TMI Blog2000 (9) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... facts are that assessee, a private limited company, did not have any taxable income in the relevant previous year, except deemed income under section 115J of the Income-tax Act, 1961. The learned Assessing Officer levied interest under sections 234B and 234C for short payment of advance tax on the aforesaid deemed income. The learned Assessing Officer also levied interest under section 201(1A) on delayed deposits of tax deducted at source. Aggrieved, the assessee preferred an appeal before the CIT(Appeals) who, relying upon the ratio of decision rendered in the case of Sutlej Cotton Mills Ltd. v. Asstt. CIT [1993] 199 ITR 170 (AT) : (SB) upheld levy of interest under sections 234B and 234C of Income-tax Act. The learned CIT(App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us to quash levy of interest under sections 234B, 234C and 201(1A) of the Income-tax Act. 5. Shri Abhay Tayal, learned Senior Departmental Representative made very valiant efforts to defend the stand taken by the lower authorities. He invited our attention to Hon ble Gauhati High Court s judgment in the case of Assam Bengal Carriers Ltd. case ( supra ) wherein levy of interest under sections 234B and 234C, in similar circumstances, was upheld. Reliance was also placed on the Tribunal decision in Sutlej Cotton Mills Ltd. v. Asstt. CIT (supra). It was further submitted that when two different High Courts have expressed conflicting views, and when jurisdictional High Court is silent on the issue, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause or permit your imagination to boggle when it comes to inevitable corollaries of that state of affairs , Hon ble Gauhati High Court has held that there is no statutory exception excluding the operations of section 115J of the Act. Hon ble Karnataka High Court, on the other hand, has held that the words for the purposes of this section in Explanation to section 115J(1A) are relevant and cannot be construed to extend beyond the computation of liability to tax. In the opinion of the Hon ble Karnataka High Court, when a deeming fiction is brought under the statute, it is to be carried to its logical conclusions but without creating further deeming fiction so as to include other provisions of the Act which are not made specifically applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the High Courts based on our perceptions about reasonableness of the respective viewpoints as such an exercise will de facto amount to sitting in judgment over the views of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect of both the Hon ble High Courts, adopt an objective criterion for deciding as to which of the Hon ble High Court should be followed by us. 8. We find guidance from the judgment of Hon ble Supreme Court in the matter of CIT v. Vegetable Products Ltd. [1973] CTR (SC) 177 : [1972] 88 ITR 192 (SC) Hon ble Supreme Court has laid down a principle that if two reasonable c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The rule of resolving ambiguity in favour of the assessee does not also apply where the interpretation in favour of assessee will have to treat the provisions unconstitutional, as held in the matter of State of M.P. v. Dadabhoy s New Chirmiry Ponri Hill Colliery Co. Ltd. AIR 1972 (SC) 614. Therefore, what follows is that in the peculiar circumstances of the case and looking to the nature of the provisions with which we are presently concerned, the view expressed by the Hon ble Karnataka High Court in the case of Kwality Biscuits Ltd. case ( supra ), which is in favour of assessee, deserves to be followed by us. We, therefore, order the deletion of interest under sections 234B and 234C in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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