2009 (8) TMI 806 - AT - Income Tax

MAT - Levy of interest of ₹ 16,71,383 under s. 234B and of ₹ 2,24,083 under s. 234C of the Act, wherein the income has been taxed on the basis of book profit under s. 115JA - It all boils down to this, namely, whether the order of the Special Bench in the case of Asstt. CIT vs. Ashima Syntex Ltd. 2008 (10) TMI 298 - ITAT AHMEDABAD-B - upholding the levy of interest in light of sub-s. (4) of s. 115JA should be followed or the judgment of the Bombay High Court in Snowcem India Ltd. 2009 (1) TMI 6 - BOMBAY HIGH COURT -, also rendered in the context of s. 115JA, has to be applied - the levy of interest upheld.

Summary

Issues Involved:
1. Levy of interest under Section 234B and Section 234C of the Income Tax Act on income computed under Section 115JA.

Detailed Analysis:

Issue 1: Levy of Interest under Section 234B and Section 234C on Income Computed under Section 115JA

Appellant's Argument:
The appellant argued that the CIT(A) erred in confirming the AO's order charging interest under Sections 234B and 234C when the income was taxed based on book profit under Section 115JA. The appellant relied on the Bombay High Court's decision in Snowcem India Ltd. vs. Dy. CIT, which held that interest under Sections 234B and 234C is not leviable when income is computed under Section 115JA.

Respondent's Argument:
The Departmental Representative supported the orders of the authorities below, relying on the Special Bench decision in Asstt. CIT vs. Ashima Syntex Ltd., which held that total income computed under Section 115JA is liable to advance tax, and in the event of default, the levy of interest under Section 234C is mandatory.

Tribunal's Analysis:
The Tribunal noted that the Bombay High Court in Snowcem India Ltd. held that interest under Sections 234B and 234C is not leviable when income is computed under Section 115JA. The Tribunal also observed that the Supreme Court had affirmed the Karnataka High Court's decision in Kwality Biscuits Ltd., which supported this view.

Separate Judgment by A.N. Pahuja, A.M.:
A.N. Pahuja disagreed with the conclusion drawn by the JM, emphasizing the decision of the Special Bench in Asstt. CIT vs. Ashima Syntex Ltd. He highlighted that the provisions of Section 115JA(4) make all other provisions of the Act applicable, including those dealing with payment of advance tax and charging of interest in case of default.

Third Member's Decision:
The Third Member, R.V. Easwar, concurred with the AM's view, emphasizing that the Special Bench decision in Ashima Syntex Ltd. should be followed. He noted that the Bombay High Court's judgment in Snowcem India Ltd. did not consider Section 115JA(4), which explicitly makes all other provisions of the Act applicable. Therefore, he upheld the levy of interest under Sections 234B and 234C for income computed under Section 115JA.

Final Decision:
The appeal of the assessee was dismissed, and the order of the CIT(A) was upheld, confirming the levy of interest under Sections 234B and 234C on income computed under Section 115JA.