TMI Blog2002 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... d the issue that arises in both the questions is whether the assessee-company is liable to be charged to interest under sections 234A and 234B of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), when the assessee-company's income was determined by applying the provisions of section 115J of the Act at the time of regular assessment. The facts are that the Income-tax Officer levied interest both under sections 234A and 234B of the Act on the assessee-company for the assessment year 1989-90. The Commissioner of Income-tax (Appeals) held that the Assessing Officer was not correct in levying interest under sections 234A and 234B of the Act when the total income was determined under section 115J of the Act. The Appellate Tribunal also upheld the order of the Commissioner of Income-tax (Appeals) and, hence, the present reference at the instance of the Revenue on the following questions of law: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the Commissioner of Income-tax (Appeals) decision cancelling interest under section 234A of the Income-tax Act, levied by the Assessing Officer on the basis of income dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he prescribed percentage where the assessee liable to pay advance tax under section 208 of the Act failed to pay the same within the time or where the assessee has paid advance tax which falls short of the ratio prescribed in the section. The expression, "assessed tax" is defined in Explanation 1 to section 234B of the Act to mean that the tax on the total income determined under sub-section (1) of section 143 or on regular assessment as reduced by the amount of tax deducted or collected at source. The pre-requisite condition for the applicability of section 234B is that the assessee must be liable to pay advance tax under section 208 of the Act or the advance tax paid under section 210 of the Act is less than 90 per cent. of the assessed tax. In so far as section 208 of the Act is concerned, it postulates that the advance tax is payable during the financial year in every case where the amount of tax payable by the assessee during that year as computed in accordance with the provisions of Chapter XVII exceeds five thousand rupees or more. Section 209 provides for the computation of advance tax and it shall be on the current income. The expression, 'current income' is construed in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and under the Explanation, the expression, "book profit" is defined to mean the net profit as shown in the profit and loss account as increased by certain amounts which are listed in the Explanation. Divergent views have been expressed by the High Courts of this country on the question whether the interest under section 234B of the Act can be levied in case the provisions of section 115JA of the Act are invoked against the company. The Gauhati High Court in Assam Bengal Carriers Limited v. CIT [1999] 239 ITR 862 and the Madhya Pradesh High Court in Itarsi Oil and Flours Pvt. Ltd. v. CIT [2001] 250 ITR 686 have taken the view that interest under sections 234B and 234C are leviable where the assessee-company's income is computed under section 115J of the Act and where there is a shortfall in the payment of advance tax. Both the courts have taken into account the intention of the Legislature and observed that there is no mention in sections 234B and 234C of the Act that in the case of a company to whom section 115J of the Act is applied, sections 234B and 234C are not applicable. Both the courts have taken the view that the assessee is liable to pay advance tax irrespective of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory obligation on the part of the assessee to file the return before the due date for filing return which it failed and the interest under section 234A of the Act is levied at the prescribed rate of interest on the amount of tax as determined under section 143(1) of the Act or on regular assessment as reduced by the advance tax, if any, paid and any tax deducted or collected at source. Hence, the question that the Income-tax Officer has applied the provisions of section 115J at the time of completion of regular assessment is immaterial in considering the question of levy of interest under section 234A of the Act for the delayed filing of the return or the non-filing of the return. In our view, the Appellate Tribunal has committed an error in holding that the interest is not leviable under section 234A of the Act where the provisions of section 115J of the Act are applied. As we have already observed, interest is levied for the delayed or non-filing of the return and the invocation of section 115J of the Act at the time of regular assessment has no relevance in considering the question of failure on the part of the assessee to file the return before the due date. So far as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the estimate of the profits of the company. We are of the view, it cannot be regarded that it would be an impossible exercise or an insurmountable difficulty for company assessees to estimate the profits of the company during the current year itself and there would be no difficulty at all for a company maintaining its account on the mercantile basis to estimate the profits during the current year itself and pay the advance tax on the estimated current profits. We find no logic in the view that if the company can estimate the current income after providing for all deductions that may be available under the Income-tax Act, it is not possible for the company to estimate the profits of the company of the current year. It is also relevant to notice on the facts of the case that the assessee here has returned a total income of Rs. 10,950 after deducting all admissible deductions available under the Income-tax Act. The profit and loss account of the assessee-company discloses the net profit, viz., Rs. 2,60,729 and the total income as returned by the company before the set off of carried forward loss was Rs. 2,64,591 and only after the carried forward loss was set off, the assessee retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the year may show profit or loss and in the latter part of the year may show loss or profit which would go to counter-balance the profit or loss as the case may be in the earlier part of the year. The above decision of the Supreme Court proceeds on the basis that it is possible to estimate the current profit though it can be stated that the profit would accrue at the end of the accounting year which is a different concept altogether. As far as the question of payment of advance tax is concerned, the question is whether it is possible to estimate the profit during the current year itself and we hold that there is no difficulty for the assessee to estimate the profit during the current accounting year on the basis of projection of transactions entered into by the company and the foreseeable receipts of the said business. Therefore it is possible for the company to estimate the current profit depending upon the company's projection in its business and on the basis of the transactions effected by the company during the relevant financial year. Though for the applicability of section 115J of the Act, the Income-tax Officer has to wait for the profit and loss account prepared in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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