TMI Blog2002 (3) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A), Jodhpur, which was also dismissed by the CIT(A) vide his order dt. 2nd Nov., 2001. Aggrieved by the order of the CIT(A) the assessee has come in appeal before the Tribunal. 4. The learned Addl. CIT, Spl. Circle, Jodhpur, after having considered the submissions of the assessee held as under: (i) There was no apparent mistake in the intimation served on the assessee under s. 143(1) (ii) It was brought to the notice of the assessee that if the advance tax payable on capital gain was not paid on or before 31st March of the relevant previous year, the mischief of s. 234C is attracted to the case of the assessee and the proviso to s. 234C(1)(b) is of no aid to the assessee. Proviso is applicable only if the requisite conditions are fulfilled. (iii) The shortfall on account of underestimate or failure to estimate is in respect of amount of capital gains and such shortfall in payment of advance tax is made good on or before the remaining instalment of advance tax and of no instalment is remaining due then by 31st March of the financial year. In the case of the assessee if the advance tax payable would have been wholly paid by 31st March of the financial year the assessee wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99 ITR 765 (Raj); (b) Virendra Raj Lodha (2001) 71 TTJ (Jd) 697 : 25 Tax World 281 (ITAT-Jd); (c) SRF Charitable Trust vs. Union of India (1991) 100 CTR (Del) 160 : (1992) 193 ITR 95 (Del); and Board s Instruction No. 1814, dt. 4th April, 1989 and also referred to the judgment of T.S. Balram, ITO vs. Volkart Bros. Ors. (1971) 82 ITR 50 (SC). (ii) The provisions of s. 234C was inserted by Direct Tax Law (Amendment) Act, 1987, w.e.f. 1st April, 1989, providing for levy of interest for deferment of advance tax. The proviso to s. 234C(1)(b) was inserted by Direct Tax Laws (Amendment) Act, 1989, to remove hardship in respect of payment of interest under s. 234C in cases of capital gains which arises after due date of payment of instalment of advance tax. The proviso to s.234C(1)(b) reads as under: "Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of underestimate or failure to estimate. (a) any amount of capital gains; or (b) income of nature referred in sub-cl. (ix) of cl. (24) of s. 2. And the assessee has paid the whole of the amount of tax payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being accrued/arisen. It is very unreasonable and absurd interpretation to provisions of s. 234C to consider the assessee in default is non-payment of the advance tax of even those instalments which fell prior to accrual of capital gain. There was no such intention of the legislature as is evident from the Memorandum of Finance Bill reproduced hereinabove. (x) A reasonable interpretation should be adopted in calculating the interest under s. 234C. The rule of reasonable interpretation/construction must be applied while construing a statute the learned authorised representative relied upon the following case laws: (a) R.B. Jodhamal Kuthiala vs. CIT (1971) 82 ITR 570, 575 (SC) (b) Good Year India Ltd. vs. State of Haryana Ors. (1990) 188 ITR 402, 440 (SC) and (c) Allied Motors (P) Ltd. vs. CIT (1997) 139 CTR (SC) 364 : (1997) 224 ITR 677, 686 (SC). (xi) If strict literal construction leads to an absurd result and if another construction is possible apart from strict literal construction, then that construction should be preferred to the strict literal construction. In this context, the learned authorised representative relied upon the following judgments: (a) CIT vs. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to rely upon the case of Union Home Products Ltd. vs. Union of India Anr. (1995) 129 CTR (Kar) 217 : (1995) 215 ITR 758 (Kar). In this judgment it was held that s. 119(2) confers upon CBDT powers of relaxation of any of the provisions mentioned, inter alia, in ss. 234A, 234B and 234C of the Act. The CBDT vide press note dt. 21st May, 1996, empowers the Chief CIT to reduce or waive penal interest under ss. 234A, 234B and 234C under the circumstances mentioned therein. The legislature has itself provided a mechanism for reducing hardship in cases where the same deserves to be mitigated. Therefore, no relief is granted to the assessee on this count as held by the Hon ble Karnataka High Court in the case of Union Home Products Ltd. vs. Union of India Anr. Interest payable under s. 234C is compensatory and mandatory in nature. The principle of natural justice will not apply. 10. The proviso to s. 234C(1)(b) provides that the tax relatable to the capital gain, etc. is to be paid as a part of remaining instalments of advance tax which are due in the financial year whereas under the old provision of the IT Act, the assessee was required to pay whole of the advance tax relatable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Up to 15-3-2000 (Rs. 33,20,360 + 1,10,55,560) 1,43,75,920 47,15,454 Up to 31-3-2000 (Rs. 1,43,75,920 + 2,18,45,220) = Rs. 3,62,21,140 - expenses Rs. 98,968 = 3,61,22,170 1,18,91,716 Calculation of instalments of advance taxes due are as under: Upto 15-9-1999 30 per cent of Rs. 3,91,190 i.e. 1,17,360 Upto 15-12-1999 60 per cent of Rs. 10,67,119 i.e., 6,40,270 Upto 15-2-2000 100 per cent of Rs. 47,15,454 i.e., 47,15,450 Upto 31-3-2000 100 per cent of Rs. 1,18,91,716 i.e. 1,18,91,720 Interest paid by the assessee under s. 234C On Rs. 1,17,360 @ 4.5 per cent 1st instalment 5,281 On Rs. 6,40,270 @ 4.5 per cent IInd instalment 28,812 On Rs. 7,15,450 @ 1.5 per cent Final instalment 10,732 On Rs. 78,78,520 @ 1.5 per cent 1,18,178 [Tax due 16-3-2000 to 31-3-2000] 13. From the above chart, it is evident that the appellant had paid the tax in accordance with the provisions of law and in accordance with the scheme of ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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