TaxTMI 
TaxTMI 
2023 (7) TMI 1074
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.... 1,69,87,900/- and Rs. 36,07,589/- on the amount of tax computed on book profits under section 115JB of the Act. 3. That the ld. CIT (A) as well as Ld. Assessing Officer erred in confirming/ charging interest under section 234B and 234C on the Book profit as calculated for the purpose of MAT provisions without appreciate the law applicable to the impugned assessment year at that time. That appellant was not required to pay any advance tax while computing the Book profit under the MAT provisions and therefore the interest under section 234B and 234C cannot be charged. 3.1 That the Ld. CIT (A) as well as Ld.A.0 have failed to appreciate the law applicable to the impugned assessment year that appellant was not required to pay any advance tax while computing the book profits under the MAT provisions and therefore the interest under section 234B and 234C cannot be charged. 4. The Ld. CIT(A) as well as the Ld. AO have failed to appreciate that the judgement of Hon'ble Supreme Court in Rolta India Ltd. (330 ITR 470) came in 2011 only and before that the judgement of Hon'ble Karnataka High Court in the case of Kwality Biscuits Ltd. (243 ITR 519) which was aff....
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.... (330 ITR 470) came in 2011 only and before that the judgement of Hon'ble Karnataka High Court in the case of Kwality Biscuits Ltd. (243 ITR 519) which was affirmed by the Supreme Court was holding the field according to which the assessee was not required to pay advance tax on book profits. 7. Without prejudice to the above, the Ld. AO has erred in referring to the intimation issued under section 143(1) of the Act which is in respect of the original return of income filed by the assessee in- spite of the fact that the assessee filed a revised return in February, 2010 which substituted the original return and against such revised return no intimation was issued in which interest was charged. 8. Without prejudice to the above the calculation of interest under section 234B & 234C made by learned A.O is grossly incorrect. 9. The order passed by Ld. CIT(A) as well as the Ld. A.O are not in accordance with the principles of natural justice." 4. In ITA No. 1575/Del/2021, following grounds have been raised by the Revenue: "1. The ld. CIT(A) has erred in law and on facts of the case in directing the Department to compute the interest u/s 234B from....
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....ee u/s 115JB of the Act as Rs. 198,74,47,666/-. 3. The Ld. CIT(A) has erred in law stating the facts that during the assessment proceeding u/s 153 A and during the appeal effect, the AO could have only operated under clause 3 and 4 of section 234B and charge interest only in respect of difference between the income assessed u/s 153 A and 143(3). Stating so the Ld. CIT(A) has ignored the fact that demands raised in subsequent proceeding under IT Act get merged with the demand raised to the current proceeding. Hence the interest charged on the assessee u/s 234B(1) of the IT Act, which was computed u/s 154 of the Act vide order date d 05.01.2021 would also be a part of the demand raised under this Section. Here it important to note that the assessee had deliberately not computed interest u/s 234B(1) and paid it, while paying the Self Assessment Tax as per the scheduled given below: Sl. No. Date Amount 1 11.12.2008 10197000 2 29.01.2009 30251100 3 27.02.2009 20394000 4 31.3.2009 110127600 5 04.07.2009 5665000 6 31.08.2009 19317220 7 31.08.2009 6496734 8 31.08.2009 17484161 Total 21....
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....as been paid on book profits of Rs. 198,74,47,666/- computed under section 115JB of the Income Tax Act, 1961. 10. The assessment under section 143(3) of the Act taking cognizance of the revised return was made on 11.05.2010. Since the tax on book profits paid by the assessee on returned income was higher than the tax on assessed income computed under normal provisions of the Act, income was assessed on returned book profits under section 115 JB of the Act and no interest under section 234B/234C of the Act was charged in the computation form attached along with the demand notice issued under section 156 of the Act. A search under section 132(1) of the Act was conducted on 30.10.2012, consequent to which the return of income under section 153A was filed by the assessee on 17.11.2014. Assessment under section 153A of the Act, consequent to search, was made on 29.03.2016 wherein yet again additions were made to the total income computed under normal provisions of the Act and no interest under section 234C was charged in the computation or demanded from the assessee. 11. Since, the tax on book profits paid by the assessee on returned income was higher than the tax on income assess....
