Our company eligible for tax credit under section 115JAA computed interest under sections 234B and 234C after deducting the tax credit available. The AO is of the opinion that it should be the other way around viz. interest under sections 234B and 234C have to be added to the tax and only on the resultant the tax credit under section 115JAA is to be reduced. Who is correct?
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Your contention is correct that interest under sections 234B and 234C have to be computed on the tax liability after reducing the tax credit under section 115JAA. You may refer to a recent decision in the case of CIT v. Chemplast Sanmar Ltd (2009) 314 ITR 231 (Mad.)
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