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2012 (5) TMI 278 - AT - Income TaxMinimum Alternate Tax (MAT) - Interest u/s 234C - deferred payment of advance tax - Section 115JB(5) - held that - Under s. 115JB of the Act, sub-s. (5) clearly states that other provisions of the Act shall apply to every assessee being a company, save as otherwise provided in the said section. In this context, Circular No. 13 of 2001 has also been issued by the CBDT as per which companies covered by the provisions of s. 115JB are liable to pay advance tax and consequently, ss. 234B and 234C of the Act are applicable. Decision in Kwality Biscuits Ltd.(2006 (4) TMI 121 (SC)) in which SC dismissed the appeal against the decision of HC in (1999 (11) TMI 48 (HC)) distinguished. - Decided against the assessee.
Issues Involved:
1. Deletion of interest charged under Section 234C of the Income-tax Act for deferred payment of advance tax. 2. Applicability of Section 154 for rectification of errors in the context of interest levied under Section 234C. Detailed Analysis: Issue 1: Deletion of Interest Charged under Section 234C The Revenue appealed against the CIT(A)'s decision to delete the interest of Rs. 2,24,28,120/- charged under Section 234C for deferred payment of advance tax. The CIT(A) had directed the deletion of this interest, arguing that the issue was debatable and not subject to prima facie adjustments under Section 143(1). The CIT(A) noted that the MAT income could not be known to the company during the previous year, making it impossible to levy interest under Sections 234B and 234C when MAT income is the deciding factor for tax chargeability. The Revenue, however, argued that the levy of interest under Section 234C is mandatory, citing various judicial decisions including Jt. CIT Mumbai vs. Rolta India Ltd., CIT vs. Rana Sugars Ltd., and CIT vs. Steel Steips Leasing Ltd. The Tribunal agreed with the Revenue, emphasizing that Section 115JB(5) explicitly states that all provisions of the Act, including those relating to advance tax, apply to companies. The Tribunal referenced the CBDT Circular No. 13 of 2001, which clarified that companies are liable for advance tax under Section 115JB, and therefore, interest under Sections 234B and 234C is applicable. Issue 2: Applicability of Section 154 for Rectification The assessee had filed an application under Section 154, arguing that interest under Section 234C was not leviable based on the Supreme Court's decision in CIT vs. Kwality Biscuits Ltd. The AO rejected this application, stating that the issue was debatable and not a clear mistake apparent from the record. The CIT(A) had allowed the assessee's appeal, stating that the issue of charging interest under Section 234C was debatable and thus outside the scope of Section 154. The Tribunal disagreed with the CIT(A), stating that the AO correctly applied the law as per Section 115JB(5) and the CBDT Circular. The Tribunal noted that the CIT(A) had inappropriately extended the debate by referring to decisions related to Section 115J, which did not apply to the context of Section 115JB. The Tribunal highlighted that the Hon'ble Karnataka High Court in Jindal Thermal Power Co. Ltd. had upheld the levy of interest under Sections 234B and 234C on tax calculated on book profits under Section 115JB, making the issue non-debatable. Conclusion: The Tribunal concluded that the AO was justified in levying interest under Section 234C on tax determined on book profits under Section 115JB. The CIT(A)'s order was vacated, and the Revenue's appeal was allowed. The Tribunal emphasized that the specific provisions of Section 115JB(5) and relevant judicial precedents supported the mandatory levy of interest, and no debatable issue existed to warrant rectification under Section 154.
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