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.... Kwality Biscuits Limited (243 ITR 519) affirmed by the Hon'ble Supreme Court in 284 ITR 434 was prevailing. 16. Against the impugned order of Assessing Officer charging interest under section 234C of the Act and the order of the Id. CIT(A) sustaining such rectification, the assessee filed appeal before us. 17. With regard to the arguments about charging of Section 234C, the revenue has relied on the case of Anium M.H. Ghaswala 252 ITR 1 (SC) wherein it was held that the charge of interest under section 234B and 234C is mandatory in nature. 18. Rebutting the argument of the revenue, the ld. AR Shri. Ajay argued that a decision is to be read vis-a-vis the facts of the case, and the ratio of the decision cannot be applied without considering its facts and the basis. It was argued the issue was whether the Settlement Commission has the power to reduce or waive interest under section 234A, 234B and 234C of the Act since the Settlement Commission held inter-alia that settlement essentially is an interplay of compromise and settlement and the Settlement Commission has powers which are coterminous that of the CBDT and in order to give purposive interpretation, they have the p....
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.... vs. Sakseria Cotton Mills Ltd. (2 Taxman 152) for the proposition that the ITO cannot go beyond the directions of the AAC. The Hon'ble Court held that only that part of the order of the ITO is, therefore, affected by the order of the AAC in respect of which the AAC has exercised his appellate jurisdiction which may consist of confirming, reducing, enhancing or annulling the assessment. If the AAC has not been called upon or has not actually dealt with any part of the assessment order made by the ITO, there is no question of that part of the order merging or being superseded by the order of the AAC. 22. With regard to the limitation of the rectification, the ld. AR relied on the judgment of Hon'ble High Court of Calcutta in the case of CIT vs. Shaw Wallace & Co. Ltd. (73 Taxman 469) wherein it was held that so long as the original order of assessment remains unaffected and does not merge with the appellate order, the limitation for rectification will run from the date of original order and not from the date when the ITO has given effect to the order of the appellate authority. The short question for determination was whether the mistake, if any, occurred in the original orde....
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..... 1,98,74,47,666/- instead of Rs. 1,85,11,16,416/- u/s 115JB of the IT Act. Further, department has also filed an appeal against deletion of interest u/s 234B of the IT Act which is mandatory as per provision of income tax Act,1961 and duly charged in the assessment orders. The assessee filed an appeal in IT AT (ITA 1451/DEL/2021) against confirming of interest of Rs. 1,11,06,607/- u/s 234C of the IT Act by the CIT (A). The case was argued in detail before the Hon'ble H-Bench on 14.09.2022. Further the case is again listed for clarification on 14.10.2022 and for assistance of the Hon'ble Bench, the following written submissions are filed. Submissions on charging of interest u/s 234B & 234C of the IT Act. In its defence, the assessee has taken the following main grounds. (1) The department has not charged the interest u/s 234B and 234C earlier i.e. u/s 143(l)and regular assessment u/s 143(3) and u/s 153A and the department cannot charge interest u/s 234B and 234C for the first time through rectification of an appeal effect order. (2) As per the law applicable at the time of impugned assessment year i.e. AY 2008-09(FY 2007....
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.... u/s 234B and 234C was not mentioned in the calculation sheet. (3) Assessment order u/s 153A read with section 143(3) was passed on 29.03.2016 (page No.127 to 131) of the paper book and again on the last page of the order i.e. page No.128 of Paper Book it is clearly mentioned by the AO to charge interest u/s 234A/B/C as per provisions of the I.T. Act in the body of the assessment order to charged interest u/s 234B and 234C as per the provisions of the IT Act. Not only this, in the income tax computation form at page no. 129 & 130 of the paper book, interest under section 234B was duly charged and by typographical error section 234C was inadvertently mentioned as 234A. However, even though the interest was charged in the income tax computation form but it was wrongly calculated, but it is clear that the interest was duly charged both in the body of the assessment order as well as IT computation form. Thus, the assessee's contentions that interest was charged for first time in order u/s 154 which was the rectification of appeal effect order is clearly incorrect and misleading because it is clearly evident from the above discussion and documents that interest was....
