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2016 (3) TMI 907 - AT - Income TaxLevy of interest u/s. 234B and 234C - MAT - Advance payment of Tax - Held that - We find that the levy of interest u/s. 234B and 234C in case of companies governed by MAT provisions was finally settled by the Hon ble Apex Court in M/s Rolta India Ltd. case 2011 (1) TMI 5 - SUPREME COURT OF INDIA , that before that the assessees were under bona - fide belief that they had not to pay advance tax as per the provisions of sec. 207/208 of the Act, that after 07. 1. 2011 position became very clear that the assessees to be taxed u/s. 115 JB would also have to pay advance tax. Considering the peculiar facts and circumstances of the case, we are of the opinion that interest should be levied for the default of March installment only and not for the earlier three installments. The AO is directed to recalculate the interest accordingly. - Decided partly in favour of assessee
Issues:
1. Challenge to the order of CIT(A)-20, Mumbai regarding interest u/s. 234A, 234B, and 234C of the Act. 2. Interpretation of provisions of section 115JB and its applicability to advance tax payments. 3. Determination of interest levy u/s. 234B and 234C for companies governed by MAT provisions. 4. Impact of the judgment in the case of Rolta India on advance tax payments. 5. Calculation of interest for default in advance tax payment. Analysis: 1. The Assessee, a company in the business of builders and developers, challenged the order of the AO regarding interest u/s. 234A, 234B, and 234C of the Act. The AO held that provisions of section 115JB were attracted, leading to the charging of interest. The Assessee, aggrieved by this order, appealed before the CIT(A)-20, Mumbai. 2. The FAA considered the arguments presented by the Assessee, citing cases like Kwality Biscuits, Snowchem, and Rolta India to support its claim that there was no requirement for advance tax payment as per section 115JB. However, the FAA held that there was a default in advance tax payment and upheld the levy of interest u/s. 234B and 234C, considering the legal obligation of the Assessee to deposit advance tax of MAT before the due date. 3. During the appeal before the ITAT Mumbai, the Assessee argued that the judgment in the case of Rolta India clarified the obligation to pay advance tax for companies governed by MAT provisions. The ITAT considered the timeline of events and the legal position post the judgment in Rolta India, determining that interest should be levied only for the default in the March installment and not for the earlier three installments. The ITAT directed the AO to recalculate the interest accordingly. 4. The ITAT's decision was based on the clarification provided by the Hon'ble Apex Court in the case of Rolta India, which established that companies taxed u/s. 115JB were also required to pay advance tax. The Assessee's belief before this clarification was considered, leading to a partial allowance of the appeal and a decision in favor of the Assessee regarding the calculation of interest for default in advance tax payment. 5. Ultimately, the ITAT's judgment partially allowed the Assessee's appeal, emphasizing the importance of the legal position post the judgment in Rolta India regarding the obligation of companies governed by MAT provisions to pay advance tax and the appropriate calculation of interest for default in advance tax payment. Conclusion: The ITAT Mumbai's judgment clarified the obligation of companies under MAT provisions to pay advance tax post the judgment in the case of Rolta India, leading to a recalibration of interest levy for default in advance tax payment. The decision highlighted the importance of legal clarity in tax matters and the impact of judicial interpretations on tax liabilities for companies.
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