2012 (7) TMI 402 - AT - Income Tax

Interest u/s 234B & 234C - failure to pay advance tax - assessee contended liability for advance tax did not exist at time of filing original return and due to retrospective amendment in the section 115JB by inserting (i) of Explanation 1 of subsection (2) of section 115JB w.e.f. 1.4.2001, the company became liable to pay tax under the provisions of section 115JB - Held that - Assessee became liable to pay the tax as per the provisions of section 115JB only on the retrospective amendment w.e.f. 1.4.2001. Hence in view of decision in case of Emami Limited (2011 (6) TMI 163 (HC)), assessee could not be held as defaulter in payment of advance tax and it would be nevertheless asked to pay interest in terms of Section 234B and Section 234C for default in making payment of tax in advance which was physically impossible - Decided in favor of assessee.

Summary

Issues:
- Interpretation of interest chargeability under sections 234B and 234C of the Income-tax Act, 1961.

Analysis:
1. Facts and Background:
- The appeal arose from an order concerning the Assessment Year 2008-09.
- The primary issue was the chargeability of interest under sections 234B and 234C of the Income-tax Act, 1961.

2. Assessee's Position:
- The company, primarily deriving income from dividends and long-term capital gains, filed its original return showing a taxable income of Rs. 31,74,330.
- Following a retrospective amendment in Section 115JB, the company revised its return, resulting in a payable Minimum Alternate Tax (MAT).
- The company paid the MAT without considering interest under sections 234B and 234C.
- The CIT (A) deleted the interest, citing the absence of advance tax liability from the beginning.

3. Revenue's Argument:
- The revenue contended that interest under sections 234B and 234C should be levied, referencing relevant legal precedents.
- The revenue relied on a Supreme Court decision emphasizing the applicability of interest for failing to pay advance tax under certain sections.

4. Judgment and Analysis:
- The Tribunal considered the unique circumstances of the case where the company's liability arose due to a retrospective amendment.
- Citing a High Court decision, the Tribunal noted that as the company had no advance tax liability before the amendment, interest under sections 234B and 234C could not be imposed.
- No contrary decisions were presented by the revenue, leading to the dismissal of the appeal and upholding the CIT (A) order.

5. Conclusion:
- The Tribunal upheld the CIT (A) decision, emphasizing that the company's liability for interest under sections 234B and 234C was triggered solely by the retrospective amendment, absolving it from liability before the amendment.
- The appeal of the revenue was dismissed, and the order was pronounced on June 22, 2012, in favor of the assessee.