Credit for MAT before charging of interest u/s.234

Last updated: 10 February 2009

Court :
Supreme Court of India

Brief :
Substantial question of law — Whether credit for MAT is to be allowed before charging of interest u/s.234B and u/s.234C of the Act is a question of law.

Citation :
CIT v. Xpro India Ltd.

The following substantial question of law arose for determination u/s.260A of the Income-tax Act, 1961. "Whether, on the facts and in the circumstances of the case, the Hon’ble High Court was right in allowing credit for MAT, u/s.115JAA of the Income-tax Act, 1961, before charging interest u/s.234B and u/s.234C of the Income-tax Act ?" The Supreme Court held that the High Court erred in coming to the conclusion that no substantial question of law arose, and consequently the Department’s appeal was dismissed. The Supreme Court was of the view that, in the present case, the question of interpretation of S. 234B in the context of short payment of interest on advance tax arose for determination before the High Court, which warranted interpretation of S. 115JAA of the 1961 Act read with S. 234B and S. 234C. The shortage in payment according to the respondent was on account of applicability of S. 115JAA. The High Court in that connection was required to decide the nature of the levy u/s.234B, whether the levy is penal or mandatory. It had also not considered the judgment of the Bombay High Court in the matter of CIT v. Kotak Mahindra Finance Ltd., (2004) 265 ITR 119. The civil appeal was therefore allowed by the Supreme Court and the impugned judgment was set aside with the direction to the High Court to consider the above question in accordance with law.