SC dismisses I-T department appeals on MAT credit set-off

The Supreme Court (SC) has dismissed a batch of nearly hundred appeals moved by the Commissioner of Income Tax against the decisions of various high courts and other appellate authorities raising an important question on taxation. The question revolved on the question how advance tax has to be computed when the assessee has Minimum Alternate Tax (MAT) credit. In other words, whether MAT credit admissible in terms of Section 115JAA of the Income Tax Act has to be set off against the tax payable (assessed tax) before calculating interest under Sections 234A, B and C. There was no dispute in regard to eligibility of the assessee companies for set-off of tax paid under Section 115JA. The dispute was only in regard to priority of adjustment for the MAT credit. The Supreme Court clarified that there were some difficulties as the law stood before 2007, and therefore Parliament amended Explanation 1 to Section 234B by Finance Act, 2006 to provide along with tax deducted or collected at source, MAT credit under Section 115JAA also to be excluded while calculating assessed tax.

Relief for owners in land acquisitions
The SC has held if land is taken over from the owner even before issuing notification under the Land Acquisition Act, the owner is entitled to rent, compensation for wrongful use and occupation from the date of actual dispossession till the date of notification. In this case, Revenue Division Officer vs M Ramakrishna, the Andhra Pradesh government took over a large sweet lime orchard in 1988 without notification. The owner moved the high court complaining that he had not only lost the orchard but the earth has been so damaged by building a percolation tank that no trees would thereafter grow. The high court asked the government to pay compensation to the owner. Following this, the government issued the notification under the Land Acquisition Act in 1993. The government then argued that the damages and interest upon it would be only from the date of the notification. The high court did not agree.

‘Secrecy in award of contracts leads to abuses’
“Secrecy in the award of Government contracts is liable to result in the worst possible abuses by excluding a large segment of the community who may have no knowledge of the fact that government is likely to disburse benefits in the form of a particular public contract. Consequently, while courts have recognized that the award of public contracts by inviting tenders is the norm, exceptions have been noted in compelling situations. The exception, however, cannot be allowed to become the rule,” a division bench of the Bombay high court has stated in its judgment in the case, MIAECT (P) Ltd vs Hindustan Computers.

In this case, the Maharashtra gave the contract for supplying computers to 270 government hostels to Hindustan Computers without inviting tenders.

Therefore, the other company moved the high court. The court held that this situation was not covered by the exceptions illustrated in Supreme Court judgments. Quashing the government decision, the high court said: “No criteria were laid down by the government specifying the credentials, financial capacity, past experience or expertise which bidders would have to meet. The government seems to have been moved only on the receipt of proposals from Hindustan Computers and a few other bidders.”