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2011 (2) SCC 1
IN THE SUPREME COURT OF INDIA
S. H. Kapadia, CJI., K.S. Panicker Radhakrishnan,Swatanter Kumar, JJ.
Commissioner of Income Tax, Chennai - Appellant(s)
versus
Tulsyan NEC Ltd. - Respondent(s)
with
Civil Appeal Nos.10680-81/2010
CIVIL APPEAL NOs.10677-79 OF 2010
Decided on : December 16, 2010
192 ITR 187 (Delhi) – Assented to
(b) Income Tax Act, 1961 – Section 115JAA – Amount of set off – Limited to tax payable on income computed under the normal provisions of the Act less the tax payable on book profits for that year. (Para Para 5, 6, 7)
(c) Income Tax Act, 1961 – Section 115 JAA – Right to set off arises on payment of tax under Section 115JA(1) – Quantum of MAT credit, however, depends upon ultimate determination of total income for the first assessment year. (Para 12)
(d) Income Tax Act, 1961 – Section 209(1)(d) – An assessee would be entitled to set off tax credit available in terms of Section 115JAA(1) while computing quantum of advance tax. (Para 13)
(e) Income Tax Act, 1961 – Section 234B – Assessee setting off MAT credit from advance tax payable – If not correctly calculated and less tax is paid, interest u/s 234B will be attracted. (Para 18, 19)
(f) Interpretation of statute – Form prescribed under Income Tax Rules providing for setting off MAT credit against amount of tax plus interest – Directly contrary to Section 115JAA(4), hence immaterial – Further, form prescribed under the rules can never have any effect on the interpretation or operation of the parent statute. (Para 20)
Facts of the case:
The question arising in these cases is whether MAT credit admissible in terms of Section 115JAA has to be set off against the tax payable (assessed tax) before calculating interest under Sections 234A, B and C of the Income Tax Act, 1961.
Finding of the Court:
There is no merit in the appeals.
Result:
Appeals dismissed.
JUDGMENT
S. H. KAPADIA, CJI
1. Leave granted.
2. The issue involved in this batch of civil appeals, by special leave, filed by the Department relates to the question whether MAT credit admissible in terms of Section 115JAA has to be set off against the tax payable (assessed tax) before calculating interest under Sections 234A, B and C of the Income Tax Act, 1961 (the Act).
3. At the outset, it may be stated that there is no dispute in regard to eligibility of the assessee for set off of tax paid under Section 115JA. The dispute is only in regard to priority of adjustment for the MAT credit.
4. To answer the above, we set hereinbelow the provisions of Sections 115JA and 115JAA, which read as under:
"Deemed income relating to certain companies.
115JA. (1) Notwithstanding anything contained in any other provisions of this Act, where in the case of an assessee, being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 but before the 1st day of April, 2001 (hereafter in this section referred to as the relevant previous year) is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit.
(2) Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956(1 of 1956) :
Provided that while preparing profit and loss account, the depreciation shall be calculated on the same method and rates which have been adopted for calculating the depreciation for the purpose of preparing the profit and loss account laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 1956 (1 of 1956) :
Provided further that where a company has adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under the Act, the method and rates for calculation of depreciation shall correspond to the method and rates which have been adopted for calculating the depreciation for such financial year or part of such financial year falling within the relevant previous year. Explanation.--For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by--
(a) the amount of income-tax paid or payable, and the provision therefor; or (b) the amounts carried to any reserves by whatever name called; or
(c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or
(d) the amount by way of provision for losses of subsidiary companies; or
(e) the amount or amounts of dividends paid or proposed; or
(f) the amount or amounts of expenditure relatable to any income to which any of the provisions of Chapter III applies; if any amount referred to in clauses (a) to (f) is debited to the profit and loss account, and as reduced by,--
(i) the amount withdrawn from any reserves or provisions if any such amount is credited to the profit and loss account :
Provided that, where this section is applicable to an assessee in any previous year (including the relevant previous year), the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 but ending before the 1st day of April, 2001 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation; or
(ii) the amount of income to which any of the provisions of Chapter III applies, if any su
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