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TMI Blog2006 (1) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... g in Clause (a) of Explanation to sub-section (2) of section 115JA of the Income-tax Act, 1961. 2. It may be declared that income-tax is defined in section 2(43) of the Income-tax Act, 1961 and the said income-tax does not include any interest payable on such income-tax. 3. The Ld. CIT(A) ought to have held that book profits under section 115JA does not include interest on income-tax. 4. It may be declared that the book profits under section 115JA cannot be enhanced by including the amount of interest on income-tax by resorting to section 154 of the Income-tax Act, 1961. 5. The quantum of income and tax thereon be reduced accordingly...." 2. The assessee was engaged, during the previous year relevant to the assessment year under appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A). The learned CIT(A) held that the term "income-tax" has not been defined in the Income-tax Act though the term "tax" has been defined in section 2(43) of the Act According to him, it was commonly understood that the income tax included interest on income-tax also. In this view of the matter, he confirmed the order of the Assessing Officer passed under section 154 with the following observations: "It is important to note that the expression 'income-tax' has not been defined in the Income-tax Act. The word 'tax' has although been defined by section 2(43) of the Income-tax Act. It is, however, commonly been understood that income-tax includes interest on income-tax. When liability towards income tax is being considered interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Departmental authorities. Inviting our attention to Explanation (a) to sub-section (2) of section 115JA she submitted that net profit, as shown in the Profit & Loss Account for the relevant previous year, was liable to be increased by the amount of income-tax paid or payable, and the provision made in that behalf. She submitted that the term "income-tax" used in the said Explanation did not include interest on income-tax. According to her, the distinction between income-tax, interest, penalty, fine, etc. was widely known. She contended that all the aforesaid terms were not interchangeable and did not have the same meaning. She argued that the term "income-tax" meant only income-tax and not interest on income-tax. The learned author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay, however, be relevant to notice the provisions of section 4 of the Income-tax Act which creates charge of income-tax. The opening words of section 4, as they stood at the relevant point of time, read thus: "Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions including provisions for levy of additional income-tax of, this Act in respect of the total income of the previous year of every person". In pursuance of the aforesaid provisions, the Finance Acts are enacted year after year to provide for the rates at which income-tax is required to be charged in a given asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be payable in consequence of any order passed under the Income-tax Act. The provisions of section 156 clearly highlight the fact that income-tax, interest, penalty, and fine are distinct terms and that the term "tax" does not include "interest", "penalty" and "fine". 9. As already mentioned above, "income-tax" is charged under section 4 of the Income-tax Act at the rates specified in the First Schedule to the Finance Act. Interest is charged, on the other hand, under the provisions of sections 201, 234A, 234B and 234C of the Income-tax Act. Thus, there are distinct provisions for charging income-tax and for charging interest. Secondly, while the rates of income-tax can fluctuate depending upon the provisions in the Finance Act enacted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax" is understood in altogether a different sense than the term 'interest'. It means the income-tax which has been specified in Schedule I to the Finance Act, 1999 and hence, its meaning cannot be artificially extended to include interest. In our humble view interest on income-tax clearly falls outside the scope of the term "income-tax" as used in Explanation (a) to sub-section (2) of section 115JA. Wherever the intention was to include interest, the Legislature has specifically provided, as in section 156, for inclusion of interest in the phrase "sum payable". No provision of law has been brought to our notice to show that the term "income-tax" has been defined to include "interest" within its ambit. We are, therefore, unable to artific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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