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TMI Blog2012 (7) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... regular assessment as earlier only processing u/s 143(1)(a) was made?" 2. Briefly stated, the facts necessary for adjudication as narrated in the appeal are that the assessee filed its return on 1.1.1990 declaring an income of Rs.43,58,142/- under Section 115J of the Act. The said return was processed under Section 143(1)(a) of the Act on 26.2.1990 which resulted into a refund of Rs.1,76,518/-. Thereafter, notice under Section 148 of the Act was issued to the assessee for the excess deduction claimed under Section 80HHC and 80-I of the Act on 28.9.1990. Notices under Sections 142(1) and 143(2) of the Act were issued on 4.7.1991. The assessment for the first time was completed on 25.8.1992 under Section 143(3)/147 of the Act at a total income of Rs.11,62,739/-. The Assessing Officer vide order dated 25.8.1992 computed the total income as per provisions of Section 115J of the Act at Rs.45,90,182/- and also charged interest under Section 234B of the Act. Feeling aggrieved, the assessee approached the Commissioner of Income Tax (Appeals) [in short "the CIT(A)"] who vide order dated 27.11.1992 partly allowed the appeal on the issue of charging of interest under Section 234B of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Commissioner of Income Tax v. K. Govindan and sons (Ker) [1999] 238 ITR 1005 and affirmed by the Supreme Court in K. Govindan & Sons v. Commissioner of Income Tax [2001] 247 ITR 192 (SC) and also Allahabad High Court in Abdul Majid v. Commissioner of Income Tax [2006] 281 ITR 366 (All). He submitted that no appeal had been filed against the said decision in view of tax effect involved being below monetary limit of Rs.2 lacs fixed for filing appeal under Section 260A of the Act by CBDT's Instruction No. 1979 dated 27.3.2000 and 1985 dated 29.6.2000 as mentioned in para 4 of the appeal. He urged that the decisions of the Tribunal and the CIT(A) being contrary to the statutory provision contained in Explanation 2 to Section 234B of the Act and the decision of the Apex Court in K. Govindan & Sons' case (supra) which was binding under Article 141 of the Constitution would render the order ineffective and would not take away the right of the revenue to charge interest under Section 234B(4) of the Act. According to the learned counsel, interest under Section 234B of the Act was correctly charged in the assessment order passed under Section 143(3)/147 and, therefore, it could be subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r return which was filed by the assessee was processed under Section 143(1)(a) of the Act on 26.2.1990 and a refund of Rs.1,76,518/- was made. The assessment was framed in pursuance to the notice under Section 148 of the Act on 25.8.1992. The point for consideration would be whether the assessment which was framed on 25.8.1992 under Section 143(3)/147 of the Act was a regular assessment and, therefore, interest under Section 234B of the Act could be charged by virtue of that order. Section 234B of the Act at the relevant time read thus:- "234B. (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 under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period from the Ist day of April 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecomputation exceeds the tax on the total income determined under subsection (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 245D, the amount on which interest was payable under sub-section (1) or subsection (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 and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the Ist day of April, 1989 and subsequent assessment years." 10. Explanation 2 to Section 234 of the Act pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) came to the conclusion that the interest 234B can only be charged by the AO in the case of regular assessment framed by the AO u/s 143(1)(a) or first time u/s 143(3) of IT Act because the sub-section (3) of section 234B of IT Act gives power to AO to increase the interest u/s 234B if the interest is charged u/s 143(1) or under regular assessment and not otherwise. The CIT(A), thereafter concluded that as the assessment was made for the first time u/s 147 but has been framed without assessment u/s 143(1) has already been completed so the AO was not justified in invoking the provisions of section 234B for charging interest from the assessee as it was not a regular assessment first time framed by the AO. The CIT(A) thus deleted the interest amount charged u/s 234B of the IT Act by the AO. 14. Keeping in view the provisions of section 234B, we do not find any illegality or infirmity in the well reasoned and well discussed order of CIT(A) because assessment framed u/s 147 being not made for the first time is not a regular assessment and hence the order of CIT(A) in holding that the interest u/s 234B of IT Act can only be charged in a case of regular assessment, does not call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.1997 passed in pursuance of revisional order dated 23.3.1995 enhancing the assessed income would make the assessee liable to interest under Section 234B(4) of the Act. The CIT(A) and the Tribunal were not right in holding otherwise. 