TMI Blog2004 (7) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... specific section. By another additional ground, the learned Counsel had challenged the levy of interest under the above sections on the ground that the interest should be calculated on the returned income and not assessed income. In support of the first additional ground, the learned Counsel has relied on the decisions in Smt. Tej Kumari v. CIT [2001] 247 ITR 210 (Pat.), CIT v. Sushila Devi Jain [2003] 259 ITR 671 (Punj. Har.), M.G. Kalyan v. ITO [2002] 80 ITD 39 (Bang.), Veena Kanoria v. ITO [2003] 85 ITD 95 (Cal. TM), Ashok Brothers v. ITO [2002] 76 TTJ (Hyd.) 427 and CIT v. Hindustan Bulk Carriers [2003] 259 ITR 4493 (SC). 4. Regarding the levy of interest on the returned income, the learned Counsel stated that even if the same is to be levied, the same should be levied on the assessed income as defined in Explanation to section 234B of the Act. He also stated that the provisions relating to the assessed tax remained unchanged even after the amendment to section 234B of the Act. On the other hand, the ld. DR objected to the admission of the additional grounds. 5. We have considered the rival submissions. As both the additional grounds relate to the very jurisdiction of lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents available to the assessee, the calculation of the net tax payable is a process which is mostly arithmetical but generally time consuming. If therefore, the Income-tax Officer first draws up an order assessing the total income and, indicating the adjustments to be made, directs the office to compute the tax payable on that basis and then approves of it, either immediately or some time later, no fault can be found with the process, though it is only when both the computation sheets are signed or initialled by the Income-tax Officer that the process described in section 143(3) will be complete. In view of the above observations, it is clear that the Assessing Officer has to pass the assessment order. He has to determine the total income on which tax is leviable. The job of making calculations can even be performed by the office. However, it is only when the order of assessment and the computation sheet are signed or initialed by the Income-tax Officer that the process of assessment is complete." 8. This issue was again considered by the Hon'ble MP High Court in the case of Ayushajaya Construction Ltd. The appeal was preferred before the Hon'ble MP High Court, inter alia, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi), the judgment of which were delivered much after the decision in the case of Anjum M.H. Ghaswala had taken a consistent view that unless there was direction to charge interest in the assessment order under the specific sections, the levy of interest was illegal. But in all these cases, unfortunately, there is no reference to the decision of the Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala. 11. We have also perused the decision of the Hon'ble Supreme Court in the case of Kalyan Kumar Ray. We find that the Hon'ble Supreme Court in the case of Kalyan Kumar Ray has considered the meaning of assessment order in different context. There is no dispute that ITNS 150 was part of the assessment order. The purpose of ITNS 150 is to apprise the assessees their liabilities under various sections of the Income-tax Act. It is just a calculation sheet and not a direction to charge interest. Looking to the contrary views on this issue, we feel that where there is no direction to charge interest at all in the assessment order, the levy of interest under the above sections would be illegal. But, where there is a direction to charge interest in the assessment order but the specific s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next following such financial year to the date of determination of total income under sub-section (1) of section 143 or regular assessment on an amount equal to the assessed tax or as the case may be on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. Explanation I: In this section, assessed tax means: (a) For the purposes of computing the interest payable under section 140A the tax on the total income as declared in the return referred to in that section. (b) In any other case, 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." 14. There was a lot of controversy about the above provisions. The controversy was as to where an assessment has been passed under section 143(3) whether the interest under section 234B could be charged upto the date of order under section 143(3) or upto the date of determination of total income under sub-section (1) of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in certain cases. Section 234A provides that if the return of income for any assessment year is either not furnished or furnished after the due date, the assessee shall be liable to pay simple interest at the rate of 1-1/2 per cent for every month or part of a month comprised in the period. It further provides that where the return is furnished after the due date or where no return has been furnished, ending on the date of completion of the assessment under section 144, the assessee shall be liable to pay simple interest on the amount of tax on the total income as determined under sub-section (1) of section 143 or on regular assessment as reduced by the advance tax, if any, paid or deducted or collected at source. Similarly, section 234B lays down the provision for payment of interest for default in payment of advance tax. From the reading of these provisions alongwith the Explanation it is clear that tax on the total income as determined under sub-section (1) of section 143 or on regular assessment shall be deemed to be tax on the total income as declared in the return for the purpose of computing the interest payable under section 140A of the Act. It is also clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted 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." 22. From the perusal of above amendments, it is clear that as regards the period upto which the interest under section 234B was to be charged as per the amended provisions, if the regular assessment has been made then the interest is to be charged upto that date. As regards the definition of the words "assessed tax" it almost remained the same which was prior to the amendment. Prior to the amendment, as per Explanation I to section 234B, "assessed tax" meant the tax on the total income determined under sub-section (1) of section 143 or on regular assessment. As per the amended Explanation I to section 234B, the assessed tax means the tax on the total income determined under sub-section (1) of section 143 or regular assessment. Thus, while amending the section 234B as well as Explanation I, the Legislature in its own wisdom provided that where a regular assessment is made, the interest was leviable upto that date. But it did not bring any similar amendment of words "assessed ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. It is argued by the learned Counsel that the disallowance of interest could be made only if the Revenue is able to prove that the interest bearing funds have been diverted for non-business purposes. In the instant case, the Revenue has failed to do so. The reliance was placed on the decision of Lucknow Bench of the Tribunal in the case of Meenakshi Synthetics (P.) Ltd. v. Asstt. CIT [2003] 84 ITD 563. Further reliance was placed on the decision in Sutlej Cotton Mills Ltd. v. Asstt. CIT [1998] 60 TTJ (Delhi) 1, Asstt. CIT v. Shree Krishna Salt Industries [1998] 60 TTJ (Ahd.) 125, Ashok Brother's case, Dy. CIT v. Shivalik Agro Poly Products Ltd. [2000] 108 Taxman 219 (Chd. Mag.) and other cases. The learned Counsel further argued that in the year under consideration, the interest to the bank has been paid at Rs. 67,177 only whereas the Assessing Officer has made the disallowance of much larger amount. The Assessing Officer was, therefore, not justified in disallowing the interest. On the other hand, the ld. DR relied on the decision in CIT v. H.R. Sugar Factory (P.) Ltd. [1991] 187 ITR 363 (All.), CIT v. H.R. Sugar Factory [1991] 190 ITR 643 (All.) and CIT v. V.I. Baby Co. [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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