2012 (1) TMI 393 - AT - Income Tax

Summary

Issues involved: Appeal against order of ld. Commissioner of Income-tax (Appeals) for assessment year 2005-06 regarding levy of interest under section 234C and applicability of retrospective amendment to tax liability.

Levy of interest under section 234C:
The assessee challenged the levy of interest under section 234C amounting to Rs. 91,17,582, contending that tax liability is on book profits u/s 115JB and interest cannot be levied on additions due to retrospective amendment. The Tribunal admitted the additional ground of appeal, stating it is purely legal and no fresh scrutiny of facts is needed. The senior counsel argued that the assessee's claim for deduction against book profit was correct based on previous decisions, and interest under section 234C cannot be imposed where tax liability arises due to retrospective amendment. The Tribunal agreed with the assessee, citing the amendment in section 115JB and previous legal interpretations, and directed the Assessing Officer to recompute the interest under section 234C.

Applicability of retrospective amendment to tax liability:
The senior counsel highlighted that the capital gains tax liability arose in the last quarter and was paid accordingly, invoking the proviso to section 234C(1)(b). This aspect was not considered by the Assessing Officer. The Tribunal, after considering the submissions, remanded the matter to the Assessing Officer for reevaluation of interest under section 234C in light of the observations made.

This judgment by the Appellate Tribunal ITAT Kolkata addressed the issues of levy of interest under section 234C and the impact of retrospective amendments on tax liability for the assessment year 2005-06. The Tribunal allowed the appeal for statistical purposes, directing a reassessment of interest under section 234C based on the legal interpretations and amendments discussed during the proceedings.