TaxTMI 
TaxTMI 
2002 (11) TMI 36
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.... under section 115J of the Act. The Appellate Tribunal also upheld the order of the Commissioner of Income-tax (Appeals) and, hence, the present reference at the instance of the Revenue on the following questions of law: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the Commissioner of Income-tax (Appeals) decision cancelling interest under section 234A of the Income-tax Act, levied by the Assessing Officer on the basis of income determined invoking the provisions of section 115J of the Income-tax Act? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in upholding the action of the Commissioner of Income-tax (Appeals) in assuming jurisdiction to adjudicate on the mandatory levy of interest under section 234B especially in the light of the fact that the assessee had income making it liable to advance tax even without applying the provisions of section 115J of the Income-tax Act?" Section 234A of the Act provides for the levy of interest where there is a delay in filing the return of income after the due date for filing the return or where the return of income i....
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....on 210 of the Act is less than 90 per cent. of the assessed tax. In so far as section 208 of the Act is concerned, it postulates that the advance tax is payable during the financial year in every case where the amount of tax payable by the assessee during that year as computed in accordance with the provisions of Chapter XVII exceeds five thousand rupees or more. Section 209 provides for the computation of advance tax and it shall be on the current income. The expression, 'current income' is construed in section 207 of the Act to mean the total income of the assessee which would be chargeable to tax for the assessment year immediately following the financial year. Section 210 provides that every person who is liable to pay advance tax shall, on his own accord, pay, on or before the due dates specified in section 211, the appropriate percentage of the advance tax on the current income. Section 210(3) empowers the Assessing Officer to issue a notice calling upon the assessee to pay advance tax and the said notice shall be issued during the financial year. The section also empowers the Assessing Officer to issue a demand notice prescribing the instalments in which the tax should be pa....
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....viable where the assessee-company's income is computed under section 115J of the Act and where there is a shortfall in the payment of advance tax. Both the courts have taken into account the intention of the Legislature and observed that there is no mention in sections 234B and 234C of the Act that in the case of a company to whom section 115J of the Act is applied, sections 234B and 234C are not applicable. Both the courts have taken the view that the assessee is liable to pay advance tax irrespective of the applicability of section 115J and where the advance tax paid by the assessee-company is less than 90 per cent. of the assessed tax, the assessee company is liable to pay interest under sections 234B and 234C of the Act. The Karnataka High Court has taken a different view in Kwality Biscuits Ltd. v. CIT [2000] 243 ITR 519, and according to the Karnataka High Court, the profit as computed under the Income-tax Act has to be prepared and thereafter, the book profit as contemplated under section 115J of the Act has to be determined and then, the liability of the assessee to pay tax under section 115J of the Act would arise, if the total income as computed under the provisions of....
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....he return. In our view, the Appellate Tribunal has committed an error in holding that the interest is not leviable under section 234A of the Act where the provisions of section 115J of the Act are applied. As we have already observed, interest is levied for the delayed or non-filing of the return and the invocation of section 115J of the Act at the time of regular assessment has no relevance in considering the question of failure on the part of the assessee to file the return before the due date. So far as interest leviable under section 234B of the Act is concerned, the section is clear that it applies to all assessees including a company. The prerequisite condition for the applicability of section 234B of the Act is that the assessee is liable to pay tax under section 208 of the Act and the expression, "assessed tax" is defined to mean the tax on the total income determined under section 143(1) or on regular assessment as reduced by the amount of tax deducted or collected at source. As observed by the Madhya Pradesh High Court in the case of Itarsi Oils and Flours P. Ltd. v. CIT [2001] 250 ITR 686, there is no exclusion of section 115J in the levy of interest under section 234....
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....ofits of the company of the current year. It is also relevant to notice on the facts of the case that the assessee here has returned a total income of Rs. 10,950 after deducting all admissible deductions available under the Income-tax Act. The profit and loss account of the assessee-company discloses the net profit, viz., Rs. 2,60,729 and the total income as returned by the company before the set off of carried forward loss was Rs. 2,64,591 and only after the carried forward loss was set off, the assessee returned a total income of Rs. 10,950. The total income of the assessee as per the return before the set off of the carried forward loss is Rs. 2,64,591 and that is nearer to the net profit of the company, viz., Rs. 2,60,729. In other words, there is no wide variation between the net profit and the total income of the company as determined by the assessee before the set off of the carried forward loss which clearly shows that it is possible for the assessee to estimate the current profit during the financial year. We therefore hold that it is possible for the company to foresee its profit and make an estimate, no doubt, it must be an honest one, of the expected profit then and ....