9911796707
TMI Blog2000 (9) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... imited company, did not have any taxable income in the relevant previous year, except deemed income under section 115J of the Income-tax Act, 1961. The learned Assessing Officer levied interest under sections 234B and 234C for short payment of advance tax on the aforesaid deemed income. The learned Assessing Officer also levied interest under section 201(1A) on delayed deposits of tax deducted at source. Aggrieved, the assessee preferred an appeal before the CIT(Appeals) who, relying upon the ratio of decision rendered in the case of Sutlej Cotton Mills Ltd. v. Asstt. CIT [1993] 199 ITR 170 (AT) : (SB) upheld levy of interest under sections 234B and 234C of Income-tax Act. The learned CIT(Appeals) also upheld levy of interest under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery valiant efforts to defend the stand taken by the lower authorities. He invited our attention to Hon'ble Gauhati High Court's judgment in the case of Assam Bengal Carriers Ltd. case (supra) wherein levy of interest under sections 234B and 234C, in similar circumstances, was upheld. Reliance was also placed on the Tribunal decision in Sutlej Cotton Mills Ltd. v. Asstt. CIT (supra). It was further submitted that when two different High Courts have expressed conflicting views, and when jurisdictional High Court is silent on the issue, the Tribunal is free to adopt the view which seems more reasonable to the Tribunal or to follow Tribunal's earlier decision, if any, on the issue. Both the High Court judgments, in such circumstances, have equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 115J of the Act. Hon'ble Karnataka High Court, on the other hand, has held that the words 'for the purposes of this section' in Explanation to section 115J(1A) are relevant and cannot be construed to extend beyond the computation of liability to tax. In the opinion of the Hon'ble Karnataka High Court, when a deeming fiction is brought under the statute, it is to be carried to its logical conclusions but without creating further deeming fiction so as to include other provisions of the Act which are not made specifically applicable. It is thus evident that views of these two High Courts are in direct conflict with each other. Clearly, therefore, there is no meeting ground between these two judgments and we are also usable to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystem. We have to, with our highest respect of both the Hon'ble High Courts, adopt an objective criterion for deciding as to which of the Hon'ble High Court should be followed by us. 8. We find guidance from the judgment of Hon'ble Supreme Court in the matter of CIT v. Vegetable Products Ltd. [1973] CTR (SC) 177 : [1972] 88 ITR 192 (SC) Hon'ble Supreme Court has laid down a principle that "if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. This principle has been consistently followed by the various authorities as also by the Hon'ble Supreme Court itself. In another Supreme Court judgment, Petron Engg. Construction (P.) Ltd. & Anr. v. CBDT & Ors. [1988] 75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly concerned, the view expressed by the Hon'ble Karnataka High Court in the case of Kwality Biscuits Ltd. case (supra), which is in favour of assessee, deserves to be followed by us. We, therefore, order the deletion of interest under sections 234B and 234C in this case. 9. The remaining grievance of the assessee is against levy of interest under section 201(1A) on the ground of legal notices and without having anything to say on the merits of livability of interest under section 201(1A). The tax audit report clearly mentions that there have been lapses in depositing tax deducted at source and it has even quantified the interest liability on account of these delays. The assessee has not refuted the liability to bear consequences of these d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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