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TMI Blog2012 (5) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and in law in directing to delete the interest of Rs.2,24,28,120/- charged u/s 234C of the Income-tax Act on the account of deferred payment of advance tax ignoring the provisions of subsection 5 of Section 115JB of the Income-tax Act, which clearly implies that in a case where tax is payable under the special provisions of Income-tax Act (here MAT case), all provisions of the Income-tax Act shall apply to the assessee and hence the provisions of section 207 to 211 are applicable in the assessee's case. 2. That the appellant craves leave for reserving the right to amend, modify or alter add or forego any ground(s) of appeal at any time before or during the hearing of the appeal." 2. This appeal, earlier disposed vide order dated 29.10.2010 was recalled in MA no.121/del./2011 vide order dated 5.8.2011. Adverting now to ground no.1 in the appeal, facts, in brief, as per relevant orders are that return declaring book profits of Rs.923,02,07,861/- in terms of provisions of sec. 115JB of the Incometax Act, 1961 (hereafter referred to as the Act) filed on 27th October, 2007 by the assessee, was processed on 25th February, 2009 u/s 143(1) of the Act, resulting in refund of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer is only confined to the prima facie adjustment and not on the issues, which are debatable ones. In the instant case, the Assessing Officer, while passing the order u/s 154 of the Act, has himself admitted the fact that the issue of charging of interest u/s 234B and 234C while processing the return is a debatable issue because various High Courts have given different verdicts. 5. While considering the facts of the case, the final accounts of the assessee is prepared after the accounting year is over and necessary audit of accounts is done in due course. The MAT income cannot be known to a company during the previous year, as he is not aware of where he stands for computation of advance tax on MAT income. Therefore, levy of interest u/s 234B and 234C is not possible in such case where MAT income is deciding factor for chargeability of tax. 6. The debatableness of the issue is also apparent from the judgments of various High Courts as discussed above. The Madras High Court in the case of Geetha Ramakrishna has given the judgment in favour of the Revenue, whereas in the case of Snowcem the Bombay High Court has given the judgment in favour of the assessee. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee and an intimation to this effect shall be sent to the assessee: Provided that except as otherwise provided in this sub-section, the acknowledgment of the return shall be deemed to be intimation under this sub-section where either no sum is payable by the assessee or no refund is due to him: Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made: Provided also that where the return made is in respect of the income first assessable in the assessment year commencing on the 1st day of April, 1999, such intimation may be sent at any time up to the 31st day of March, 2002." 6.1 It may be pointed out that substantial changes have been made to section 143(1) of the Act with effect from June 1, 1999. Up to March 31, 1989, after a return of income was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return is deemed to be intimation under section 143(1) where (a) either no sum is payable by the assessee or (b) no refund is due to him. The intimation under section 143(1) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. No adjustments of the nature envisaged in the old provisions were stipulated in the substituted provisions nor in the instant case, admittedly, any such adjustments have been made. What the AO has done in the instant case is that he has merely determined the tax and interest due on the basis of return after adjustment of TDS and advance tax. The assessee itself made payment of four instalments of advance tax but not at the rates stipulated in provisions of sec. 211 of the Act. Resultantly, the AO while processing the return u/s 143(1) of the Act levied interest u/s 234C of the Act on account of deferment of advance tax Such interest has been calculated on the basis of income returned by the assessee in terms of provisions of sec. 115JB of the Act. The relevant por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board that a large number of companies liable to tax under the new MAT provisions of section 115JB, are not making advance tax payments. It may be emphasised that the new provision of section 115JB is a self-contained code. Sub-section (1) lays down the manner in which income-tax payable is to be computed. Sub-section (2) provides for computation of "book profit". Sub-section (5) specifies that save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company mentioned in that section. In other words, except for substitution of tax payable under the provision and the manner of computation of book profits, all the provisions of the tax including the provision relating to charge, definitions, recoveries, payment, assessment, etc., would apply in respect of the provisions of this section. 