RELEVANT PARAGRAPH
7.1 The scheme of levying Minimum Alternative Tax (MAT) on zero-tax companies was introduced by the Finance Act 1996 w. e f. 01.04.1997. A new section 115JAA was also inserted to provide for a tax-credit scheme by which the MAT paid can be carried forward for set-off against regular tax payable during the subsequent years, subject to certain conditions The sub-sections (1), (2) and (3) of section 115JAA read as under.
“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.
(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
(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-sections (4) and (5) but such carry forward shall not be allowed beyond the fifth assessment year immediately succeeding the assessment year in which tax credit becomes allowable under sub-section (1).
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8. In the present case the tax credit was allowed for the first time for AY 1998-99. The AO, in his rectification order passed u/s 154 on 30.04.2007, held that such a tax credit could be allowed only up to AY 2002-03, and that it was not allowable for AY 2003-04. The CIT(A) allowed the assessee’s claim for the reasons given in paragraph 5 of his order as under.
“5. I have gone through the facts of the case and the submissions made by the appellant on this issue. The details of tax credit allowed as per the letter filed by the appellant on 14-08-06 with the Assessing Officer is as under:
Accordingly in our case tax credit shall be allowable for set off from asst. year 1998-99, which succeeds asst. year 1997-98 in which tax credit was allowed, for the succeeding 5 years i.e . from asst. year 1999-00 upto asst. year 2003-04 as given below.
