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Income Tax Appellate Tribunal, F Bench, Mumbai
Before: Shri Jason P. Boaz & Shri Sandeep Gosain
This appeal by the Revenue is directed against the order of the CIT(A)- 39, Mumbai dated 07.11.2013 for A.Y. 2001-02.
The facts of the case, briefly, are as under: - 2.1 The assessee filed its return of income for A.Y. 2001-02 on 30.10.2001 declaring total income of `11,38,79,120/- under normal provisions and Book Profit of `11,95,97,648/- under section 115JB of the Income Tax Act, 1961 (in short 'the Act'). Subsequently, a revised return was filed wherein income of `7,83,83,421/- was declared under normal provisions of the Act. The case was taken for scrutiny and the assessment was completed under section 143(3) of the Act vide order dated 22.03.2004 wherein the total income under the normal provisions was assessed at `13,66,33,390/-. On appeal, the learned CIT(A) allowed the assessee relief vide order dated 21.02.2005 whereby the assessee’s income was re-computed at `6,63,87,460/-.
M/s. Uniphos Enterprises Ltd. 2.2 Subsequently, proceedings under section 147 of the Act were initiated for taking up re-assessment proceedings for A.Y. 2001-02 and notice under section 148 of the Act was issued to the assessee. The re-assessment was completed under section 143(3) r.w.s. 147 of the Act vide order dated 31.12.2007, wherein the total income of the assessee under normal provisions was determined at `7,29,60,700/- thereby granting the assessee refund of `8,75,000/-. Subsequently, the Assessing Officer (AO) issued notice under section 154 of the Act, on the grounds that excess MAT credit was given resulting in under charging of interest under section 234B and 234D of the Act and passed orders in this regard on 16.01.2013. 2.3 Aggrieved by the order under section 154 of the Act dated 16.01.2013 for A.Y. 2001-02, the assessee preferred an appeal before the CIT(A)-39, Mumbai. The learned CIT(A) disposed off the assessee’s appeal vide the impugned order dated 07.11.2013 allowing the assessee partial relief.
Revenue is aggrieved by the order of the CIT(A)-39, Mumbai dated 07.11.2013 for A.Y. 2001-02 and has preferred the appeal raising the following grounds: - “
1. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing interest u/s. 244A on MAT credit i.e. taxes paid u/s. 115JA without considering that proviso to sub section 2 of section 115JA specifically provides that no interest shall be payable on tax credit allowed u/s. 115JA(1).
2. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in following the decision of the CIT vs. Jindal Exports Ltd. (314 ITR 137 (Del) wherein the Hon'ble Delhi High Court had rightly held that credit u/s. 115JAA should be given before charging of interest 234B & 234C, for which specific provisions is in these sections to allow credit of same before charging interest u/s. 234B & 234C, and no such provision is prescribed for allowed credit.
4. Ground No. 1 4.1 In this ground, the Revenue contends that the learned CIT(A) erred in allowing interest under section 244A of the Act on MAT credits, i.e. on taxes paid, under section 115JA of the Act without considering the proviso to sub- section 2 to section 115JAA which provides that no interest shall be payable on tax credit allowed under section 115JA(1) of the Act. The learned D.R.
M/s. Uniphos Enterprises Ltd. was heard in support of the grounds raised and he placed strong reliance on the order of the AO in this regard. 4.2 Per contra, the learned A.R. for the assessee supported the findings of the learned CIT(A) on this issue. It is submitted that the learned CIT(A) had rightly followed the order of the Hon'ble Bombay High Court in the case of APAR Industries Ltd. (2010) 323 ITR 411 (Bom) to hold that interest under section 244A of the Act is allowable on the refundable taxes arrived at after giving credit of brought forward MAT from the gross demand. The learned A.R. for the assessee submitted that in view of the above, Revenue’s ground is liable to be dismissed. 4.3.1 We have heard the rival contentions and perused and carefully considered the material on record including the judicial pronouncement cited. The learned CIT(A) at paras 7 and 8 of her order, following the decisions of the Hon'ble Bombay High Court in the case of APAR Industries Ltd. (supra) has held as under: - “7. As regards to the grounds raised with regard to the interest under s. 244A as per the proviso to section 115JAA no interest shall be payable on the tax credit allowed under sub-section 1(A). However, it has been stated by the “Hon'ble High Court” in the case of APAR Industries Ltd., interest under s. 244A is allowable. It is hereby clarified that though no interest is due, which is in accordance with the proviso to section 115JAA, but once the credit is given and there is still tax payable and further credit is given to the TDS and advance tax, then refund, if any can be said to have been originating from payment of advance tax or credit of TDS and the assessee in this case becomes entitled to interest in terms to section 244A of the Act. In drawing this conclusion reliance is placed on the decision of the order of the ITAT Delhi Bench in the case of DCIT vs. Bharat Aluminum Ltd. pronounced on 19.02.2010, copy of which order is placed on record.
