Judgment:
1. This is an appeal of the Revenue for asst. yr. 2000-01, filed against the order of the CIT(A) dt. 28th Dec, 2004.
On the facts and in the present circumstances of the case, the learned CIT(A) has erred in directing to charge interest under Sections 234B & 234C of the IT Act, 1961 after setting off of MAT credit.
3. The facts of this case are that while completing the assessment under Section 143(3) of the Act on 30th Nov., 2000, interest under Sections 234B & 234C was calculated after allowing MAT (minimum alternate tax) credit under Section 115JAA of Rs. 88,55,225. According to the learned AO for allowing of interest under Section 244A MAT credit is not covered under TDS or advance-tax and, therefore, set off of MAT credit is to be allowed after charging of interest under Sections 234B & 234C and interest under Section 244A is allowable on the balance amount of refund.
According to the learned AO, the interest under Sections 234B & 234C are chargeable at Rs. 57,73,161 and Rs. 4,93,253 respectively against Rs. 14,78,377 and Rs. nil charged at the time of processing and regular assessment. For rectifying the above mistake the AO issued a notice under Section 154 of the Act on 16th Jan., 2004. According to the assessee as per the provisions of Section 115JAA, the interest under Sections 234B & 234C is to be calculated after allowing MAT credit.
Therefore, the learned AO rectified the same and allowed MAT credit after charging interest under Sections 234B & 234C of the Act. The learned CIT(A), however, accepted the plea of the assessee. Hence, this appeal has been filed by the Department.
4. We have heard the rival submissions and perused the evidence on record.
5. The tax (MAT) credit is the first amount to be set off against the tax payable and not after advance tax and TDS. The tax payable is only the amount after set off of the credit under Section 115JAA. For the purpose of computing the interest amount of tax payable after the set off only should be taken.
6. In the very beginning, it was brought to our notice that this issue, which is raised by the AO, stands covered in the favour of the assessee by the decision of this Bench. We are aware that this Bench has been taking a similar view as has been taken by the learned CIT(A) that the issue being debatable with regard to the assessment order cannot be rectified by withdrawing MAT credit under Section 154 of the Act. The very ground taken by the Revenue, macroscopically reveals, crystal clear, that the issue of allowing set off before charging interest under Sections 234B & 234C is a debatable one which cannot be decided without resorting to long drawn arguments from both the sides. There is no dispute with regard to the settled law that in such cases, where debatable issues are involved, an order passed by the AO cannot be rectified under Section 154 of the Act.
7. We have gone through the appellate order. The learned CIT(A) has come to a conclusion after elaborating all the relevant provisions of law like Sections 115JAA, 234B & 234C of the Act. After giving detailed reasoning, he has mentioned that though, it is not specifically mentioned in Sections 234B & 234C of the Act, the set off of MAT paid in earlier years is allowable as per Sub-section (1) & (5) of Section 115JAA of the Act and set off of MAT is available against the tax and not the total amount of the tax and interest under above two charging sections. This conclusion appeals to logic besides being correct as per the plain reading of the provision of law that to allow set off of tax paid before charging interest on short payment/deferred payment of advance tax. Therefore, in our considered opinion, a demand of Rs. 52,43,039 raised by the Revenue after rectifying the order passed under Section 143(1) of the Act on 30th Dec, 2002 is not correct and hence, we confirm the order of the learned CIT(A).