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....on 31.3.94 it is indicated that penalty proposing are indicated separately and interest be charged as per rules. The Himachal Pradesh High Court considered the question of charging of interest in a proceeding held on a reference made to it and the question of law formulated for consideration by the Himachal Pradesh High Court reads as under:- "Whether interest under Section 234B of the Act could be charged in the notice of demand issued under s. 156 in the absence of any specific order demanding interest in the assessment or rectification orders?" This question has been answered by the High Court in para 17 and it is held by the Himachal Pradesh High Court after following certain judgments rendered by the Uttarakhand and Allahabad High Court that payment of interest under Section 234A, 234B and 234C is a mandatory, the assessing authority while passing the original assessment order or while reassessment or rectification order has to pass orders on payment of interest. It is held that even if in the order it is indicated that interest be paid in accordance with law, without specifying any particular provision, the benefit has to be given to the Revenue and since pa....
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....ed by Finance Act, 2000 and applicable for the A.Y.2001-02 onwards. The section clearly provides for payment of Advance Tax by the companies paying taxes u/s 115JA and 115JB of the I.T. Act. 2. CBDT Circular No. 13/2001 was issued on 9-11-2001 regarding the liability for payment of advance tax under the new MAT provisions of section 115JB of the Act and it is abundantly made clear in the said Circular that the new provisions of the section 115JB as introduced by Finance Act, 2000 is a self-contained Code. Sub-section (1) lays down the manner in which income-tax payable is to be computed. Sub-section (2) provides for computation of 'book profit'. Sub-section (5) specifies that save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company mentioned in that section. In other words, except for substitution of tax payable under the provision and the manner of computation of book profits, all the provisions of the tax including the provision relating to charge, definitions, recoveries, payment, assessment, etc., would apply in respect of the provisions of this section. The scheme of the Income-tax Act also nee....
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....prejudice to the above, the reliance is also placed on the decision of Hon'ble Karnataka High Court in the case of Commissioner of Income Tax vs. Sankala Polymers (P) Ltd. 338 ITR 617 wherein the Hon'ble High Court has decided that when a specific provision of Act has not been applied while passing an order of assessment, it constitutes a mistake apparent from the record, the Income Tax authority has the power to rectify such mistakes by invoking Section 154 of the Income Tax Act. This decision was rendered with regard to provisions charging interest u/s 234B and u/s 234C of the Income Tax Act only in case of companies paying taxes u/s 115JB of the Income Tax Act, 1961. Thus, the decision in this case squarely covers the instant case also. (Para 12 & Para 13 of the decision.) Further, the similar issue was decided by the Hon'ble High Court of Gujarat in the case of AIMS Oxygen Ltd. vs. Addl. Commissioner of Income Tax in 55 taxmann.com 269 (2015). In that case, the Hon'ble High Court held that interest u/s 234B can be charged when income of assessee is modified u/s 154 even if no interest has been charged at the time of framing of regular assessment. (Para ....
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.... 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 234C of the Act would not be attracted in cases where a company is assessed on the income computed under section 115J. As already observed, the levy is automatic without any notice to the assessee. The Tribunal has cancelled the levy by placing reliance on its earlier order decided on the basis of the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. (supra). The Karnataka High Court while accepting the claim of the assessee has observed as under (at page 526): "........The liability of the assessee for payment of tax under section 115J arises if the total income as computed under the provisions of the Act is less than....
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....sue in favour of the department. Lastly, this issue has been decided in clear and absolute manner by Hon'ble SC in JCIT vs. Rolta India Ltd. 330 ITR 470 (SC) and leaves no ambiguity as it is decided that S 115 JB is a self contained code and all companies were liable for payment of advance tax u/s 115JB and in case of default, provisions of section 234B & section 234C imposing interest were also applicable. (Para 7, 8 & 9 of Hon'ble SC decision). Also, The Supreme Court has also mentioned that decision of Kwality Biscuits Ltd. was not even followed by even the Karnataka High Court in the case of Jindal Thermal Power Co. Ltd vs. DCIT (2006) 154 Taxmann 547 and held that companies paying taxes under MAT u/s 115 JB are liable to pay advance tax and in case of default, also liable for interest u/s 234B and 234C of IT Act, 1961. Also, the assessee's contention that the decision of Hon'ble Supreme Court in the case of Rolta India Ltd. cannot be applied retrospectively was answered by the same decision of the Hon'ble Supreme Court, which stated that all companies which were liable for payment of Advance Tax were also liable to pay interest u/s 234B & ....
