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TMI Blog2012 (5) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... or during the hearing of the appeal." 2. This appeal, earlier disposed vide order dated 29.10.2010 was recalled in MA no.121/del./2011 vide order dated 5.8.2011. Adverting now to ground no.1 in the appeal, facts, in brief, as per relevant orders are that return declaring book profits of Rs.923,02,07,861/- in terms of provisions of sec. 115JB of the Incometax Act, 1961 (hereafter referred to as the Act) filed on 27th October, 2007 by the assessee, was processed on 25th February, 2009 u/s 143(1) of the Act, resulting in refund of Rs. 3,84,20,761/-. While processing the return, the Assessing Officer (in short A.O.) noticed that the assessee paid following amount of advance tax: Date Amount [In Rs.] 14.6.2005 3,50,00,000 15.9.2005 11,00,00,000 14.12.2005 31,00,00,000 14.3.2006 63,00,00,000 Total 108,50,00,000 2.1. Since the assessee deferred its advance tax liability and failed to pay various instalments of advance tax at the prescribed percentage in terms of provisions of sec. 211 of the Act, the AO levied interest of Rs.2,24,28,120/- u/s 234C of the Act while processing the return. Subsequently, on 23.3.2009, the assessee filed an application 154 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Therefore, levy of interest u/s 234B and 234C is not possible in such case where MAT income is deciding factor for chargeability of tax. 6. The debatableness of the issue is also apparent from the judgments of various High Courts as discussed above. The Madras High Court in the case of Geetha Ramakrishna has given the judgment in favour of the Revenue, whereas in the case of Snowcem the Bombay High Court has given the judgment in favour of the assessee. In view of such legal position and keeping into consideration the jurisdiction available u/s 143(1) of the Act, which is akin to the jurisdiction available u/s 154 of the Act, the interest as charged by the Assessing Officer u/s 234C of the Act in processing of return u/s 143(1) is not in accordance with law and is required to be deleted. It is again reminded that the Assessing Officer had not charged 234C interest u/s 143(1) on the same income computed under MAT. The Assessing Officer is directed to delete the interest charged u/s 234C of the Act at Rs.2,24,28,130/-." 4. The Revenue is now in appeal before us against the aforesaid findings of learned CIT(A).The ld. DR while supporting the order of the AO, contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent after the expiry of one year from the end of the financial year in which the return is made: Provided also that where the return made is in respect of the income first assessable in the assessment year commencing on the 1st day of April, 1999, such intimation may be sent at any time up to the 31st day of March, 2002." 6.1 It may be pointed out that substantial changes have been made to section 143(1) of the Act with effect from June 1, 1999. Up to March 31, 1989, after a return of income was filed the AO could make an assessment under section 143(1) without requiring the presence of the assessee or production by him of any evidence in support of the return. Where the assessee objected to such an assessment or where the officer was of the opinion that the return was incorrect or incomplete or the officer did not complete the assessment under section 143(1), but wanted to make an inquiry, a notice under section 143(2) was required to be issued to the assessee requiring him to produce evidence in support of his return. After considering the material and evidence produced and after making necessary inquiries, the officer had power to make assessment under section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s merely determined the tax and interest due on the basis of return after adjustment of TDS and advance tax. The assessee itself made payment of four instalments of advance tax but not at the rates stipulated in provisions of sec. 211 of the Act. Resultantly, the AO while processing the return u/s 143(1) of the Act levied interest u/s 234C of the Act on account of deferment of advance tax Such interest has been calculated on the basis of income returned by the assessee in terms of provisions of sec. 115JB of the Act. The relevant portion of the provisions of sec. 115JB of the Act, read as under: "(4) Every company to which this section applies, shall furnish a report in the prescribed form from an accountant as defined in the Explanation below sub-section (2) of section 288, certifying that the book profit has been computed in accordance with the provisions of this section along with the return of income filed under sub-section (1) of section 139 or along with the return of income furnished in response to a notice under clause (i) of sub-section (1) of section 142. (5) Save as otherwise provided in this section, all other provisions of this Act shall apply to every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner of computation of book profits, all the provisions of the tax including the provision relating to charge, definitions, recoveries, payment, assessment, etc., would apply in respect of the provisions of this section. 