2013 (11) TMI 1047 - HC - Income Tax

Interest u/s 234B Held that - The return of the assessee was initially processed under Section 143(1) of the Act - The re-assessment proceedings were initiated against the assessee under Section 147 Decision in the case of Commissioner of Income Tax v. Nahar Spinning Mills Ltd. 2011 (7) TMI 961 - Punjab and Haryana High Court followed - The Tribunal has failed to notice the fact that the Assessing Officer has framed the assessment for the first time on 30.1.1992, therefore, Explanation No.2 is applicable with full force in respect of levy of charging of interest under Section 234-B of the Act. There was no previous assessment finalized therefore, in the assessment framed in re-assessment proceedings under Section 147 of the Act would attract levy of interest under Section 234B of the Act - Explanation No.2 is applicable to the case of assessee Decided in favour of Revenue.

Summary

Issues:
1. Whether sales tax should be excluded from total turnover for deduction u/s 80HHC?
2. Whether interest u/s 234B is chargeable on re-assessment when originally not charged?

Analysis:
*Issue 1:*
The first issue pertains to the exclusion of sales tax from total turnover for the purpose of deduction under Section 80HHC of the Income Tax Act. The Court relied on previous judgments to conclude that sales tax should indeed be excluded from total turnover. Citing judgments like Commissioner of Income Tax Vs. Lakshmi Machine Works, the Court held that sales tax is not part of total turnover for computation of deductions under Section 80HHC.

*Issue 2:*
The second issue revolves around the chargeability of interest under Section 234B on re-assessment when it was not originally charged. The Court examined the provisions of Section 234B and noted that re-assessment proceedings are considered regular assessments for the purpose of levying interest under Section 234B if it is the first time such an assessment is made. Relying on precedents like Commissioner of Income Tax v. Nahar Spinning Mills Ltd., the Court held that interest under Section 234B can be charged in cases of regular assessment, and re-assessment falls under this category. The Tribunal's decision was found unjustified, and the orders of the Commissioner of Income Tax (Appeals) and the Tribunal were set aside.