3. The scheme of the Income-tax Act also needs to be referred to. Section 4 of the Income-tax Act charges to tax the income at any rate or rates which may be prescribed by the Finance Act every year. Section 207 deals with the liability for payment of advance tax, and section 209 deals with its computation based on the rates in force for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le levying interest u/s 234C of the Act at the time of processing of return u/s 143(1) of the Act. 7. In the instant case, liability for payment of advance tax has nowhere been denied. Since the AO levied interest u/s 234C of the Act on account of deferment of payment of advance tax, at the time of processing of return on 25.2.2009, the assessee company moved an application u/s 154 of the Act vide letter dated 23.3.2009 which reads as under: "You have levied an amount of Rs.22,428,119 u/s 234C in respect of assessment u/s 143(1) of the Act. In this connection, we would like to refer to the judgment of the Apex Court in the case of Commissioner of Income Tax vs. Kwality Biscuits Ltd.(2006) 284 ITR 0434, wherein it was decided that when the assessee's income is assessed under MAT, interest u/s 234C is not leviable. For your ready reference, we are enclosing a copy of order of the Apex Court which is self explanatory. Since as per order of the Supreme Court, interest u/s 234C is not leviable, we would request you to amend the said order and refund us an amount of Rs.22,428,119/- wrongly levied by you. 7.1 The AO rejected the aforesaid application on the ground that issue w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext of provisions of sec. 115J of the Act, cannot, in our view, be applied in the context of provisions of sec. 115JB of the Act or for holding the issue of levy of interest u/s 234C on tax on book profits u/s 115JB of the Act, as debatable.. As regards levy of interest u/s 234B and 234C in the context of provisions of sec. 115JA of the Act, the decision in Upper India Steels Mfg.and Engg. Co. Ltd. was in favour of Revenue while decision in Snowcem India Ltd.(supra) was in favour of the assessee. In Snowcem India Ltd.(supra), Hon'ble Bombay High Court merely followed the decision of Hon'ble Apex Court in Kwality Biscuits Ltd.(supra) rendered in the context of provisions of sec. 115J of the Act, without even examining the applicability of provisions of sec. 115JA(4) of the Act. However, in the context of provisions of 115JB of the Act, the only decision available was of Hon'ble Karnataka High Court in Jindal Thermal Power Co. Ltd. (supra), where in after considering their own decision in the case of Kwality Biscuits Ltd., Hon'ble High Court held in the context of levy of interest under sections 234B and 234C of the Act on tax calculated on book profits in terms of provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997 by the Finance (No.2) Act, 1996, the question whether a company which is liable to pay tax under either of the provisions should pay advance tax does not assume much importance as specific provisions have been made in the section providing that all provisions of the Act shall apply to the assessee being a company mentioned in the said section and therefore, section 115J of the Act is no more available for the assessee for delaying the payment of advance tax in view of the insertion of sections 115JA and 115JB of the Act. 8.2 The ld. CIT(A), in our opinion, has unnecessarily and unjustifiably made the issue debatable while dragging in the decisions rendered in the context of provisions of sec. 115J of the Act, ignoring the specific provisions of sec. 115JB(5) of the Act nor pointed out any contrary decision in the context of relevant provisions of sec. 115JB of the Act. 9. Even otherwise, recently Hon'ble Apex Court in Rolta India Ltd.(supra) vide their decision dated 7.1.2011 upheld the levy of interest u/s 234B on the tax calculated on book profits u/s 115JA of the Act. While referring to the judgments in Kwality Biscuits Ltd.(supra) and Jindal Thermal Power Company L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporated. This Court, in the case of Kwality Biscuits Ltd. (supra), raised one of the substantial questions of law as follows: "Having regard to the scheme of s. 115J whether in an assessment year where the assessee's income is computed by invoking the provisions of s. 115J interest under ss. 234B and 234C are leviable ?" While answering the said question, this Court held that since the entire exercise of computing the income or that of book profit could be only at the end of financial year, the provisions of ss. 207, 208, 209 and 210 cannot be made applicable, unless and until accounts are audited and the balance sheet is prepared, because till then even the assessee may not know whether the provisions of s. 115J would be applicable or not. The liability would be after the book profits are determined in accordance with the Companies Act. The words "for the purposes of this section" in the Explanation to s. 115J(1A) are relevant and cannot be construed to extend beyond the computation of liability of tax. Hence, interest cannot be charged under ss. 234B and 234C. The said reasoning was based on the fact that it is only in respect of the deemed income for which the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer to rectify the said mistake by invoking s. 154 