N. Barathvaja Sankar, A.M.: - (1.) THE assessee, M/s Chemplast Sanmar Ltd. Chennai, has filed this appeal for the asst yr 2002-03 against the order dt 23rd May, 2003, of the CIT(A)-III, Chennai, raising the following grounds of appeal: "1. THE learned CIT erred in upholding the action of the AO by not adjusting the carry forward MAT credit before calculating interest under Sections 234B and 234C.
(2.) The learned CIT has failed to appreciate the fact that as per Sub-section (4) of Section 115JAA (which is reproduced as below), tax credit shall be allowed to be set off in a year when tax becomes payable on normal computation. 'The 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 115J' The learned CIT(A) erred in ignoring the submission that the logic behind Section 115JAA(3) clearly established that the tax paid under Section 115JA and provided right of set off under Section 115JAA shall be treated as tax paid ahead of advance tax Section 115JAA(3) stipulates that no interest shall be paid by the IT Department on credit available under Section 115JAA implying thereby the tax represented by it be considered similar to advance tax.
(3.) THE learned CIT(A) ought to have appreciated that the interpretation of the Department upheld by him would lead to absurd consequences. THE stand taken by the Department would require that a company wanting to avoid penal effects of interest under Sections 234B and 234C would first be called upon to pay advance tax without reckoning the credit available under Section 115JAA and claim refund of advance tax while filing the return. Further, it results in a situation where MAT credit get elapsed without being adjusted, which would lead to absurd consequences.;