TaxTMI 
TaxTMI 
2015 (5) TMI 646
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....54,995/- to claim deduction u/s 80G amounting to Rs. 12,50,000/-. However, it had paid taxes u/s 115JB of IT Act, 1961 on book profits at Rs. 1,53,50,25,905/-. Subsequently the case was selected for scrutiny and order u/s 143(3) of the IT Act was passed. In the assessment order assessment was done u/s 143(3) on a Book profit of Rs. 1,53,50,25,905/- u/s 115JB as tax on MAT, as it was higher than tax on normal income. AO also levied interest u/s 234B and 234C of the Act. 3.1. In appeal filed against the assessment order before the ld. CIT(A) the assessee also raised the following issue : "3. On the facts and circumstances of the case, the AO legally erred in charging interest u/s 234B & 234C of Rs. 98,52,442 and Rs. 82,91,886 respectively on MAT taxes u/s 115JB of the IT Act." 3.2. In the appellate order the ld. CIT(A) decided this issue against the assessee by holding as under :- " Ground no.3 is related to the charging of interest u/s 234B and 234C on taxes computed on MAT profit u/s 115JB. The action of the AO is upheld in view of the decision of the Apex Court in the case of Rolta India Ltd 330 ITR 470. Ground No.3 is dismissed." Against the above order the assessee is in ap....
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....oresee such an order and hence the assessee cannot be visited with the liability of interest u/s 234 B and 234C of the Act in case of assessments on book profit under MAT u/s 115JB of the Act. 7. We have carefully considered the submissions. We can gainfully here refer to the provisions of section 115JB, sections 234B and 234C of the Act. "[Special provision for payment of tax by certain companies. 115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, [2007], is less [ten per cent] of its book profit, [such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of [ten per cent]]. (2) Every assessee, being a company, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI70 to the Companies A....
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....ng a reserve created before the 1st day of April, 1997 otherwise than by way of a debit to the profit and loss account), if any such amount is credited to the profit and loss account: Provided that where this section is applicable to an assessee in any previous year, the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation or Explanation below the second proviso to section 115JA, as the case may be; or] (ii) the amount of income to which any of the provisions of [section 10 (other than the provisions contained in clause (38) thereof)] or [***] section 11 or section 12 apply, if any such amount is credited to the profit and loss account; or [(iia) the amount of depreciation debited to the profit and loss account (excluding the depreciation on account of revaluation of assets); or (iib) the amount withdrawn from revaluation reserve and credited to the profit and loss account, to the....
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.... levied by the Central Acts from time to time.] (3) Nothing contained in sub-section (1) shall affect the determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years under the provisions of sub-section (2) of section 32 or sub-section (3) of section 32A or clause (ii) of sub-section (1) of section 72 or section 73 or section 74 or subsection (3) of section 74A. (4) Every company to which this section applies, shall furnish a report in the prescribed form83 from an accountant as defined in the Explanation below subsection (2) of section 288, certifying that the book profit has been computed in accordance with the provisions of this section along with the return of income filed under sub-section (1) of section 139 or along with the return of income furnished in response to a notice under clause (i) of sub-section (1) of section 142. (5) Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section.] [(6) The provisions of this section shall not apply to the income accrued or arising on or after the 1st day of April, 2005 from an....
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.... if any, payable under section 143.] (2) Where, before the date of [determination of total income under sub-section (1) of section 143 or] completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,- (i) interest shall be calculated in accordance with the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section; (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. (3) Where, as a result of an order of reassessment or recomputation under section 147 [or section 153A], the amount on which interest was payable under sub-section (1) is increased, the assessee shall be liable to pay simple interest at the rate of [one] 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 [and where a regular assessment is made as is referred to in sub-section (1) following the date of ....
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....me on or before the 15th day of March is less than the tax due on the returned income, then, the company shall be liable to pay simple interest at the rate of [one] per cent on the amount of the shortfall from the tax due on the returned income: Provided that if the advance tax paid by the company on its current income on or before the 15th day of June or the 15th day of September, is not less than twelve per cent or, as the case may be, thirty-six per cent of the tax due on the returned income, then, it shall not be liable to pay any interest on the amount of the shortfall on those dates; (b) the assessee, other than a company, who is liable to pay advance tax under section 208 has failed to pay such tax or,- (i) the advance tax paid by the assessee on his current income on or before the 15th day of September is less than thirty per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than sixty per cent of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of [one] per cent per month for a period of three months on the amount of the shortfall from ....
