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TMI Blog2011 (1) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ashi Kapila,Adv., Mr. Vikas Mehta,Adv., Mr. Bhargava V. Desai,Adv. For Respondent : Mr. Pratap Venugopal,Adv., for M/s. K.J. John and Co.,Advs., Mr. Kamal Mohan Gupta,Adv., Mr. B.V. Balaram Das,Adv. JUDGMENT S.H. KAPADIA, CJI Leave granted. 2. A short question which arises for determination in this batch of cases is - whether interest under Section 234B can be charged on the tax calculated on book profits under Section 115JA? In other words, whether advance tax was at all payable on book profits under Section 115JA? 3. The lead matter in this batch of cases is Joint CIT v. Rolta India Ltd. (Civil Appeal arising out of S.L.P. (C) No.25746/09). 4. Assessee furnished a return of income on 28.11.1997 declaring total income of Rs. Nil. On 28.3.2000, an order under Section 143(3) was passed determining the total income at nil after set off of unabsorbed business loss and depreciation. The tax was levied on the book profit worked out at ₹ 1,52,61,834/- determined as per the provisions of Section 115JA. The interest under Section 234B of ₹ 39,73,167/- was charged on the tax on the book profit as worked out in the order of assessment. Aggrieved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 3.--In Explanation 1 and in sub- section (3) tax on the total income determined under sub-section (1) of section 143 shall not include the additional income-tax, if any, payable under section 143. (2) Where, before the date of determination of total income under sub-section (1) of section 143 or completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,-- (i) interest shall be calculated in accordance with the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section; (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. (3) Where, as a result of an order of re- assessment or re-computation under section 147, the amount on which interest was payable under sub-section (1) is increased, the assessee sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be liable to pay simple interest at the rate of one and one-half per cent per month for a period of three months on the amount of the shortfall from fifteen per cent or forty-five per cent or seventy-five per cent, as the case may be, of the tax due on the returned income; (ii) the advance tax paid by the company on its current income on or before the 15th day of March is less than the tax due on the returned income, then, the company shall be liable to pay simple interest at the rate of one and one- half per cent on the amount of the shortfall from the tax due on the returned income: Provided that if the advance tax paid by the company on its current income on or before the 15th day of June or the 15th day of September, is not less than twelve per cent or, as the case may be, thirty-six per cent of the tax due on the returned income, then, it shall not be liable to pay any interest on the amount of the shortfall on those dates; (b) the assessee, other than a company, who is liable to pay advance tax under section 208 has failed to pay such tax or,-- (i) the advance tax paid by the assessee on his current income on or before the 15th day of September is less than t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be paid under Section 208 and there is a failure on that if the amount of advance tax paid under Section 210 is less than 90% of the assessed tax, then, in that case the assessee is liable to pay interest. Section 234C refers to interest for 1 deferment of advance tax. It says that if the assessee has to pay advance tax on its current income on or before 15th of June and the tax paid is less than 15% of the tax due on the returned income or the amount of the advance tax paid on or before 15th of September is less than 45% of the tax due on the returned income or the amount of such advance tax paid on or before 15th of December is less than 75% of the tax due on the returned income, then the assessee shall be liable to pay interest at the specified rate on the amount of the shortfall from 15% or 45% or 75%, as the case may be, of the tax due on the returned income. 7. In our view, Section 115J/115JA are special provisions. Section 207 envisages that tax shall be payable in advance during any financial year on current income in accordance with the scheme provided in Sections 208 to 219 (both inclusive) in respect of the total income of the assessee that would be chargeab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15JA in the regular assessment. 9. The question which remains to be considered is whether the assessee, which is a MAT Company, was not in a position to estimate its profits of the current year prior to the 1 end of the financial year on 31st March. In this connection the assessee placed reliance on the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. v. CIT reported in (2000) 243 ITR 519 and, according to the Karnataka High Court, the profit as computed under the Income Tax Act, 1961 had to be prepared and thereafter the book profit as contemplated under Section 115J of the Act had to be determined and then, the liability of the assessee to pay tax under Section 115J of the Act arose, only if the total income as computed under the provisions of the Act was less than 30% of the book profit. According to the Karnataka High Court, this entire exercise of computing income or the book profits of the company could be done only at the end of the financial year and hence the provisions of Sections 207, 208, 209 and 210 (predecessors of Sections 234B and 234C) were not applicable until and unless the accounts stood audited and the balance sheet stood prepared, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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