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TMI Blog2003 (4) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ks, buses and motor vans leased out to its customers. However, the assessee had claimed higher depreciation at 50 per cent. of the written down value on the said vehicles. As stated in our judgment in Income-tax Appeal No. 77 of 2002 (Kotak Mahindra Finance Ltd. v. Deputy CIT [2004] 265 ITR 114 (Bom)), the Tribunal took the view that the assessee was not entitled to higher depreciation by merely leasing out the above vehicles. That, the assessee did not run the vehicles on hire and nor does the assessee carry on the business of running them on hire. Therefore, the Tribunal took the view that higher depreciation cannot be allowed. This view of the Tribunal has been affirmed by us in our judgment in Income-tax Appeal No. 77 of 2002 (Kotak Mahindra Finance Ltd. v. Deputy CIT [2004] 265 ITR 114 (Bom)). However, the Tribunal came to the conclusion by placing reliance on the judgment of the Supreme Court in the case of CIT v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308 that the assessee would be entitled to higher depreciation if its lessees had used the vehicles in the business of running them on hire and, consequently, the Tribunal remitted the matter back to the Assessing Officer to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire" in the said entry cannot be equated to a "lease" still if the assessee proves that the lessees had used the leased vehicles in the business of running them on hire, the assessee would still be entitled to a higher depreciation. In other words, the assessee had invoked the test of end-user as laid down by the judgment of the Supreme Court in the case of CIT v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308. This argument was accepted by the Tribunal. The Tribunal has remanded the matter back to the Assessing Officer to decide this issue on facts. Findings: At the outset, it may be mentioned that in this case, the Assessing Officer has granted normal depreciation. Therefore, we are not required to go into the question as to whether the transactions entered into by the assessee were genuine or fake. The genuineness of the transactions was never challenged. The Department has accepted that the assessee was in the business of leasing and financing and that, in the course of business, the assessee had leased out the vehicles to its customers/lessees. The vehicles are owned by the assessee. The assessee is not using those vehicles itself. The assessee earns lease rent by letting out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity was Rs. 26,45,004 after taking into account the tax deducted at source. As stated above, as against the tax liability of Rs. 26,45,004, the assessee had paid advance tax of Rs. 15 lakhs on March 15, 1989. Therefore, there was a short payment of tax to the tune of Rs. 11,45,004. The accounts were finalised under Schedule VI to the Companies Act on June 22, 1989, and on June 29, 1989, i.e., within seven days, the assessee paid self-assessment tax of Rs. 11,64,200. In the circumstances, the above facts show that under the normal provisions of the Income-tax Act the assessee had paid the full tax. That, under the normal provisions of the Income-tax Act, the assessee had paid an advance tax of Rs. 15 lakhs on March 15, 1989, which covered the full amount of tax of Rs. 14,55,158. However, in view of section 115J of the Income-tax Act, the tax liability increased from Rs. 14,55,158 to Rs. 26,45,004 and, therefore, there was a short payment of tax to the tune of Rs. 11,45,004. The Department has, therefore, invoked the provisions of sections 234B and 234C of the Income-tax Act. It is against this levy of interest that the matter has come by way of appeal to this court with the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt income, the assessee is liable to pay advance tax under section 207 which in turn refers to estimation of current income by the assessee whereas, section 208 refers to computation of advance tax which has to be done under sections 208 to 219. He, therefore, contended that section 207 imposes liability for payment of advance tax whereas, section 208 refers to computation of advance tax in accordance with Chapter XVII of the Income-tax Act. He contended that the liability for payment of advance tax is in respect of the total income of the assessee during the current year and, therefore, that liability cannot exclude the provisions of section 115J. He contended that when the assessee is required to estimate its current income, all the provisions of the Income-tax Act as applicable to the assessee, including section 115J, are attracted. He, therefore, contended that section 115J cannot be left out while estimating the current income. In the circumstances, it was argued that the Tribunal erred in holding that interest under section 234B and interest under section 234C was not leviable in cases where income was subjected to tax under section 115J. In this connection, reliance was plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 207 and section 208 of the Income-tax Act. Mr. Irani contended that section 207 and section 208 come under Chapter XVII-C whereas, section 115J comes under Chapter XII-B which deals with determination of tax in certain special cases. He contended that under section 115J, every assessee had to compute the total income firstly under the normal provisions of the Income-tax Act and, thereafter, the assessee had to compare the said total income with the figure of book profits and only if the total income computed under the normal provisions of the Act was less than 30 per cent. of the book profits then, the total income shall be deemed to be 30 per cent. of the book profits. In this connection, Mr. Irani invited our attention to the Explanation to section 115J which defines "book profits" to mean the net profits as shown in the profit and loss account prepared under section 115J(1A). Mr. Irani contended that under section 115J(1A), every assessee, being a company, shall, for the purposes of section 115J, prepare its profit and loss account for the previous year in accordance with Schedule VI to the Companies Act, 1956. He, therefore, submitted that for the purposes of computatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Companies Act. He contended that under Schedule VI to the Companies Act there was no requirement for preparing profit and loss account on estimated basis. He, therefore, contended that the Legislature did not intend the assessee-companies falling under section 115J to prepare their profit and loss account on estimated basis. That, while estimating the current income for the purposes of payment of advance tax, the assessee has to see only the provisions of the Income-tax Act. He, therefore, contended that the provisions of section 207 to section 211 of the Income-tax Act are separate and distinct from section l1SJ as the former apply only to income arising during the financial year whereas, for the provisions of section 11SJ the curtain rises only when the accounts are duly audited by the auditor. In the circumstances, it was contended that section 234B and section 234C are not applicable to special provisions relating to companies falling under section 115J as it stood at the relevant time. In this connection, he placed reliance on the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. v. CIT [2000] 243 ITR 519. Findings on question No.2: We find merit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it. Therefore, it is clear that if there is non-payment or short payment of tax on the current income, then the assessee has to pay interest as the income has accrued to the assessee for the previous year. In our opinion, merely because the curtain rises in the cases of companies falling under section 115J after March 31, is no ground for the assessee-company not to pay interest under section 234B and section 234c. Under section 115J, every assessee-company had to compute the total income under the Act and, thereafter, compare such total income with the book profits and if the total income computed under the Act was less than 30 per cent. of the book profits then the total income shall be deemed to be 30 per cent. of the book profits. It is not in dispute that every such company has to prepare its profit and loss account under Schedule VI of the Companies, after the end of the accounting year/previous year but, once it is found that the total income computed under the Act is less than 30 per cent. of the book profits and consequent upon which there is non-payment or short payment of advance tax then, the provisions of sections 234B and 234C are automatically attracted. In this c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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