2011 (12) TMI 314 - HC - Income Tax

Assessment under 115JA(MAT) - Interest under 234A,234B,234C - Held That - Interest under Sections 234B and 234C of the Act as the assessment has been made under Section 115JA of the Act. is valid and decision of Kwality Biscuits is not applicable.

Summary

Issues:
1. Appeal against ITAT order dismissing revenue's appeal.
2. Imposition of interest under Sections 234B and 234C of the Income Tax Act.
3. Application of decision in Kwality Biscuits Ltd. case.
4. Interpretation of Section 115JA(4) of the Act.
5. Justification for not following previous decisions.
6. Rectification of order under Section 234(2).

Analysis:
1. The appeal was filed against the ITAT order dismissing the revenue's appeal for the assessment year 1999-2000. The assessment was completed under Section 143(3) of the Income Tax Act, 1961, with directions for charging interest under Sections 234B and 234C. The appellant challenged the imposition of interest, leading to a series of appeals culminating in this High Court judgment.

2. The main contention revolved around the imposition of interest under Sections 234B and 234C. The appellant argued that the decision in Kwality Biscuits Ltd. case should have been applied, contending that no interest could be levied under these sections. However, the authorities justified the imposition citing Section 115JA(4) of the Act, which makes these provisions applicable when the assessment is done under Section 115JA. The High Court upheld this justification based on the Supreme Court's decision in Rolta India Ltd. case.

3. The issue of applying the decision in Kwality Biscuits Ltd. case was crucial. The appellant insisted that this decision should have been followed, emphasizing that the assessment under Section 115JA necessitated a different approach. However, the High Court ruled in favor of the revenue, stating that the decision in Kwality Biscuits Ltd. case was limited to assessments under Section 115J and not applicable to assessments under Section 115JA.

4. Interpretation of Section 115JA(4) was pivotal in determining the applicability of interest under Sections 234B and 234C. The authorities relied on this section to justify the imposition of interest, emphasizing that the provisions of these sections are triggered when the assessment is conducted under Section 115JA. This interpretation played a significant role in the High Court's decision.

5. The High Court justified not following previous decisions, including Kwality Biscuits Ltd. case, by emphasizing the specific provisions of Section 115JA(4) and the Supreme Court's ruling in Rolta India Ltd. case. The Court held that these decisions supported the authorities' actions and confirmed the imposition of interest under Sections 234B and 234C for the assessment year in question.

6. The issue of rectification of the order under Section 234(2) was also raised. However, the High Court found the appeal devoid of merit and dismissed it, upholding the authorities' decision to impose interest under Sections 234B and 234C based on the assessment conducted under Section 115JA of the Income Tax Act.