Gujarat H.C : Tt was permissible to charge interest under sections 234B and 234C of the Income-tax Act, 1961, before allowing credit for minimum alternate tax under section 154 of the Act

High Court Of Gujarat

CIT vs. Bilag Industries (P.) Ltd.

Assessment Year : 2002-03

Section : 154, 234B, 234C

D.A. Mehta And Ms. H.N. Devani, JJ.

Tax Appeal No. 167 Of 2009

March 30, 2010

JUDGMENT

D.A. Mehta, J. – On March 2, 2010, the following order came to be made by the court :

“(1) Heard learned senior standing counsel for the appellant-Revenue.

(2) Though the Income-tax Appellate Tribunal, while passing the impugned order dated April 10, 2008, has not dealt with the issue as to whether under section 154 of the Income-tax Act, 1961 (the Act), it was permissible to charge interest under sections 234B and 234C of the Act before allowing credit for minimum alternate tax, in the facts of the present case, the same is required to be considered.

(3) Hence, notice for final disposal returnable on March 23, 2010.”

2. Heard learned counsel appearing for the parties.

3. Admit. The following substantial question of law arises for determination from the order dated April 10, 2008, made by the Income-tax Appellate Tribunal, D-Bench, Ahmedabad :

“Whether, on the facts and in the circumstances of the case, it was permissible to charge interest under sections 234B and 234C of the Income-tax Act, 1961, before allowing credit for minimum alternate tax under section 154 of the Act ?”

4. The assessment year in question is 2002-03. Vide order dated September 11, 2003, made under section 154 of the Act, the Assessing Officer charged interest under sections 234B and 234C of the Act before allowing credit for minimum alternate tax. The assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals) who, after considering the submissions of the assessee, partly allowed relief by directing the Assessing Officer to rectify the order made under section 154 of the Act. The appeal filed by the Revenue before the Tribunal came to be dismissed by the Tribunal upholding the order made by the Commissioner (Appeals). The Tribunal, while dismissing the Departmental appeal, has placed reliance on various orders of the Tribunal referred to in paragraph 6 of the order impugned. Learned counsel appearing for the appellant submitted that the Tribunal has wrongly placed reliance on orders in the case of Asstt. CIT v. Gujarat Heavy Chemicals Ltd. because the controversy and the facts therein were different. As against that, the learned advocate appearing for the respondent-assessee submitted that two High Courts have taken a view that interest under sections 234B and 234C of the Act cannot be charged without giving credit for minimum alternate tax under the provisions of section 154 of the Act as the issue is debatable.

5. The impugned order dated April 10, 2008, made by the Tribunal nowhere indicates that the Tribunal has even considered as to whether the exercise carried out by the Assessing Officer was permissible considering the scope of the provisions of section 154 of the Act. The law on the subject-matter is well-settled. Any issue of law on which there may conceivably be two opinions, or where the issue is debatable, cannot form part of proceedings under section 154 of the Act. The scope of section 154 of the Act is to correct an apparent mistake on record and not something which can be established by a long drawn out process of reasoning as to the true scope of the provisions in question.

6. In the facts of the present case, the order made by the Assessing Officer on September 11, 2003, itself indicates that the issue requires debate and deliberation. Hence, the same cannot be termed to be a mistake apparent on record so as to levy interest under sections 234B and 234C of the Act without granting credit for minimum alternate tax.

7. The Tribunal having failed to consider the said issue, the impugned order dated April 10, 2008, is quashed and set aside and the appeal, being I.T.A. No. 1232/Ahd/2004 is restored to file. The Tribunal shall, after giving an opportunity of hearing to the parties, decide the aforesaid issue in the first instance and thereafter, if necessary, go into the merits of the issue. The appeal accordingly stands disposed of with no order as to costs.

[Citation : 339 ITR 46]

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