3. The scheme of the Income-tax Act also needs to be referred to. Section 4 of the Income-tax Act charges to tax the income at any rate or rates which may be prescribed by the Finance Act every year. Section 207 deals with the liability for payment of advance tax, and section 209 deals with its computation based on the rates in force for the financial year, as are contained in the Finance Act. The rates of tax are provided in the Finance Act. The first proviso to section 2(8) of the Finance Act, 2001, reads as under: "Provided that in cases to which the provisions of Chapter XII or Chapter XII-A or section 115JB or sub-section (1A) of section 161 or section 164A or section 167B of the Income-tax Act apply, 'advance tax' shall be computed with reference to the rates imposed by this sub-section or the rates as specified in that Chapter or section, as the case may be:" The third proviso to section 2(8) of the Finance Act, 2001, further provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of the Apex Court in the case of Commissioner of Income Tax vs. Kwality Biscuits Ltd.(2006) 284 ITR 0434, wherein it was decided that when the assessee's income is assessed under MAT, interest u/s 234C is not leviable. For your ready reference, we are enclosing a copy of order of the Apex Court which is self explanatory. Since as per order of the Supreme Court, interest u/s 234C is not leviable, we would request you to amend the said order and refund us an amount of Rs.22,428,119/- wrongly levied by you. 7.1 The AO rejected the aforesaid application on the ground that issue was amenable to different interpretations, which cannot be subject matter of rectification u/s 154 of the Act and referred to decision in Geetha Ramakrishna Mills (P) Ltd., 288 ITR 489 (Mad.). On appeal, the ld. CIT(A) allowed the claim of the assessee on the ground that jurisdiction as available u/s 143(1) to the AO is only confined to the prima facie adjustment and not on the issues which are debatable ones. According to the ld. CIT(A), the issue in the instant case was debatable in view of judgments in Assam Bengal Carriers Ltd. vs. CIT, 239 ITR 862 (Gau); Itarsi Oil and Flours Pvt. Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court in Kwality Biscuits Ltd.(supra) rendered in the context of provisions of sec. 115J of the Act, without even examining the applicability of provisions of sec. 115JA(4) of the Act. However, in the context of provisions of 115JB of the Act, the only decision available was of Hon'ble Karnataka High Court in Jindal Thermal Power Co. Ltd. (supra), where in after considering their own decision in the case of Kwality Biscuits Ltd., Hon'ble High Court held in the context of levy of interest under sections 234B and 234C of the Act on tax calculated on book profits in terms of provisions of section 115JB of the Act that:- "The Central Board of Direct Taxes Circular No. 13/2001 was issued on 18-11- 2001, regarding the liability for payment of advance tax under the new MAT provisions of section 115JB of the Act and it is abundantly made clear in the said circular that the new provision of the section 115JB as introduced by the Finance Act, 2000 is a self-contained code. Sub-section (1) lays down the manner in which income-tax payable is to be computed. Sub-section (2) provides for computation of "book profit". Sub-section (5) specifies that save as otherwise provided in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essarily and unjustifiably made the issue debatable while dragging in the decisions rendered in the context of provisions of sec. 115J of the Act, ignoring the specific provisions of sec. 115JB(5) of the Act nor pointed out any contrary decision in the context of relevant provisions of sec. 115JB of the Act. 9. Even otherwise, recently Hon'ble Apex Court in Rolta India Ltd.(supra) vide their decision dated 7.1.2011 upheld the levy of interest u/s 234B on the tax calculated on book profits u/s 115JA of the Act. While referring to the judgments in Kwality Biscuits Ltd.(supra) and Jindal Thermal Power Company Ltd. (supra),Hon'ble Apex Court observed that Circular No. 13/2001 dated 9.11.2001 issued by CBDT reported in 252 ITR(St.)50 clarified that section 115JB is a self-contained code and thus, all companies were liable for payment of advance tax u/s 115JB and consequently provisions of Sections 234B and 234C imposing interest on default in payment of advance tax were also applicable. 10. The ld. AR argued before us that debate cannot be obliterated with the subsequent decision of the Hon'ble Apex Court. But the debate was in respect of issue of levy of interest on tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be made applicable, unless and until accounts are audited and the balance sheet is prepared, because till then even the assessee may not know whether the provisions of s. 115J would be applicable or not. The liability would be after the book profits are determined in accordance with the Companies Act. The words "for the purposes of this section" in the Explanation to s. 115J(1A) are relevant and cannot be construed to extend beyond the computation of liability of tax. Hence, interest cannot be charged under ss. 234B and 234C. The said reasoning was based on the fact that it is only in respect of the deemed income for which the provision of s. 115J had been incorporated and when a deemed fiction is brought under the statute, it should be carried to the logical conclusion but without creating further deeming fiction so as to include other provisions of the Act which are not specifically made applicable. However, what is being considered in this case is that the assessee's case falls under s. 115JB. Under s. 115JB of the Act, sub-s. (5) clearly states that other provisions of the Act shall apply to every assessee being a company, save as otherwise provided in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angalore, Bench-A, dt. 7th June, 2005 bearing ITA No. 383/Bang/2005 vide Annex. A is set aside and the order dt. 10th Jan., 