TMI Blog2011 (5) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... .K. SIKRI, MR. JUSTICE M.L. MEHTA, JJ. For Applicant : Ms. P.L. Bansal, Sr. Advocate with Mr. Deepak Anand, Advocate. For Respondent : Mr. M.S. Syali, Sr. Advocate with Ms. Madhavi Swaroop, Advocate and Mr. Mayank Nagi, Advocate. A.K. SIKRI, J. 1. This appeal was admitted on the following substantial questions of law: Whether ITAT was correct in law in allowing interest u/s 244A of the Act to the assessee if the advance tax paid by the assessee was in excess of MAT credit available to the assessee? 2. We may first recapitulate, in brief, the events which have led to the aforesaid question. For the Assessment Year 1998-99, the respondent/assessee filed return of income tax declaring income at Rs. 153.97 crores. Tax payable on this income worked out to Rs. 53,89,06,594/-. The assessee had paid advance tax of Rs. 55.65 crores and in addition thereto against the tax deducted at source (TDS), a credit of Rs. 29,86,273/- was also claimed. In this way, the total amount paid worked out to Rs. 55,94,86,273/-. While processing the return under Section 143(1)(a), the AO had also charged interest under Section 234C at Rs. 55,52,656/-. Thus, the total tax and interest p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Tribunal. The assessee also objected to the action of the AO for not recalculating interest chargeable under Section 234C of the Act. 7. As per the provisions of Section 244A of the Act, where refund of any amount becomes due to the assessee, inter alia, on account of advance tax, the assessee is entitled to interest at the rate prescribed in the said provision from the first of April of the assessment year to the date on which the refund is granted. Thus, the interest is payable if refund is due out of advance tax paid by the assessee. The plea of the assessee was that while paying advance tax, the assessee was entitled to adjust the MAT credit, as the MAT credit was not set off and the amount was paid as the advance tax. After the MAT credit was allowed to the assessee, it is the excess advance tax which became payable and therefore, the provisions of Section 244A were applicable and the assessee was entitled to interest thereupon. The assessee had relied upon the judgment of the jurisdictional High Court, i.e., this Court in the case of Commissioner of Income Tax Vs. Jindal Exports [314 ITR 137]. The plea of the assessee was accepted by the CIT (A) holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the minimum alternate tax credit under Section 115JAA is nothing but credit for tax paid under Section 115JA of the Act. Minimum alternate tax credit is granted for tax already paid under Section 115JA. Thus, the sum represented by the available minimum alternate tax credit would fall within the expression tax already paid under any provisions of this Act . This means that the expression such tax referred to in Section 140A(1) would mean the tax payable on the basis of the return minus, inter alia, the available minimum alternate tax credit which represents the tax already paid under the provision of Section 115JA of the Act. The adjustment or set off in respect of the available minimum alternate tax credit is implicit in the meaning of such tax . The Court was also of the opinion that the amendment introduced by the Finance Act, 2006, with effect from April 1, 2007 in Explanation 1 after Section234B of the Act merely clarifies and makes explicit what was already implicit. Even if the amendment had not been introduced, the expression such tax as appearing in Section 140A would have reference to the tax payable on the basis of the returns minus the minimum alternate tax cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is granted. Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined under sub-section (1) of section 143 or on regular assessment; (b) In any other case, such interest shall be calculated at the rate of one per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation : For the purposes of this clause, "date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. 13. In Jindal Exports (supra), this Court held that the amount which was paid as advance tax, it is that amount which becomes refundable, as MAT credit was available which was to be adjusted first. The Court relied upon the earlier Division Benchs judgment of this Court in the case of Dr. Prannoy Roy Vs. Commissioner of Income Tax[2002] 254 ITR 755 to which one of us (A.K. Sikri, J.) was a Member of the Bench. In that case, the provisions of Section 234A were in issue. The questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put beyond the pale of controversy by a recent judgment of the Apex Court in the case of Commissioner of Income Tax Vs. Tulsyan NEC Ltd. 330 ITR 226. In that judgment, it has been authoritatively held that MAT credit admissible in terms of Section 115JAA has to be set off against the tax payable (assessed tax) before calculating interest under Sections 234A, 234B and 234C of the Act. Discussing the scheme of tax payable by the companies under MAT provision, the Court held that as per provisions of Section 115JA, a company is liable to pay tax on 30% of book profits, if the income computed under normal provisions of the Act is less than 30% of the book profits. Thus, the Assessee is required to compute income chargeable to tax on two alternative basis - (i) income computed under normal provisions of the Act and (ii) 30% of book profits as disclosed in the P L Account prepared in accordance with Parts II and III of Schedule VI to the Companies Act, 1956, subject to the adjustments specified in the Explanation to Section 115JA. The higher of the two computations is deemed to be the "total income" chargeable to tax and tax is payable accordingly. Thus, Section 115JA enacts a deeming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of calculating advance tax when the company has MAT credit. Following answer is provided: The issue which crops up for decision is - how should the advance tax be calculated when the Company has MAT credit? To answer, we need to look at Section 234B. Under that section, "assessed tax" means the tax on the total income determined under Section 143(1) or on regular assessment under Section 143(3) as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income. The definition, thus, at the relevant time excluded MAT credit for arriving at assessed tax. This led to immense hardship. The position which emerged was that due to omission on one hand MAT credit was available for set off for five years under Section 115JAA but the same was not available for set off while calculating advance tax. This dichotomy was more spelt outbecause Section 115JAA did not provide for payment of interest on the MAT credit. To avoid this situation, Parliament amended Explanation 1 to Section 234B byFinance Act, 2006 w.e.f. 1.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of Section 115JAA of the Act. 19. Having interpreted the provisions in the aforesaid manner, we are clear in mind that Proviso to sub-Section (2) of Section 115JAA of the Act will have no application to the facts situation prevailing in the instant case. This proviso will have limited application only in those cases where tax credit is allowed to be set off under sub-Section (1) of Section 115JAA of the Act. On the other hand, Section 244A of the Act deals with altogether different situation. Once we take into account the interpretation given by the Supreme Court in Tulsyan NEC Ltd. (supra), viz., the MAT credit is available on the very first day and such a right gets crystallized no sooner the tax is payable to the assessee under Section 115JA of the Act which is to be adjusted first, then what becomes refundable after adjustment of MAT credit is the excess advance tax, which was paid by the assessee. On such advance tax, which becomes refundable, interest under Section 244A of the Act has to be calculated and paid. 20. We, thus, answer the question formulated above, in favour of the assessee and against the Revenue and dismiss this appeal. - - TaxTMI - TMITax - I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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