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Commissioner of Income Tax, Jalandhar-I Versus M/s Max India Ltd.

Set off of tax credit under section 115J (correct provision is Section 115JAA) for the purpose of calculation of interest under section 234B - Held that:- The matter is no longer res integra. The Apex Court in Tulsyan Nec Limited's case (2010 (12) TMI 23 - Supreme Court of India) considering identical issue held that the Assessing Officer is required to give benefit of tax credit available under Section 115JAA of the Act and determine the interest payable under Section 234B of the Act thereafter .....

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unal") in ITA No.102(ASR)/ 2006 for the assessment year 2000-01, claiming following substantial questions of law:- "I. Whether on the facts and circumstances of the case, the ITAT was right in law in allowing the set off of tax credit under section 115J (correct provision is Section 115JAA) for the purpose of calculation of interest under section 234B of the IT Act ignoring the fact that there is no provision in law warranting such set off? II. Whether on the facts and circumstances of .....

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(1)(a) of the Act on 30.3.2001. Later on, the assessee company revised its return of income on 30.10.2001 declaring income at ₹ 12,22,50,282/- under section 115J of the Act which was processed under section 143(1)(a) of the Act on 30.4.2002. The case of the assessee was taken up for scrutiny. Notices under section 143(2)/142(1) of the Act were issued to the assessee. Assessment was made at total income of ₹ 15,46,86,210/- under Section 143 (3) of the Act on 12.3.2003. The Assessing O .....

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ppeal deleting the addition made by the Assessing Officer. Not satisfied with the order, the revenue filed appeal before the Tribunal. Vide order dated 1.1.2010, Annexure A.3, the Tribunal dismissed the appeal. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the parties. 4. It was not disputed by the learned counsel for the parties that question No.II is covered by our decision dated 8.9.2015 in ITA No.426 of 2010 (CIT, Jalandhar I, Jalandhar vs. M/s Max India Limit .....

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s concluded against the revenue by the decision of the Apex Court in CIT vs.Tulsyan Nec Limited, (2011) 330 ITR 226 wherein judgment of the Madras High Court in CIT vs. Tulsyan Nec Limited, (2011) 330 ITR 224 was affirmed. 7. The issue herein is whether while computing interest under Section 234B of the Act, the tax credit available under Section 115JAA of the Act is to be reduced from the taxes payable or not. 8. The matter is no longer res integra. The Apex Court in Tulsyan Nec Limited's c .....

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rry forward and set off of credit available in respect of tax paid under Section 115JA, show that when tax is paid by the assessee under Section 115JA, then the assessee becomes entitled to claim credit of such tax in the manner prescribed. Such a right gets crystallized no sooner the tax is paid by the assessee under Section 115JA, as per the return of income filed by that assessee for a previous year (say, year one). [See Section 115JAA(1)]. The said credit gets limited to the tax difference b .....

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al provisions of the Act exceeds the tax payable on book profits computed for that year [See Section 115JAA(4), (5)]. At this stage, we would like to emphasize the word "allowed" in all the sub-sections of Section 115JAA. The statute envisages under Section 115JAA "credit in respect of tax so paid" because the entire tax is not an automatic credit but has to be calculated in accordance with sub-section (2) of Section 115JAA. Sub-section (4) to Section 115JAA allows "tax .....

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dit to be allowed. The A.O. may vary the amount of tax credit to be allowed pursuant to completion of summary assessment under Section 143(1) or regular assessment under Section 143(3) for year one, in terms of Section 115JAA(6). As a consequence of such variation the tax credit to be allowed for year one is liable to change. With every change in the amount of tax payable on book profits and/ or tax payable on income computed under the normal provisions of the Act, the tax credit to be allowed w .....

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tallized in year one, on payment of tax under Section 115JA and the set off thereof follows statutorily, the amount of credit available and the amount of set off to be actually allowed as in all cases of deductions/ allowances under Sections 30-37, is fluid/ inchoate and subject to final determination only on adjudication of assessment either under Section 143(1) or under Section 143(3). The fact that the amount of tax credit to be allowed or to be set off is not frozen and is ambulatory, does n .....

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ce the conditions mentioned in Section 115JAA are fulfilled and the grant of such credit is not dependent upon determination by the A.O. save and except that the ultimate amount of tax credit to be allowed will be dependent upon the final determination of the total income for the first assessment year. There is no provision under Section 115JAA which postpones the right of the assessee to claim set off to the determination of the total income by the A.O. in the first assessment year. Entitlement .....

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o take into account the set off even while estimating its liability to pay advance tax on the "current income" in accordance with the provisions of Chapter XVII-C. Although Section 209(1)(d) does not make any specific provision either before or after the amendments carried out by the Finance Act, 2006 to the effect that an assessee is entitled to set off the tax credit that would be available in terms of Section 115JAA(1) while computing the quantum of advance tax that is to be paid it .....

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emand or refund. Section 143(1) provides that where a return is made under Section 139 and if any tax or interest is found due on the basis of such return after adjustment of any TDS, any advance tax, any tax paid on self assessment and any amount paid otherwise by way of tax or interest, then, without prejudice to provisions of sub-section (2), an intimation will be sent to the assessee specifying the amount so payable and such intimation shall be deemed to be a notice of demand under Section 1 .....

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he Act after reducing the tax credit available under section 115JAA of the Act and giving the credit of the taxes paid. The said finding was affirmed by the Tribunal. The finding recorded by the CIT(A) on this question reads thus:- "For the sake of setting the matter to rest with finally, the computation of interest under section 234B as computed by the AO and as per appellant's claim is : As per AO (Rs.) As per appellant (Rs.) Tax as per order under section 143 (3) dated 12.3.2003 59,5 .....

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