TaxTMI 
TaxTMI 
2011 (7) TMI 961
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....planation 2 to section 234B was a regular assessment as earlier only processing under section 143(1)(a) was made ?" 2. Briefly stated, the facts necessary for adjudication as narrated in the appeal are that the assessee filed its return on January 1, 1990, declaring an income of Rs. 43,58,142 under section 115J of the Act. The said return was processed under section 143(1)(a) of the Act on February 26, 1990, which resulted into a refund of Rs. 1,76,518. Thereafter, notice under section 148 of the Act was issued to the assessee for the excess deduction claimed under sections 80HHC and 80-I of the Act on September 28, 1990. Notices under sections 142(1) and 143(2) of the Act were issued on July 4, 1991. The assessment for the first time was completed on August 25, 1992, under section 143(3)/147 of the Act at a total income of Rs. 11,62,739. The Assessing Officer, vide order dated August 25, 1992, computed the total income as per the provisions of section 115J of the Act at Rs. 45,90,182 and also charged interest under section 234B of the Act. Feeling aggrieved, the assessee approached the Commissioner of Income-tax (Appeals) (in short "the CIT(A)") who, vide order dated Nov....
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....)(a) of the Act on February 26, 1990, which had resulted into a refund of Rs. 1,76,518. According to the learned counsel, the order of the Commissioner of Income-tax (Appeals) dated November 27, 1992, and the Tribunal dated August 28, 2001, deleting the interest levied under section 234B of the Act was contrary to the decision of the Kerala High Court in CIT v. K. Govindan and Sons [1999] 238 ITR 1005 (Ker) and affirmed by the Supreme Court in K. Govindan and Sons v. CIT [2001] 247 ITR 192 (SC) and also the Allahabad High Court in Abdul Majid v. CIT [2006] 281 ITR 366 (All). He submitted that no appeal had been filed against the said decision in view of the tax effect involved being below the monetary limit of Rs. 2 lakhs fixed for filing appeal under section 260A of the Act by the Central Board of Direct Taxes's Instruction Nos. 1979, dated March 27, 2000, and 1985, dated June 29, 2000, as mentioned in paragraph 4 of the appeal. He urged that the decisions of the Tribunal and the Commissioner of Income-tax (Appeals) being contrary to the statutory provision contained in Explanation 2 to section 234B of the Act and the decision of the apex court in K. Govindan and Sons' case [2001]....
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.... No. 176 of 2003 decided on March 4, 2011(CIT v. Steel Steips Leasing Ltd. [2011] 338 ITR 455 (P & H)) to controvert the said contention. 8. After giving our thoughtful consideration to the respective submissions of learned counsel for the parties, we find substantial force in the submissions raised by the learned counsel for the Revenue. 9. It is not disputed that the earlier return which was filed by the assessee was processed under section 143(1)(a) of the Act on February 26, 1990, and a refund of Rs. 1,76,518 was made. The assessment was framed in pursuance of the notice under section 148 of the Act on August 25, 1992. The point for consideration would be whether the assessment which was framed on August 25, 1992, under section 143(3)/147 of the Act was a regular assessment and, therefore, interest under section 234B of the Act could be charged by virtue of that order. Section 234B of the Act, at the relevant time, read thus : "234B. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assess....
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....r sub-section (1) is increased, the assessee shall be liable to pay simple interest at the rate of two per cent. for every month or part of a month comprised in the period commencing on the day following the date of determination of total income under sub-section (1) of section 143 or regular assessment referred to in sub-section (1) and ending on the date of the reassessment or recomputation under section 147, on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the basis of the regular assessment aforesaid. (4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) or sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and- (i) in a case where the interest is increased, the Assessing Officer shall serve on ....
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....deleting the levy of interest under section 234B of the Act in the order of assessment under section 143(3)/147 dated August 25, 1992, passed by the Assessing Officer. The relevant observations in the order reads thus : "12. In this case, the assessee filed its original return declaring income at Rs. 43,58,142. The same was processed under section 143(1)(a) and the Assessing Officer found that the assessee has claimed excess deduction under sections 80HHC and 80-I which were allowed while processing the return under section 143(1)(a) on February 26, 1990, was served upon the assessee on October 11, 1990. Thereafter, the assessment under section 147/143(3) of the Income- tax Act was framed on August 25, 1992, and the Assessing Officer charged interest under section 234B of the Income-tax Act. 13. On going through the provisions of Explanations 1 and 2 of section 234B, the Commissioner of Income-tax (Appeals) came to the conclusion that the interest under section 234B can only be charged by the Assessing Officer in the case of regular assessment framed by the Assessing Officer under section 143(1)(a) or....
