TMI Blog2016 (8) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... under the new Sub- Section (3), it was provided that interest will be calculated on the enhanced amount from the period commencing on 1st April next following the relevant financial year for which advance tax was payable and ending on that date of the re-assessment or re computation u/s. 147/153A. Thus, where in a case interest u/s. 234B(1) was levied on regular assessment u/s. 234B(1), enhanced interest was payable for the entire period and not on broken period as it was provided earlier. This is the substance of the amendment brought to Sub-section(3) by the Finance Act, 2015. In view of this, we are of the opinion that the interest u/s. 234B(1) is to be calculated on the originally accepted amount u/s. 143(1) as was done by the AO in the intimations and the enhanced amount is to be levied from the date of intimation till the date of consequential order passed u/s. 143(3) r.w.s. 153A r.w.s. 245D(4) ie on 03-12- 2013. We are not sure whether the AO is correct about the levy of interest in the orders u/s. 154, as the period and calculations were not provided for our examination. In fact there is reduction of demand in AYs 2005-06 and 2009-10. In view of this, we, while allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission passed an order on 30-07-2013. Subsequently, the assessment was completed in accordance with the directions of the Settlement Commission through order u/s. 143(3) r.w.s. 153A and r.w.s. 245D(4) on 03-12-2013. Interest u/s. 234B was charged for the shortfall of the advance tax from the date of order u/s. 143(1). Subsequently, the AO issued a notice u/s. 154 for charge of interest u/s. 234B from 01-04-2005 ie. from the beginning of assessment year. In response to that notice, assessee filed a reply on 17-12-2014 objecting to the same relying on the provisions of the Act. However, rejecting the contentions of assessee, the AO passed an order u/s. 154 charging interest u/s. 234B from 01-04-2005. Against the same, assessee filed an appeal before the CIT(A). 5. During the course of appellate proceedings, Ld. CIT(A) while upholding the order of AO, dismissed the appeals on this issue with the following observations: 08.0 I have gone through the facts of the case and carefully considered the submissions of the appellant. A mistake should exist and it should be apparent from the record in such a way that its discovery should not be dependent on an elaborate pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-TIOL- 487-HC-MAD-IT)]. This was plainly unnecessary. No principle of interpretation or construing statutes has it that a section be read de hors the Explanation appended immediately there-under. The matter being self evident on a plain reading of the section, an act of invoking case-law in support of the proposition can hardly make the position arguable. While the Assessing Officer did not require such case-law to state his case, such an act by itself cannot render it a point of view. This has to be seen as the only point of view. 08.3 During the hearing Ld AR furnished a copy of the decision in the case of Datamaties Ltd vs ACIT 110 ITO 24[Mum] by way of placing reliance thereon. On a consideration of facts it emerges that in this case the assessee is not contesting the details of levy of interest such as period, amount, etc. Rather, the assessee is denying it's liability to the levy of interest altogether, in contrast to the Assessing Officer's stand that interest u/s 234B is mandatory. It was contended that since it had a net refund position at the point of the Intimation u/s 143(1)(a), the threshold requirement for charge of interest u/s 234B viz, Advance Tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that any failure to follow the clear position of law generates rectification under sec 154. In S.I.J Chains Pvt Ltd vs Asst CIT, the Hon'ble ITAT[Asr] 284 ITR 246, had to decide whether in the circumstances of the case, provisions of sec 115JB were applicable or not, and whether the matter could have been decided u/s 154. Relying on Northern Air Products vs CIT 274 ITR 225[MP], it was held that granting a benefit to assessee in ignorance of a statutory requirement is a mistake attracting the rigours of section 154 of the Act. In the case of CIT vs Kesaria Tea Co Ltd 233 ITR 700 [Ker], facts related to a wrong application of sec 356, corrected by the Assessing Officer u/s 154. Relying on the Supreme Court's decision in the case of TS Balaram ITO vs Volkart Bros ors, 82 ITR 50, the High Court distinguished between a long drawn process of reasoning' and a 'mandatory application of provisions of the Act', and upheld the stand of Revenue by reversing the order of the ITAT. The Delhi High Court in the case of Escorts Ltd vs Vol Ors, 189 ITR 81, held on the