Scope of Sec.139(8). - Income Tax - 1339/CBDT

INSTRUCTION NO. 1339/CBDT Dated: June 18, 1980 Reference is invited to Board's Instruction No.783 (F.No.237/9/74 -A PAC.II) dated 6th November 1974 wherein it has been clarified that even where the assessment of a registered firm or an unregistered firm assessed u/s.183(b) is made on a total income below the minimum not liable to tax, interest u/s.139(8) will nevertheless be chargeable on the tax which would have been payable if the firm had been assessed as an unregistered firm. 2. Instances have come to the notice of the board where the Appellate Assistant Commissioners/ITAT have taken the view that there is no liability to interest u/s.139(8) in the case of a registered firm when the advance tax paid exceeds the tax payable on the total income in the status of a registered firm. 3. The matter as clarified in Boards Instruction No.783 was again referred to the Ministry of Law. The board have been advised that the fiction created by explanation 2 to sub-sec.8 of sec.139 has to be given full effect to with the result that if the firm whether registered or unregistered and assessed u/s.183(b) as a registered firm has filed belated return its tax liability for the purposes of interest u/s.139(8) would have to be computed as if it were an unregistered firm. Plain reading of the explanation leaves no scope for any other view. The firms u/s.183(b) filing belated returns fall in a different class and as such the question of any discrimination vis-a-vis other assessees who file returns in time does not arise. The treatment given to assessees, other than firms cannot be cited in support of a view which would qualify the explanation 2 to sec.139(8) of the act which deals with firms. The legal position is that registration of a firm makes no difference for computation of taxable income and is relevant only for determining tax payable. It is well settled that in a taxation provision, if the legislative intent is clear, there is no room for equity interest us/.139(8) in the case of a registered firm or a firm assessed u/s.183(b) would therefore be leviable with reference to the tax chargeable creating the registered firms as unregistered. 4. Decisions of AAC/ITAT which are contrary to the views expressed in par 3 above should be contested.