High Court Of Madras
CIT vs. Geetha Ramakrishna Mills (P) Ltd.
Sections 234A, 234B, 234C
Asst. Year 1989-90
P.D. Dinakaran & P.P.S. Janarthana Raja, JJ.
Tax Case No. 112 of 2002
1st August, 2006
Counsel Appeared
N. Muralikumaran, for the Appellant
JUDGMENT
P.D. Dinakaran, J. :
This appeal is directed against the order dt. 22nd May, 2002 made in ITA No. 1907/Mad/1992 of the Tribunal, Madras ‘D’ Bench, raising the following substantial question of law : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that interest under ss. 234A, 234B and 234C of the IT Act, 1961 cannot be levied in cases where the assessment was on the basis of book profits under s. 115J of the Act ?”
2.1. The relevant assessment year is 1989-90. The respondent/assessee is a closely-held company carrying on business in textiles. The assessee filed its return of income for the asst. yr. 1989-90 admitting nil total income. The AO passed an assessment order dt. 27th March, 1992 under s. 143 (3) of the IT Act (for brevity “the Act”), computing the book profit under s. 115J of the Act as Rs. 17,90,717 and arrived at the income of Rs. 5,39,670, taking a stand that the unabsorbed loss or unabsorbed depreciation, whichever is less, is to be set off. Accordingly, the AO allowed the unabsorbed business loss of Rs. 21,65,013 to be set off and refused to set off unabsorbed depreciation of Rs. 96,16,268 and thus, held that the respondent/assessee was liable to pay a total tax of Rs. 3,11,631 and also computed the interest under ss. 234A, 234B and 234C and 201(1A) of the Act to be Rs. 2,43,275.
2.2. Against the order of assessment dt. 27th March, 1992, the assessee filed an appeal before the CIT(A), who, by order dt. 21st May, 1992, held that when the liability arises under s. 115J of the Act no interest under ss. 234A, 234B and 234C of the Act, which are relevant only for computation of assessable income, could be levied.
The Revenue went on appeal before the Tribunal questioning the negation of interest payable under ss. 234A, 234B and 234C of the Act and the Tribunal dismissed the appeal and held in favour of the assessee. Hence, the present appeal.
Mr. N. Muralikumaran, learned senior standing counsel for the appellant submitted that even if the liability arises on the computation of income under s. 115J of the Act, interest is leviable under ss. 234A, 234B and 234C of the Act and invited our attention to the following decisions : (i) the decision of the Gauhati High Court in Assam Bengal Carriers Ltd. vs. CIT (2000) 162 CTR (Gau) 170 : (1999) 239 ITR 862 (Gau), whereunder it was held that interest under ss. 234B and 234C of the Act is chargeable even in a case where assessment is made under s. 115J of the Act; (ii) the decision of the Madhya Pradesh High Court in Itarsi Oils & Flours (P) Ltd. vs. CIT (2001) 170 CTR (MP) 158 : (2001) 250 ITR 686 (MP), wherein it was held that ss. 234B and 234C of the Act do not make any reference to s. 115J of the Act. Sec. 234B lays down that where advance tax is required to be paid and there is failure to pay or if the amount of tax paid is less than 90 per cent of the assessed tax, then the assessee is liable to pay interest. Similarly, under s. 234C of the Act, a company shall be liable to pay simple interest for a period of three months on the amount of the shortfall from 15 per cent, 45 per cent, or 75 per cent, as the case may be, of the tax due on the returned income. The crux of the matter is that whenever the assessee is liable to pay advance tax, irrespective of s. 115J, he has to pay the tax and if the tax deposited is less than 90 per cent, the assessee would have to pay simple interest; (iii) the decision of this Court in CIT vs. Holiday Travels (P) Ltd. (2003) 181 CTR (Mad) 442 : (2003) 263 ITR 307 (Mad) whereunder it was held that it was possible for the assessee to foresee its profit and make an estimate of the expected profit; the fact that the ITO had applied the provisions of s. 115J at the time of completion of regular assessment was immaterial in considering the question of levy of interest under s. 234A for the delayed filing of the return or non-filing of the return; and that the Tribunal was not right in holding that interest was not leviable under ss. 234A and 234B of the Act where the provisions of s. 115J of the Act were applied. (iv) the decision of Bombay High Court in CIT vs. Kotak Mahindra Finance Ltd. (2003) 183 CTR (Bom) 491 : (2004) 265 ITR 119 (Bom) wherein it was held that the interest can be levied under ss. 234B and 