9911796707
TMI Blog2011 (3) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... ") against the order of the Income Tax Appellate Tribunal, Chandigarh dated 18.11.2002 in I.T.A. No.81/2001 proposing to raise following substantial question of law:- "Whether on the facts and circumstances of the case, the Hon'ble ITAT is right in law in upholding the I.T.A. No.176 of 2003 decision of the C.I.T.(A) that interest under sec.234B and 234C cannot be charged in the cases where income of the assessee is computed as per provisions of Section 115JA of the Income Tax Act, 1961?" 2. The Assessing Officer invoked the provisions of Section 115JA and computed tax on the book profit of the assessee. It was also held that the assessee was liable to pay interest under Sections 234B and 234C of the Act. On appeal, the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was bound to pay advance tax under the said scheme of the Act. Section 115J/115JA of the Act were special provisions which provided that where in the case of an assessee, the total income as computed under the Act in respect of any previous year relevant to the assessment year is less than 30% of the book profit, the total income of the assessee shall be deemed to be an amount equal to 30% of such book profit. The object is to tax zerotax companies. 8. Section 115J was inserted by Finance Act, 1987 w.e.f. 1.4.1988. This section was in force from 1.4.1988 to 31.3.1991. After 1.4.1991, Section 115JA was inserted by Finance Act of 1996 w.e.f. 1.4.1997. After insertion of Section 115JA, Section 115JB was inserted by Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Karnataka High Court in the case of Kwality Biscuits Ltd. v. CIT reported in (2000) 243 ITR 519 and, according to the Karnataka High Court, the profit as computed under the Income Tax Act, 1961 had to be prepared and thereafter the book profit as contemplated under Section 115J of the Act had to be determined and then, the liability of the assessee to pay tax under Section 115J of the Act arose, only if the total income as computed under the provisions of the Act was less than 30% of the book profit. According to the Karnataka High Court, this entire exercise of computing income or the book profits of the company could be done only at the end of the financial year and hence the provisions of Sections 207, 208, 209 and 210 (predecessor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity Biscuits stood affirmed. However, the Karnataka High Court has thereafter in the case of Jindal Thermal Power Company Ltd. v. Dy. CIT reported in (2006) 154 TAXMAN 547 distinguished its own decision in case of Kwality Biscuits Ltd. (supra) and held that Section 115JB, with which we are concerned, is a self-contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under Section 115JB, it was liable to pay interest under Sections 234B and 234C of the Act. Thus, it can be concluded that interest under Sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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