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The Tax Publishers Allowance of MAT credit - PCIT questioning the same via revision under Section 263 *Facts:* Assessee claimed tax holiday under Section 80-IA for a period of ten years beginning from assessment year 2005-06 until assessment year 2014-15 during which MAT was applicable and paid. There were disallowances under Section 80-IA upheld until ITAT and the high court allowed assessee's claim for Section 80-IA deduction. Revenue's appeal to Apex court was rejected on 27-07-2018 (refer decision of high court - Cochin International Airport v. Dy. CIT (2018) 89 taxmann.com 142 (Ker) : 2017 TaxPub(DT) 3936 (Ker-HC). Thus finality to assessee's claim of deduction under Section 80-IA got allowed. AO denied granting MAT credit during assessment year 2013-14 and 2014-15 during which period as there was no decision to their favour and assessee had to pay taxes as per the normal tax rate under normal assessment. PCIT reopened the case alleging that because the AO did not grant the MAT credit in those two years to the assessee they ended up getting credit later on in the subsequent years thus the revenue was prejudiced and AO had not made proper inquiry of this matter and case was remanded for de novo consideration to AO. Assessee appealed to ITAT against the revision by PCIT. Held in favour of the assessee that the reopening by PCIT was unwarranted as there was prejudice to the assessee and not to the revenue by denying MAT credit. "How, we wonder, is the AOs order erroneous, much less also prejudicial, to the interest of the Revenue? All the facts and figures, duly tabulated from the record by the Pr. CIT in his order, are undisputed. The AO has only allowed the tax credit as available on record. The AO cannot presume utilization of tax credit for these two earlier years, i.e., where the same has not been actually allowed, and proceed on that basis. That is, he could not take cognizance of sums that had not crystallized upon passing of the requisite orders. That would be, plainly, presumptuous. Tax liability, unless admitted, it maybe appreciated, is only as determined by following the due process of law. On the contrary, it is the non-allowance of the tax credit, exigible on the basis of record, that would make the assessment as liable to be questioned in its respect. True, the ld. Pr. CIT stating that no credit would be available if the AO had allowed the tax credit for assessment years 2013-2014 and 2014-2015 is arithmetically correct, as the combined credit liable to be utilized for these years is Rs.40.74 crore, as against the available credit of Rs.26.15 cr. The inclusion of tax credit for assessment years 2008-09 and 2009-10, available since 26-6-2020, would decrease, but not eliminate, this shortfall. That would notthough make the assessment for the current year as erroneous. Rather, as apparent and admitted, it is the assessment for those years that could be said to be so. And as we shall see, erroneous to the prejudice of the assessee, and not the Revenue. .. A timely appeal-effect would have, on the contrary, led to the assesses being entitled to refund of the entire amount of Rs.40.74 cr., being the excess of tax under the regular provisions, over that under the MAT regime, collected by it. That is, no tax credit would arise for those years. Put differently, the assessee, on account of the appeal effect being not given by the Revenue, has been saddled with additional tax demand, which would stand refundable to it with interest, thus causing prejudice for itself. And which explains our observing earlier of the assessment being erroneous to the prejudice of the assessee, and not the Revenue.". *Ed. Note:* The workings given by the PCIT is worth noting. *Case:* Cochin International Airport Ltd. v. Dy. CIT 2023 TaxPub(DT) 4676 (Cochin-Trib)

The Tax Publishers

Allowance of MAT credit - PCIT questioning the same via revision under Section 263

Facts:

Assessee claimed tax holiday under Section 80-IA for a period of ten years beginning from assessment year 2005-06 until assessment year 2014-15 during which MAT was applicable and paid. There were disallowances under Section 80-IA upheld until ITAT and the high court allowed assessee's claim for Section 80-IA deduction. Revenue's appeal to Apex court was rejected on 27-07-2018 (refer decision of high court - Cochin International Airport v. Dy. CIT (2018) 89 taxmann.com 142 (Ker) : 2017 TaxPub(DT) 3936 (Ker-HC). Thus finality to assessee's claim of deduction under Section 80-IA got allowed.

AO denied granting MAT credit during assessment year 2013-14 and 2014-15 during which period as there was no decision to their favour and assessee had to pay taxes as per the normal tax rate under normal assessment. PCIT reopened the case alleging that because the AO did not grant the MAT credit in those two years to the assessee they ended up getting credit later on in the subsequent years thus the revenue was prejudiced and AO had not made proper inquiry of this matter and case was remanded for de novo consideration to AO. Assessee appealed to ITAT against the revision by PCIT.

Held in favour of the assessee that the reopening by PCIT was unwarranted as there was prejudice to the assessee and not to the revenue by denying MAT credit.

"How, we wonder, is the AOs order erroneous, much less also prejudicial, to the interest of the Revenue? All the facts and figures, duly tabulated from the record by the Pr. CIT in his order, are undisputed. The AO has only allowed the tax credit as available on record. The AO cannot presume utilization of tax credit for these two earlier years, i.e., where the same has not been actually allowed, and proceed on that basis. That is, he could not take cognizance of sums that had not crystallized upon passing of the requisite orders. That would be, plainly, presumptuous. Tax liability, unless admitted, it maybe appreciated, is only as determined by following the due process of law. On the contrary, it is the non-allowance of the tax credit, exigible on the basis of record, that would make the assessment as liable to be questioned in its respect. True, the ld. Pr. CIT stating that no credit would be available if the AO had allowed the tax credit for assessment years 2013-2014 and 2014-2015 is arithmetically correct, as the combined credit liable to be utilized for these years is Rs.40.74 crore, as against the available credit of Rs.26.15 cr. The inclusion of tax credit for assessment years 2008-09 and 2009-10, available since 26-6-2020, would decrease, but not eliminate, this shortfall. That would notthough make the assessment for the current year as erroneous. Rather, as apparent and admitted, it is the assessment for those years that could be said to be so. And as we shall see, erroneous to the prejudice of the assessee, and not the Revenue.

A timely appeal-effect would have, on the contrary, led to the assesses being entitled to refund of the entire amount of Rs.40.74 cr., being the excess of tax under the regular provisions, over that under the MAT regime, collected by it. That is, no tax credit would arise for those years. Put differently, the assessee, on account of the appeal effect being not given by the Revenue, has been saddled with additional tax demand, which would stand refundable to it with interest, thus causing prejudice for itself. And which explains our observing earlier of the assessment being erroneous to the prejudice of the assessee, and not the Revenue.".

Ed. Note: The workings given by the PCIT is worth noting.

Case: Cochin International Airport Ltd. v. Dy. CIT 2023 TaxPub(DT) 4676 (Cochin-Trib)