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....e view taken by Karnataka High Court in the case of Kwality Biscuits Ltd., then the assessee cannot claim that it is covered by the decision of Mangalore Refinery & Petrol Chemicals Ltd. by any stretch of imagination. Also the assessee case is of A.Y 2008-09 and as the decision of jurisdictional High Court of Punjab & Haryana in the case of Upper India Steel Mfg. & Engg Ltd. (2005) 279 ITR 123 is of 2004 than in FY 2007-08, the decision of jurisdictional High Court was available and applicable on the assessee and the assessee was duty bound to pay advance tax and assessee cannot say that it was governed by the decision of Hon'ble Karnataka High Court in the case of Kwality Biscuits Ltd. Thus all the contentions of the assessee are wrong and misleading and clearly rebutted both during the argument stage as well as by the above submission, accordingly the assessee appeal may be allowed." 24. Similar arguments have been put forth by the Represented by Ms. R. Raja Rajeshwari, Ld.Sr. DR representing for the A.Y.2006-07 in I TA No. 1575/Del/2 021. She argued eloquently and submitted her arguments in writing. 25. The submission of the ld. DR is as under: 1. Bri....
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....e of completion of regular assessment as per section 234B (2) of the Act r.w.s 140A of the Act. Further, it is also noticed by the AO that the interest u/s 234C was not charged at all.234B and 234C being mandatory statutory liability, the AO rectified the order u/s 254/143(3) dated 26.12.2018 after providing an opportunity of being heard to the assessee. By order u/s 154/254/143(3) dated 23.11.2020, the AO rectified the mistake and calculated the interest liability u/s 234B of Rs. 1,90,12,711 till the date of regular assessment order (i.e.) 31st December,2008 for 33 months. This is led to additional levy of interest u/s 234B of Rs. 20,24,811 to the Assessee as against the original interest liability determined in the assessment order u/s 143(3) of the Act. The AO by the said order dated 23.11.2020, also levied interest u/s 234C of the Act of Rs. 36,07,589. 1.7. Against the above order 154/254/143(3) dated 23.11.2020, the assessee preferred an appeal before the CIT(A). The learned CIT(A) by his order dated 18.08.2021 held that the assessee was liable to pay interest u/s 234B and 234C on failure to pay advance tax in respect of tax payable under section 115JB by relying on t....
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.... provisions of section 234B(2) r.w.s. 140A of the Act. 2.2.1. In this regard, the relevant portion of section 234B(2) of the Act is reproduced as under: "Interest for defaults in payment of advance tax. 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 assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, 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 from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. ......................... (2) Where, before the date of determination of total income under sub-section (1) of section 143 o....
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....e self-assessment tax liability without considering the interest liability u/s 234B and 234C of the Act. As per provisions of Explanations to section 140A of the Act, the payment made by the assessee on 31.03.2008 was adjusted towards the interest liability existed on that date first and thereafter adjusted on the outstanding tax liability. As there was balance tax payable after 31.03.2008, interest u/s 234B was calculated on the said balance amount till the date of regular assessment. Therefore, it is humbly submitted that the finding of the CIT(A) that since the returned income (MAT income) was accepted under section 143(3) without any variation, clause(2) of 234B is squarely applicable and the terminal date for charge of interest under section 234B is the date of payment of self assessment tax is incorrect. Hence, it is requested that the above submissions may kindly be considered while deciding the ground raised by the Department. 3. ln addition to the above, it is submitted that as per Form No.36, the tax effect is Rs. 16,60,206 which is below the monetary limit specified by the CBDT. However, the appeal has been filed in the case as this case involves Revenue Audit O....
