2003 (2) TMI 187 - AT - Income Tax

Summary

Issues:
1. Levy of interest under sections 234B and 234C when income assessed under section 115JA of the IT Act, 1961.
2. Applicability of legal provisions and case laws in determining interest charges.

Analysis:

Issue 1: Levy of Interest under Sections 234B and 234C
The appeal raised concerns regarding the imposition of interest under sections 234B and 234C of the IT Act when the income was assessed under the deeming provisions of section 115JA. The appellant argued that interest should not be charged in such circumstances. However, the CIT(A) upheld the interest levy citing the failure of the appellant to pay advance tax as per section 208 of the Act. The CIT(A) emphasized that advance tax is payable on total income, including income computed under section 115JA, and hence, interest under sections 234B and 234C was rightly imposed.

Issue 2: Applicability of Legal Provisions and Case Laws
The appellant contended that interest should be canceled as the income was determined under section 115JA, and reliance was placed on the decision of the Karnataka High Court. However, the CIT(A) favored the decision of the Gauhati High Court, which held that interest was justified even when income was computed under section 115JA. The appellant further argued for deletion of interest charges, citing various Supreme Court decisions and previous rulings in favor of the assessee. The Departmental Representative supported the CIT(A)'s decision, emphasizing the correctness of following the Gauhati High Court ruling.

Judgment and Conclusion
After considering arguments from both sides and analyzing relevant legal provisions and case laws, the Tribunal found that the levy of interest under sections 234B and 234C was justified even when income was determined under section 115JA. The Tribunal emphasized that the statutory scheme required the payment of advance tax based on total income, including income computed under section 115JA. Upholding the CIT(A)'s decision, the Tribunal followed the Gauhati High Court ruling and other supportive decisions, leading to the dismissal of the appellant's appeal. The Tribunal concluded that the interest charges were valid and upheld the order of the CIT(A).