2005 (1) TMI 321 - AT - Income Tax

Summary

Issues:
- Appeal against deletion of interest charged under section 234C of Income-tax Act
- Interpretation of provisions governing advance tax under section 115JA

Analysis:
1. Issue 1: Appeal against deletion of interest under section 234C
- The department filed an appeal challenging the deletion of interest amounting to Rs. 35,257 charged by the Assessing Officer under section 234C of the Income-tax Act. The ld. CIT(A) had deleted this interest, leading to the department's appeal.
- The Assessing Officer had charged interest under section 234C as the income of the assessee was computed under section 115JA. The ld. CIT(A) was confronted with the argument that no interest was payable due to the application of section 115JA for specific instalment dates.
- After considering submissions, the ld. CIT(A) observed that the interest under section 234C was not chargeable on income determined under section 115JA. The department, however, argued that the assessee was liable to pay advance tax regardless of the income determination under section 115JA.

2. Issue 2: Interpretation of provisions governing advance tax under section 115JA
- The debate centered on whether advance tax was payable even if income was determined under section 115JA. The ld. counsel for the assessee argued that the Finance (No. 2) Act, 1996, which introduced section 115JA, was not in effect on specific due dates for advance tax payments.
- The Tribunal analyzed the provisions of section 115JA, noting that all other provisions of the Income-tax Act, including advance tax payment, are applicable to companies falling under section 115JA. The Tribunal cited relevant Supreme Court judgments to support the view that the assessee was liable to pay advance tax.
- The Tribunal acknowledged that the Finance (No. 2) Act, 1996, introducing section 115JA, was not in force on certain due dates for advance tax payments. However, it held that the assessee was liable for default in paying advance tax for subsequent due dates after the enactment of section 115JA.

3. Conclusion
- The Tribunal concluded that while the assessee was not liable for advance tax on specific dates before the enactment of section 115JA, the liability arose for subsequent due dates. Therefore, the appeal by the department was partly allowed, setting aside the order of the ld. CIT(A) and reinstating the interest under section 234C for specific instalment dates post the enactment of section 115JA.
- The decision was based on the interpretation of provisions governing advance tax under section 115JA and the applicability of other Income-tax Act provisions to companies falling under section 115JA.