TMI Blog2007 (5) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... y dispute in the mind of the assessee with respect to charging of interest u/s 234B of the Act after the order of the ITAT on account of the issue of deduction claimed by the assessee u/s 80-O on gross basis and allowed by the ITAT on net basis. We find that the argument raised for the first time by the assessee, i.e., since the claim of deduction u/s 80-O was debatable the interest u/s 234B could not be levied against the assessee u/s 234B, is not relevant and is meaningless keeping in view the facts and circumstances because from a bare reading of provisions of section 234B, as well as the decision of Apex Court in the cases of Anjum M.H. Ghaswala and Modi Industries Ltd.[ 2001 (10) TMI 4 - SUPREME COURT] , it is evident that the Assessing Officer is duty bound to charge the interest u/s 234B of the Act as per the order of ITAT up to the date of the order of assessment passed by the Assessing Officer and not up to the date of the order passed by the Assessing Officer and after the date of the order of passed by the ITAT. Hence, now it cannot be said that in the instant case the charging of interest u/s 234B was debatable irrespective of the deduction claimed by the assessee u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in law the Ld. CIT (Appeals) was not justified in confirming the order passed by the Assessing Officer under section 154/254 of the Act because: (i) there was no mistake apparent from record in the order passed under section 254/143(3) of the Act; (ii) interest under section 234B could not be charged under section 154 of the Act since there was no directions by the Assessing Officer in the original order for charging the interest; (iii) the order against which the rectification order was passed had merged with the order of the Hon'ble ITAT and therefore the Assessing Officer had no jurisdiction to take recourse to rectification proceedings. 3. Briefly stated, the facts relating to the issue involved in these grounds of appeals are that the original assessments under section 143(3) of the Income-tax Act, 1961 were completed in these cases. While making the assessments, the Assessing Officer did not allow the claim of the assessee for deduction under section 80-O of the Act as the same was claimed by the assessee on the basis of gross amount of convertible foreign exchange received by the assessee. 4. On appeal, the CIT(A) allowed the relief to the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Forex International Drilling Co. Ltd.'s case with the facts of the instant case of the assessee, rejected the contentions of the assessee and came to the conclusion that by not charging correct interest under section 234B of the Act vide ITNS-150 the Assessing Officer committed a mistake apparent from record and hence it required rectification and accordingly he rectified the mistake and charged interest under section 234B of the Act up to the date of the order of ITAT. 9. Aggrieved with the order of the Assessing Officer, the assessee filed an appeal before the CIT(A) and reiterated the submissions made before the Assessing Officer. The CIT(A) after considering the submissions of the assessee and analyzing the provisions of section 234B and after taking into consideration the decision of the Apex Court in the case of CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1, held that levying of interest under section 234B upon the assessee was mandatory and the same has been rightly charged by the Assessing Officer by passing an order under section 154/254 of the Act because after the order passed by the ITAT there was no debate on the point of charging interest under section 234B of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the interest under section 234B of the Act up to the date of decision by the ITAT. He further contended that since there was no debate on this point after the decision of the ITAT, hence, the Assessing Officer has rightly issued a notice under section 154 of the Act and corrected his mistake which he earlier committed at the time of issuing ITNS-150. 12. We have considered the rival contentions of both the parties, perused the records and carefully gone through the orders of the tax authorities below as well as the case laws relied upon by the learned AR for the assessee. 13. In order to appreciate the proposition, whether the Assessing Officer by passing an order under section 154/254 can validly charge interest under section 234B of Income-tax Act in consequence of the order passed by the ITAT, we have looked into the relevant provision of section 234B of the Act which are reproduced as under: 234B. Interest for defaults in payment of advance tax.- (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of which the advance tax paid falls short of assessed tax. In Explanation 1, it has also been defined what is assessed tax. As per this Explanation, the assessed tax means the tax on the total income determined under sub-section (1) of section 143 or on regular assessment as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income. From the above provisions noted and discussed above, it is clear that for determining the liability under section 234B of the Act, the assessed tax is to be taken into consideration for working out the liability as noted above. It is also provided in this section itself, how the interest under section 234B of the Act is required to be calculated. 15. Whereas section 234B(4) specifically deals with a situation where the assessment made under section 143(1), 143(3) or 144 is altered/modified/revised by an order of rectification, appeal, revision or reference or even by an order of settlement passed under section 245D(4) of the Act. Interest under section 234B shall be increa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the terminal point up to which interest is payable for default in the payment of advance tax till the decision of the Apex Court in the case of Modi Industries Ltd. v. CIT [1995] 216 ITR 759, relevant page 790E-H. Because in the case of Modi Industries Ltd., the Apex Court has set this controversy at rest by making following relevant observations in their order:- 'Assessment' has been given an inclusive meaning in sub-section (8) of section 2. It includes reassessment. 'Regular assessment' has been defined in section 2(40) to mean the assessment made under section 143 or 144. In the context of sections 140A, 141 and 141A 'regular assessment' could only mean the original assessment made under section 143 or 144. Having regard to the scheme of the Act and use of the phrase 'regular assessment' in various sections of the Act, in section 214 'regular assessment' has been used in no other sense than the first order of assessment passed under section 143 or 144. If any consequential order has to be passed by the Income-tax Officer to give effect to an order passed by the higher authority that consequential order cannot be treated as 'regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee with respect to charging of interest under section 234B of the Act after the order of the ITAT on account of the issue of deduction claimed by the assessee under section 80-O on gross basis and allowed by the ITAT on net basis. 23. It further means that for the first time the issue regarding the debatability of deduction under section 80-O and charging of interest under section 234B of Income-tax Act, 1961 was only raised by the assessee when the Assessing Officer issued a notice under section 154 simply for charging of interest under section 234B up to the date of the passing of the order by him in pursuance of the order passed by the Tribunal instead of wrong working of the same in ITNS 150 up to date of the assessment order. Whereas, the only so-called debate raised by the assessee could be said to be whether interest under section 234B is to be charged up to the date of the order of assessment or up to the date of the passing of the order by him in pursuance of the order by ITAT. Hence, we find that the argument raised for the first time by the assessee, i.e., since the claim of deduction under section 80-O was debatable the interest under section 234B could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Isthmian India Maritime (P.) Ltd. and Asian Cables Corpn. Ltd. (No. 1) we find that these cases are of no assistance to the assessee for advancing the proposition that charging of interest under section 234B was debatable because the charging of interest under section 234B was not an issue under consideration before their Lordships in the cases but in those cases their Lordships were simply required to consider the issue of deduction claimed under section 80-O and while deciding that issue their Lordships held that the deduction was to be allowed on gross income and not the net income for the purposes of calculating deduction under section 80-O whereas, the simple issue under consideration before us is that in the instant case when the Tribunal has decided that the deduction under section 80-O is to be allowed to the assessee on net income whether the Assessing Officer can vary the interest under section 234B as per the order passed by the Tribunal and whether in a case the Assessing Officer comes to the conclusions that he committed a mistake in charging interest under section 234B while issuing ITNS 150, he can rectify the same by passing an order under section 154 of the Act ..... 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