2015 (1) TMI 200 - HC - Income Tax

High Court rules interest under Sections 234B & 234C applicable on income assessed under Section 115JA

JOINT COMMISSIONER OF INCOME TAX Versus SUMIT INDUSTRIES LTD.

The Gujarat High Court held that the Tribunal's deletion of interest charged under Sections 234B and 234C on income assessed under Section 115JA of the ... Levy of interest u/s 234B and 234C – Computation of income u/s 115JA – Held that:- Relying upon the decision in Joint Commissioner of Income Tax V. Rolta India Ltd. [2011 (1) TMI 5 - SUPREME COURT OF INDIA] in Commissioner of Income Tax - III Versus The Riddhi Siddhi Gluco Boils Limited [2014 (4) TMI 558 - GUJARAT HIGH COURT] it has been held that it is clear from reading Sections 115JA and 115JB that the question whether a company which is liable to pay tax under either provision does not assume importance because specific provision(s) is made in the section saying that all other provisions of the Act shall apply to the MAT Company (Section 115JA(4) and Section 115JB(5)) - Similarly, amendments have been made in the relevant Finance Acts providing for payment of advance tax under Sections 115JA and 115JB - so far as interest leviable u/s 234B is concerned, the section is clear that it applies to all companies - the prerequisite condition for applicability of Section 234B is that assessee is liable to pay tax u/s 208 and the expression “assessed tax” is defined to mean the tax on the total income determined u/s 143(1) or u/s 143(3) as reduced by the amount of tax deducted or collected at source - there is no exclusion of Section 115J/115JA in the levy of interest u/s 234B - the expression “assessed tax” is defined to mean the tax assessed on regular assessment which means the tax determined on the application of Section 115J/115JA in the regular assessment - the assessee was liable to pay interest u/s 234B and 234C of the Act in respect of tax determined on the basis of Section 115JA – Decided in favour of revenue. Issues Involved:1. Deletion of interest charged under Sections 234B and 234C of the Income Tax Act on income charged to tax under the provisions of Section 115JA of the Income Tax Act.Detailed Analysis:Issue 1: Deletion of Interest Charged under Sections 234B and 234C on Income Charged to Tax under Section 115JAThe primary issue in the appeals was whether the Income Tax Appellate Tribunal was correct in deleting the interest charged under Sections 234B and 234C on income assessed under Section 115JA of the Income Tax Act, 1961.The facts of both appeals were identical, and thus, they were heard together. The assessee had filed its return, which was scrutinized, and the Assessing Officer determined a higher total income than declared. The assessee's appeal to the CIT(A) was allowed, but the Tribunal dismissed the revenue's subsequent appeal.Legal Provisions:- Section 234B pertains to interest for defaults in payment of advance tax. It mandates that if an assessee fails to pay advance tax or the advance tax paid is less than 90% of the assessed tax, they are liable to pay simple interest at 1% per month on the shortfall.- Section 234C deals with interest for deferment of advance tax, requiring companies to pay advance tax in specified installments. Failure to meet these installments results in interest at 1% per month for the period of default.Court's Analysis:The court referenced the Supreme Court's decision in Joint Commissioner of Income Tax v. Rolta India Ltd., which clarified that the provisions of Sections 115JA and 115JB (Minimum Alternate Tax - MAT) do not exclude the applicability of Sections 234B and 234C. The Supreme Court held that the interest under Section 234B applies to all companies, including those liable under Sections 115JA and 115JB, and the term 'assessed tax' includes tax determined under these sections.The Gujarat High Court also referred to its own decision in M/s Riddhi Siddhi Gluco Boils Ltd. v. Assistant Commissioner of Income Tax, which followed the Supreme Court's ruling, confirming that interest under Sections 234B and 234C is applicable even when tax is computed under Section 115JB.Additionally, the court cited the Punjab and Haryana High Court's decision in Swaraj Mazda Ltd. v. Commissioner of Income Tax, which held that interest under Sections 234B and 234C is payable on the tax determined based on book profits under Section 115JA.Conclusion:Given the binding precedents, the Gujarat High Court concluded that the Tribunal's decision to delete the interest charged under Sections 234B and 234C was incorrect. The court held in favor of the revenue, stating that the assessee was liable to pay interest under these sections on the tax determined under Section 115JA. Consequently, the appeals were allowed, and the questions of law were answered in favor of the revenue and against the assessee.