2014 (2) TMI 1154 - AT - Income Tax

Levy of interest under sections 234B and 234C - disallowance of the claim of deduction under section 80-IB(10) as such the book profit - Held that - It is pertinent to mention that the decision of the hon'ble apex court in the case of Rolta India Ltd. 2011 (1) TMI 5 - SUPREME COURT OF INDIA has been passed on January 7, 2011. However, during the relevant assessment year under consideration, the law on this point has been governed by the decision of the hon'ble apex court in the case of CIT v. Kwality Biscuits Ltd. 2006 (4) TMI 121 - SUPREME Court according to which no interest has chargeable under sections 234B and 234C for non-payment of minimum alternate tax in advance. Since this difference in the legal position as applicable to the case of the assessee has not been appreciated by the authorities below, we are of the considered view that the authorities below are not justified in confirming/ levying the interest under sections 234B and 234C of the Act and hence the same are deleted - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of interest levied under sections 234B and 234C of the Act by the Commissioner of Income-tax (Appeals).
2. Applicability of legal precedents in determining the interest chargeable for non-payment of minimum alternate tax in advance.

Analysis:

Issue 1: Confirmation of interest levied under sections 234B and 234C
The appeal was filed against the order of the Commissioner of Income-tax (Appeals) confirming the Assessing Officer's decision to levy interest under sections 234B and 234C of the Act. The Assessing Officer disallowed the deduction claim under section 80-IB(10) after ascertaining the book profit under section 115JB. Consequently, the taxable income was computed inclusive of interest under section 234B and 234C. The Commissioner upheld this decision based on the judgment in the case of Joint CIT v. Rolta India Ltd. [2011] 330 ITR 470 (SC).

Issue 2: Applicability of legal precedents
The Tribunal noted that the judgment in the case of Rolta India Ltd. was passed on January 7, 2011, while the relevant assessment year was governed by the decision in CIT v. Kwality Biscuits Ltd. [2006] 284 ITR 434 (SC). The Tribunal observed a difference in legal positions regarding the chargeability of interest under sections 234B and 234C for non-payment of minimum alternate tax in advance. As the authorities below failed to consider this distinction, the Tribunal held that interest under sections 234B and 234C should not have been confirmed or levied. Consequently, the interest amounts were deleted.

The Tribunal dismissed other issues raised in ground No. "A" as academic in light of the decision on the main issue. Ultimately, the appeal by the assessee was allowed, and the interest levied under sections 234B and 234C was deleted. The judgment was pronounced on February 21, 2014, in favor of the assessee.