2015 (3) TMI 274 - HC - Income Tax

Interest under Section 234B - default in payment of advance tax when the income is computed under Section 115JA - Held that - Section 115JB is a self-contained code and thus, all companies were liable for payment of advance tax under section 115JB and consequently the provisions of sections 234B and 234C imposing interest on default in payment of advance tax were also applicable. Tribunal was right in imposing interest under Section 234B of the Act for default in payment of advance tax as the issue raised in this appeal is no longer res integra in view of the decision of Joint Commissioner of Income Tax v. Rolta India Limited, (2011 (1) TMI 5 - SUPREME COURT OF INDIA), wherein an identical issue was answered against the assessee. - Decided in favour of revenue.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal on interest under Section 234B for default in advance tax payment when income computed under Section 115JA.

Analysis:
The appellant challenged the Income Tax Appellate Tribunal's order regarding the imposition of interest under Section 234B for default in advance tax payment when income is computed under Section 115JA. The counsel for the appellant acknowledged the Supreme Court's decision in Joint Commissioner of Income Tax v. Rolta India Limited, where a similar issue was decided against the assessee. The Supreme Court in Rolta India Limited case clarified that interest under Section 234B can be charged on tax calculated on book profits under Section 115JA. The Court emphasized that Sections 234B and 234C do not exclude Section 115J/115JA and that the special provisions under Section 115J/115JA necessitate the payment of advance tax. The Court highlighted that interest under Sections 234B and 234C is applicable for failure to pay advance tax in relation to tax payable under Section 115JA/115JB. The Circular No. 13 of 2001 issued by the Central Board of Direct Taxes was deemed inapplicable as Section 115JB is considered a self-contained code imposing liability for advance tax payment on MAT companies.

The Court further discussed conflicting judgments of various High Courts on the issue. The Karnataka High Court in Kwality Biscuits Ltd. held that interest under Sections 234B and 234C is not leviable when Section 115J applies, a view not shared by other High Courts. The Supreme Court dismissed the special leave petition against Kwality Biscuits Ltd., affirming the decision. However, the Karnataka High Court later distinguished its decision in Jindal Thermal Power Co. Ltd., stating that interest under Sections 234B and 234C is payable for failure to pay advance tax under Section 115JB. The Court concluded that interest under Sections 234B and 234C is applicable in cases of default in advance tax payment under Section 115JA/115JB.

Based on the legal principles established in the Rolta India Limited case and subsequent interpretations, the Court upheld the Tribunal's decision to impose interest under Section 234B for default in advance tax payment. Consequently, the appeal was dismissed, with the question of law decided against the assessee and in favor of the Revenue, without any costs incurred.