The Commissioner Of Income Taxchennai v. M/S.aban Loyd Chiles Offshore Ltd96, Pantheon Road, Egmorechennai 600 008

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 02.04.2014 CORAM THE HON'BLE MRS.JUSTICE CHITRA VENKATARAMANANDTHE HON'BLE MR.JUSTICE T.S.SIVAGNANAM Tax Case (Appeal).No.1367 of 2007 --- The Commissioner of Income TaxChennai..Appellant -vs- M/s.Aban Loyd Chiles Offshore Ltd96, Pantheon Road, EgmoreChennai 600 008 ..Respondent Tax Case (Appeal) filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras"A"Bench,Chennai,dated16.02.2007in ITA.No.2253/Mds/2005 for the assessment year 2001-02. For appellant : Mr.T.Ravikumar Standing Counsel for Income Tax Department For respondent: Mr.R.Venkata Narayanan for M/s.Subbaraya Aiyar. ----- JUDGMENT (Judgment of the Court was made by CHITRA VENKATARAMAN, J.) Revenue is on appeal as against the order of the Income Tax Appellate Tribunal relating to the assessment year 2001-02. At the time of admission, following question of law was raised:- " Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is eligible for the interest on refund arising out of MAT credit." However, on going through the order of the Income Tax Appellate Tribunal, we find that it applied the decision of the Income Tax Appellate Tribunal in the case of M/s.Chemplast Sanmar Ltd., Vs. DCIT reported in (2004) (83 TTJ Chennai 427), which was the subject matter of consideration before this Court in the decision reported in(2009) 314 ITR 231 (Mad)in the case of Commissioner of Income-Tax Vs. Chemplast Sanmar Limited, which was affirmed in the decision reported in (2011) 330 ITR 226 (SC) in the case of Commissioner of Income Tax Vs. Tulsyan Nec. Ltd., in favour of the assessee. 2. The assessee is engaged in the business of Offshore oil well drilling. In respect of the claim for MAT credit under Section 115JAA of the Income Tax Act, 1961 (hereinafter called as the "Act"), by order in ITA.268/Mds/2004, the Income Tax Appellate Tribunal directed the Assessing Officer to give MAT credit before TDS and advance tax for the year under consideration. While giving effect to the same, the Assessing Officer did not allow any interest on refund under Section 244A of the Act. 3. The assessee went on appeal before the Commissioner of Income Tax (Appeals), who upheld the order of the Assessing Officer and dismissed the appeal. Thereupon, the assessee went on further appeal before the Income Tax Appellate Tribunal. 4. In considering the issue, the Income Tax Appellate Tribunal pointed out that while giving effect to the ITAT's order dated 28.02.2005, it was noted that the assessee had TDS of Rs.1,72,90,710/- and the MAT credit available was Rs.83,73,659/-. Thus out of total tax of Rs.2,06,96,452/-, after giving credit to MAT credit of Rs.83,73,659/-, the TDS was adjusted resulting in a refund of Rs.49,67,917/-. In the order passed by the Assessing Officer on 16.03.2005, the Assessing Officer pointed out that for the purpose of finding out the liability to payment of advance tax, the credit of MAT must first be given and then, on the balance of the tax payable, the liability to advance tax was to be worked out for the purpose of charging interest under Section 234B and 234C of the Act; the Assessing Officer also pointed out that since the tax deducted at source was exceeding the liability, the question of interest under Section 234B and 234C did not arise. Thus, the Income Tax Appellate Tribunal pointed out that once MAT credit is to be set off against any tax payable by the assessee on the basis of normal computation and thereafterwards credit for TDS, advance tax and self assessment tax could be given and accordingly, the interest be charged or allowed to the assessee under Sections 234B, 234C or 234A of the Act. 5. In the light of the results giving effect to the ITAT order, the Income Tax Appellate Tribunal directed the Assessing Officer to allow the claim of the assessee on interest on refund. To that end, the Tribunal followed the decision of Chemplast Sanmar Ltd., Vs. DCIT decision reported in (2004) 83 TTJ Chennai 427. 6. In view of the facts as noted above, the question that would arise herein is as to whether the assessee would be entitled to interest on the refund as per Section 244A of the Act. 7. A reading of the order passed on 28.02.2005 giving effect to the order of ITAT reveals that on the total tax liability of Rs.2,06,96,452/-, the adjusted MAT credit under Section 115JAA of the Act leaves the tax payable at Rs.1,23,22,793/-, after deducting TDS Rs.1,72,90,710/- the Assessing Officer had shown the refund due as Rs.49,67,917/-. 