Taxpayer liable for interest under sections 234B/234C on MAT (section 115JB) advance tax defaults; appeal dismissed

The HC dismissed the assessee's appeal and upheld the tax authorities' levy of interest for failure to pay advance tax. The court rejected the contention that interest under section 234B could be levied only in a "regular"/first-time assessment, and held that liability to pay advance tax arising under the MAT regime (section 115JB) or otherwise can attract interest under sections 234B/234C where advance tax is defaulted. The alternative legal arguments were rejected and the order charging interest was sustained.

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Issues Involved:
1. Interpretation of section 234B(4) of the Income-tax Act, 1961.
2. Whether the assessment under section 143(3)/147 is considered a regular assessment.
3. Applicability of interest under section 234B on book profits under section 115J.

Issue-wise Detailed Analysis:

1. Interpretation of section 234B(4) of the Income-tax Act, 1961:
The primary question of law was whether the Tribunal's interpretation of section 234B(4) was sustainable. The Revenue argued that the Tribunal misinterpreted the law by not considering the assessment under section 143(3)/147 as a regular assessment. The court emphasized that Explanation 2 to section 234B clarifies that an assessment made for the first time under section 147 is regarded as a regular assessment for the purposes of section 234B. This interpretation aligns with the Supreme Court's decision in K. Govindan and Sons v. CIT, which held that an initial assessment under section 147 is a regular assessment.

2. Whether the assessment under section 143(3)/147 is considered a regular assessment:
The court examined whether the assessment framed on August 25, 1992, under section 143(3)/147 was a regular assessment. The Tribunal had previously held that the assessment under section 147 was not a regular assessment. However, the court found this interpretation contrary to the statutory provision and the settled law as held by the Supreme Court. The court concluded that the assessment under section 147 should be regarded as a regular assessment, making the assessee liable to pay interest under section 234B.

3. Applicability of interest under section 234B on book profits under section 115J:
The court also addressed whether interest under section 234B applies when income is assessed based on book profits under section 115J. The assessee argued that interest under section 234B should not apply to book profits. The court referred to the Karnataka High Court's decision in Kwality Biscuits Ltd. v. CIT, which held that interest under sections 234B and 234C is not applicable to income computed under section 115J. However, the court noted that this view was not shared by other High Courts and was ultimately overruled by the Supreme Court in Joint CIT v. Rolta India Ltd. The Supreme Court held that sections 234B and 234C apply to all companies, including those assessed under section 115J/115JA, and that the liability to pay advance tax arises irrespective of the computation method.

Conclusion:
The court found substantial force in the Revenue's submissions, holding that the Tribunal's interpretation was contrary to the statutory provisions and the Supreme Court's established law. The court ruled in favor of the Revenue, concluding that the assessment under section 143(3)/147 is a regular assessment, and interest under section 234B applies to income computed under section 115J. The appeal was allowed, answering the question of law in favor of the Revenue and against the assessee.

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