2014 (8) TMI 158 - AT - Income Tax

Non payment of advance tax on MAT u/s 115JB - Rectification of order u/s 154 Levy of Interest u/s 234B and 234C Held that - For the relevant AY and up till the end of the FY as on 31/03/2007 the assessee was not required to pay advance tax in respect of book profit u/s 115JB as per the decision in Commissioner Of Income-Tax Versus Kwality Biscuits Limited 2006 (4) TMI 121 - SUPREME Court - no advance tax was payable on minimum alternate tax computed u/s 115JB and accordingly interest u/s. 234B and 234C cannot be levied for non-deposit of advance tax on minimum alternate tax for the yea - the impossibilities cannot be thrust upon the assessee when there was no requirement under the existing law at that point of time for payment of advance tax in respect of minimum alternate tax u/s 115 JB - the levy of interest u/s 234B and 234C in respect of tax liability on book profit u/s 115JB is set aside.

Summary

Issues:
1. Validity of order u/s. 154 of the Income Tax Act, 1961.
2. Charging of interest under sections 234B and 234C for non-deposit of advance tax on minimum alternate tax computed under section 115JB.

Issue 1: Validity of order u/s. 154:
The appeal challenged the order u/s. 154 of the Income Tax Act, 1961, passed by the AO for assessment year 2007-08. The assessee contended that subsequent decisions of Higher Courts cannot be the subject matter of rectification u/s. 154. The AO rectified the order to credit tax paid, but also charged interest under sections 234B and 234C based on a decision of the Hon'ble Supreme Court in the case of Rolta India Ltd. The CIT(A) upheld the AO's action. The assessee argued that at the relevant time, there was no requirement to pay advance tax on book profit under section 115JB, citing the decision in the case of CIT vs. Kwality Biscuits Ltd. The Tribunal, in line with previous decisions, held that the assessee cannot be penalized for not paying advance tax when it was not required by law, thus deleting the interest charged under sections 234B and 234C.

Issue 2: Charging of interest under sections 234B and 234C:
The dispute centered around the AO's decision to charge interest under sections 234B and 234C for non-deposit of advance tax on minimum alternate tax under section 115JB. The assessee argued that as per established law, no advance tax was payable on minimum alternate tax until a subsequent decision by the Hon'ble Supreme Court in the case of JCIT vs. Rolta India Ltd. The Tribunal agreed with the assessee, emphasizing that the law prevailing at the time did not necessitate payment of advance tax on minimum alternate tax. Relying on past judgments, including the case of Charbhuja Industries P. Ltd. vs. ACIT, the Tribunal ruled in favor of the assessee, deleting the interest levied under sections 234B and 234C.

In conclusion, the Tribunal allowed the appeal, emphasizing that the assessee should not be penalized for not fulfilling a requirement that did not exist in law at the relevant time. The decision was based on established legal principles and prior judgments, ultimately leading to the deletion of the interest charged under sections 234B and 234C.