TMI Blog2007 (4) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... 154. 3. The learned CIT(A) erred in confirming the order of Assessing Officer in recomputing the deduction under section 80HHC, by deducting unabsorbed investment allowance from the income eligible for the purpose of deduction under section 80HHC. The question involved is a debatable issue and cannot be made the subject-matter of rectification under section 154. 4., For these and other grounds to be further adduced at the time of hearing the order of the learned CIT(A) requires to be modified to the extent appealed against." 3. The first issue which arises for our consideration is regarding levy of interest under section 234B(3) of the Income-tax Act. 4. The facts in brief can be stated as follows: The assessee is a public sector company engaged in the manufacture and sale of fertilizers and chemicals. For the asst. year 1996-97, the original assessment of the assessee was completed under section 143(3) on 26-3-1999. Subsequently, re-assessment proceedings under section 147 were initiated and assessment under section 143(3) read with section 147 was completed on 18-3-2002. The Assessing Officer invoked section 154 for rectifying certain mistakes which as per the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards the interest payable as aforesaid and the balance, if any, shall be adjusted towards the tax payable." As per the provisions of section 140A, it is a statutory obligation on the assessee to pay the tax along with interest due if any on the basis of income declared in the return filed under section 139 or 142 or 148 etc. At the same time, the assessee has to take into consideration the pre-paid taxes like TDS and advance-tax. The assessee has to compute the interest under section 234B(1) of the Act in case of short payment or non-payment of the advance-tax and accordingly to pay the same. 7. As per the provisions of section 234B(1) if there is a failure on the part of the assessee to pay the advance-tax as per provisions of section 208 or advance-tax paid by the assessee as per the provisions of section 210 is less than 90% of the tax assessed then the assessee is liable to pay simple interest as specified for every month or part of the month from the 1st day of April of the assessment year to the date of determination of total income under section 143(1) or if subsequently regular assessment is made then till the date of regular assessment. 8. The controversy before us i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid tax under section 140A is immaterial it is based on the enhanced income computed that this interest is chargeable. Accordingly, rejecting the assessee's contentions on the issue, the additional amount of interest leviable i.e. Rs. 77,66,031 is charged." 10. When the assessee challenged the findings of the Assessing Officer before the CIT (Appeals), the CIT (Appeals), concurred with the reasoning given by the Assessing Officer. In the opinion of the CIT (Appeals), the payment of self-assessment tax under section 140A has relevance only for the purpose of computing the interest for the purpose of section 234B(1) of the Act and levy of interest under section 234B(1) proceeds on the basis of the assessed tax determined in the regular assessment. In sum and substance, both the Assessing Officer as well as the CIT (Appeals) are of the opinion that as the sub-section (3) to section 234B reference is made in respect of sub-section (1) to section 234B then sub-section (2) to section 234B has no relevance and hence ignoring the self-assessment tax paid under section 140A, interest is to be worked out under section 234B(3) of the Act. 11. We have heard the rival submissions of the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 143(1) or completion of the regular assessment then interest is to be calculated up to the date on which the tax under section 140A is to be paid. There is no controversy on the legal interpretation that if the tax paid under section 140A is still short, considering the tax determined in the regular assessment or assessment made under section 143(1), then at the first instance interest element is to be adjusted from the said tax and thereafter the interest shall be calculated on the amount by which the tax so paid together with advance-tax paid falls short of the assessed tax. 14. When the re-assessment is made, the situation may be different. In case of are-assessment made under section 147, the liability to pay the tax under section 234B(1) will be varied to the extent that the assessee shall be further liable to pay the interest on that element of tax which is increased or in other words, which is additionally determined to be payable by the assessee other than determined in the regular assessment or assessment under section 143(1). The liability of the assessee to pay the interest on the additional tax determined is for the period comprised on commencing the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Any statute should be read as a whole and one provision should be construed with reference to the other provision so as to make the rule consistent and any construction which would bring in inconsistency or repugnancy between one provision and the other should be avoided. 17. If we accept the interpretation given by the Assessing Officer as well as the CIT (Appeals), it will create a situation which is not contemplated by the Legislature when re-assessment is done after the regular assessment or assessment under section 143(1) and where the assessee has paid the tax under section 140A. The reference of section 234B(1) in section 234B(3) is to be read with reference to section 234B(2) of the Act and applying the rule of harmonious construction on the facts of the present case, interest is to be charged up to 12-6-1997, the date on which the assessee has paid the tax under section 140A. In the present case, the income of the assessee is enhanced and due to the enhanced income, additional tax liability is also determined, but at the same time, it is seen that the assessee has paid the self-assessment tax under section 140A which is more than even whatever tax is determined after re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Supreme Court has held in the case of CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd. in 224 ITR 604 (SC) that the Assessing Officer can set off the carried forward business loss of earlier years in accordance with section 72 of the I.T. Act before computing the deduction under section 80P. The Kerala High Court has again held in the case of CIT v. P. V. Narayanan (233 ITR 330) that the deduction under section 80HH should be worked out after reducing the investment allowance from the business income for the purpose of computation of deduction under section 80HHC. The above principle applies in the determination of the profits of the business for the purpose of deduction under section 80HHC. It is worthnoting that the section 32A(3) falls in the gamut of sections 28 to 43D as per which the profits and gains of business or profession are computed. Hence, the Assessing Officer has correctly reduced the profits and gains by the unabsorbed investment allowance under section 32A(3) in the computation of profits for the purpose of deduction under section 80HHC. The action of the Assessing Officer in this regard is upheld. In view of the aforesaid decisions of the Kerala ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
