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2010 (6) TMI 586 - HC - Income TaxLevy of interest in case of minimum alternate tax (MAT) - Difference between section 115J and 115JB - held that - it is only a deemed income which is taken into consideration under section 115J and in the absence of any specific provisions being made applicable the same could not be applied by creating a further deeming fiction and it is in that context held that interest under sections 234B and 234C was not leviable when the case of the assessee falls under section 115J. However, under section 115JA as well as under section 115JB, there are specific provisions making applicable other provisions of the Act to an assessee being a company coming under the relevant sections. In view of the specific provision, particularly, under section 115JB under which the case of the present assessee falls we hold that the ratio of Kwality Biscuits (1999 -TMI - 15292 - KARNATAKA High Court) cannot apply to the case of the assessee herein which is covered under section 115JB of the Act, wherein sub-section (5) makes all other provisions of the Act applicable. - the case of the assessee falls under section 115JB of the Act and not under section 115JA. - Decided in favor of revenue.
Issues Involved:
1. Applicability of interest under sections 234B and 234C when income is computed under section 115JA of the Income-tax Act. 2. Consideration of the object of section 115JA and relevant Board Circular regarding mandatory levy of interest under sections 234B and 234C. Detailed Analysis: Issue 1: Applicability of Interest under Sections 234B and 234C with Section 115JA The primary issue revolves around whether the law declared in the Kwality Biscuits case, which held that no interest can be levied under sections 234B and 234C when income is computed under section 115J, also applies to computations under section 115JA. The Tribunal had allowed the appeal by the assessee, holding that the interest under sections 234B and 234C is not chargeable where assessment is made under section 115JA, relying on the Kwality Biscuits case. However, the Revenue argued that the Tribunal erred in applying the Kwality Biscuits decision to section 115JA, emphasizing that section 115JA(4) includes a saving clause that makes all other provisions of the Act applicable, unlike section 115J. The court noted that the saving clause in section 115JA(4) and section 115JB(5) explicitly states that "all other provisions of this Act shall apply to every assessee being a company," which was absent in section 115J. Issue 2: Consideration of Object and Board Circular The Tribunal failed to consider the object of introducing section 115JA and the relevant Board Circular, which clearly contemplated that under the new provisions, the levy of interest under sections 234B and 234C was mandatory. The Revenue highlighted that the Central Board of Direct Taxes (CBDT) Circular No. 13 of 2001 clarified that companies covered by section 115JB are liable to pay advance tax, making sections 234B and 234C applicable. Judgment Analysis: The court clarified that the assessee's case falls under section 115JB, not section 115JA. Both sections 115JA and 115JB contain a saving clause making all other provisions of the Act applicable to the assessee. The court distinguished the Kwality Biscuits decision, which was under section 115J without a saving clause, from the present case under section 115JB with a saving clause. The court held that the Tribunal's reliance on Kwality Biscuits was misplaced because section 115JB explicitly makes other provisions of the Act, including sections 234B and 234C, applicable. Therefore, the interest under sections 234B and 234C is chargeable when income is computed under section 115JB. The court concluded that the Assessing Officer was correct in invoking section 154 to rectify the omission of charging interest under sections 234B and 234C, as it was a mistake apparent from the record. The Tribunal's order was set aside, and the orders of the Appellate Commissioner and the Assessing Officer were upheld, subject to the clarification that the case falls under section 115JB. Conclusion: The appeal by the Revenue was allowed. The Tribunal's order was set aside, and the orders of the Appellate Commissioner and the Assessing Officer were upheld. The matter was remitted back to the Assessing Officer to recompute the interest under section 115JB within three months.
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