INCOME TAX ACT, 1961

Section 154

Rectification - Mistake apparent - MAT credit given wrongly - Assessee pleading involvement of debatable issue in adjusting MAT credit

AO noticed that for assessment year 2011-12, because of transfer pricing adjustment of Rs. 20 crores made by AO, MAT credit allowed by AO of Rs. 56 lakhs was not allowable to assessee in assessment year 2013-14. Therefore, MAT credit availed of by the assessee and allowed by AO was not correct. Therefore, AO held that this was the mistake apparent from record, which resulted into the incorrect set-off of MAT credit amounting to Rs. 56 lakhs. Therefore, order under section 154 read with section 143 (3) wherein income of assessee remained unchanged but MAT credit was withdrawn. Assessee contended that correcting MAT credit available to assessee was a debatable issue and, therefore, AO could not have invoked power under section 154. Held: On application of a particular formula, if tax payable Under the normal computation is higher than the minimum alternate tax payable by the assessee, and if assessee has MAT credit available, same would be granted as a credit to assessee against tax liability. There is no other option available either to AO or to assessee and there was not any debatable issue involved in adjusting the MAT credit against tax liability of assessee. When MAT credit given to assessee was found to be a mistake apparent from the record. Thus, AO had correctly assumed jurisdiction under section 154.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 154

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