2011 (12) TMI 154 - HC - Income Tax

Interest u/s 234B advance tax not paid - entire income subject to TDS - Held that - Assessee had no liability to pay advance tax in view of the fact that his entire income was subject to tax at source. Thus, no interest is chargeable u/s 234B. This issue also stands concluded in Director of Income-Tax Vs. Jacab Civil Incorporated (2010 - TMI - 78020 - Delhi High Court). Hence, no substantial question of law arises in these appeals which are accordingly dismissed.

Summary

Issues:
1. Charging of interest under Section 234-B of the Income-Tax Act.
2. Tax effect in the appeals.
3. Liability to pay advance tax when income is subject to tax at source.
4. Applicability of Division Bench judgment in similar cases.

Analysis:

Issue 1: Charging of interest under Section 234-B of the Income-Tax Act
In all the appeals, the primary issue was the charging of interest under Section 234-B of the Income-Tax Act. The Assessing Officer had charged interest on the ground that advance tax was not paid. However, the CIT (A) set aside this order, and the ITAT affirmed it, stating that the assessee had no liability to pay advance tax as the entire income was subject to tax at source. This decision was supported by a Division Bench judgment of the Court in a similar case. Consequently, the appeals were dismissed as no substantial question of law arose in this regard.

Issue 2: Tax effect in the appeals
The Court noted that the tax effect in the appeals was below a certain threshold as per the CBDT guidelines. Given that the issue did not have a cascading effect, the appeals were deemed not entertainable based on the latest guidelines. This criterion was considered in deciding the fate of the appeals.

Issue 3: Liability to pay advance tax when income is subject to tax at source
The Assessing Officer had imposed interest under Sections 234-B and 234-C of the Income-Tax Act due to non-payment of advance tax. However, the CIT (A) overturned this decision, and the ITAT upheld it, ruling that the assessee was not liable to pay advance tax since the entire income was already subject to tax at source. This interpretation was also supported by a Division Bench judgment of the Court, leading to the dismissal of the appeals.

Issue 4: Applicability of Division Bench judgment in similar cases
The Division Bench judgment in Director of Income-Tax Vs. Jacab Civil Incorporated [2010] 194 TAXMAN 495 was cited in all the appeals to support the conclusion that the assessee had no obligation to pay advance tax when the income was subject to tax at source. This consistent application of precedent reinforced the decisions in the appeals and led to their dismissal on the grounds of no substantial question of law arising.

In conclusion, the High Court dismissed all the appeals as no substantial question of law emerged from the issues raised, particularly concerning the charging of interest under Section 234-B of the Income-Tax Act and the liability to pay advance tax when income was already subject to tax at source. The decisions were also influenced by the tax effect in the appeals and the application of relevant Division Bench judgments.