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2020 (2) TMI 506 - AT - Income TaxLevy interest u/s 234B - addition made in Book Profit under MAT with respect to deduction on export profit u/s 80HHC(3), ignoring the amendment made by the Finance Act 2011 to section 115JB with retrospective effect from 01.04.2005 - HELD THAT - Liability arising on account of retrospective amendment could not be fastened on the assessee, where the assessee could not have foreseen the liability, at the time of estimating his income for the purpose of payment of advance tax. In this case, additions was made to book profits computed u/s 115JB, towards deduction claimed on eligible profit u/s 80HHC of the Act, on the basis of retrospective amendment to Section 115JB of the Act, by omitting clause (iv) to (vii) to explanation 1 by the Finance Act, 2011 with effect from 01/04/2005. At the time of payment of advance tax, said provisions were very much was on statute, and assessee was entitled to deduct amount claimed as deduction u/s 80HHC from book profit u/s 115JB of the Act. Therefore, the assessee has taken the advantage of provisions as was there in statue at the time of payment of advance tax and hence, the assesee cannot be expected to pay advance tax on the part of disputed amount. No interest can be levied u/s 234B of the Act, for shortfall in payment of advance tax on the basis of retrospective amendment to law. The Ld.CIT(A), after considering relevant submissions of the assessee and also, by following the order of the ITAT in assessee own case for very same AY 2005-06 2016 (6) TMI 300 - ITAT MUMBAI has rightly deleted additions made by the Ld. AO towards levy of interest u/s 234B of the I.T. Act, 1961. Hence, we are inclined to uphold the order of the Ld.CIT(A) and dismiss, appeal filed by the revenue.
Issues involved:
Levy of interest u/s 234B for shortfall in advance tax payment due to retrospective amendment in tax law. Analysis: The appeal pertains to the order of the Ld. Commissioner of Income Tax (Appeals) concerning the Assessment Year 2005-06. The key issue raised by the revenue is whether interest u/s 234B should be levied on the addition made in Book Profit under MAT provisions due to deductions on export profit u/s 80HHC(3), despite the retrospective amendment by the Finance Act 2011 to section 115JB from 01.04.2005. The assessee, a public limited company engaged in various businesses, had claimed deductions under section 80HHC, which were disallowed by the Ld. AO. The ITAT confirmed the disallowances, and the Ld. AO levied interest u/s 234B on the book profit computed u/s 115JB for the shortfall in advance tax payment. The assessee challenged this before the Ld.CIT(A), arguing that interest should not be charged due to the retrospective amendment. The Ld.CIT(A) agreed with the assessee, citing judicial precedents, and deleted the interest levied by the Ld. AO. The revenue appealed against this decision. The Ld. DR contended that the Ld.CIT(A) erred in deleting the interest levied by the Ld. AO, while the Ld. AR supported the Ld.CIT(A)'s decision, referencing past judgments. The ITAT analyzed the issue, considering the retrospective amendment to the tax law and the impact on interest liability. Referring to previous decisions, including the ITAT's ruling in the assessee's own case for the same AY and the Bombay High Court's judgment in similar matters, the ITAT held that interest u/s 234B should not be imposed for a shortfall in tax payment resulting from subsequent amendments to the law. The ITAT emphasized that the assessee could not have anticipated such liabilities at the time of estimating income for advance tax payment. The court's rulings highlighted that it would be unjust to burden the assessee with liabilities arising from retrospective amendments that were unforeseeable at the time of tax estimation. Therefore, the ITAT upheld the Ld.CIT(A)'s decision to delete the interest levied by the Ld. AO, concluding that no interest should be charged for the shortfall in advance tax payment due to retrospective amendments in tax laws. In conclusion, the ITAT dismissed the revenue's appeal, affirming the Ld.CIT(A)'s order to delete the interest levied by the Ld. AO. The decision was based on the principle that interest u/s 234B should not be imposed when the shortfall in advance tax payment is a result of subsequent amendments to the law that the assessee could not have foreseen at the time of tax estimation.
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