Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was liable to pay interest under ss. 234B and 234C of the IT Act ?

High Court Of Madhya Pradesh

Itarsi Oils & Flours (P) Ltd. vs. CIT

Section 115J, 234B, 234C

A.K. Mathur, C.J. & S.K. Kulshreshtha, J.

IT Ref. No. 80 of 1996

31st August, 1999

Counsel Appeared

B.L. Nema, for the Assessee : Abhay Sapre, for the Revenue

JUDGMENT

A.K. MATHUR, C.J. :

This is a reference under s. 256(1) of the IT Act, 1961 (for short, “the Act”), at the instance of the assessee and the following question of law has been referred by the Tribunal for answer by this Court : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was liable to pay interest under ss. 234B and 234C of the IT Act ?”

2. The brief facts for disposal of this reference are as under : The assessee-company filed a return on 29th Dec., 1989, showing an income of Rs. 62,610 which was computed under s. 115J of the Act. The assessment was completed by accepting the returned income. Later it came to the notice of the authorities that there has been underassessment of the income inasmuch as it related to the depreciation aspect. In the computation of the income, depreciation had been claimed as provided under s. 32 of the Act, whereas while computing the income under s. 115J, depreciation was required to be calculated as per Sch. XIV to the Companies Act. In view of the above position, notice under s. 148 of the Act was issued in response to which the assessee-company filed a return on 28th Jan., 1993, showing an income of Rs. 6,34,648 computed under s. 115J of the IT Act. Notice under s. 143(2) of the Act was issued fixing the case on 18th March, 1993. The AO, after computing the income of Rs. 6,34,648 under s. 115J of the Act, issued a demand notice by order dt. 18th March, 1993. Aggrieved against this order, an appeal was preferred before the CIT(A); the CIT(A), affirmed the order of the AO. It was contended that there is no provision for advance tax on deemed income under s. 115J of the Act and, therefore, charging interest under ss. 234B and 234C of the Act was not justified. The CIT(A), after referring to a decision of the Delhi Bench in the case of Steel Authority of India Ltd. vs. Dy. CIT (1991) 40 TTJ (Del) 559 : (1991) 38 ITD 193 (Del), held that interest is not chargeable under ss. 234B and 234C of the Act. He, therefore, allowed the appeal in part on this question only. Aggrieved by this order, the Revenue filed an appeal before the Tribunal and the Tribunal, in view of the Special Bench decision given in the case of Sutlej Cotton Mills Ltd. vs. Asstt. CIT (1993) 46 TTJ (Cal)(SB) 310 : (1993) 199 ITR 164 (AT) (Cal), has overruled the earlier decision of the Delhi Tribunal in the case of Steel Authority of India Ltd. vs. Dy. CIT (supra). Therefore, the learned Tribunal affirmed the levy of interest under ss. 234B and 234C of the Act and reversed the finding of the CIT(A) and allowed the appeal of the Department. Hence, the present reference has been made by the Tribunal at the instance of the assessee.

3. We have gone through the order passed by the learned Tribunal. Secs. 234B and 234C of the Act do not make any reference of s. 115J. Sec. 234B only lays down that where advance tax is required to be paid under s. 208 of the Act and there is a failure or that if the amount of the advance tax paid under the provisions of s. 210 is less than 90 per cent of the assessed tax, then in that case, the assessee is liable to pay interest. Similarly, s. 234C also, with regard to interest for deferment of advance tax, says that if the company has to pay advance tax on its current income on or before the 15th June, and such tax paid is less than 15 per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th September, is less than 75 per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th December, is less than 75 per cent of the tax due on the returned income, then, the company shall be liable to pay simple interest at the rate of one and one-half per cent per month for a period of three months on the amount of the shortfall from 15 per cent or 45 per cent or 75 per cent as the case may be, of the tax due on the returned income. Therefore, on a reading of both the provisions, there is no mention that in case of s. 115J, both the sections will not become applicable. The only crux of the matter is that whenever the assessee pays advance tax under s. 208 of the Act, irrespective of s. 115J, he has to pay the tax and if the tax deposited is less than 90 per cent the assessee will have to pay simple interest.

We are satisfied that the view taken by the Tribunal is correct and we answer the question in favour of the Revenue and against the assessee.

[Citation :250 ITR 686]

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