IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 20.04.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal)No.323 of 2007 Commissioner of Income Tax Coimbatore Appellant/Appellant v. M/s.Lambodhara Textiles Ltd., 6-B, B Block Pioneer Apartments 1075-B, Avanashi Road Coimbatore – 641 018. Respondent/Respondent Tax Case Appeal filed under section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai, dated 28.9.2006 passed in ITA No.1107/Mds/2006 against the order of the Commissioner of Income Tax (Appeals) 1, Coimbatore dated 21.2.2006 and made in Appeal No.346/05-06 against the order of the Asst Commissioner of Income Tax Commissioner Circle I (1), Coimbatore dated 23.11.2005 in PA.No/GIR.No.AAACL352413. For appellant : Mr.J.Nareshkumar, Standing Counsel for Income-tax. For Respondent: Mr.T.N.Seetharamam JUDGMENT (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN, J.) The appeal has been preferred by the revenue against the order of the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai, dated 28.9.2006 passed in ITA No.1107/Mds/2006 for the assessment year 2003-2004. 2. The material facts culled out from the statement of facts in the memorandum of grounds of appeal are as follows:- https://hcservices.ecourts.gov.in/hcservices/ The assessee filed a return of income on 28.11.2003 returning a total income of Rs.53,91,810/-. The assessee had furnished audited profit and loss account, balance sheet, tax audit report, proof of repaid taxes and other relevant enclosures and the return was processed under Section 143(1) on 2.3.2004. Thereafter intimation under Section 143(1) was served and a demand was determined at Rs.7,37,836/- after giving credit for prepaid taxes. The demand arose on account of the fact that no credit was given to the MAT paid to the assessment year 2000- 2001. Thereafter the case was selected for scrutiny and notice under Section 143(2) dated 21.10.2004 was served on the assessee. The assessing officer had charged interest under Section 234(B) and 234(C) after giving credit for MAT. Aggrieved by the order of the assessing officer on the method of computation of MAT credit, the assessee filed appeal before the Commissioner of Income-tax (Appeals), who allowed the appeal. Aggrieved by the same, the Department filed appeal before the Tribunal, which following its own judgement in the case of Chemplast Sanmar Limited held that the assessee was entitled to adjust the MAT credit first before interest under Section 234(B) and 234(C) is charged. Aggrieved by the order of the Tribunal, the revenue has filed the present appeal by formulating the following questions of law:- "1. Whether in the facts and circumstances of the case, the Tribunal is right in holding that the charging of interest under Section 234 B and C after considering the MAT credit available to the assessee was proper? 2. Whether on the facts and in the circumstances of the case, the Income Tax Tribunal is right in law in not considering the judgment of the Madras High Court reported in 263 ITR Page 306? 3. Whether on the facts and in the circumstances of the case, the Income-tax Tribunal is right in law in holding that for the purpose of computing interest credit under Section 115 JAA should be set off and the interest can be imposed only on net liability? 3. We heard the arguments of the learned counsel for the appellant and perused the materials available on record. 4. The very same issues have been considered by the Division Bench of this Court in T.C.A.Nos.887 of 2004 etc. batch on 09.04.2009. In respect of the first question of law, the Division Bench has answered in favour of the assessee and against the revenue by observing as follows by concurring with CIT vs. Jindal Experts Ltd., (2009) 222 CTR 8 (Delhi):- https://hcservices.ecourts.gov.in/hcservices/ 1."7.In respect of the first question of law, the arguments advanced by the counsel on either side are the same as the one advanced before the Delhi High Court cited supra. The Delhi High Court has considered the relevant provisions and dealt with the matter in detail and held that the credit under Section 115JAA should be given effect to before charging of interest under Section 234A, 234B and 234C of the Act. We are in agreement with the reasoning given by the Delhi High Court. The learned counsel appearing for the revenue has not produced any materials or given compelling reasons to take a contrary view with that of the Delhi High Court. In such circumstances, we answer the first question in favour of the assessee and against the revenue. 5. In respect of the other questions of law, the Division Bench has observed as follows:- "18. In the present case, the intention of the legislature is to give tax credit to tax and not to the tax and interest. Once the intention is clear, the revenue cannot rely on the Form-I to say that the MAT credit under Section 115JAA should be given only after tax and interest. Further we have answered the first question of law in favour of the assessee i.e. the MAT credit under Section 115JAA should be given effect to before charging the interest under Section 234B and 234C. Rule 12(1)(a) and Form-I cannot go beyond the provisions of the Act. Form-I cannot lay down the order of priority of adjustment of TDS, advance Tax, MAT credit under Section 115JAA which is contrary to the provisions of the Act. The order passed by the Tribunal is in accordance with law and we do not find any error or illegality in the order of the Tribunal so as to warrant interference. Accordingly, we answer the questions 2 and 3 also in favour of the assessee and as against the Revenue. Thus both the questions of law have been answered against the revenue in favour of the assessee. https://hcservices.ecourts.gov.in/hcservices/ 6. The questions of law in this case also are identical to the one considered by the Division Bench. Following the Division Bench Judgment cited supra, the appeal is dismissed since the questions of law have already been answered. Usk Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar To 1. The Commissioner of Income Tax (Appeals), Coimbatore 2. The Commissioner of Income Tax Appellate Tribunal, Chennai 'D' Bench, Chennai. 3. The Asst Commissioner of Income Tax, Commissioner Circle -1 (1), Coimbatore. 4. The Asst Registrar, Income Tax Appellate Tribunal, Rajaji Bhavan, III Floor, Besant Nagar, Chennai. + 1 cc to Mr. T. N. Seithuraman, Advocate, SR No.15840 + 1 cc to Mr. J. Naresh Kumar, Advocate, SR No.15712 GV(CO) SR/28.4.2009 T.C.(A)No.323 of 2007 https://hcservices.ecourts.gov.in/hcservices/