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TMI Blog2010 (12) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant challenges the order passed by the Income-tax Appellate Tribunal, Mumbai Bench "I" in I. T. A. No. 5639/Bom/95 relating to the assessment year 1991-92. 2. The facts which are relevant are that the assessee filed the return of income for the assessment year 1991-92 declaring total income at Rs.16,62,730 on December 31, 1991. This return was signed and verified by one Shri Balasubramaniam Iyer, who was the secretary of the company. The Assessing Officer addressed a letter to the assessee on October 9, 1992, as to why the aforesaid return should not be treated as an invalid return because the return of income was required to be signed and verified by a director of the company or its managing director. The assessee there-upon fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital assets was required to be withdrawn in accordance with the provisions of section 47A of the Act and interest under section 234B was charged on this amount. 3. The case of the appellant is that there was no dispute between the parties that in view of the issuance of shares by the assessee-company in the month of March, 1992, the assessee is entitled to deduction under section 47(v) of the Act. The Tribunal has held that the appellant is liable to pay interest under section 234B of the Income-tax Act mainly relying on the judgment of the Supreme Court in the case of CIT v. Anjum M. H. Ghaswala [2001] 252 ITR 1. The Tribunal has held that the provisions of section 234B are mandatory and therefore interest under section 234B is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The petitioner ceased to be a fully owned subsidiary only after March, 1992. The defect in signature was removed on October 15, 1992, but in respect of the same assessment year 1991-92. In our opinion, the subsequent event cannot result in holding that the return as originally filed was not in substance and effect in conformity with or according to the intent or purpose of the Act on the date the return was filed. The test to be applied is whether on the date the original return was filed was the return in conformity with or according to the purpose of the Act. On the date the return was filed the petitioner was admittedly a wholly owned subsidiary of Great Eastern Shipping. It is true that the return was invalid as originally filed becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4B has to be charged. He relied on the judgment of the Division Bench of the Delhi High Court in the case of CIT v. Insilco Ltd. [2010] 321 ITR 105. 8. Now, if in the light of these rival submissions the provisions of law are perused, it becomes clear that the appellant would not be liable to pay interest under section 234B of the Act. Section 234B, especially sub-section (1) thereof which is relevant for our purpose reads as under : "234B. (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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of sections 208 and 209. So far as the judgment of the Supreme Court in the case of Ghaswala [2001] 252 ITR 1 is concerned, the Supreme Court was concerned with the powers of the Settlement Commission in granting waiver of interest and for that purpose the Supreme Court considered the provisions of sections 234A, 234B and 234C. The Supreme Court in no uncertain terms held that the interest is compensatory in nature. The court read the provisions of sections 234A, 234B and 234C as mandatory in character holding that after the amendment in the provisions in the Finance Act, 1987, that with the use of the expression "shall" therein the Legislature clearly indicated that its intention to make the collection of statutory interest mandat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest under section 234B is mandatory, what it really means is that once the assessee is found liable to pay interest, then recovery of interest is mandatory and recovery of that interest cannot be waived for any reason. But for charging interest under that section, it has to be established that the assessee has committed default in payment of advance tax. In our opinion, as in the present case it is nobody's case that the appellant has committed a default in payment of advance tax when it actually paid it, the appellant cannot be held liable to pay interest under section 234B. In so far as the observations in the order of the Tribunal, that the appellant should have anticipated the events that took place in March, 1992 are concerned, in ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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