COMMISSIONER OF INCOME TAX Vs. SWATHY CHEMICALS LTD

JUDGEMENT

(1.) The revenue is on appeal against the order of the Income Tax Appellate Tribunal, Madras 'B' Bench, Chennai, dated 28.09.2006 passed in ITA No. 1714/Mds/2006.

(2.) The assessment year involved in this case is 2002-03. For the preceding assessment year, the assessee paid Maximum Alternate Tax (MAT) under Section 115JA of the Income Tax Act and the MAT credit was carried under Section 115JAA to be set off against the tax payable for the assessment year 2001-02. The assessing officer did not grant MAT credit in the proceedings under Section 143(1) of the Act and petition filed under Section 154 of the Act by the assessee was dismissed. The assessee appealed against the order of assessment to the Commissioner of Income Tax (Appeals), who allowed the appeal holding that MAT credit is nothing but the assessee's credit lying with the Government available to the assessee for adjustment against tax due in the subsequent years on normally computed income and the tax credit brought forward has to be automatically adjusted. The revenue carried the matter to the Tribunal, the Tribunal following its earlier order in the case of M/s. Chemplast Sanmar Ltd., and held that the assessee is entitled to adjust the MAT credit first before charging of interest under Section 234B and 234C of the Act. The revenue is thus before us in this appeal.

(3.) The appeal was admitted by this Court on the following substantial questions of law: