that if, the assessee has paid any additional tax as well as interest under sections 234A, 234B and 234C of the Act, the credit of the same should not be considered for set off as the same are in the nature of penal interest. 2.3 The learned Departmental Representative vehemently submitted that the assessee has paid tax under the KVSS, 1998 and that cannot be treated as the tax paid under the normal provision of the Income-tax Act. The learned Departmental Representative gave the reference of section 2( 43 ) of the Act, wherein the term "Tax" has been defined. 2.4 Per contra , the learned counsel for the assessee vehemently submitted that the assessee opted for KVSS to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the provisions of this section. (2) The tax credit to be allowed under sub-section (1) shall be the difference of the tax paid for any assessment year under sub-section (1) of section 115JA and the amount of tax payable by the assessee on his total income computed in accordance with the other provisions of this Act : Provided that no interest shall be payable on the tax credit allowed under sub-section (1). (3) The amount of tax credit determined under sub-section (2) shall be carried forward and set off in accordance with the provisions of sub-section (4) and sub-section (5) but such carry forward shall not be allowed beyond the fifth assessment year immediately succeeding the assessment year in which tax credit b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115JAA of the Act was introduced. As per section 115JAA of the Act, if the assessee had paid tax on the total income determined under section 115JA of the Act, that is, on book profit, then the tax credit is to be allowed in respect of the difference in tax paid in any assessment year due to application of section 115JA of the Act and the amount of tax payable on the total income which is computed under the normal provisions of the Act. 4. We are unable to agree with the argument advanced by the learned Departmental Representative that KVSS is a separate scheme and, hence, if the assessee opted for KVSS he cannot claim the benefit of section 115JAA of the Act. There is no dispute in this case that the income, which finally remained unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered under the provisions of the Scheme. It is a misconception to consider that the operation of the Scheme is to decrease or increase the liability of the assessee, which exists independent of the Scheme, and is to be determined in accordance with the enactment under which the arrears are due. This is clear from the definition of "tax arrears" itself which postulates that the amount of tax, penalty or interest must be determined on or before 31-3-1998, under the enactment in respect of an assessment year as modified in consequence of giving an effect to the appellate order. Therefore, the existence of liability on account of tax, penalty or interest is directly referable to the determination under the enactment under which it is to be dete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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