January 2009
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.
By Kishor Karia, Chartered Accountant
Atul Jasani, Advocate
Reading Time 2 mins
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11 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.
[ CIT v. Xpro India Ltd., (2008) 300 ITR 337 (SC)]
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.
