2014 (8) TMI 945 - AT - Income Tax

Disallowance u/s 14A - Levy of interest under section 234B and 234C - tax payable under section 115JB - Held that - first of all, once, on the issue of disallowance under section 14A, in the computation of book profit under section 115JB, which was the subject matter of rectification of proceedings under section 154 earlier, the Tribunal has already decided that such a disallowance is outside the scope of 154 proceedings as it was highly debatable in nature then the entire proceedings under section 154, come to an end. Once the original proceedings under section 154, has been decided in such a manner, then there was no occasion to rectify the earlier order of the learned Commissioner (Appeals) again under section 154, for the second time. That apart on merits also, whether the interest under section 234B and 234C are to be levied on account of retrospective amendment brought in the statute in a subsequent date is again a matter of great debate because it cannot be held that the assessee at the time of filing of return of income could have foreseen such an amendment and was obliged to pay any kind of advance tax especially on a disallowance under section 14A, when the explanation to section 115JB was brought in the statute by Finance Act, 2008, with retrospective effect from 1st April 2001. In such a situation, it cannot be said that the assessee was liable to pay advance tax at the time of filing of return of income when such a provision did not exist in the statute. - Following decision of Emami Ltd. v/s CIT, 2011 (6) TMI 163 - CALCUTTA HIGH COURT - Decided in favour of asessee.

Summary

Issues:
Challenge to impugned order under section 154 regarding interest levy under sections 234B and 234C for assessment year 2006-07.

Analysis:
The appeal challenged the order under section 154 of the Income Tax Act, 1961, related to the assessment year 2006-07. The Tribunal previously held that issues raised during rectification proceedings under section 154 were debatable and outside the scope of the section. The current appeal questioned the maintainability of the impugned order as the earlier order was deemed not tenable. The facts revealed that the Assessing Officer had made additions to the book profit under section 115JB, which led to a series of appeals and rectification proceedings. The Assessing Officer's decision to add a disallowance under section 14A was contested, and the Commissioner (Appeals) had given partial relief in a previous order. Subsequent attempts to rectify the order were challenged by the assessee, leading to the current appeal regarding the levy of interest under sections 234B and 234C.

The assessee argued that the additions to book profit were unforeseen, and thus, no advance tax was paid on them. The Commissioner (Appeals) relied on a retrospective amendment and a Supreme Court decision to justify charging interest under sections 234B and 234C. However, the Tribunal found that the issue of disallowance under section 14A had already been deemed debatable and outside the scope of section 154 proceedings in a previous decision. Therefore, rectifying the earlier order again under section 154 was unwarranted. Additionally, the Tribunal considered the retrospective nature of the amendment and the impossibility for the assessee to foresee such changes, citing a relevant decision of the Calcutta High Court. Consequently, the impugned order was deemed meritless, and the appeal of the assessee was allowed.

In conclusion, the Tribunal reversed the order of the Commissioner (Appeals) under section 154, dated 13th September 2012, regarding the interest levy under sections 234B and 234C. The appeal of the assessee was allowed, and the order was pronounced in the open court on 14th August 2014.