2017 (3) TMI 902 - HC - Income Tax

Interest under sections 234B and 234C not chargeable if the total income is assessed to tax under section 115J - Recall of HC order 2011 (6) TMI 915 - GUJARAT HIGH COURT - Held that - A conjoint reading of section 115J of the Act as it stood at the relevant time, with sections 115JA and 115JB of the Act reveals that insofar as sections 115JA and 115JB are concerned, they are a complete code in themselves. Sub-section (4) of section 115JA and sub-section (5) of section 115JB of the Act specifically provide that save as otherwise provided in the section, all other provisions of the Act shall apply to every assessee, being a company, mentioned in the section; whereas, no similar provision is found in section 115Jof the Act. Moreover, the Supreme Court in the case of Rolta India Limited (2011 (1) TMI 5 - SUPREME COURT OF INDIA ) has specifically referred to the decision in the case of Kwality Biscuits Ltd. as having been affirmed by the Supreme Court (2006 (4) TMI 121 - SUPREME Court ) and has not disturbed the position of law enunciated therein. In Rolta India Limited (supra), the Supreme Court, in the context of the provisions of sections 115JA and 115JB of the Act, which are held to be a self-contained code pertaining to MAT, held that interest under sections 234B and 234C of the Act shall be payable on failure to pay advance tax in respect of tax payable under those sections. Apparently therefore, the judgment and order dated 24.06.2011 made by this court in Tax Appeal No.31 of 2003 has been rendered on a misreading of the decision of the Supreme Court in the case of Rolta India Limited (supra). Moreover, this court in the case of Farmson Pharmaceuticals Guj. Ltd (2011 (4) TMI 1037 - Gujarat High Court ) has followed the decision of the Karnataka High Court in Kwality Biscuits Ltd. (2006 (4) TMI 121 - SUPREME Court ) as affirmed by the Supreme Court and has held that interest cannot be charged under section 234B and 234C of the Act where the total income is determined under sec 115J of the Act. The said decision has been rendered on 07.04.2011, that is, prior in point of time to the judgment and order dated 24.06.2011 which is sought to be recalled. In the aforesaid premises, the application deserves to be allowed.

Summary

Issues:
Recall of judgment based on misinterpretation of Supreme Court decision in relation to interest under sections 234B and 234C of the Income Tax Act, 1961.

Analysis:
The applicant sought the recall of a judgment and order dated 24.06.2011, which had quashed the order passed by the Income Tax Appellate Tribunal, Ahmedabad. The Tribunal had previously ruled that no interest under sections 234B and 234C of the Act would be chargeable based on the income determined under section 115J. The court had passed an ex-parte order in favor of the revenue, citing a Supreme Court decision. The applicant argued that the Supreme Court's decision did not apply to the present case, referencing a Karnataka High Court decision affirmed by the Supreme Court. The applicant contended that the Tribunal's decision was justified, and the Supreme Court had not interfered with the earlier ruling.

The respondent, on the other hand, argued that a previous decision by the court had followed the Karnataka High Court decision, which was affirmed by the Supreme Court, stating that interest could not be charged under sections 234B and 234C when income was determined under section 115J. The court noted that the earlier judgment was based on a misunderstanding, as the Supreme Court's decision related to different sections of the Act than the present case. The court highlighted the distinction between sections 115JA, 115JB, and 115J, emphasizing that the latter did not have provisions similar to the former two. The court also referenced the decision in Farmson Pharmaceuticals Guj. Ltd., which supported the applicant's argument.

Consequently, the court found that the previous judgment was rendered on a misinterpretation of the law and decided to recall the judgment and order dated 24.06.2011. The court restored the appeal to the file, ruling in favor of the applicant. The court concluded that the application for recall deserved to be allowed based on the arguments presented and the legal analysis provided.