Acc Ltd, Mumbai vs Department Of Income Tax

This appeal by the Revenue is directed against the order passed by CIT(A)-24, Mumbai and it pertains to AY 2007-08.

2. The only ground urged by the Revenue reads as under: -

"1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred allowing interest U/s. 244A of the I.T. Act, 1961 on the refund without excluding MAT Credit component. Hon'ble Kerala High Court in CIT Vs. Metrolla Steels Ltd. (195 Taxman

319) held in favour to the Income Tax department."

3. Facts necessary for disposal of the appeal are stated in brief. The assessee is entitled to interest under section 244A of the Act on the tax refundable. The mode of computation of tax is the subject matter of dispute. Assessee computed its tax liability and refund due as under: -

Particulars Amounts (`) Amounts (`) Tax liability on total income 3,11,74,74,822 Less: Set off of MAT Credit 9,30,88,851 3,02,43,85,971 2 ITA No. 2253/Mum/2013 M/s. ACC Limited

Add: Surcharge @10% 30,24,38,597 Education Cess @2% 6,65,36,491 3,39,33,61,060 Less: Unilateral Relief for taxes 1,46,35,309 paid in Saudi Arabia TDS 9,20,91,548 Advance tax 4,13,00,00,000 4,23,67,26,857 Tax Refundable 84,33,65,797

According to the assessee MAT credit is the first amount to be set off against tax payable and thereafter TDS, advance tax, etc. has to be adjusted and the balance tax refundable should be taken into consideration for the purpose of working out the interest payable to the assessee. In this regard the assessee relied upon the decision of the ITAT Jodhpur in the case of P.I. Industries Ltd. 104 TTJ 502 and also the decision of the Hon'ble Bombay High Court in the case of Apar Industries Ltd. 323 ITR 411. Based on the view taken by the jurisdictional High Court the CIT(A) directed the AO to compute interest payable to the assessee under section 244A of the Act. The Revenue is aggrieved by the view taken by the CIT(A) mainly on account of the fact that the Hon'ble Kerala High Court, in the case of Metrolla Steels Ltd. (195 Taxman 319), observed that refund should be granted under section 244A after reducing MAT credit given from refund amount. The Hon'ble Kerala High Court has taken into consideration the plain language of section 115JA of the Act and in particular the first proviso, which reads as under: -

"Provided that no interest shall be payable on the tax credit allowed under sub-section (1)"

The view of the Hon'ble Kerala High Court is that the proviso expressly bars grant of interest on tax credit refund and as a natural corollary the assessee is entitled to interest only on the balance refund.

4. The learned D.R. referred to the explanatory notes attached to the Finance Act, 2006 wherein for the first time the Legislature thought it fit to give benefit of MAT credit also and they have also made it clear that the above amendment will take effect from 01.04.2007. In the opinion of the learned Commissioner D.R. the assessee, for the year under consideration, is not eligible for the benefit since the proviso to section 115JAA prior to 3 ITA No. 2253/Mum/2013 M/s. ACC Limited

01.04.2007 restricts benefit to tax credit allowed under sub-section (1) only which excludes MAT credit.

5. On the other hand, the learned counsel for the assessee submitted that the amendment is only clarificatory in nature and it anyway applies to AY 2007-08. Even otherwise the issue stands covered by the decision of the jurisdictional High Court and thus the learned CIT(A) is justified in directing the AO to grant interest on tax refundable after taking into consideration the MAT credit.

6. We have heard the rival submissions and carefully perused the record. Consistent with the view taken by the Hon'ble jurisdictional High Court (supra) we are of the view that the assessee is entitled to interest on the net tax refundable. Since the view taken by the learned CIT(A) is in consonance with the view taken by the Hon'ble Bombay High Court and also the clarification issued in Circular No. 14 of 2006, we do not find any infirmity in the order passed by the learned CIT(A) and thus the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 16th January, 2015.

Sd/- Sd/- (D. Karunakara Rao) (D. Manmohan) Accountant Member Vice President

Mumbai, Dated: 16th January, 2015

Copy to:

1. The Appellant 2. The Respondent 3. The CIT(A) - 24, Mumbai 4. The CIT- LTU, Mumbai City 5. The DR, "A" Bench, ITAT, Mumbai

By Order

//True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.