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....sessee for the assessment year commencing on the 1st day of April immediately following the financial year in which the advance tax is paid or payable, as reduced by the amount of,- (i) any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income; (ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (iv) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and (v) any tax credit allowed to be set off in accordance with the provisions of section 115JAA ] (2) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.]]" 7.1. We find that the issue as to levy of interest u/s 234B and 234C of the Act on assessments on book profit u/s 115JB of the Act is settle....
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.... the book profit, the total income of the assessee shall be deemed to be an amount equal to 30 per cent of such book profit. The object is to tax zero-tax companies. Section 115J was inserted by the Finance Act, 1987 with effect from April 1, 1988. This section was in force from April 1, 1988 to March 31, 1991. After April 1, 1991, section 115JA was inserted by the Finance Act of 1996 with effect from April 1, 1997. After insertion of section 115JA, section 115JB was inserted by the Finance Act, 2000 with effect from April 1, 2001. It is clear from reading sections 115JA and 115JB that the question whether a company which is liable to pay tax under either provisions 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 under section 234B is concerned, the section is clear that it applies to all companies. The pre-requisite condition for applicability of section 234B is that the as....
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.... CIT v. Kotak Mahindra Finance Ltd. reported in [2003] 130 Taxman 730 which decide the issue in favour of the Department and against the assessee. It appears that none of the assesses challenged the decisions of the Gauhati High Court, Madhya Pradesh High Court as well as the Bombay High Court in the Supreme Court. However, it may be noted that the judgment of the Karnataka High Court in Kwality Biscuits Ltd was confined to section 115J of the Act. The order of the Supreme Court dismissing the special leave petition in limine filed by the Department against Kwality Biscuits Ltd. is reported in [2006] 284 ITR 434. Thus, the judgment of the Karnataka High Court in Kwality Biscuits stood affirmed. However, the Karnataka High Court has thereafter in the case of Jindal Thermal Power Co.Ltd. v. Deputy CIT reported in [2006] 154 Taxman 547 distinguished its own decision in the case of Kwality Biscutis Ltd. (supra) and held that section 115JB, with which we are concerned, is a self-contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under sect....
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....d in payment of advance tax in respect of tax payable u/s 115JB, it was liable to pay interest u/s 234B and 234C of the Act. From the above exposition we find that reference to the Hon'ble Apex Court's decision in the case of Kwality Biscuits Ltd. (supra) does not help the case of the assessee. 7.3. Now we refer to the case laws referred by the ld.counsel of the assessee. We find that the decision of the Hon'ble Bombay High Court in the case of Snowcem India Ltd. v. DCIT 313 ITR 170 was rendered prior to the Hon'ble Apex Court decision in the case of CIT vs Rolta India Ltd.. Hence this case law does not support the case of the assessee. The decision of the Hon'ble Mumbai Bench of the Tribunal in the case of Charbuja Industries P.Ltd vs Addl. CIT 31 ITR (Trib) 889 and in the case of Rockline Developers P.Ltd. vs ITO 31 ITR (Trib) 123 did not have the benefit of reference of the exposition of the Hon'ble Apex Court in the case of ACIT vs Saurashtra Kutch Stock Exchange Ltd. (supra). The Hon'ble Bombay High Court decision in the case of Prime Securities Ltd. vs ACIT 333 ITR 464 did not deal with the interest u/s 234B and 234C of the Act leviable on book profit under MAT u/s 115JB of ....
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....able on default in payment of advance tax. The plea of the asessee that it cannot foresee as to whether assessments would be done on book profits under MAT u/s 115JB of the Act has not been sustained by the Hon'ble Apex Court . Hence the assessee can not take shelter under the plea that there was divergence of opinion in this regard also. 7.6. The above view is also supported by the Hon'ble Apex Court's decision in the case of CIT vs Anjum M.H.Ghaswala & Others 252 ITR 1. In this case the Hon'ble Apex Court has expounded that levy of interest u/s 234B and 234C of the Act is mandatory in nature. Now once we find that levying of interest u/s 234B and 234C of the Act is mandatory in nature as per the Hon'ble Apex Court's decision in the case of CIT vs Anjum M.H.Ghaswala and Others (supra) and as per the exposition of the Hon'ble Apex Court in the case of Rolta India Ltd. (supra) that the indentment of the Act u/s 115JB of the Act is that interest u/.s 234B and 234C of the Act is leviable on assessments on book profit under MAT, there is no room for ambiguity as to whether the assessee is liable for interest u/s 234B and 234C of the Act. 7.7. This view is further fortified by Hon'ble....