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....g of interest of u/s 143(2)/154 of the IT Act. Not only this the Assessing Officer i.e. DCIT, Hisar has given an intimation dated 25.11.2010 wherein he clearly mentions that refund of Rs. 14,24,080/- for A.Y. 1993-94, was adjusted against the outstanding demand of the AY 2008-09 and the outstanding demand was with regard to charging of interest u/s 234B and u/s 234C only. Again the assessee never protested nor filed an appeal against the intimation of the Assessing Officer. Further vide order dated 05.04.2011 u/s 154 for AY 2006-07 there Assessing Officer has again adjusted the refund of Rs. 8,98,770/- for AY 2006-07 against the outstanding demand for AY 2008-09 and the assessee again did not file an appeal against the adjustment of refund by the Assessing officer. 28. The ld. DR passionately argued that at the time of impugned AY i.e. 2008-09 there was no bar u/s 143 of the IT Act which prohibited summery assessment u/s 143(1) after the issuance of notice u/s 143(2). Even after the subsequent amendment u/s 143(2) sub section 2 brought about by Finance Act 2012 and by Finance Act 2017 there was no bar of processing the return after the issuance of the notice u/s 143(2). The prov....
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.... dated 05.01.2021 only. 30. In conclusion, the ld. DR argued that the demand raised vide order u/s 143(1) and subsequently reconfirmed vide order u/s 154/143(1) dated of 04.11.2009 is still outstanding and even on merits, the issue raised by the assessee has no meaning because the charging of interest for default in payment of advance tax was mandatory and automatic as clearly mentioned in section 234B and 234C of the IT Act and affirmed by Hon'ble High Court and Hon'ble Supreme Court and various High Courts in various decisions. 31. Heard the arguments of both the parties and perused the material available on record. 32. To cull the chaff to find out the seed, we have gone through the core arguments of the assessee that the order dated 23.11.2020 passed by the AO u/s 154/254/143(3) and confirmed by the ld. CIT(A) charging interest u/s 234B and u/s 234C is barred by limitation while the revenue was aggrieved with the deletion made by the ld. CIT(A) on account of interest levied on Section 234B and also the grievance at ground no. 5 in ITA No. 1578/Del/2021 wherein the ld. CIT(A) held that the order u/s 154 is beyond jurisdiction and deleted interest u/s 234B. 33....
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....Rs. 36,07,589/- and 234B of Rs. 1,90,12,7 11/- was required to be levied on the balance of tax after adjustment of TDS/TCS at credit However, the interest was neither offered by the assessee nor charged by the Department. This resulted in non-levy of interest of Rs. 2,26,20,300/-. Calculation Sheet Particulars Amount (in Rs.) Returned Tax 7253 9602 TDS/ TCS 1102 135 Balance Tax 71437417 15.06.2010 [(15 % of 71437417)- 0] x 3% 321468 15.09.2010 [(45 % of 71437417)- 0] x 3% 9644 05 15.12.2010 [(75 % of 71437417)- 0] x 3% 1607 342 15.03.2011 [(100 % of 71437417)- 0] X 1% 714374 Total interest u/s 23 4C 3607589 Balance Tax 71437417 Interest u/s 234B for 24 months (up to March 2008) 1714498 0(A) Self Asstt. Tax paid on 31.01.2007 of Rs 11220 00 1122000 Self Asstt. Tax pai d On 31.03,2008 of Rs 70315417 70315417 Total self asstt. tax paid 71437417 Tax and Interest to be adjusted (71437417 + 3607589 + 1714498 0) 9218 998 6 Balance tax 20752569 Interest for 09 months (December 08) 1867731(B) Total interest u/s 234B [A +B] 19012711 Total non -levy of interest (23 4C and 23 4B) ....
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....terate that the ld. DR vehemently argued that at the time of impugned AY i.e. 2008-09 there was no bar u/s 143 of the IT Act which prohibited summery assessment u/s 143(1) after the issuance of notice u/s 143(2). Even after the subsequent amendment u/s 143(2) sub section 2 brought about by Finance Act 2012 and by Finance Act 2017 there was no bar of processing the return after the issuance of the notice u/s 143(2). The provision of section as amended by the subsequent Finance Act 2017 merely mentions that the processing of return shall not be necessary where a notice has been issued u/s 143(2) which was mainly brought in the Income Tax Act to stop the granting of refunds in the case of assessee's, whose return has been taken for scrutiny u/s 143(2). In other words, even the subsequent amendment u/s 143(2) was inserted only for protection of the interest of the revenue so as to stop the department from issuing refund in cases where demand is anticipated after scrutiny. Thus the assessee contention that after issuing of notice u/s 143(2), the intimation u/s 143(1) becomes an irrelevant and invalid is clearly not borne out of provisions of section 143 and accordingly the assessee ....