specific facts of the case, that the withdrawal by an order u/s 154 of a deduction that was earlier allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undant if the contention raised by the appellant is accepted. On the other hand, the scheme of the section can be understood clearly without resulting in any redundancy if the provisions are correctly interpreted. The section holds that the interest under that section is to be calculated for any shortfall of advance tax paid, firstly, under the assessment U/s.143(1) from the beginning of that assessment year. If there is a scrutiny assessment, the interest will be calculated U/s.234B from the first day of the relevant assessment year upto the date of scrutiny assessment. Subsequently, if there is a reassessment either U/s.147 or U/s.153A, interest will be recalculated on the shortfall either from the date of Intimation U/s.143(1) or from the date of regular assessment in case of a regular assessment. The CIT(A) has given a narrow meaning to the word 'assessment' in the Explanation-2. Explanation-2 reads as under: Explanation 2. - Where, in relation to an assessment year, an assessment is made for the first time under section 147 [or section 153A], the assessment so made shall be regarded as a regular assessment for the purposes of this section. It was contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive, if the Commissioner of Income Tax(Appeals)'s version will be accepted. 6.1. It was submitted that to understand the correct position, as to the scheme of calculation of Interest U/s.234B, a chart showing 3 hypothetical cases was submitted as under: Case-1 Case-2 Case-3 Return of income filed in the normal course: Return of income filed in the normal course Belated Return of income/No Return of Income/Return of Income filed in response to Notice u/s. 147/153A: Order u/s. 143(1) Order u/s. 143(1) -- Order u/s. 143(3) -- -- Order u/s. 147/153A Order u/s. 147/153A Order u/s. 147/153A In case-1, a normal Return is followed an Intimation U/s.143(1), there is scrutiny assessment and subsequently, a reassessment. In such a case, Interest U/s.234B is calculated from 1st of April for the shortfall in the Intimation U/s.143(1). The interest is recalculated in the scrutiny assessment from 1 st of April. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion(1) of section 143 or on regular assessment and ending on the date of reassessment under section 147 or section 153A. It is proposed to amend sub-section(3) of the said section so as to provide that the period for which the interest is to be computed will begin from the 1st day of April next following the financial year and end on the date of determination of total income under section 147 or section 153A. These amendments will take effect from 1st day of June, 2015 . 8. It was submitted that the interpretation made by the Revenue is not correct and AO has correctly calculated the interest while giving effect to the directions of Settlement commission in the order passed. 9. Ld. DR supported the action of AO/ CIT(A). Ld. DR also reiterated the decision of Hon'ble Madras High Court in the case of Textile Dye-Chem Corporation [35 taxmann.com 467 (Mad)]. He submitted that assessment used in the Income Tax Act cannot extend to the intimation u/s. 143(1) and reliance was placed on the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd., [291 ITR 500]. His submissions are that processing under Section 143(1) cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78 2009-10 16,55,520 10.2. It seems there are no appeals on the consequential orders dt. 03-12-13, but the appeals were preferred only on the rectification orders passed u/s. 154. As can be seen from the above tables, the interest u/s. 234B revised in the order u/s. 154 is less than originally levied amount, in the consequential orders for AY. 2005-06 and AY. 2009-10. Only in AY. 2008-09, there is a higher levy of interest u/s. 234B. We are not sure why assessee has preferred appeals, when AO reduced the interest in AYs. 2005-06 and 2009-10 in the modification orders. 11. Be that as it may, assessee s contention is that interests are to be considered u/s. 234B(3) rather than u/s 234B(1) as was done by the AO in the orders u/s. 154. The entire submissions made by assessee are on the notion that interest u/s. 231B(1) and interest u/s. 234B(3) are mutually exclusive. This is not correct. As per the scheme of Act, interest u/s. 234B(1) is leviable from the period 1st April of the assessment year following the closure of the financial year till the date of intimation u/s. 143(1) or completion of assessment u/s. 143(3). The explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest, etc., thereon have to be incorporated in the reassessment order passed under section 143(3)/147 and in the computation sheet