2005 passed in ITA No. 084/C-12(1)/CIT(A)-III/2004-05 by the CIT(A)-III, Bangalore, vide Annex. B and the order passed by the AO dt. 1st Dec., 2004 for the asst. yr. 200102, vide Annex. C are all hereby upheld, subject to the clarification that the case of the assessee falls under s. 115JB of the Act. The matter is remitted back to the AO to recompute the interest by considering the case of the assessee under s. 115JB of the Act and pass an order in accordance with law 13. In the instant case before us, the AO applied specific provisions of sec. 115JB(5) of the Act and as pointed out by the Hon'ble Karnataka High Court in their aforesaid decision in view of the specific provisions of s. 115JB(5), the ratio of Kwality Biscuits (supra) cannot apply to the case of the assessee herein which is covered under s. 115JB of the Act. For this reason alone, the AO was correct in rejecting the application of the assessee u/s 154 of the Act, seeking rectification of the order in the light of decision of the Hon'ble Apex Court in Kwality Biscuits Ltd.(supra) rendere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t upheld the findings of the Tribunal that the interest shall be payable only with effect from the date the liability to pay advance tax in respect thereof has been incurred. There cannot be any interest prior to the date in respect of such liability when there was no liability to pay advance tax under any provisions of the Act. Hon'ble High Court also observed that assessee's plea for rectification in that case was not that the liability to pay interest under section 234C is disputable, but his contention was that under section 143(1), the Assessing Officer had no authority to make such adjustment to interest statutory provision and on which possibly two opinions can exist. This issue notwithstanding noticed by the Tribunal, had not been decided by it at all, Hon'ble High Court concluded. But such are the facts and circumstances in the instant case nor the ld. AR explained before us as to how this decision is of any help to the assessee, especially when the provisions of sec. 115JB of the Act are self contained in view of specific clause (5) thereof as also decisions of the Hon'ble Karnataka High Court in Jindal Thermal Power Co. Ltd. (supra) and observations of the Hon'ble Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw on the question was settled by the Madras High Court and again by the Supreme Court, with the uncertainty existing as on the date when the proceedings under section 143(1)(a) were subjected to section 154, the jurisdiction under section 154 was not available to correct the illegality in an assessment. An impression formed on the scope of the provisions could not be a mistake or an error apparent from the record so as to justify the exercise of jurisdiction under section 154. The invoking of the provisions of section 154 presupposes a mistake or an error which is patent or obvious and does not involve a long drawn process of reasoning on a point which is already a debatable issue. How this decision, rendered on an altogether different issue of carry forward of loss and depreciation while determining book profits u/s 115J of the Act, helps the assessee has not been explained before us by the ld. AR. In the present case issue involved is mandatory levy of interest u/s 234C of the Act in terms of provisions of sec. 115JB(5) of the Act and the assessee sought rectification on the basis of a decision rendered in the context of provisions of sec. 115J of the Act. The creation of a disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the point is covered by a decision of the jurisdictional High court or Supreme Court rendered prior or even subsequent to the order of rectification, it could be said to be a "mistake apparent from the record" under section 254(2) of the Act and could be corrected by the Tribunal. 15. We may further point out that reliance by the assessee in their application u/s 154 of the Act on the decision in Kwality Biscuits Ltd.(supra), which was rendered in the context of different provisions of sec. 115J of the Act and ignoring specific provisions of sec. 115JB(5) of the Act as also reliance by the ld. AR on decisions which were rendered in different context and circumstances is not in accordance with law, in view of following observations of the Hon'ble Supreme Court in the case of CIT vs. Sun Engineering Works Pvt. Ltd., 198 ITR 257: "It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete "law" declared by this court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isive." *** *** *** "Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it." 16. In view of the foregoing, especially when neither at the time of processing of return or on the date of application u/s 154 of the Act and even at the time of passing of impugned order, any contrary decision in respect of levy of interest on tax computed on book profits u/s 115JB of the Act was available nor pointed by the assessee before the lower authorities and even before us, we are of the opinion that no such debatable issue as has been made out by the ld. CIT(A) while referring to decisions rendered in the context of altogether different provision of sec. 115J of the Act, existed. In view of specific provisions of sec. 115JB(5) of the Act and in the light of view taken in the aforesaid decisions by the Hon'ble Apex Court in Rolta India Ltd.(supra), Saurashtra Kutch Stock Exchange Limited (supra) and by the Hon'ble Karnataka High Court in Jindal Thermal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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