Case Law Details

Case Name : ACIT Vs Bank Of India (ITAT Mumbai)
Appeal Number : ITA No. 4102/Mum/2010
Date of Judgement/Order : 30/06/2011
Related Assessment Year : 1999- 2000
Courts : All ITAT (4244) ITAT Mumbai (1416)

ACIT Vs Bank Of India (ITAT Mumbai)- As per the provisions of section 115JAA(2), the amount of tax credit of MAT to be carried forward is determined and it is not provided therein that first the taxes paid are to be adjusted and then credit of MAT is to be given. In the case of Chemplast Sanmar, cited supra, the Chennai Bench of the Tribunal has held while deciding he issue u/s.234B and 234C that the tax credit u/s.115JA(2) is advance tax retained by the Department for being set off against the tax liability of future years. We are in agreement with the ld. CIT that the assessee is entitled for interest u/s.244A on the refund given to it. We are also of the view that it was a mistake which could be rectified u/s. 154. So from this is is clear that MAT credit has to be given right at the beginning and if ultimately the calculation leads to a refund, then such interest has to be paid u/s.244A.

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI ‘H’ BENCH

BEFORE SHRI N.VASUDEVAN, JUDICIAL MEMBER &

SHRI T.R. SOOD, ACCOUNTANT MEMBER

I.T.A.NO. 4102/Mum/2010

 A.Y. 1999- 2000

Asst. Commissioner of I.T. 2(1), Mumbai.

Vs.

M/s Bank of India, C -5, G Block Star House Bandra Kurla Complex, Bandra (E), Mumbai. PAN: AAACB 0472 C
(Appellant) (Respondent)

Revenue by

:

Shri Goli Sriniwas Rao [CIT DR]

Assessee by

:

None.

O R D E R

Per T.R.SOOD, AM:

In this appeal, the Revenue has raised the following grounds:

On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below:

1. The order of the CIT(A) is opposed to law and facts of the case.
2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing interest u/s.244A on MAT credit i.e. taxes paid u/s.115JA without considering that proviso to sub sec.2 of sec.115JAA specifically provides that no interest shall be payable on tax credit allowed u/s.115JAA(1).

3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in following the decision of CIT vs. Jindal Exports Ltd. [314 ITR 137 (Del) wherein the Hon’ble Delhi High Court had rightly held that credit u/s.115JAA should be given before charging of interest u/s.234B & 234C, for which specific provisions is in these sections to allow credit of same before charging interest u/s.234B & 234C, and no such provision is prescribed for allowing credit u/s.115JAA for charging of interest u/s.244A.

2. None appeared, despite notice. However, on perusal of records we find that the issue is covered, therefore, the appeal was heard on ex parte basis.

3.  The Ld. DR was heard.
4. After considering the submissions of Ld. DR and relevant material on record, we find that assessee made an application u/s.154 for allowance of interest u/s.244A by giving MAT credit. The application was rejected by the AO by observing that MAT credit has been allowed to the assessee, but as per the provisions of sec.115JAA(1) the amount of tax credit is required to be carried forward and set off subject to ‘no interest shall be payable on the tax credit allowed.’
5. On appeal, the Ld. CIT(A) allowed the relief by following the decision of the Hon’ble Delhi High Court in the case of CIT vs. Jindal Exports Ltd. [314 ITR 137] vide para-5 which is as under:

“5. I have carefully considered the submissions of the A.R. I find that there is no dispute that interest u/s.244A is to be allowed to the assessee. The only question is whether the MAT credit is to be allowed before giving credit to TDS and Advance tax. This has enhanced the assessee’s liability towards interest u/s.234B and 234C and decreased his entitlement to interest u/s.244A. Respectfully following the decision of ITAT, Mumbai in the case of ACIT vs. Candy Industries Ltd. referred to above, I direct the AO to allow interest u/s.244A on the refund amount due to the assessee before adjusting advance tax and TDS. Apparently the assessee is not asking for interest u/s.244A on the MAT credit but only want that the interest u/s.244A should be allowed after adjusting MAT credit before adjusting advance tax and TDS. The AO has granted interest u/s.244A after giving credit of advance tax and TDS and then given credit to MAT credit which has resulted in reducing the amount of interest u/s.244A allowable to the assessee. In arriving at this decision the Hon’ble Bombay ITAT relied on the decision of Madras High Court in the case of CIT vs. Chemplast Sanmar Ltd. [314 ITR 231] (Mad). This ground of appeal is allowed.”

6. We find that the Ld. CIT(A) has correctly decided the issue. Section 115JAA(1) reads as under:”Sec.115JAA.(1) Where any amount of tax is paid under sub-section (1) of section 115JA by an assessee being a company for any assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section.”

Further, the Board has issued a Circular No.763 in which it has been explained that no interest is payable on such credit. However, what is meant is required to be ascertained. In our opinion, if the MAT is paid, for example, in A.Y 2000-01 and credit for the same is allowed in A.Y 2003-04, then no interest is payable in the intervening years 2001-02 and 2002-03. However, in the year in which ultimately MAT credit is given and credit for other tax payment is also given and after such tax credit if there is a refund, then the same has to be construed because of taxes paid and not because of the MAT credit. This legal position is absolutely clear from the fact that MAT payment in earlier year can be only used as a matter of credit and no refund is possible. Therefore, the MAT credit has to be allowed as a set off in the year in which tax became payable on the total income and set off would obviously mean that credit has to be allowed at the very thresh hold of working out the tax liability. In other words, such credit has to be given right at the beginning. We further find that Ld. CIT(A) has also referred to the decision of the Mumbai Bench of the Tribunal in the case of ACIT vs. Candy Industries Ltd. and a portion of the said order has been reproduced as under:

“We have heard both the parties. It is clear from the working as reproduced by the ld. CIT(A) that the refund has to be given to the assessee out of TDS/Advance tax paid. As per the provisions of section 115JAA(2), the amount of tax credit of MAT to be carried forward is determined and it is not provided therein that first the taxes paid are to be adjusted and then credit of MAT is to be given. In the case of Chemplast Sanmar, cited supra, the Chennai Bench of the Tribunal has held while deciding he issue u/s.234B and 234C that the tax credit u/s.115JA(2) is advance tax retained by the Department for being set off against the tax liability of future years. We are in agreement with the ld. CIT that the assessee is entitled for interest u/s.244A on the refund given to it. We are also of the view that it was a mistake which could be rectified u/s. 154.”

From above it becomes clear that MAT credit has to be given right at the beginning and if ultimately the calculation leads to a refund, then such interest has to be paid u/s.244A. Therefore, we find nothing wrong in the order of the Ld. CIT(A) and confirm the same.

7. In the result, Revenue’s appeal is dismissed.

Order pronounced in the open Court on this day of 30/06/2011.

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