THE COMMISSIONER OF INCOME TAX -V vs. M/S NATIONAL FERTILIZERS LIMITED

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 532/2013 . THE COMMISSIONER OF INCOME TAX -V..... Appellant . Through Mr. Sanjeev Sabharwal, Sr. Standing Counsel. . . . versus . . . M/S NATIONAL FERTILIZERS LIMITED ..... Respondent . Through Mr. Ved Jain, Advocate. . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE SANJEEV SACHDEVA . . . O R D E R . 26.11.2013 . . . Revenue by this appeal under Section 260A of the Income Tax Act, 1961 (Act) impugns order dated 26th March, 2013 passed by the Income Tax Appellate Tribunal in the case of National Fertilizers Limited in respect of assessment year 2003-04 on the question of charging of interest under Section 234B and C on the MAT credit under Section 115JAA of the Act. . The issue is covered against the Revenue and in favour of the assessee by decision of the Supreme Court in Commissioner of Income Tax Vs. Tulsyan Nec Ltd. (2011) 330 ITR 226 wherein it has been held as under:- . ?9.?We have discussed hereinabove the scheme of Section 115-JA(1) and Section 115-JAA. The entire scheme of Sections 115-JA(1) and 115-JAA shows that if an assessee is entitled to a tax credit as a consequence of the assessee making payment of tax under Section 115-JA(1) in the year one, then, the set-off of such tax credit follows as a matter of course once the conditions mentioned in Section 115-JAA are fulfilled and the grant of such credit is not dependent upon determination by the AO save and except that the ultimate amount of tax credit to be allowed will be dependent upon the final determination of the total income for the first assessment year. There is no provision under Section 115-JAA which postpones the right of the assessee to claim set-off to the determination of the total income by the AO in the first assessment year. Entitlement/right to claim set-off is different from the quantum/quantification of that right. Entitlement of MAT credit is not . dependent upon any action taken by the Department. However, quantum of tax credit will depend upon the assessment framed by the AO. Thus, the right to set-off arises as a result of the payment of tax under Section 115-JA(1) although quantification of that right depends upon the ultimate determination of total income for the first assessment year. Further, an assessee has a right to take into account the set-off even while estimating its liability to pay advance tax on the ?current income? in accordance with the provisions of Chapter XVII(C). Although Section 209(1)(d) does not make any specific provision either before or after the amendments carried out by the Finance Act, 2006 to the effect that an assessee is entitled to set off the tax credit that would be available in terms of Section 115-JAA(1) while computing the quantum of advance tax that is to be paid, it must follow that an assessee would be entitled to do so otherwise it results in absurdity viz. that an assessee pays advance tax on the footing that it is not entitled (when in fact it is so entitled as discussed above) to the credit and thereafter claims a refund of such advance tax paid as a consequence of the set-off. Moreover, when an AO makes an intimation under Section 143(1) he accepts the return filed by the assessee to which the AO may make an adjustment and consequently makes a demand or refund. Section 143(1) provides that where a return is made under Section 139 and if any tax or interest is found due on the basis of such return after adjustment of any TDS, any advance tax, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest, then, without prejudice to provisions of sub-section (2), an intimation will be sent to the assessee specifying the amount so payable and such intimation shall be deemed to be a notice of demand under Section 156 and all the provisions of the Act shall apply thereto. This section itself makes it clear that whilst the AO determines the tax payable he has to give credit for all taxes paid either by way of deduction at source, advance tax, self-assessment tax or tax paid otherwise which would include or which cannot exclude tax credit under Section 115-JAA(1).? . . . In view of the aforesaid position, the present appeal is dismissed. . . . SANJIV KHANNA, J. . . . . . . . . . SANJEEV SACHDEVA, J. . NOVEMBER 26, 2013 . NA . . . $ 53 .