Opinion Of Eminent Legal Luminaries On Controversial Issues

Book profit – Deemed income – Tax credit – Availment of MAT credit u/s. 115JAA.

QUERY: Can availment of MAT credit be deferred. In other words, assessee wants to pay regular tax and does not wish to utilise available MAT credit for reducing the current tax liability. Assessee wishes to utilise available MAT credit in future years. Is there any bar in his doing so?
ANSWER: No, subject to the provisions of sub-sections (3A) to (5) of section 115JAA. The sections read as under:
(3A) The amount of tax credit determined under sub-section (2) shall be carried forward and set-off in accordance with the provisions of sub-section (4) and sub-section (5) but such carry forward shall not be allowed beyond the fifteenth assessment year immediately succeeding the assessment year in which tax credit becomes allowable under sub-section (1A).
(4) Tax credit shall be allowed set-off in a year when tax becomes payable on the total income computed in accordance with the provisions of this Act other than section 115JA or section 115JB as the case may be.
(5) Set-off in respect of brought forward tax credit shall be allowed for any assessment year to the extent of the difference between the tax on his total income and the tax which would have been payable under the provisions of sub-section (1) of section 115JA or section 115JB, as the case may be for the assessment year.

In CIT v. Tulsyan NEC Ltd. [330 ITR 227], the Supreme Court held that the fact that the amount of credit to be allowed or to be set off is not frozen and is ambulatory does not take away / destroy the right of the assessee to the amount of tax credit.

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