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....e noticed that as submitted by the learned counsel for the Revenue, no appeal under section 260A of the Act had been filed against the order of the Tribunal dated August 28, 2001, as the tax effect involved was below the monetary limit prescribed by the circulars of the Central Board of Direct Taxes. The order of the Tribunal being contrary to the statutory provision and the legal enunciation of the apex court would be rendered ineffective in view of the law propounded in paragraph 16 in Director of Settlements, A. P. v. M. R. Apparao [2002] 4 SCC 638 . The Supreme Court following its earlier decision in Shenoy and Co. v. CTO[1985] 60 STC 70 (SC) ; [1985] 2 SCC 512 had held that article 141 of the Constitution of India empowers the Supreme Court to declare the law and statement of court on matter of facts may not have binding force but the ratio of the decision is binding. It was further observed that the judgment of the High Court or the subordinate court which does not follow the decision of the apex court on law would be a nullity. Thus, no indefeasible right would accrue on the basis of the order of the Tribunal dated August 28, 2001, in favour of the assessee notwith standing ....
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..... of its book profits. This exercise for determining the total income in accordance with the provisions of the Act and that of book profit can be only after the end of the relevant assessment year. It is only the deemed income for which the provisions of section 115J have been incorporated. When a deeming fiction is brought under the statute, it is to be carried to its logical conclusion but without creating further deeming fiction so as to include other provisions of the Act which are not specifically made applicable. Since the entire exercise of computing the income or that of book profit could be only at the end of the financial year, the provisions of section 207, 208, 209 or 210 cannot be made applicable until and unless the accounts are audited and the balance-sheet is prepared even the assessee may not know whether the provision of section 115J would be applicable or not. The liability could 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 section 115JA(1A) are relevant and cannot be construed to extend beyond the computation of liability of tax. Accordingly, we are of ....
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....ed that a default has been committed within the comprehension of any one of the provisions in question." It was further observed (page 132) : "Section 207 of the Act provides that tax shall be payable in advance during the financial year in accordance with the scheme provided in sections 208 to 219 in respect of the total income of the assessee that would be chargeable to tax for the assessment year immediately following that financial year. Such income has been described as 'current income'. Thus, this section contemplates estimation of current income by the end of the financial year and on the basis of such estimation, the assessee is required to pay advance tax. Advance tax is payable on the current income irrespective of whether the same is computed under section 115J or under the other provisions of the Act. In other words, the expression 'current income', on which advance tax is payable under the provisions of section 207, does not exclude the income computed under the provisions of section 115J. We, therefore, find no merit in the contention that the provisions of sections 234B and ....
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....of the year were to be accepted, then no assessee who maintains regular books of account would be liable to pay advance tax as in those cases also, income can only be determined after the close of the books of account at the end of the year." 22. Civil Appeal No. 459 of 2006 had been filed against the judgment of this court in CIT v. Upper India Steel Manufacturing and Engineering Co. Ltd.'s case [2005] 279 ITR 123 (P&H) which was heard by the apex court along with the case of Joint CIT v. Rolta India Ltd. [2011] 330 ITR 470 (SC) and was affirmed as has been noticed therein. 23. The apex court in Rolta India Ltd.'s case [2011] 330 ITR 470 (SC) had recorded as under (pages 477-79) : "In our view, section 115J/115JA are special provisions. Section 207 envisages that tax shall be payable in advance during any financial year on current income in accordance with the scheme provided in sections 208 to 219 (both inclusive) in respect of the total income of the assessee that would be chargeable to tax for the assessment year immediately following that financial year. Section 215(5) of the Act defined what is 'assessed tax',....
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....n the regular assessment. The question which remains to be considered is whether the asses-see, which is a MAT company, was not in a position to estimate its profits of the current year prior to the end of the financial year on 31st March. In this connection, the assessee placed reliance on the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. v. CIT reported in [2000] 243 ITR 519 and, according to the Karnataka High Court, the profit as computed under the Income-tax Act, 1961 had to be prepared and thereafter the book profit as contemplated under section 115J of the Act had to be determined and then, the liability of the assessee to pay tax under section 115J of the Act arose, only if the total income as computed under the provisions of the Act was less than 30 per cent. of the book profit. According to the Karnataka High Court, this entire exercise of computing income or the book profits of the company could be done only at the end of the financial year and, hence, the provisions of sections 207, 208, 209 and 210 (predecessors of sections 234B and 234C) were not applicable until and unless the accounts stood audited and t....