Commissioner Of Income Tax Chennai Appellant/Appellant v. M/S Southern Sportswear P Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 24.04.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANandTHE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal)No.2252 of 2006 Commissioner of Income TaxChennai Appellant/Appellant vs. M/s Southern Sportswear P Ltd69,Eldams Road, Chennai.Respondent/Respondent Tax Case Appeal filed under section 260A of the Income TaxAct, 1961 against the order of the Income Tax Appellate Tribunal,Madras 'B' Bench, Chennai, dated 17.02.2006 passed in ITANo.816/Mds/2003 against the order of the Commissioner of Income Tax(Appeals)-V, 121, Mahatma Gandhi Raod, Chennai-34 dated 10.02.2003and made in ITA.No.188/2002-03 against the order of the DeputyCommissioner of Income Tax, Company Circle-VI(3), Chennai dated28.11.2002 in GIR.No.PAN SO-83/AAACS 4972L. For appellant : Mrs.Pushya Sitaraman For respondent: Mr.John for M/s T.S.Gopalan &Co. JUDGMENT (Judgment of the Court was delivered byK.RAVIRAJA PANDIAN, J.) The revenue on appeal against the order of the Income TaxAppellate Tribunal, Madras 'B' Bench, Chennai, 17.02.2006 passed inITA No.816/Mds/2003 in respect of the assessment year 2001-02. 2. The assessee filed a return of income for assessmentyear 2001-02. For the preceding assessment year, the assessee hadpaid Minimum Alternate Tax (MAT) u/s 115JA and the MAT credit wascarried u/s 115JAA to be set off against the tax payable.Assessing Officer vide proceedings under 143(3) gave MAT creditafter reducing the TDS and after charging interest u/s 234B and234C. On appeal, the Commissioner of Income Tax (Appeals) heldthat MAT credit is nothing but the assessee's credit lying with thehttps://hcservices.ecourts.gov.in/hcservices/Government available to the assessee for adjustment against the tax due in the subsequent years on normally computed income, and thetax credit brought forward is to be automatically adjusted againstby virtue of the provisions of Section 115JAA(4). The revenue fileda second appeal to the Income Tax Appellate Tribunal. The Tribunalallowed the appeal in favour of the assessee following its earlierorder in case of Chemplast Sanmar Pvt. Ltd reported in 83 TTJ 427(Chennai) for the assessment year 2002-03. Aggrieved by the same,the revenue filed the present appeal by formulating the followingquestions of law:- "1. Whether in the facts and circumstancesof the case, the Tribunal was right in holdingthat MAT credit is to be set off from the taxpayable before setting off the tax deducted atsource?2. Whether on the facts and circumstancesof the case the MAT credit can be given priorityof set off against tax payable, contrary to thescheme of Schedule G of Form 1?".3. Whether in the facts and circumstancesof the case, the interest under Section 234B and234C had to be calculated after giving the MATcredit against the tax payable on the basis ofnormal computation? 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 theDivision Bench of this Court in T.C.A.Nos.887 of 2004 etc. batch on09.04.2009. In respect of the third question of law, the DivisionBench has answered in favour of the assessee and against therevenue by observing as follows by concurring with CIT vs. JindalExperts Ltd., (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 theDivision Bench of this Court in T.C.A.Nos.887 of 2004 etc. batch on09.04.2009. In respect of the third question of law, the DivisionBench has answered in favour of the assessee and against therevenue by observing as follows by concurring with CIT vs. JindalExperts Ltd., (2009) 222 CTR 8 (Delhi):- "7.In respect of the first question of law, thearguments advanced by the counsel on either sideare the same as the one advanced before the DelhiHigh Court cited supra. The Delhi High Court hasconsidered the relevant provisions and dealt withthe matter in detail and held that the creditunder Section 115JAA should be given effect tobefore charging of interest under Section 234A,234B and 234C of the Act. We are in agreementwith the reasoning given by the Delhi High Court.The learned counsel appearing for the revenue hasnot produced any materials or given compellingreasons to take a contrary view with that of theDelhi High Court. In such circumstances, weanswer the first question in favour of theassessee and against the revenue. 5. In respect of the 1[st] and 2[nd] questions of law, theDivision Bench has observed as follows:- "18. In the present case, the intention ofthe legislature is to give tax credit to tax andnot to the tax and interest. Once the intention isclear, the revenue cannot rely on the Form-I to saythat the MAT credit under Section 115JAA should begiven only after tax and interest. Further we haveanswered the first question of law in favour of theassessee i.e. the MAT credit under Section 115JAAshould be given effect to before charging theinterest under Section 234B and 234C. Rule 12(1)(a)and Form-I cannot go beyond the provisions of theAct. Form-I cannot lay down the order of priorityof adjustment of TDS, advance Tax, MAT credit underSection 115JAA which is contrary to the provisionsof the Act. The order passed by the Tribunal is inaccordance with law and we do not find any error orillegality in the order of the Tribunal so as towarrant interference. Accordingly, we answer thequestions 2 and 3 also in favour of the assessee andas against the Revenue. Thus all the questions of law have been answered against therevenue in favour of the assessee. 6. The questions of law in this case also are identical asthe one considered by the Division Bench. Following the DivisionBench Judgment cited supra, the appeal is dismissed. Sd/Asst.Registrar rg To 1. The Commissioner of Income Tax Chennai Chennai 2. The Income Tax Appellate Tribunal, Chennai 'B' Bench, Chennai. Chennai 'B' Bench, Chennai. 3. The Assistant Registrar,Income-Tax Appellate Tribunal,Besant Nagar, Chennai -90. 4. The Income Tax (Appeals)-V,121, Mahatma Gandhi Road,Chennai - 34. 5. The Deputy Commissioner of Income Tax,Company Circle-VI(3), Chennai. 1 cc To Mr.Pushya Sitaraman, Standing Counsel for I.T.Cases, SR.17629. 1 cc To Mr.T.S.Gopalan, Advocate, SR.17595. T.C.(A)No.2252 of 2006 GV(CO)RVL 08.06.2009