Appellant v. Respondent

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 20.04.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal)No.1984 of 2008 The Commissioner of Income TaxCoimbatore M/s.Shiva Texyarn Limited 252, Mettupalayam, Coimbtore – 641 018. Appellant v. Respondent Tax Case Appeal filed under section 260A of the Income Tax Act,1961 against the order of the Income Tax Appellate Tribunal, Madras'D' Bench, Chennai, dated 5.5.2008 passed in ITA No.2089/Mds/2006against the order of the Commissioner of Income Tax (Appeals)-I,Coimbatore dated 10.08.2006 in Appeal No.241/05-06 against the orderof the Assistant Commissioner of Income Tax, CompanyCircle,Coimbatore dated 31.3.2005 Coimbatore in PAN AABCA 6617M. For appellant :Mr.J.Nareshkumar,Standing Counsel for Income-tax. For Respondent: Mr.Venkatanarayanan JUDGMENT The appeal has been preferred by the revenue against the orderof the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai,dated 5.5.2008 passed in ITA No.2089/Mds/2006. 2. The material facts culled out from the statement of facts inthe memorandum of grounds of appeal are as follows:- The assessee private limited Company filed return of income forhttps://hcservices.ecourts.gov.in/hcservices/the assessment year 2004-2005 on 1.11.2004 declaring an income of Rs.1,10,31,970/-. The return was processed under Section 143(1) on31.3.2005. The assessing officer denied the assessee claim of taxcredit of Rs.8,46,276/- made under Section 115JAA(4) and (5) of theIncome Tax Act, 1961 which the assessee had paid on book profits inassessment year 1999-2000. The assessing officer denied the relief onthe ground that there was no specific provision of the Act to givecredit for MAT on the gross tax payable. Aggrieved by the same, theassessee filed appeal before the Commissioner of Income-tax(Appeals), who allowed the assessee's claim following the orderpassed by Tribunal in the case of CHEMPLAST SANMAR LIMITED, whereinit was held that MAT credit should be adjusted first before adjustingTDS and advance tax. On further appeal by the Department to theTribunal, the Tribunal relying on the decision of Chemplast SanmarLimited reported in 83 TTJ(Chennai) Page 427 which held that MATcredit should be given in precedence of TDS and advance tax dismissedthe appeal filed by the Department. Aggrieved by the order of theTribunal, the revenue filed the present appeal by formulating thefollowing questions of law:- "1. Whether on the facts and circumstances ofthe case, the Income Tax Tribunal is right inholding that charging of interest under Section234 B and C after considering the MAT creditavailable to the assessee was proper?2. Whether on the facts and in thecircumstances of the case, the Income Tax Tribunalis right in law in not considering the judgment ofthe Madras High Court reported in 263 ITR 307?3. Whether on the facts and in thecircumstances of the case, the Income-tax Tribunalis right in holding that for the purpose ofcomputing interest credit under Section 115 JAAshould be set off and interest can be imposed onlyon net liability? 3. We heard the arguments of the learned counsel for theappellant and perused the materials available on record. 4. The very same issues have been considered by the DivisionBench of this Court in T.C.A.Nos.887 of 2004 etc. batch on09.04.2009. In respect of the first question of law, the DivisionBench has answered in favour of the assessee and against the revenueby observing as follows by concurring with CIT vs. Jindal ExpertsLtd., (2009) 222 CTR 8 (Delhi):- 3. We heard the arguments of the learned counsel for theappellant and perused the materials available on record. 4. The very same issues have been considered by the DivisionBench of this Court in T.C.A.Nos.887 of 2004 etc. batch on09.04.2009. In respect of the first question of law, the DivisionBench has answered in favour of the assessee and against the revenueby observing as follows by concurring with CIT vs. Jindal ExpertsLtd., (2009) 222 CTR 8 (Delhi):- "7.In respect of the first question of law, thearguments advanced by the counsel on either side arethe same as the one advanced before the Delhi HighCourt cited supra. The Delhi High Court hasconsidered the relevant provisions and dealt withthe matter in detail and held that the credithttps://hcservices.ecourts.gov.in/hcservices/under Section 115JAA should be given effect to before charging of interest under Section 234A, 234B and234C of the Act. We are in agreement with thereasoning given by the Delhi High Court. Thelearned counsel appearing for the revenue has notproduced any materials or given compelling reasons totake a contrary view with that of the Delhi HighCourt. In such circumstances, we answer thefirst question in favour of the assessee and againstthe revenue. 5. In respect of the other questions of law, the Division Benchhas observed as follows:- "18. In the present case, the intention of thelegislature is to give tax credit to tax and not tothe tax and interest. Once the intention is clear,the revenue cannot rely on the Form-I to say that theMAT credit under Section 115JAA should be given onlyafter tax and interest. Further we have answered thefirst question of law in favour of the assessee i.e.the MAT credit under Section 115JAA should be giveneffect to before charging the interest under Section234B and 234C. Rule 12(1)(a) and Form-I cannot gobeyond the provisions of the Act. Form-I cannot laydown the order of priority of adjustment of TDS,advance Tax, MAT credit under Section 115JAA which iscontrary to the provisions of the Act. The orderpassed by the Tribunal is in accordance with law andwe do not find any error or illegality in the orderof the Tribunal so as to warrant interference.Accordingly, we answer the questions 2 and 3 also infavour of the assessee and as against the Revenue. Thus both the questions of law have been answered against the revenuein favour of the assessee. 6. The questions of law in this case also are identical to theone considered by the Division Bench. Following the Division BenchJudgment cited supra, the appeal is dismissed since the questions oflaw have already been answered in favour of the assessee. Sd/Asst.Registrar /true copy/ Sub Asst.Registrar To 1. The Assistant Registrar,The Income Tax Appellate Tribunal, Chennai 'D' Bench, Chennai. 2.The Commissioner of Income Tax(Appeals-I) Coimbatore. 3.The Assistant Commissioner of Income Tax,Company Circle,Coimbatore. 4. The Commissioner of Income Tax Coimbatore +1cc to Mr.J.Naresh Kumar, Standing Counsel for Income Tax, Sr 15708BV(CO)km/29.4.T.C.(A)No.1984 of 2008