1 IN HIGH COURT OF JUDICATURE AT MADRAS DATE : 19.01.2015 CORAM HONOURABLE MR. JUSTICE R.SUDHAKAR AND HONOURABLE MR. JUSTICE R.KARUPPIAH T.C.A. NO. 1078 OF 2007 Commissioner of Income Tax Chennai. Appellant - Vs - Mangal Tirth Estates Ltd. 769, Mount Road Chennai 600 002. Respondent Appeal filed under Section 260-A of Income Tax Act, against order dated 28.02.2007, passed by Income Tax Appellate Tribunal, 'B' Bench, Chennai, made in ITA No.2927/Mds/04. For Appellant : Mr. T.R.Senthil Kumar For Respondents : Mr. Venkatnarayanan JUDGMENT (DELIVERED BY R.SUDHAKAR, J.) Revenue, aggrieved by order passed by Income Tax Appellate Tribunal in dismissing appeal filed by it, is before this Court by filing present appeal. This Court, vide order dated 17.07.2007, admitted appeal on following substantial questions of law:- 1) Whether on facts and in circumstances of case, 2 Tribunal was right in law in holding that amenities charges paid for central air conditioning of shops sold should be treated only as advance and not as trading receipt? 2) Whether, on facts and in circumstances of case, Tribunal was right in holding that receipt for allotment of car park should be treated as returnable deposit when as per sale deed, ownership of shop and car park are inseparable? 3) Whether, on facts and in circumstances of case, Tribunal was right in holding that MAT credit is to be set off from tax payable before setting off tax deducted at source and advance tax paid? 4) Whether on facts and in circumstances of case, MAT credit can be given priority of set off against tax payable, contrary to scheme of Schedule G of Form 1? 2. assessee was engaged in business of construction and sale of multi storeyed office-cum-shopping complex. For assessment year 2001-2002, assessing officer, inter alia, made addition on account of amenity charges to tune of Rs.79.26 Lakhs paid by buyers for air conditioning shops and also made additions on amount received for car park. assessing officer calculated interest payable under Sections 234B and 234C and gave credit for MAT thereafter. Aggrieved by said assessment, assessee preferred appeal before CIT (Appeals), who allowed appeal following Tribunal's order for assessment year 1990-1991 and 1992-1993 in ITA Nos.1565 and 2037/Mds/94 with respect to air conditioning and car park and also directed assessing officer to set off MAT credit before calculation of interest under Sections 234B and 234C. 3. Aggrieved by said order of CIT (Appeals), Revenue preferred appeal before Income Tax Appellate Tribunal. Tribunal also, by following its own order in 3 assessee's own case in ITA Nos.1565 and 2037/Mds/94 for assessment year 1990-1991 and 1992-1993 with regard to air conditioning and car park and by following its own order in case of Chemplast Sanmar, held that assessee is entitled to MAT credit first before charging of interest under Sections 234B and 234C, allowed appeal. Aggrieved by said order of Tribunal, Revenue is before this Court by filing present appeal. 3. Heard learned standing counsel appearing for Department and learned counsel appearing for respondent. 4. It is submitted by counsel on either side that first two substantial questions of law is squarely covered in favour of Department in assessee's own case reported in 303 ITR 366 (Commissioner of Income Tax Vs Mangal Tirth Estates Ltd.), wherein identical questions of law have been decided in favour of Revenue. Accordingly, substantial questions of law Nos. 1 and 2 are answered in favour of Revenue and against assessee. 5. Insofar as 3rd and 4th substantial questions of law raised with regard to demand made by Department claiming interest under Sections 234B and 234C before giving credit for MAT (Minimum Alternative Tax), it is submitted by learned counsel on either side that above two issues have been decided in favour of assessee by Hon'ble Supreme Court in case of Commissioner of Income Tax Vs Tulsyan NEC Ltd. (330 ITR 226), wherein Supreme Court held as under :- To answer, we need to look at section 234B. Under that section, assessed tax means tax on total income determined under section 143(1) or on regular assessment under section 143(3) as reduced by amount of tax deducted or collected at source in accordance with provisions of Chapter XVII on any income which is subject to such deduction or collection and which 4 is taken into account in computing such total income. definition, thus, at relevant time excluded MAT credit for arriving at assessed tax. This led to immense hardship. position which emerged was that due to omission on one hand MAT credit was available for set off for five years under section 115JAA but same was not available for set off while calculating advance tax. This dichotomy was more spelt out because section 115JAA did not provide for payment of interest on MAT credit. To avoid this situation, Parliament amended Explanation 1 to section 234B by Finance Act, 2006 with effect from April 1, 2007 to provide along with tax deducted or collected at source, MAT credit under section 115JAA also to be excluded while calculating assessed tax. From above, it is evident that any tax paid in advance/pre-assessed tax paid can be taken into account in computing tax payable subject to one caveat, viz, that where assessee on basis of self-computation unilaterally claims set off or MAT credit, assessee does so at its risk as in case it is ultimately found that amount of tax credit availed of was not lawfully available, assessee would be exposed to levy of interest under section 234B on shortfall in payment of advance tax. We reiterate that we cannot accept case of Department because it would mean that even if assessee does not have to pay advance tax in current year, because of his brought forward MAT credit balance, he would nevertheless be required to pay advance tax, and if he fails, interest under section 234B would be chargeable. consequence of adopting case of Department would mean that MAT credit would lapse after five succeeding assessment years under section 115JAA(3) ; that no interest would be payable on such credit by Government under proviso to section 115JAA(2) and that assessee would be liable to pay interest under sections 234B and 234C on shortfall in payment of advance tax despite existence of MAT credit standing to account of assessee. Thus, despite MAT credit standing to account of assessee, liability of assessee gets increased instead of it getting reduced. Accordingly, substantial questions of law Nos.3 and 4 are answered in favour of 5 assessee and against Revenue. 6. In result, appeal stands ordered accordingly. However, in circumstances, there shall be no order as to costs. (R.S.J.) (R.K.J.) 19.01.2015 Index : Yes/No Internet : Yes/No GLN To 1. Commissioner of Income Tax Chennai. 2. Income Tax Appellate Tribunal 'B' Bench, Chennai. 6 R.SUDHAKAR, J. AND R.KARUPPIAH, J. GLN T.C.A. NO. 1078 OF 2007 19.01.2015 Commissioner of Income-tax, Chennai v. Mangal Tirth Estates Ltd