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TMI Blog2007 (5) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 154 of the Act since there was no directions by the Assessing Officer in the original order for charging the interest; (iii) the order against which the rectification order was passed had merged with the order of the Hon'ble ITAT and therefore the Assessing Officer had no jurisdiction to take recourse to rectification proceedings." 3. Briefly stated, the facts relating to the issue involved in these grounds of appeals are that the original assessments under section 143(3) of the Income-tax Act, 1961 were completed in these cases. While making the assessments, the Assessing Officer did not allow the claim of the assessee for deduction under section 80-O of the Act as the same was claimed by the assessee on the basis of gross amount of convertible foreign exchange received by the assessee. 4. On appeal, the CIT(A) allowed the relief to the assessee in toto. However, in 2nd appeal before the Tribunal filed by the Revenue, the ITAT directed the Assessing Officer to allow deduction under section 80-O of the Act on net income to be computed as per directions of the Tribunal issued in assessment year 1996-97. As per the directions of the ITAT, the Assessing Officer de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required rectification and accordingly he rectified the mistake and charged interest under section 234B of the Act up to the date of the order of ITAT. 9. Aggrieved with the order of the Assessing Officer, the assessee filed an appeal before the CIT(A) and reiterated the submissions made before the Assessing Officer. The CIT(A) after considering the submissions of the assessee and analyzing the provisions of section 234B and after taking into consideration the decision of the Apex Court in the case of CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1, held that levying of interest under section 234B upon the assessee was mandatory and the same has been rightly charged by the Assessing Officer by passing an order under section 154/254 of the Act because after the order passed by the ITAT there was no debate on the point of charging interest under section 234B of the Act. 10. Before us, the learned AR for the assessee in support of his grounds of appeals raised before us firstly contended that in this case the Assessing Officer has wrongly charged interest up to the date of order, i.e., 30-11-2004 passed by the ITAT because the same if at all is required to be charged that should have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuing ITNS-150. 12. We have considered the rival contentions of both the parties, perused the records and carefully gone through the orders of the tax authorities below as well as the case laws relied upon by the learned AR for the assessee. 13. In order to appreciate the proposition, whether the Assessing Officer by passing an order under section 154/254 can validly charge interest under section 234B of Income-tax Act in consequence of the order passed by the ITAT, we have looked into the relevant provision of section 234B of the Act which are reproduced as under: "234B. Interest for defaults in payment of advance tax.- (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income. From the above provisions noted and discussed above, it is clear that for determining the liability under section 234B of the Act, the assessed tax is to be taken into consideration for working out the liability as noted above. It is also provided in this section itself, how the interest under section 234B of the Act is required to be calculated. 15. Whereas section 234B(4) specifically deals with a situation where the assessment made under section 143(1), 143(3) or 144 is altered/modified/revised by an order of rectification, appeal, revision or reference or even by an order of settlement passed under section 245D(4) of the Act. Interest under section 234B shall be increased or reduced accordingly. 16. The Apex Court in the case of Anjum M.H. Ghaswala has held that levying of interest under sections 234A, 234B and 234C of the Act is mandatory in nature which means that after the decision of the Apex Court in the case of Anjum M.H. Ghaswala, the Assessing Officer in view of the clear provisions of section 234B was dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- "'Assessment' has been given an inclusive meaning in sub-section (8) of section 2. It includes reassessment. 'Regular assessment' has been defined in section 2(40) to mean the assessment made under section 143 or 144. In the context of sections 140A, 141 and 141A 'regular assessment' could only mean the original assessment made under section 143 or 144. Having regard to the scheme of the Act and use of the phrase 'regular assessment' in various sections of the Act, in section 214 'regular assessment' has been used in no other sense than the first order of assessment passed under section 143 or 144. If any consequential order has to be passed by the Income-tax Officer to give effect to an order passed by the higher authority that consequential order cannot be treated as 'regular assessment' nor can the date of the consequential order be treated as the date of the regular assessment." The Apex Courtin this case has also approved the Full Bench decision of Bombay High Court in the case of Carona Sahu Co. Ltd. and disapproved the Full Bench decision of Gujarat High Court in the case of Bardolia Textile Mills Ltd. Hence, from these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest under section 234B of Income-tax Act, 1961 was only raised by the assessee when the Assessing Officer issued a notice under section 154 simply for charging of interest under section 234B up to the date of the passing of the order by him in pursuance of the order passed by the Tribunal instead of wrong working of the same in ITNS 150 up to date of the assessment order. Whereas, the only so-called debate raised by the assessee could be said to be whether interest under section 234B is to be charged up to the date of the order of assessment or up to the date of the passing of the order by him in pursuance of the order by ITAT. Hence, we find that the argument raised for the first time by the assessee, i.e., since the claim of deduction under section 80-O was debatable the interest under section 234B could not be levied against the assessee under section 234B, is not relevant and is meaningless keeping in view the above discussed facts and circumstances because from a bare reading of provisions of section 234B, as well as the decision of Apex Court in the cases of Anjum M.H. Ghaswala and Modi Industries Ltd., as reproduced hereinabove, it is evident that the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdships were simply required to consider the issue of deduction claimed under section 80-O and while deciding that issue their Lordships held that the deduction was to be allowed on gross income and not the net income for the purposes of calculating deduction under section 80-O whereas, the simple issue under consideration before us is that in the instant case when the Tribunal has decided that the deduction under section 80-O is to be allowed to the assessee on net income whether the Assessing Officer can vary the interest under section 234B as per the order passed by the Tribunal and whether in a case the Assessing Officer comes to the conclusions that he committed a mistake in charging interest under section 234B while issuing ITNS 150, he can rectify the same by passing an order under section 154 of the Act. 27. Similarly, the other case law relied upon by ld. AR for the assessee in the case of Sri Renukeshwara Rice Mills decided by ITAT Bangalore Bench wherein the Tribunal held that the tax payable on the returned income being less than Rs. 5,000, the assessee was not under obligation to pay advance tax under section 208 because it could not have foreseen the disallowance und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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