TMI Blog2011 (8) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... as preferred these two appeals challenging the order passed by the Tribunal which has held that section 115JB as amended by Finance Act, 2002 is not attracted for the assessment years 2001-02 and 2002-03 and consequently, no interest is payable on such advance tax. 2. ITA No. 737/2006 relates to the assessment year 2001-02 and ITA No. 181/2007 relates to assessment year 2002-03. 3. For both these years, the assessment was completed by applying the principles of section 115JB and interest was charged under sections 234B and 234C. The assessee filed an application for withdrawal of the interest charged under sections 234B and 234C on the ground that the aforesaid provisions is not applicable for these two years. The said application came to be rejected. Aggrieved by the same, the assessee preferred an appeal to the Commissioner of Income-tax (Appeals). The assessee's contention was accepted. The appeal came to be allowed and the interest charged was deleted. Aggrieved by the same, the revenue preferred an appeal to the Tribunal, which came to be dismissed affirming the order of the Appellate Commissioner. Aggrieved by the same, the revenue is in appeal. 4. The appeals were admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort, hereinafter referred to as 'the Act') deals with advance payment of tax. Section 207 reads as under:- "Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as "current income". Therefore, from the aforesaid provision, it is clear that the advance tax is payable on the total income of the assessee. 10. Section 115JB deals with the special provision for payment of tax by certain companies. Sub-section (1) of section 115JB reads as under:- "115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2001, is less than seven and one-half per cent of its book profit, [such book profit shall be deemed to be the total income of the assessee and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act w.e.f. 1-4-2001 i.e., from assessment year 2001-02 providing for levy of Minimum Alternate Tax on companies. Section 115JB conceptually differs from erstwhile section 115JA, which provided for MAT on companies, so far as it does not deem any part of whole of book profit as total income. However, the new provision of section 115JB provides that if tax payable on "total income" is less than 7.5 per cent of book profit, the tax payable under this provision shall be 7.5 per cent of book profit. 2. Instances have come to the notice of the Board that a large number of companies liable to tax under the new MAT provisions of section 115JB, are not making advance tax payments. It may be emphasized that the new provision of section 115JB is a self-contained code. Sub-section (1) lays the manner in which income-tax payable is to be computed. Sub-section (2) provides for computation of "book profit". Sub-section (5) specifies that save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company mentioned in that section. In other words, except for substitution of tax payable under the provision and the manner of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are 15th January, 15th September, 15th December and 15th March. 15. The Apex Court in the case of Govind Saran Ganga Saran v. CST [1985] 155 ITR 144 explaining the essential components for levy has held as under:- "The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity." 16. Section 4 of the Income-tax Act deals with the charge of Income-tax at the rate, which may be prescribed by the Finance Act of every year. Section 207 deals with the liability for payment of advance tax and section 209 deals with its computation based on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down that the payment of interest for delayed payment of tax is compensatory in nature. It is a suffered liability. Though such a liability could be created retrospectively, when such a liability is retrospectively created, the assessee cannot be accused of committing default and he cannot be charged with interest for such default. As the assessee was under no obligation on the date of the alleged default to pay tax at that particular rate, he cannot be accused of having committed default and made to pay interest as compensating the revenue for having not paid the money. The liability to pay advance tax on payable Income-tax is not disputed. In that view of the matter, the charging of interest on the difference in the advance tax cannot sustained. Therefore what emerges from the aforesaid discussion is: (a) The assessee is liable to pay advance tax as per the amended provisions of section 115JB for the relevant period. However, he is not liable to pay interest on the amount due as per the amended provision. (b) If he has not paid the advance tax as per the provision existing prior to amendment, he is liable to pay interest on the said amount. (c) He has no liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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