The Commissioner of Income Tax-IV, V. Nagarjuna Holdings Pvt.Ltd.,

ITTA/94/2012

AI Insights

The case involves an appeal by the Commissioner of Income Tax-IV, Hyderabad against Nagarjuna Holdings Pvt. Ltd., Hyderabad, concerning the treatment of Minimum Alternate Tax (MAT) credit in the computation of tax payable for the assessment year 2002-2003. The core legal question was whether the MAT credit should be applied before or after the computation of net tax payable. The Tribunal had previously ruled that MAT credit should be treated like advance tax and adjusted first, a decision which was contested in this appeal. The High Court, referencing a Supreme Court decision, affirmed the Tribunal's decision, concluding that MAT credit is akin to advance tax and should be prioritized in tax computations.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 740941 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 02-07-2013
• Assessment Year: misc
• Other Referred Cases: Chemplast Sanmar Ltd. vs. DCIT, Commissioner of Income Tax vs. Tulsyan NEC Limited
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Advance tax; Interest computation; MAT credit; Net tax payable
• Section: 234C; 234 B; 115JAA(2); 115JAA(3); 115JAA(4)

Judgement Text

"THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A. No. 94 OF 2012 DATED: 2.7.2013 Between: The Commissioner of Income Tax-IV, Hyderabad. … Appellant And Nagarjuna Holdings Pvt. Ltd., Hyderabad. … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A. No. 94 OF 2012 Judgment: (per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be admitted on the following suggested question of law: Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the MAT credit should be given first before computing the net tax payable ? This appeal is preferred in relation to assessment year 2002-2003 against the judgment and order of the learned Tribunal dated 13.2.2009. We have heard the learned counsel for the appellant and gone through the impugned order of the learned Tribunal. It appears that the learned Tribunal while following the judgment of the Chennai Bench of the Tribunal in Chemplast Sanmar Ltd., vs. DCIT reported in (2004) 83 TTJ 427, has held that the MAT credit is akin to advance tax and, therefore, it has to be adjusted first like advance tax, before computing the net tax and interest shall be computed thereafter. There is no statement or averment that the said decision rendered by the Chennai Bench of the Tribunal in the case of Chemplast has been appealed against or the same has been upset. Moreover, we find that the learned Tribunal has taken the correct view, even if it is adjudged independently since it is found that the MAT credit is akin to advance tax. Therefore, in the matter of computation, the treatment has to be made like an advance tax and adjustment has to be made first. Our aforesaid conclusion is supported by the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Tulsyan NEC Limited reported in [2011] 330 ITR 226 (SC), wherein the Supreme Court observed in paragraphs 11 and 12 thus: “11. From the above, it is evident that any tax paid in advance/pre-assessed tax paid can be taken into account in computing the tax payable subject to one caveat, viz., that where the assessee on the basis of self-computation unilaterally claims set off or the MAT credit, the assessee does so at its risk as in case it is ultimately found that the amount of tax credit availed of was not lawfully available, the assessee would be exposed to levy of interest under Section 234-B on the shortfall in the payment of advance tax. We reiterate that we cannot accept the case of the Department because it would mean that even if the assessee does not have to pay advance tax in the current year, because of his brought forward MAT credit balance, he would nevertheless be required to pay advance tax, and if he fails, interest under Section 234B would be chargeable. The consequence of adopting the case of the Department would mean that the MAT credit would lapse after five succeeding assessment years under Section 115JAA(3); that no interest would be payable on such credit by the Government under the proviso to Section 115JAA(2) and that the assessee would be liable to pay interest under Sections 234B and 234C on the shortfall in the payment of advance tax despite existence of the MAT credit standing to the account of the assessee. Thus, despite the MAT credit standing to the account of the assessee, the liability of the assessee gets increased instead of it getting reduced. 12) Lastly, it is immaterial that the relevant form prescribed under the Income Tax Rules, at the relevant time (i.e., before April 1, 2007), provided for set off of the MAT credit balance against the amount of tax plus interest i.e., after the computation of interest under Section 234B. This was directly contrary to a plain reading of Section 115JAA(4). Further, a form prescribed under the rules can never have any effect on the interpretation or operation of the parent statute.” We, therefore, do not like to interfere with the impugned judgment and order of the learned Tribunal. The appeal is accordingly dismissed. ________________________ K.J. SENGUPTA, CJ ______________________ G. ROHINI, J 02.07.2013 pnb "