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ACIT, Large Tax Payer Unit Centre-1, 28th Floor, World Trade Centre, Cuffe Parade Mumbai 400005 Vs. M/s. ACC Limited 121, M.K. Road Mumbai 400020
January, 21st 2015
                          "A" Bench, Mumbai

                Before Shri D. Manmohan, Vice President
            and Shri D. Karunakara Rao, Accountant Member

                         ITA No. 2253/Mum/2013
                         (Assessment Year: 2007-08)

           ACIT, Large Tax Payer Unit      M/s. ACC Limited
           Centre-1, 28th Floor, World     121, M.K. Road
           Trade Centre, Cuffe Parade      Mumbai 400020
           Mumbai 400005
                            PAN - AAACT1507C
                    Appellant                 Respondent

                   Appellant by:     Ms. S. Padmaja
                   Respondent by:    S/Shri Basant Kasat
                                     & Alpesh T. Dharod

                   Date of Hearing:       31.12.2014
                   Date of Pronouncement: 16.01.2015


Per D. Manmohan, V.P.

     This appeal by the Revenue is directed against the order passed by
CIT(A)-24, Mumbai and it pertains to AY 2007-08.

2.    The only ground urged by the Revenue reads as under: -

     "1. On the facts and in the circumstances of the case and in law, the
         Ld. CIT(A) erred allowing interest U/s. 244A of the I.T. Act, 1961
         on the refund without excluding MAT Credit component. Hon'ble
         Kerala High Court in CIT Vs. Metrolla Steels Ltd. (195 Taxman
         319) held in favour to the Income Tax department."
3.    Facts necessary for disposal of the appeal are stated in brief. The
assessee is entitled to interest under section 244A of the Act on the tax
refundable. The mode of computation of tax is the subject matter of dispute.
Assessee computed its tax liability and refund due as under: -

                   Particulars            Amounts (`)        Amounts (`)
         Tax liability on total income                       3,11,74,74,822
 Less:   Set off of MAT Credit                                  9,30,88,851
                                       2                    ITA No. 2253/Mum/2013
                                                                    M/s. ACC Limited

 Add:      Surcharge @10%                   30,24,38,597
           Education Cess @2%                6,65,36,491
 Less:     Unilateral Relief for taxes
           paid in Saudi Arabia
           TDS                                9,20,91,548
           Advance tax                     4,13,00,00,000        4,23,67,26,857
           Tax Refundable                                          84,33,65,797

According to the assessee MAT credit is the first amount to be set off against
tax payable and thereafter TDS, advance tax, etc. has to be adjusted and the
balance tax refundable should be taken into consideration for the purpose of
working out the interest payable to the assessee. In this regard the assessee
relied upon the decision of the ITAT Jodhpur in the case of P.I. Industries
Ltd. 104 TTJ 502 and also the decision of the Hon'ble Bombay High Court in
the case of Apar Industries Ltd. 323 ITR 411. Based on the view taken by the
jurisdictional High Court the CIT(A) directed the AO to compute interest
payable to the assessee under section 244A of the Act. The Revenue is
aggrieved by the view taken by the CIT(A) mainly on account of the fact that
the Hon'ble Kerala High Court, in the case of Metrolla Steels Ltd. (195
Taxman 319), observed that refund should be granted under section 244A
after reducing MAT credit given from refund amount. The Hon'ble Kerala High
Court has taken into consideration the plain language of section 115JA of the
Act and in particular the first proviso, which reads as under: -

     "Provided that no interest shall be payable on the tax credit allowed
     under sub-section (1)"
The view of the Hon'ble Kerala High Court is that the proviso expressly bars
grant of interest on tax credit refund and as a natural corollary the assessee
is entitled to interest only on the balance refund.

4.      The learned D.R. referred to the explanatory notes attached to the
Finance Act, 2006 wherein for the first time the Legislature thought it fit to
give benefit of MAT credit also and they have also made it clear that the
above amendment will take effect from 01.04.2007. In the opinion of the
learned Commissioner D.R. the assessee, for the year under consideration,
is not eligible for the benefit since the proviso to section 115JAA prior to
                                         3                 ITA No. 2253/Mum/2013
                                                                   M/s. ACC Limited

01.04.2007 restricts benefit to tax credit allowed under sub-section (1) only
which excludes MAT credit.

5.        On the other hand, the learned counsel for the assessee submitted
that the amendment is only clarificatory in nature and it anyway applies to
AY 2007-08. Even otherwise the issue stands covered by the decision of the
jurisdictional High Court and thus the learned CIT(A) is justified in directing
the AO to grant interest on tax refundable after taking into consideration the
MAT credit.

6.        We have heard the rival submissions and carefully perused the record.
Consistent with the view taken by the Hon'ble jurisdictional High Court
(supra) we are of the view that the assessee is entitled to interest on the net
tax refundable. Since the view taken by the learned CIT(A) is in consonance
with the view taken by the Hon'ble Bombay High Court and also the
clarification issued in Circular No. 14 of 2006, we do not find any infirmity
in the order passed by the learned CIT(A) and thus the appeal filed by the
Revenue is dismissed.

Order pronounced in the open court on 16th January, 2015.

                    Sd/-                                    Sd/-
            (D. Karunakara Rao)                       (D. Manmohan)
            Accountant Member                          Vice President

Mumbai, Dated: 16th January, 2015

Copy to:

     1.   The   Appellant
     2.   The   Respondent
     3.   The   CIT(A) ­ 24, Mumbai
     4.   The   CIT­ LTU, Mumbai City
     5.   The   DR, "A" Bench, ITAT, Mumbai

                                                        By Order

//True Copy//
                                                     Assistant Registrar
                                             ITAT, Mumbai Benches, Mumbai
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