TMI Blog2011 (6) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of tax in advance which was physically impossible - Decided in favour of assessee. - I.T.A. No.199 of 2006 - - - Dated:- 17-6-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. R. N. Bajoria, Mr. J. P. Khaitan, Mr. Sanjay Bhowmik, Mr. Siddharth Das, Mr. C. S. Das. For the Respondent: Md. Nizamuddin. Bhaskar Bhattacharya, J.: 1. This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against an order dated December 16, 2005 passed by the Income-tax Appellate Tribunal, D Bench, Kolkata, in Income-tax Appeal being ITA No.108/Kol/2005 for the Assessment Year 2001-02 and thereby allowing the appeal preferred by the Revenue and setting aside the order passed by the CIT (A). 2. Being dissatisfied, the assessee has come up with the present appeal. 3. The facts giving rise to filing of this appeal may be summed up thus: a) The assessee carries on business, inter alia, of manufacturing toiletries and medicines. b) As the assessee did not have any taxable income according to the normal computation provisions of the Income-tax Act for the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn on March 31, 2003 on the basis that the sum of Rs.26.51 crore credited to the profit and loss account was not deductible in computing the book profit. According to the said revised return, the book profit amounted to Rs.20,63,65,711/- entailed a tax liability of Rs.1,74,89,494/-. g) After taking into consideration the tax deducted at source of Rs.19,26,983/- and the sum of Rs.1,55,62,511/- paid on August 31, 2002, the assessee was not required to make any further payment. h) On March 31, 2004, the Assessing Officer passed an order under Section 143(3)/115JB for the Assessment Year 2001-02. The Assessing Officer computed the tax liability under Section 115JB at the same figure as shown in the assessee s revised return. However, the Assessing Officer charged interest under Section 234B of Rs.44,00,937/- and interest under Section 234C of Rs.11,78,960/- since the assessee did not pay any advance tax with reference to the liability for tax under the retrospective amended Section 115JB. i) Being dissatisfied, the assessee preferred an appeal before the Commissioner of Income-tax who by an order dated October 11, 2004 allowed the same. The Commissioner of Income-tax (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion No. (b) formulated above, the same should be answered in the negative and against the Revenue and consequently, the last question should also be answered in the negative and in favour of his client. 7. In view of the aforesaid stance taken by Mr. Bajoria, the principal question that arises for determination in this appeal is in view of the fact that the provision contained in Section 115JB of the Act was amended with retrospective operation with effect from April 1, 2001 by the Finance Act, 2002, whether the assessee was under any obligation to pay advance tax under Section 208 of the Act on the due dates mentioned in the Act for payment of advance tax so as to attract the provision contained in Section 234B and Section 234C of the Act. 8. In order to appreciate the question, it would be profitable to refer to the provision contained in Section 234B and Section 234C which are quoted below: 234-B. 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period commencing on the day following the date of determination of total income under subsection (1) of Section 143 [and where a regular assessment is made as is referred to in sub-section (1) following the date of such regular assessment] and ending on the date of the reassessment or recomputation under Section 147 [or Section 153-A], on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of Section 143 or on the basis of the regular assessment aforesaid. (4) Where, as a result of an order under Section 154 or Section 155 or Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264 or an order of the Settlement Commission under sub-section (4) of Section 245-D, the amount on which interest was payable under sub-section (1) or sub- section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss than sixty per cent of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of 13[one] per cent per month for a period of three months on the amount of the shortfall from thirty per cent or, as the case may be, sixty per cent of the tax due on the returned income; (ii) the advance tax paid by the assessee on his current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of [one] per cent, on the amount of the shortfall from the tax due on the returned income:] 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) the amount of capital gains; or (b) income of the nature referred to in sub-clause (ix) of clause (24) of Section 2, and the assessee has paid the whole of the amount of tax payable in respect of income referred to in clause (a) or clause (b), as the case may be, had such income been a part of the total income, as part of the 15[remaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 of the Act within the time prescribed under Section 211 of the Act. Those provisions are quoted below: 207. Liability for payment of advance tax. Tax shall be payable in advance during any financial year, in accordance with the provisions of Sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as current income . 208. Conditions of liability to pay advance tax. Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is [five thousand rupees] or more. 211. Instalments of advance tax and due dates. 1[(1) Advance tax on the current income calculated in the manner laid down in Section 209 shall be payable by (a) all the companies, who are liable to pay the same, in four instalments during each financial year and the due date of each instalment and the amount of such instalment shall be as specified in Table I below: TABLE I D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable to tax for the Assessment Year immediately following that Financial Year. Thus, in order to hold an assessee liable for payment of advance tax, the liability to pay such tax must exist on the last date of payment of advance tax as provided under the Act or at least on the last date of the Financial Year preceding the Assessment Year in question. If such liability arises subsequently when the last date of payment of advance tax or even the last date of the Financial Year preceding the assessment year is over, it is inappropriate suggest that still the assessee had the liability to pay advance tax within the meaning of the Act. 12. In the case before us, the last date of the relevant Financial Year was March 31, 2001 and on that day, admittedly, the appellant had no liability to pay any amount of advance tax in accordance with the then law prevailing in the country. Consequently, the appellant paid no advance tax and submitted its regular return on October 31, 2001 within the time fixed by law wherein it declared its total income and the book profit both as nil. However, consequent to the amendment of the provisions contained in Section 115JB of the Act by virtue of Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Act could be charged on the tax calculated on the book profit under Section 115JA and in other words, whether advance tax was at all payable on book profits under Section 115JA of the Act. The Supreme Court answered the said question in the affirmative and further held that the provisions of interest on default as provided in Sections 234B and 234C would also apply. We have already pointed out that Mr. Bajoria, at the very outset, conceded that the said decision should be applied for answering the first question formulated in this appeal against his client. In our opinion, the said decision is not relevant for considering the second and the third questions as to whether an assessee can be said to be a defaulter in payment of advance tax if he had no liability to make payment of such tax on the last date of a Financial Year preceding the relevant Assessment Year as such question did not arise in the said case before the Supreme Court. 16. It appears that the learned Tribunal has not at all considered the aforesaid aspect as to the liability of the assessee to make payment of the advance tax on the last day of the Financial Year i.e. March 31, 2001 when its book profit w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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