COMMISSIONER OF INCOME TAX Vs. METROLLA STEELS LTD.

JUDGEMENT

(1.) The question raised in the appeal filed by the revenue is whether the Tribunal was justified in holding that Respondent-Assessee is entitled to interest under Section 244A of the Income Tax Act on the refund amount equal to the tax credit given under Section 115JAA of the Act. We have heard standing counsel appearing for the Appellant-revenue and Sri A. Kumar, counsel appearing for the Respondent-Assessee.

(2.) The facts leading to the appeal are the following. The assessment for the assessment year 2002-03 was completed under Section 115JAA on book profit and the Assessee had remitted tax liability computed for that year. Under the said assessment, the Assessee gets a tax credit of Rs. 18,98,136 to be carried over to the next year, if that years regular assessment leads to liability for tax. For the assessment year 2003-04 regular assessment was completed determining tax liability at Rs. 47.5 lakhs. After setting-off the MAT credit carried from the immediately preceding year, 2002-03, and after adjusting the pre-paid taxes, a refund was granted to the Assessee.

(3.) Standing counsel appearing for the revenue has referred to Sub-section (2) of Section 115JAA and contended that under the proviso to the said sub-section, no interest could be granted on the tax credit allowed to the Assessee under Sub-section (1). According to counsel for the revenue, interest referred to therein is the interest payable under Section 244A of the Act and so much so the first appellate authority as well as the Tribunal wrongly declared Assessees eligibility for interest on refund of tax credit adjusted under MAT scheme. Counsel for the Respondent-Assessee on the other hand contended that once tax credit is given the same partakes the character of tax payment along with pre-paid taxes including advance tax paid, tax deducted at source, etc. and therefore, the Assessee is entitled to interest on entire refund amount under Section 244A of the Act. In order to consider the controversy we have to necessarily refer to Section 115JAA of the Act, which is extracted hereunder with Sub-section (2) and proviso thereof: