Law:

Section:

Section 115JAA of the Income-tax Act, 1961, read with rule 12(1)(a) of the Income-tax Rules, 1962 - Minimum alternate tax - Assessment year 2002-03 - Whether MAT credit under section 115JAA should be given effect to before charging interest under sections 234B and 234C - Held, yes - Whether if there is a conflict between a rule and a substantial provision of Act, rule must pave way to provision of Act and, therefore, rule 12(1)(a) and Form No. 1 cannot go beyond provisions of Act and Form No. 1 cannot lay down order of priority of adjustment of TDS, advance tax and MAT credit under section 115JAA as it would be contrary to provisions of Act - Held, yes FACTS The Assessing Officer processed the assessee's return under section 143(1). While computing tax, he had not adjusted the carried forward MAT credit available to the assessee before charging the interest under section 234B and, consequently, raised demand of additional tax. On appeal, the Commissioner (Appeals) upheld the Assessing Officer's order by taking recourse to rule 12(1)(a) of the 1962 Rules which lays down that in the case of a company, the return of income is required to be furnished in Form No. 1 and Schedule G to Form No. 1 lays down the manner of computing the total tax payable by the assessee and also gives the order in which TDS, advance tax and tax credit under section 115JAA should be given effect to. However, on second appeal, the Tribunal allowed the assessee's appeal and directed the Assessing Officer to give set off of the MAT credit first, i.e., before charging of interest under sections 234B and 234C. The Tribunal held that rule 12(1)(a) is contrary to the intention of the Legislature and, hence, is not applicable. HELD Section 139(1) contemplates that the assessee being a company has to file return in the prescribed form which has to be verified in the prescribed manner and setting forth such other particulars as may be prescribed. Rule 12(1)(a) prescribes that the assessee being a company should file a return of income in Form No. 1. The said Form prescribes the manner in which the computation has to be made. Schedule G deals with statement of tax and the same is prescribed in the…

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