accompanying therewith. if the Assessing Officer had not followed the aforesaid course of action, the total income originally determined under section 143(1) or 143(3) or 144 and tax, interest, etc., thereon would have escaped taxation. The assessee did not challenge the levy of interest under section 234B(1) as per the intimation originally issued under section 143(1). The Assessing Officer was, therefore, justified in incorporating the said figure of interest originally charged under section 234B(1) as per the intimation issued under section 143(1) in the computation sheet accompanying the order of reassessment passed under section 143(3)/147. While sub-section (1) of section 234B is applicable to cases involving determination of total income under section 143(1) or regular assessment made under section 143(3) or under section 144, sub-section (3) of section 234B is applicable, inter alia, to a case where the amount of tax on the total income determined on the basis of reassessment or re-computation under section 147 exceeds the tax on the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r it is a case of re-assessment or re-computation u/s. 147. It was held that in a case where there is determination of tax u/s. 143(1) or where regular assessment order is passed u/s. 143(3), then, order passed u/s. 147 is treated as an order of re-assessment or recomputation and in such case, interest u/s. 234B is leviable not from the first day of April next following such financial year, but from the date of determination of tax u/s. 143(1) or order of regular assessment u/s. 143(3). The Hon'ble High Court in the above referred case Vijay Kumar Saboo (HUF) Vs. ACIT, Bangalore [201 Taxmann 366 (Karnataka)](supra) has held as under: A harmonious reading of entire section 234B makes it clear that if no advance tax is paid or what is paid is less than 90 per cent of the assessed tax, the assessee is liable to pay interest on the difference in the tax. For the purpose of levying tax, it is computed from first day of April next following, till the date of determination of tax under sub-section (1) of section 143 or from that day till the date of regular assessment. If in a given case, there is no determination of tax under sub-section (1) of section 143 or regular assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There was no substance in the contention raised by the revenue that in a reassessment completed under section 153A interest for nonpayment or short payment of advance tax was payable under section 2348(3) merely because the said reassessment under section 153A was completed by accepting the return filed under section 143(1). Interest for non-payment or short-payment of advance tax is payable under section 2348 for different periods under sub-sections (I) and (3) of the said section. In all cases of regular assessment completed under section 143(1), interest is to be charged for the period provided under section 2348(1). Further, if the first assessment is itself income escaping assessment made under section 147 or under section 153A, then such assessment will be treated as regular assessment and interest for non-payment or short payment of advance tax in such cases will be payable under section 2348(1). However, when an original assessment completed under section 143 is revised either under section 147 or under section 153A, then interest for non-payment or short- payment of advance tax is payable only for period mentioned in section 2348(3), which provides for interest from the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied, from 1st April following the financial year till the date of processing u/s. 143(1) Us 234B(1) and then on enhanced income/enhanced tax u/s. 234B(3). Viewed in this perspective, there is no conflict in the provisions of the Act. 16. In this case, the dispute is with reference to whether the 143(1) order passed earlier is to be considered as an assessment? Ld. CIT(A) was of the opinion that 143(1) is not an assessment and is only an intimation. This view can be accepted in the context of re-opening of assessment as held by the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd., [291 ITR 500] or for any other provisions on assessment. For the purpose of levy of interest u/s. 234B where it is very clearly mentioned that even processing u/s. 143(1) is also to be considered as an assessment by specifically mentioning in the Section the periods therein then, for the purpose of levy of interest u/s. 234B(3), the period it was already considered in an intimation u/s. 143(1) is to be excluded while calculating the interest u/s. 234B(3). The provisions of Section 234B(3) are as under: Section 234B : 1. . . (3) Where, as a resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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