17 August 2009
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Decided by: ITAT, MUMBAI BENCH `E’, MUMBAI, In The case of: Sucham Finance & Investments Pvt. Ltd. v. ACIT, Appeal No.: ITA No. 6868/M/2006, Decided on: November 21, 2008.
17 August 2009
We have heard the rival contentions and carefully perused the orders. The short question here is whether credits for tax paid as provided in section 115JAA of the Act has to be given before charging of interest u/s 234A & 234B or after charging of interest u/s 234A and 234B of the Act, in the later years, when such credit is claimed. Even, before the substitution of Explanation 1 to section 234B and the unnumbered explanation to section 234C, through Finance Act 2006, no doubt various Benches of this Tribunal had held that credit for such MAT tax paid had to be first allowed before charging interest under section 234B and 234C of the Act. Decisions of the Chennai Bench in the cae of Chemplast Sanmar Ltd. v/s. DCIT, 83 TTJ 427, Jodhpur Bench of this Tribunal in Synthetic Industrial Chemicals Ltd. v/s. DCIT, 90 ITD 851, Chandigarh Bench of this Tribunal in Philips India Ltd. v. ACIT, 92 ITD 441 were all in favour of this treatment. However, the contention of the Department now is that after substitution of Explanation in section 234B and 234C of the Act, by which tax credit u/s 115JAA has been specifically allowed to be set off before for arriving at the assessed tax for charging interest under the respective section, it is implied that prior to the date of such substituted explanation coming into effect i.e. from 1-4-2007, credit of tax u/s 115JAA could not be allowed before interest was computed u/s 234B and 234C of the Act on the assessed tax. However, we do not find this argument to be attractive. Explanation as substituted by Finance Act 2006 in sections 234B and 234C does not say that tax credit should not be allowed as a set off while computing assessed tax prior to the date of such substituted explanation coming unto force. Reliance placed on the explanatory memorandum states that representations were received pointing out such tax credits under 115JAA to be not different from tax paid in advance and hence credit should be given the tax liability determined as on an assessment while calculating interest payable by the assessee under sections 234A, 234B and 234C of the Act. It does not say that the treatment prior to that date should have been different or was different. The issue of treatment of MAT credit brought forward u/s. 115JAA of the Act prior to the date had come before various Benches of this Tribunal which through the decisions mentioned (supra) had clearly laid down that such credit had to be given while computing the assessed tax for the purpose of levy interest under the respective sections. In any case, the explanatory memorandum which is appended to a Finance Bill has to be used with great circumspection as held by the Hon’ble Apex Court in Ashwinikumar Ghosh v. Arvind Boss, AIR 1952 SC 369. Justice Patanjali Shastri, the then Chief Justice of India held as under:- “As regards the property of the reference to the statement of Objects and Reasons, it must be remembered that it seeks only to explain what reasons induced the mover to introduce the Bill in the House what objects he sought to achieve. But those objects and reasons may or may not correspond to the objective which the majority of members had in view when they passed it into law. The Bill may have undergone radical changes during its passage through the House or Houses, and there is no guarantee that the reasons which led to its introduction and the objects thereby sought to be achieved have remained the same throughout till the Bill emerges from the House, as an Act of the Legislature, for they do not form part of the Bill and are not voted upon by the members. We, therefore, consider that the Statement of Objects and Reasons appended to the Bill should be ruled out as an aid to the construction of the statute”. Again in the case of Shashikant Laxman Kale v. Union of India, AIR 1990 (SC) 244 it has been held that an explanatory memorandum is easily not an accurate guide of a Financial Act. Therefore, in our opinion, there can be no logical conclusion, drawn by implication from an explanatory memorandum, to the effect that prior to the date of substituted explanation coming into effect, the position would have been opposite. On the other hand, it could be more correct to say that such substituted explanation was to give a legislative recognition to the rule of the law with regard to carry forward of tax credits u/s 115JA of the Act as laid down by various Benches of this Tribunal referred (supra). Therefore, in our opinion, the introduction of the substituted Explanation did not have any on the position as it held forte priori. In the result, we are inclined to follow the decision of the co-ordinate Benches on carry forward of MAT credit u/s 115JAAS of the Act with regard to charge of interest u/s. 234N and 234C of the Act. Therefore, the assessee’s ground No. 1 is allowed and A. O. is directed to give the assessee MAT credit available to it under law before charging interest u/s 234B and 234C of the Act. Result is that assessee’s appeal stands allowed.
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