2012 (4) TMI 486 - HC - Income Tax

Appeal by Revenue against the Tribunal - challenging the order that interest under section 234B and 234C of the Act cannot be levied against the assessee as the computation of income has been made under Section 115JA of the Act Held that - The pre requisite condition for applicability of Section 234B is that the assessee is liable to pay tax under Section 208 and the expression assessed tax is defined to mean the tax on the total income determined under Section 143(1) or under Section 143(3) as reduced by the amount of tax deducted or collected at source - The expression assessed tax is defined to mean the tax assessed on regular assessment which means the tax determined on the application of Section 115J/115JA in the regular assessment - there is no exclusion of Section 115J/115JA in the levy of interest under section 234B appeal of revenue accepted.

Summary

Issues:
1. Appeal by the revenue challenging Tribunal's order on income computation under Section 115JA.
2. Substantial questions of law regarding interest under Section 234B and 234C.

Analysis:
1. The High Court considered the appeal by the revenue challenging the Tribunal's order on income computation under Section 115JA. The Tribunal had held that the provisions of Section 115J and 115JA are not materially different. However, the High Court noted that even though income was computed under Section 115JA, interest under Section 234B and 234C were not chargeable. The revenue appealed against this decision, arguing that the Tribunal erred in its interpretation of the law.

2. The High Court admitted the appeal to consider substantial questions of law. The first question was whether the Tribunal was correct in holding that interest under Section 234B and 234C cannot be levied against the assessee when income is computed under Section 115JA. The second question raised was whether the Tribunal erred in considering irrelevant circumstances like the "bona fides of the assessee" when levying interest under Section 234B, which is an automatic levy without discretion under Section 208 of the Act.

3. The counsel for both parties referred to a judgment by the Apex Court in the case of Jt. CIT v. Rolta India Limited, where it was clarified that Sections 115J and 115JA are special provisions requiring the payment of advance tax. The Apex Court emphasized that the evaluation of current income and determination of assessed income must be made in accordance with the statutory scheme of Sections 115J and 115JA. The purpose of these provisions is to tax zero-tax companies.

4. Based on the Apex Court's judgment, the High Court concluded that the Tribunal's decision was unsustainable. Therefore, the High Court allowed the appeal by the revenue, answering the substantial questions of law in favor of the revenue and against the assessee. The High Court's decision overturned the Tribunal's ruling, emphasizing the mandatory nature of paying advance tax under Sections 115J and 115JA, and the applicability of interest under Section 234B to all companies, including those falling under these special provisions.