8. The assessee in its appeal before the Commissioner of Income Tax (Appeals) apparently sought for interest on the amount of refund due as per Section 244A of the Act contending that the Assessing Officer had not granted interest while refunding excess TDS. It pointed out that as per Section 244A of the Act, interest has to be granted upto the date of refund. To that end, the assessee relied on the decision in the case of CIT Vs. T.V.Sundaram Iyengar and Sons Ltd., reported in 236 ITR 524. The Commissioner of Income Tax (Appeals), however rejected the appeal holding that MAT credit allowed would not bear any interest; consequently, the Assessing Officer did not grant any interest on the MAT credit. 9. On appeal preferred before the Income Tax Appellate Tribunal, the Tribunal, however referred to the decision in the case of Chemplast Sanmar Ltd. Vs. DCIT reported in (2004) (83 TTJ Chennai 427) and allowed the assessee's case. 10. As far as the decision reported in (2009) 314 ITR 231(Mad) relating to CIT Vs. Chemplast Sanmar Limited, which was an appeal against the Income Tax Appellate Tribunal before this Court is concerned, the issue was as to whether the Tribunal was right in holding that carry forward MAT credit available to the assessee was to be adjusted first, before charging interest under sections 234B and 234C of the Act. Confirming the view of the Tribunal, this Court held that credit under Section 115JAA only should be given effect to and not to the tax and interest therefor and that interest under Sections 234A, 234B and 234C of the Act should be given after giving MAT credit under Section 115JAA. In so holding in favour of the assessee, this Court referred to the decision of the Delhi High Court in the case of CIT Vs. Jindal Exports Ltd., reported in (2009) 314 ITR 137 (Delhi) holding that the credit under Section 115JAA should be given effect to before charging of interest under Sections 234A, 234B and 234C of the Act. This was confirmed by the Apex Court in the decision reported in (2011) 330 ITR 226 (SC) in the case of Commissioner of Income Tax Vs. Tulsyan Nec Ltd., 11. Thus the issue before this Court is totally different from what was considered in the case of Commissioner of Income-Tax Vs. Chemplast Sanmar Limited,Chemplast Sanmar [(2009) 314 ITR 231 (Mad)]; consequently, we do not think the decisions would be safely relied on by either parties before us. 12. As is evident from the reading of the order of the Assessing Officer dated 28.02.2005, the assessee became entitled to refund consequent upon the deduction given on MAT credit and the TDS. 13. Thus, going by the factual details, the assessee is entitled to a refund of Rs.49,67,917/- and the deduction on TDS itself was before granting or charging any interest under any provisions of the Act. Hence, we hold that the proper course herein would be to remand the matter back to the Assessing Officer to work out interest on the refund payable to the assessee on the sum of Rs.49,67,917/- as ordered in the order of the Assistant Commissioner dated 28.02.2005 in accordance with Section 244A of the Act. 12. As is evident from the reading of the order of the Assessing Officer dated 28.02.2005, the assessee became entitled to refund consequent upon the deduction given on MAT credit and the TDS. 13. Thus, going by the factual details, the assessee is entitled to a refund of Rs.49,67,917/- and the deduction on TDS itself was before granting or charging any interest under any provisions of the Act. Hence, we hold that the proper course herein would be to remand the matter back to the Assessing Officer to work out interest on the refund payable to the assessee on the sum of Rs.49,67,917/- as ordered in the order of the Assistant Commissioner dated 28.02.2005 in accordance with Section 244A of the Act. Index:YesInternet:Yes nvsri (C.V.,J.) (T.S.S.,J.) 02.04.2014 To 1.The Commissioner of Income Tax, Chennai. 2.The Commissioner of Income Tax (Appeals)-III 121, Mahatma Gandhi Road, Chennai-600 034 121, Mahatma Gandhi Road, Chennai-600 034 3.The Income Tax Appellate Tribunal 'A" Bench, Chennai. 'A" Bench, Chennai. CHITRA VENKATARAMAN, J.AND T.S.SIVAGNANAM, J. nvsri Tax Case (Appeal).No.1367 of 2007