Commissioner Of Income Tax Chennai Iii v. M/S.rane Engine Valves, "Maithiri"

Dated : 30.04.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN andTHE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal)No.110 of 2009 Commissioner of Income TaxChennai III ... Appellant Vs. M/s.Rane Engine Valves,"MAITHIRI"132, Cathedral RoadChennai 86. ... Respondent Tax Case Appeal filed under section 260A of the Income Tax Act, 1961 against the order of theIncome Tax Appellate Tribunal, Madras 'B' Bench, Chennai, dated 31.7.2008 passed inM.P.No.177/Mds/2008 in ITA No.1049/Mds/2007 relating to the assessment year 2002-2003. For appellant : Mr.K.Subramaniam JUDGMENT(Judgment of the Court was delivered byK.RAVIRAJA PANDIAN,J.) The appeal has been preferred by the revenue against the order of the Income Tax AppellateTribunal, Madras 'B' Bench, Chennai, dated 31.7.2008 passed in M.P.No.177/Mds/2008 in ITANo.1049/Mds/2007 relating to the assessment year 2002-2003.2. The material facts as culled out from the statement of facts in the memorandum of grounds ofappeal are stated below:- The assessment of assessee Company for the assessment year 2002-03 was completed on 9.12.2005under Section 143(3) read with Section 147, computing the total income at Rs.3,93,77,211/- Theassessing officer also levied interest of Rs.6,86,715, Rs.19,89,45/- and Rs.78,246/- respectively,under Sections 234A, 234B and 234C. The assessing officer had not deducted MAT credit beforelevying interest under the said sections. Aggrieved by the said order, the assessee filed an appealbefore the Commissioner of Income Tax (Appeals), who following the decision of the Income TaxAppellate Tribunal in the case of Chemplast Sanmar Limited Vs. DCIT, (2004) 83 TTJ (Chennai) 427directed the assessing officer to give the MAT credit before charging interest under Sections 234A,243B and 2423C of the Act. There were other additions in the assessment, which were also thesubject matter of appeal before the Commissioner of Income Tax(Appeals. Aggrieved by the same,the revenue filed appeal before the Income Tax Appellate Tribunal. The Tribunal while disposing ofthe appeal by order in ITA No.1049 /Mds/2007 dated 11.1.2008 had not considered the revenue'sgrounds of appeal relating to the direction of the Commissioner of Income Tax (Appeals) to the assessing officer to allow MAT credit prior to levy of interest under Section 234A, 234B and 234C.Hence the revenue filed a Miscellaneous petition before the Tribunal for consideration of thosegrounds. Accordingly, the Tribunal passed an order dated 31.7.2008 in M.P.No.177/Mds/2008dealing with the grounds of appeal filed by the revenue on the issue of MAT credit. The Tribunalheld the issue in favour of the assessee following its earlier order in the case of Chemplast SanmarLimited and confirmed the order of the Commissioner of Income tax (Appeals). Aggrieved by thesame, the revenue has filed this appeal by formulating the following questions of law: "1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that MATcredit is to be set off from the tax payable before setting off the tax deducted at source ?2. Whether on the facts and circumstances of the case the MAT credit can be given priority of set offagainst tax payable, contrary to the Scheme of Schedule G of Form 1? 3. We heard the arguments of the learned counsel for the appellant and perused the materialsavailable on record. 4. The very same issues have been considered by the Division Bench of this Court in T.C.A.Nos.887of 2004 etc. batch on 09.04.2009 and the Division Bench has answered in favour of the assessee andagainst the revenue by observing as follows: "1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that MATcredit is to be set off from the tax payable before setting off the tax deducted at source ?2. Whether on the facts and circumstances of the case the MAT credit can be given priority of set offagainst tax payable, contrary to the Scheme of Schedule G of Form 1? 3. We heard the arguments of the learned counsel for the appellant and perused the materialsavailable on record. 4. The very same issues have been considered by the Division Bench of this Court in T.C.A.Nos.887of 2004 etc. batch on 09.04.2009 and the Division Bench has answered in favour of the assessee andagainst the revenue by observing as follows: "7.In respect of the first question of law, the arguments advanced by the counsel on either side arethe same as the one advanced before the Delhi High Court cited supra. The Delhi High Court hasconsidered the relevant provisions and dealt with the matter in detail and held that the credit underSection 115JAA should be given effect to before charging of interest under Section 234A, 234B and234C of the Act. We are in agreement with the reasoning given by the Delhi High Court. The learnedcounsel appearing for the revenue has not produced any materials or given compelling reasons totake a contrary view with that of the Delhi High Court. In such circumstances, we answer the firstquestion in favour of the assessee and against the revenue. ...... 18. In the present case, the intention of the legislature is to give tax credit to tax and not to the taxand interest. Once the intention is clear, the revenue cannot rely on the Form-I to say that the MATcredit under Section 115JAA should be given only after tax and interest. Further we have answeredthe first question of law in favour of the assessee i.e. the MAT credit under Section 115JAA should begiven effect to before charging the interest under Section 234B and 234C. Rule 12(1)(a) and Form-Icannot go beyond the provisions of the Act. Form-I cannot lay down the order of priority ofadjustment of TDS, advance Tax, MAT credit under Section 115JAA which is contrary to theprovisions of the Act. The order passed by the Tribunal is in accordance with law and we do not findany error or illegality in the order of the Tribunal so as to warrant interference. Accordingly, weanswer the questions 2 and 3 also in favour of the assessee and as against the Revenue."5. The questions of law in this appeal are identical to the one considered by the Division Bench.Therefore, following the Division Bench Judgment stated supra, the appeal is dismissed since thequestions of law have already been answered in favour of the assessee. krrTo 1. The Commissioner of Income TaxChennai