234C of the Act for the shortfall in the payment of advance tax; (v) the decision of Punjab & Haryana High Court in CIT vs. Upper India Steel Mfg. & Engg. Co. Ltd. (2004) 192 CTR (P&H) 385 : (2005) 279 ITR 123 (P&H) wherein it is held that the non-payment or short payment due to the computation of income under s. 115J of the Act attracts the levy of interest under ss. 234B and 234C of the Act and that the estimation of current income does not exclude the income computed under s. 115J of the Act. Sec. 115J of the IT Act, which provides special provisions relating to certain companies, contemplates the companies mentioned thereunder to prepare the P&L a/c for the relevant previous year under sub-s. (1A) to s. 115J of the Act. Of course, in Kwality Biscuits Ltd. vs. CIT (2000) 159 CTR (Kar) 316 : (2000) 243 ITR 519 (Kar), the Karnataka High Court held that since the entire exercise of computing the income or that of book profit could be only at the end of the financial year, the provisions of ss. 207, 208, 209 or 210 cannot be made applicable, unless and until the accounts are audited and the balance sheet is prepared, because till then, even the assessee may not know whether the provisions of s. 115J would be applicable or not. However, in CIT vs. Holiday Travels (P) Ltd. (supra), this Court had an occasion to consider the judgment of the Karnataka High Court in Kwality Biscuits Ltd. vs. CIT (supra) and held that there was no difficulty for the assessee to estimate the profit during the current accounting year on the basis of projection of transactions and it was possible for the assessee to foresee its profit and make an estimate of the expected profit and the fact that the ITO had applied the provisions of s. 115J at the time of completion of regular assessment was immaterial in considering the question of levy of interest under s. 234A for the delayed filing of the return or non-filing of the return. Further, as pointed out by the learned senior standing counsel for the Revenue, the Bombay High Court in CIT vs. Kotak Mahindra Finance Ltd. (supra) and the Punjab & Haryana High Court in CIT vs. Upper India Steel Mfg. & Engg. Co. Ltd. (supra) also considered the judgment of the Karnataka High Court in Kwality Biscuits Ltd. vs. CIT (supra) and held that where there is nonpayment or short payment due to the computation of income under s. 115J of the Act, interest can be levied under ss. 234B and 234C of the Act and dissented from the view taken by the Karnataka High Court in Kwality Biscuits Ltd. case, cited supra. Even though it is brought to our notice that the decision of the apex Court in CIT vs. Kwality Biscuits Ltd. (2006) 205 CTR (SC) 122 : (2006) 284 ITR 434 (SC), confirming the decision of the Karnataka High Court in Kwality Biscuits Ltd. vs. CIT (supra), we find that the apex Court has only dismissed the appeal. It is a settled law that dismissal simpliciter would not be a declaration of the law and it would not be a binding precedent [vide : Saurashtra Oil Mills Assn. vs. State of Gujarat (2002) 3 SCC 202 : AIR 2002 SC 1130].
As we have already observed, the Division Benches of different High Courts, viz., the Madras High Court, the Bombay High Court and the Punjab & Haryana High Court considered the judgment of the Karnataka High Court in Kwality Biscuits Ltd.’s case (supra) and dissented from the view taken by the Karnataka High Court. Therefore, agreeing with the view expressed by this Court as also other High Courts, viz., the Gauhati High Court, the Madhya Pradesh High Court, the Bombay High Court and the Punjab & Haryana High Court, referred to above, we have no option except to hold that even where the assessment was made under s. 115J of the Act, interest could be levied. That apart, in view of the introduction of ss. 115JA and 115JB of the Act w.e.f. 1st April, 1997 by the Finance (No. 2) Act, 1996, the question whether a company which is liable to pay tax under either of the provisions should pay advance tax does not assume much importance as specific provisions have been made in the section providing that all provisions of the Act shall apply to the assessee being a company mentioned in the said section and therefore, s. 115J of the Act is no more available for the assessee for delaying the payment of advance tax in view of the insertion of ss. 115JA and 115JB of the Act.
For all these reasons, the question referred to us is answered in favour of the Revenue and against the assessee and the appeal is allowed.
[Citation : 288 ITR 489]