of the Act. Therefore, we are of the view that the order passed by the Tribunal cannot be sustained and is liable to be set aside while the orders of the CIT(A) and the AO have to be upheld subject to the clarification that the case of the assessee falls under s. 115JB of the Act and not under s. 115JA. For the aforesaid reasons, the substantial questions of law have to be answered in favour of the Revenue by allowing this appeal. Accordingly, the order passed by the Tribunal, Bangalore, Bench-A, dt. 7th June, 2005 bearing ITA No. 383/Bang/2005 vide Annex. A is set aside and the order dt. 10th Jan., 2005 passed in ITA No. 084/C-12(1)/CIT(A)-III/2004-05 by the CIT(A)-III, Bangalore, vide Annex. B and the order passed by the AO dt. 1st Dec., 2004 for the asst. yr. 200102, vide Annex. C are all hereby upheld, subject to the clarification that the case of the assessee falls under s. 115JB of the Act. The matter is remitted back to the AO to recompute the interest by considering the case of the assessee under s. 115JB of the Act and pass an order in accordance with law 13. In the instant case before us, the AO applied specific p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of payment of the last instalment of advance tax had already expired. The assessee could not have paid advance tax on such capital gains arising out after March 15, 2000. The assessee has not paid the tax payable in respect of such capital gains by March 31, 2000, but has paid the tax in respect thereof in April, 2000.He calculated interest payable in respect of such late payment of tax on such capital gain for one month in his return and deposited the same along with the return. In the light of these facts, Hon'ble High Court upheld the findings of the Tribunal that the interest shall be payable only with effect from the date the liability to pay advance tax in respect thereof has been incurred. There cannot be any interest prior to the date in respect of such liability when there was no liability to pay advance tax under any provisions of the Act. Hon'ble High Court also observed that assessee's plea for rectification in that case was not that the liability to pay interest under section 234C is disputable, but his contention was that under section 143(1), the Assessing Officer had no authority to make such adjustment to interest statutory provision and on which possibly two o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni Andavar Cotton and Synthetic Spinners Ltd.(supra), the issue related to the computation of book profit and the carry forward of loss and the depreciation for purposes of section 115J of the Act in the AYs 1988-89 to 1990- 91. Hon'ble High Court observed that on the date of the proceedings taken under section 143(1)(a) as well as under section 154, admittedly, there was a dispute with reference to the computation of book profit and the carry forward of loss and the depreciation for purposes of section 115J and the law on the question was settled by the Madras High Court and again by the Supreme Court, with the uncertainty existing as on the date when the proceedings under section 143(1)(a) were subjected to section 154, the jurisdiction under section 154 was not available to correct the illegality in an assessment. An impression formed on the scope of the provisions could not be a mistake or an error apparent from the record so as to justify the exercise of jurisdiction under section 154. The invoking of the provisions of section 154 presupposes a mistake or an error which is patent or obvious and does not involve a long drawn process of reasoning on a point which is already a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood." 14.4.1 In their aforesaid decision, Hon'ble Apex Court affirmed the view taken by the Hon'ble Gujrat High Court in their decision in Suhrid Geigy Ltd. v. Commissioner of Surtax [1999] 237 ITR 834, while holding that if the point is covered by a decision of the jurisdictional High court or Supreme Court rendered prior or even subsequent to the order of rectification, it could be said to be a "mistake apparent from the record" under section 254(2) of the Act and could be corrected by the Tribunal. 15. We may further point out that reliance by the assessee in their application u/s 154 of the Act on the decision in Kwality Biscuits Ltd.(supra), which was rendered in the context of different provisions of sec. 115J of the Act and ignoring specific provisions of sec. 115JB(5) of the Act as also reliance by the ld. AR on decisions which were rendered in different context and circumstances is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecedents have become locus classicus: "Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive." *** *** *** "Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it." 16. In view of the foregoing, especially when neither at the time of processing of return or on the date of application u/s 154 of the Act and even at the time of passing of impugned order, any contrary decision in respect of levy of interest on tax computed on book profits u/s 115JB of the Act was available nor pointed by the assessee before the lower authorities and even before us, we are of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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