2007 (6) TMI 296 - AT - Income Tax

Summary

Issues:
1. Rectification of tax calculation under section 154 of the Act.
2. Charging of tax on income computed under section 115JA at normal rate.
3. Charging of interest under sections 234B and 234C on income determined under section 115JA.

Analysis:
1. The appeal challenged the order of the CIT(A) regarding the rectification of tax calculation under section 154 of the Act. The Assessing Officer had noticed an error in the tax calculation under section 112(1) on the deemed income computed under section 115JA. The assessee argued that there was no mistake apparent from the record as the tax issue had been thoroughly discussed. The Assessing Officer proceeded with the rectification, leading to an appeal. The assessee contended that the tax should be charged at a lower rate based on long-term capital gains, not the normal rate. The tribunal found that the Assessing Officer correctly rectified the tax calculation under section 154, as the issue was not debatable, and the correct provision of law was not applied initially.

2. The appellant disputed the charging of tax on income computed under section 115JA at the normal rate instead of a lower rate based on long-term capital gains. The appellant argued that the tax should be calculated at 20% on capital gains and 35% on the balance of income. However, the tribunal held that when income is computed under section 115JA, the uniform tax rate of 35% applies, as confirmed by the Supreme Court precedent in Apollo Tyres Ltd. v. CIT. The tribunal emphasized that the Assessing Officer must charge income tax at the prescribed rate for the total income computed under section 115JA, and not based on specific heads of income.

3. The issue of charging interest under sections 234B and 234C on income determined under section 115JA was also raised. The tribunal upheld the charging of interest, as the Assessing Officer correctly rectified the tax calculation under section 154. The tribunal reasoned that the Assessing Officer had the jurisdiction to levy tax at the prescribed rate for the total income computed under section 115JA, and rectification was warranted as the correct provision of law was not initially applied. The tribunal dismissed the appeal, affirming the orders of the Assessing Officer and the CIT(A).

This detailed analysis of the judgment highlights the key issues raised in the appeal, the arguments presented by the parties, and the tribunal's reasoning in deciding the case.