15. Suffice it to notice, that the reliance of the learned counsel for the assessee on Darshan Lal Gulati's case (supra) does not come to the rescue of the assessee as the same was on the individual fact situation involved therein. 16. Now adverting to the alternative submission of the learned counsel for the assessee, reference is made to the judgment of the Karnataka High Court in Kwality Biscuits Ltd's case (supra). The High Court while disagreeing with the Tribunal had held as under:- "Under Section 115J, where the total income of the company is less than 30 per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to 30 per cent of such book profit. It is, thus, by way of deeming fiction that this income has been considered to be the deemed income. Profit and loss account has to be prepared in accordance with the provisions of Parts II and III of Schedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. Commissioner of Income Tax [1999] 239 ITR 862; Madhya Pradesh High Court in Itarsi Oils and Flour (P) Ltd. v. Commissioner of Income Tax [2001] 250 ITR 686; Madras High Court in Commissioner of Income Tax v. Holiday Travels (P) Ltd. [2003] 263 ITR 307; and Bombay High Court in Commissioner of Income Tax v. Kotak Mahindra Finance Ltd. [2004] 265 ITR 119, wherein it was held that that there is no mention in Section 234B and 234C of the Act that in cases of determination of income under Section 115J of the Act, the provisions of the same would not be attracted. The Bombay High Court had concurred with the judgment of the Gauhati High Court and Madhya Pradesh High Court. 19. This Court in Commissioner of Income Tax v. M/s Upper India Steel Manufacturing and Engineering Co.Ltd. [2005] 279 ITR 123 was considering identical issue of levy of interest under Section 234B and 234C of the Act where there was non-payment or short payment due to computation of income on the basis of book profits under Section 115J of the Act. The view of the High Courts of Gauhati, Madhya Pradesh, Madras and Bombay was followed and that of Karnataka High Court in Kwality Biscuits Ltd's case (supra) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready observed earlier, the provisions of section 207 do not exclude the income determined under section 115J from the purview of current income on which advance tax is payable. Similarly, there is no scope for considering the hardship of the assessee as the levy is automatic and does not require any opportunity to be given to the assessee. We, therefore, dissent from the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. [2000] 243 ITR 519." 21. This Court while concurring with the view of the High Courts of Gauhati, Madhya Pradesh, Madras and Bombay had concluded as under:- "We fully concur with the view expressed in the aforesaid judgments. The Madras High Court has correctly pointed out that for the purpose of payment of advance tax, all assessees including companies, are required to make an estimate of their current income. Even before the introduction of the provisions of section 115J of the Act, companies had been estimating their total income after providing deductions admissible under the Act. In fact, all assessees who maintain books of account have to undertake this exercise for the purpose of payment of advance tax. If a profit and loss account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance Act of 1996 w.e.f. 1.4.1997. After insertion of Section 115JA, Section 115JB was inserted by Finance Act, 2000 w.e.f. 1.4.2001. It is clear from reading Sections 115JA and 115JB that the question whether a company which is liable to pay tax under either provision does not assume importance because specific provision(s) is made in the section saying that all other provisions of the Act shall apply to the MAT Company (Section 115JA(4) and Section 115JB(5)). Similarly, amendments have been made in the relevant Finance Acts providing for payment of advance tax under Sections 115JA and 115JB. So far as interest leviable under Section 234B is concerned, the section is clear that it applies to all companies. The pre-requisite condition for applicability of Section 234B is that assessee is liable to pay tax under Section 208 and the expression "assessed tax" is defined to mean the tax on the total income determined under Section 143(1) or under Section 143(3) as reduced by the amount of tax deducted or collected at source. Thus, there is no exclusion of Section 115J/115JA in the levy of interest under Section 234B. The expression "assessed tax" is defined to mean the tax assessed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confined to Section 115J of the Act. The Order of the Supreme Court dismissing the Special Leave Petition in limine filed by the Department against Kwality Biscuits Ltd. is reported in (2006) 284 ITR 434. Thus, the judgment of Karnataka High Court in Kwality 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 payable under Section 115JA/115JB. For the aforestated reasons, Circular No. 13/2001 dated 9.11.2001 issued by CBDT reported in 252 ITR(St.)50 has no application. Moreover, in any event, para 2 of that Circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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