COMMISSIONER OF INCOME TAX Vs. CHEMPLAST SANMAR LIMITED

JUDGEMENT

(1.) COMMON Judgment: (P.P.S. Janarthana Raja, J.) In this batch of cases, the questions raised for consideration are one and the same. Therefore, they are taken up together and disposed of by a common judgment.

(2.) THE questions of law raised for consideration are as follows:

(3.) THE learned counsel appearing for the Assessee/Respondent submitted that the liability to pay interest under Section 234B can only be computed after the liability to pay advance tax is calculated, which in turn, depends on the tax payable on the current income. He further contended that the tax credit is a nature of advance tax with the department and hence, the same has to be set off against the tax payable only. It is also further contended that as per sub-Section 4 of 115JAA of the Act, tax credit shall be allowed at the stage at which the tax has become payable. It is further contended that the assessee is entitled to take into account the MAT credit under Section 115JAA, when it computes tax payable under Section 209 i.e. the tax payable on the current income less the MAT credit available. It is vehemently contended that under Section 234B and 234C of the Act, the interest can only be computed after the tax credit under Section 115 JAA is set off against the tax payable. As per provision of 234B(2) of the Act, any tax paid by the assessee under Section 140A or otherwise should be taken into consideration. THE word "or otherwise" includes the tax credit available with the department i.e. whatever manner the tax is paid, shall be taken note of in calculating the interest. THE learned counsel further contended that the interest leviable under Section 234A and 234B are only compensatory in nature and not a penal one and it is only by way of compensation in respect of the tax withheld and since, MAT credit was available at the beginning of the year and had to set off against the tax payable, no loss has been caused to the revenue, and therefore, there is no question of charging any interest thereon by way of compensation. To support the above claim, the learned counsel has relied on the decision of the Apex Court in the case of COMMISSIONER OF INCOME TAX Vs. PRANOY ROY AND ANOTHER reported in (2009) 309 ITR 231), wherein it has been held as follows: