TMI Blog2012 (7) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... x 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 u/s 234B and 234C. Thus, it can be concluded that interest u/s 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB - against assessee. - ITA No.8 of 2004 - - - Dated:- 6-7-2012 - Adarsh Kumar Goel, Ajay Kumar Mittal, JJ. For Appellant: Mr Denesh Goyal, Standing Counsel For Respondents: Mr Sanjay Bansal, Senior Adv. Mr Robin Jarial, Adv. JUDGEMENT Per: Ajay Kumar Mittal: 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short the Act ) against the order dated 3.6.2003 passed by the Income Tax Appellate Tribunal, Chandigarh, Bench A , Chandigarh (hereinafter referred to as the Tribunal ) in ITA No. 1078/Chandi/97, relating to the assessment year 1989-90. The appeal was admitted on 11.7.2006 to consider the following substantial question of law:- Whether, on the facts and in the circumstances of the case, the interpretation of Section 234B(4) made by the ITAT is sustainable in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, the assessee filed an appeal before the CIT(A) who vide order dated 12.8.1997 upheld the quantum addition. On the issue of charging of interest under Section 234B of the Act, the CIT(A) held that the same was not chargeable as the assessment order which had been revised was not a regular assessment. Being dissatisfied, the department approached the Tribunal. The Tribunal vide order dated 3.6.2003 upheld the order of the CIT(A) and dismissed the appeal. Hence, the present appeal by the revenue. 3. We have heard learned counsel for the parties. 4. Learned counsel for the revenue submitted that the assessee having failed to pay the advance tax on the assessed income under the provisions of the Act was liable to pay interest under Section 234B of the Act. Learned counsel with the aid of Explanation 2 to Section 234B of the Act sought to draw support to contend that the assessment which was framed by the Assessing Officer under Section 143(3)/147 on 25.8.1992 was the first assessment as earlier the return which was filed by the assessee was processed under Section 143(1) (a) of the Act on 26.2.1990 which had resulted into a refund of Rs.1,76,518/-. According to the learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax, Jalandhar [2008] 173 TAXMAN 268 . 6. In the alternative, it was urged by the learned counsel that the income having been assessed on book profits under Section 115J of the Act, the judgment of the Karnataka High Court in Commissioner of Income-Tax v. Kwality Biscuits Ltd. [2000] 243 ITR 519 (Kar) was applicable which stood affirmed by the Apex Court as the civil appeal filed there against was dismissed by the judgment reported in Commissioner of Income Tax v. Kwality Biscuits Ltd. [2006] 284 ITR 434 (SC) and on that basis, no interest under Section 234B of the Act was exigible. 7. In rejoinder, learned counsel for the revenue reiterated his earlier submissions. Adverting to the alternative plea of the assessee, he relied upon the decision of the Apex Court in Joint Commissioner of Income-Tax v. Rolta India Ltd. [2011] 330 ITR 470 (SC) and the judgments of this Court in ITA No. 589 of 2006 (M/s Amtek Auto Limited v. The Commissioner of Income Tax, Gurgaon) decided on 25.3.2011 and ITA No. 176 of 2003 (The Commissioner of Income Tax v. M/s Steel Strips Leasing Ltd.) decided on 4.3.2011 to controvert the said contention. 8. After giving our t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (3) tax on the total income determined under subsection (1) of Section 143 shall not include the additional income-tax, if any, payable under section 143. (2) Where, before the date of determination of total income under sub-section (1) of section 143 or completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,- (i) interest shall be calculated in accordance with the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section; (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. (3) Where, as a result of an order of reassessment or recomputation under section 147, the amount on which interest was payable under sub-section (I) is increased, 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 commencing on the day following the date of determination of total income under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment within the meaning of section 139(8) of the Act, has been the position of law even before the Explanation in section 139(8) was added by amendment. In that view of the matter the Explanation merely clarified the position taking it beyond the pale of doubt. Parliament thought it necessary to add the Explanation with a view to remove the doubt raised in certain decisions of different High Courts in which a contrary view was taken. Thus, the Explanation is merely a clarificatory provision and has application to the period of assessment in the case, i.e., assessment year 1984-85. 13. It would be apposite to refer to the order of the Tribunal dated 28.8.2001 which had affirmed the order of the CIT(A) dated 27.11.1992 deleting the levy of interest under Section 234B of the Act in the order of assessment under Section 143(3)/147 dated 25.8.1992 passed by the Assessing Officer. The relevant observation in the order reads thus:- 12. In this case the assessee filed its original return declaring income at Rs.43,58,142/-. The same was processed u/s 143(1)(a) and the AO found that the assessee has claimed excess deduction u/s 80HHC and 80-I which were allowed while processin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the revenue, no appeal under Section 260A of the Act had been filed against the order of the Tribunal dated 28.8.2001 as the tax effect involved was below monetary limit prescribed by the circulars of the CBDT. The order of the Tribunal being contrary to statutory provision and the legal enunciation of the Apex Court would be rendered ineffective in view of law propounded in para 16 in Director of Settlements, A.P. and others v. M.R. Apparao and another [2002] 4 SCC 638 . The Supreme Court following its earlier decision in M/s Shenoy and Co. represented by its partner, Bele Srinivasa Rao Street Bangalore and others v. Commercial Tax Officer and others [1985] 2 SCC 512 had held that Article 141 of the Constitution of India empowers the Supreme Court to declare the law and statement of court on matter of facts may not have binding force but the ratio of the decision is binding. It was further observed that the judgment of the High Court or the subordinate court which does not follow the decision of the Apex Court on law would be a nullity. Thus, no indefeasible right would accrue on the basis of order of the Tribunal dated 28.8.2001 in favour of the assessee notwiths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the end of the relevant assessment year. It is only the deemed income for which the provisions of section 115J have been incorporated. When a deeming fiction is brought under the statute, it is to be carried to its logical conclusion but without creating further deeming fiction so as to include other provisions of the Act which have not specifically been made applicable. Since the entire exercise of computing the income or that of book profit could be only at the end of the financial year, the provisions of section 207, 208, 209 or 201 cannot be made applicable until and unless the accounts are audited and the balance sheet is prepared even the assessee may not know whether the provisions of section 115J would be applicable or not. The liability could be after the book profits are determined in accordance with the Companies Act. The words 'for the purpose of this section' in the Explanation to section 115J(A) are relevant and cannot be construed to extend beyond the computation of liability of tax. Accordingly, we are of the view that the Tribunal was not justified in directing to charge interest under sections 234B and 234C. Thus, question No.2 is, therefore, answered in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 208 to 219 in respect of the total income of the assessee that would be chargeable to tax for the assessment year immediately following that financial year. Such income has been described as current income . Thus, this section contemplates estimation of current income by the end of the financial year and on the basis of such estimation, the assessee is required to pay advance tax. Advance tax is payable on the current income irrespective of whether the same is computed under section 115J or under the other provisions of the Act. In other words, the expression current income , on which advance tax is payable under the provisions of section 207, does not exclude the income computed under the provisions of section 115J. We, therefore, find no merit in the contention that the provisions of sections 234B and 234C of the Act would not be attracted in cases where a company is assessed on the income computed under section 115J. 20. The view of the Karnataka High Court in Kwality Biscuits Ltd's case (supra) was dissented with the following observations:- From the above, it is clear that two factors had weighed with the High Court while granting relief to the assessee. Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed as has been noticed therein. 23. The Apex Court in Rolta India Ltd's case (supra) had recorded as under:- 7. In our view, Section 115J/115JA are special provisions. Section 207 envisages that tax shall be payable in advance during any financial year on current income in accordance with the scheme provided in Sections 208 to 219 (both inclusive) in respect of the total income of the assessee that would be chargeable to tax for the assessment year immediately following that financial year. Section 215 (5) of the Act defined what is assessed tax , i.e., tax determined on the basis of regular assessment so far as such tax relates to income subject to advance tax. The evaluation of the current income and the determination of the assessed income had to be made in terms of the statutory scheme comprising Section 115J/115JA of the Act. Hence, levying of interest was inescapable. The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 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 (predecessors of Sections 234B and 234C) were not applicable until and unless the accounts stood audited and the balance sheet stood prepared, because till then even the assessee may not know whether the provisions of Section 115J would be applied or not. The Court, therefore, held that the liability would arise only after the profit is determined in accordance with the provisions of the Companies Act, 1956 and, therefore, interest under Sections 234B and 234C is not leviable in cases where Section 115J applied. This view of the Karnataka High Court in Kwality Biscuits Ltd. case was not shared by the Gauhati High Court in Assam Bengal Carriers Ltd. v. CIT reported in (1999) 239 ITR 862 and Madhya Pradesh High Court in Itarsi Oil and Flours (P.) Limited v. CIT reported in (2001) 250 ITR 686 as also by the Bombay High Court in the case of CIT v. Kotak Mahindra Finance Ltd. reported in (2003) 130 TAXMAN 730 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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