8. On the basis of the above discussion, it is held that the MAT credit be allowed before giving effect to TDS and advance tax paid and interest under s. 244A is subject to the findings as contained in paragraph 6 above.” 4.3.2 We have carefully perused the decision of the Hon'ble Bombay High Court in the case of APAR Industries Ltd. (323 ITR 411) (Bom) and find that one of the questions before the Hon'ble High Court was whether interest under section 244A of the Act was allowable on the refundable taxes arrived M/s. Uniphos Enterprises Ltd. at after giving credit of brought forward MAT from the gross demand. Their Lordships held this issue in favour of the assessee. Respectfully following the aforesaid decision of the Hon'ble Bombay High Court in the case of APAR Industries Ltd. (supra), we hold and direct that assessee is entitled to be allowed interest under section 244A of the Act on refundable taxes after giving credit of brought forward MAT credit. Consequently, ground No. 1 of the Revenue’s appeal is dismissed.
Ground No. 2 5.1 In this ground, Revenue contends that the learned CIT(A) erred in following the decisions of the Hon'ble Delhi High Court in the case of Jindal Exports Ltd. (314 ITR 137( (Del) that credit under section 115JA of the Act to be allowed on brought forward MAT credit from gross demand before charging interest under section 234B and 234C of the Act. The learned D.R. was heard in support of the grounds raised and he supported the order of the AO on this issue. 5.2 Per contra, the learned A.R. for the assessee contended that there was no error in the impugned order of the learned CIT(A) on this issue; in following the decision of the jurisdictional High Court in the case of APAR Industries Ltd. (supra) to hold that credit for brought forward MAT is to be allowed from the gross demand before charging interest under section 234A and 234B of the Act. It was also submitted that the decisions of the Hon'ble Delhi High Court in the case of Jindal Exports Ltd. (2009) 314 ITR 137 (Del), referred to and contested in Revenue’s ground No. 2, has been affirmed by the Hon'ble Apex Court in the case of CIT vs. Tulsyan NEC Ltd. (2011) 330 ITR 226 (SC). 5.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial decisions cited. We find that the learned CIT(A) at para 6 of the impugned order, following the decision of the Hon'ble Bombay High Court in the case of APAR Industries Ltd. (supra) has held as under: -
I have very carefully considered the matter. The issue to be considered is whether the MAT credit as available ought to be first set M/s. Uniphos Enterprises Ltd. off against the tax on total income before adjusting the amount of advance tax and tax deducted at source. Section 115JAA(1) allows credit for tax paid under s. 15JAA(1). The credit available is thus in respect of tax paid. As per the provisions of section 234B the liability to pay interest arises when there is failure to pay such tax or where the advance tax paid is less than 80% of the assessed tax. Explanation (1) to section 234B inserted with effect from 1st April, 2007 defined the term "assessed tax" to also account for tax credit allowed to be set off in accordance with the provisions of section 115JAA. The nature corollary arises is that prior to the substitution to the explanation (1) section 234B by the Finance Act of 2006 MAT credit could not be reckoned while computing the liability to pay interest under s. 234B. However, the said view has been overruled by the decision of the Hon'ble High Court of Bombay in the case of CIT vs. APAR Industries Ltd. 2010 - TIOL- 255-HC-MUM-IT. The Hon'ble High Court of Bombay after analyzing the provisions of section 234B and 115JAA has categorically held that the said amendment to section 234B is clarificatory in nature and consequently even prior to the amendment the credit to which the assessee was entitled under s. 115JAA could not ignored in determining the liability to pay interest under s. 234B. It has been held by the Hon'ble High Court that an amendment which is intended to remove an ambiguity in the interpretation of a section must of necessity be regarded as clarificatory. If it is clarificatory in nature, it is expressive of a position in law which Parliament intended to hold the field at all material times and must consequently be regarded as operating with retrospective effect. Holding that Explanation (1) to section 234B brought about by the Finance Act 2006 is clarificatory or curative in nature, the Hon'ble High Court has held that the credit for brought forward MAT is to given from gross demand before charging interest under s. 234B/234A. Hence, drawing support from the said judgement of the Hon'ble High Court of Bombay, the A.O is directed to first set off the MAT credit as available before adjusting the amount of advance tax and tax deducted at source. It is held accordingly.” 5.3.2 We have carefully perused the decision of the Hon'ble Bombay High Court in the case of APAR Industries Ltd. (323 ITR 411) (Bom) and find that one of the questions before the Hon'ble High Court was whether credit for brought forward MAT is to be allowed from the gross demand before charging interest under section 234B of the Act. Their Lordships decided the issue in favour of the assessee holding that credit for brought forward MAT is to be given from gross demand before charging interest under section 234B of the Act. Respectfully following the aforesaid decision of the Hon'ble Bombay High Court in the case of APAR Industries Ltd. (supra), we hold that credit for brought forward MAT is to be given from gross demand before