Income Tax Appellate Tribunal - Chennai
Sterlite Industries (India) Ltd., ... vs Assessee on 11 June, 2012
IN THE INCOME-TAX APPELLATE TRIBUNAL
'D' BENCH, CHENNAI.
Before Shri Abraham P. George, Accountant Member &
Shri Challa Nagendra Prasad, Judicial Member
I.T.A. No. 234/Mds/2011
Assessment Year : 2003 - 04
M/s. Sterlite Industries (India) Ltd., The Assistant Commissioner of
No. 1, Sai Flats, No. 55, Pillaiyar Vs. Income Tax,
Koil Street Kanagam, Tharamani, Company Circle, Range VI(4),
Chennai 600 113. Chennai.
[PAN:AABCS4955Q]
(Appellant) (Respondent)
Appellant by : Shri T. Vasudevan, Advocate
Respondent by Shri K.E.B. Rengarajan, Junior
: Standing Counsel &
Shri Anirudh Rai, CIT DR
Date of Hearing : 11.06.2012
Date of pronouncement : 26.06.2012
ORDER
PER Challa Nagendra Prasad, Judicial Member
This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) V, Chennai dated 13.12.2010 in ITA No. 21/2008-09 for the assessment year 2003-04. Shri T. Vasudevan, Advocate represented on behalf of the assessee and Shri K.E.B. Rengarajan, Junior Standing Counsel & Shri Anirudh Rai, CIT DR represented on behalf of the Revenue.
2 I.T.A. No.234
No.234/M/ 234/M/11 /M/11
2. The only issue in the grounds of appeal is that the Commissioner of Income Tax (Appeals) erred in upholding the interest levied under section 234B and 234C of the Income Tax Act.
3. The brief facts of the case are that the assessee filed return of income on 28.11.2003 declaring NIL income under normal provisions of the Act and income under section 115JB at `.139,58,37,014/-. The Assessing Officer completed the assessment under section 143(3) determining NIL income under normal provisions of the Act and accepted the book profits returned at `.139,58,37,014/-. The Assessing Officer while computing the tax payable on the book profits levied interest of `.12,37,756/- under section 234B and interest of `.7,15,858/- under section 234C of the Act.
4. The assessee filed rectification petition under section 154 before the Assessing Officer contending that the interest under section 234B and 234C are not leviable on the income computed as per the provisions of section 115JB in view of the decision of the Hon'ble Supreme Court in the case of CIT vs. Kwality Biscuits Ltd. [284 ITR 434]. The Assessing Officer passed order rejecting the rectification petition filed by the assessee stating that the Hon'ble Supreme Court in the case of Kwality Biscuits Ltd. (supra) has merely dismissed the appeals filed by the Revenue and did not deal with the issue of chargeability of interest under section 234B and 234C while computing the book profits under section 115J. The Assessing Officer relied 3 I.T.A. No.234 No.234/M/ 234/M/11 /M/11 on the decision of Hon'ble Jurisdictional High court in the case of CIT vs. Geetha Ramakrishna Mills Ltd. [288 ITR 489] and held that interest under section 234B and 234C are leviable while computing the book profits under section 115JB.
5. The assessee preferred an appeal before the Commissioner of Income Tax (Appeals) challenging the levy of interest under section 234B and 234C. The Commissioner of Income Tax (Appeals) uphold the levy of interest under section 234B and 234C holding that it is not possible to adjudicate the rectification proceedings by taking recourse to contradictory decision of the Hon'ble High Courts/Supreme Court. However, the Commissioner of Income Tax (Appeals) directed the Assessing Officer to recompute the interest chargeable under section 234B and 234C as there are certain mistakes in the computation of levy of interest.
6. Against this order of the Commissioner of Income Tax (Appeals), the assessee is in appeal before us contending that the Commissioner of Income Tax (Appeals) erred in upholding the interest chargeable under section 234B and 234C while computing the book profits under section 115JB. The grounds of appeal are as under:
"1) On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) V, Chennai has erred in upholding the interest u/s 234B & 234C of Income Tax Act, 1961.4 I.T.A. No.234
No.234/M/ 234/M/11 /M/11
2) The levy of interest by CIT(A) u/s 234B & 234C is bad in law.
3) The appellant Company craves indulgence to add, amend, alter, modify the grounds on or before the hearing of the appeal.
7. We have heard both sides, perused the orders of lower authorities. We find that the issue has been decided by the Hon'ble Supreme Court in the case of JCIT vs. Rolta India Ltd. [330 ITR 470], wherein their Lordships after considering the decision in the case of Kwality Biscuits Ltd. (supra) held as under:
"9. The question which remains to be considered is whether the assessee, which is a MAT Company, was not in a position to estimate its profits of the current year prior to the end of the financial year on 31st March. In this connection the assessee placed reliance on the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. v. CIT reported in (2000) 243 ITR 519 and, according to the Karnataka High Court, the profit as computed under the Income Tax Act, 1961had to be prepared and thereafter the book profit as contemplated under Section 115J of the Act had to be determined and then, the liability of the assessee to pay tax under Section 115J of the Act arose, only if the total income as computed under the provisions of the Act was less than 30% of the book profit. According to the Karnataka High Court, this entire exercise of computing income or the book profits of the company could be done only at the end of the financial year and hence the provisions of Sections 207, 208, 209 and 210 (predecessors of Sections 234B and 234C) were not applicable until and unless the accounts stood audited and the balance sheet stood prepared, because till then even the assessee may not know whether the provisions of Section 115J would be applied or not. The Court, therefore, held that the liability would arise only after the profit is determined in accordance with the provisions of the Companies Act, 1956 and, therefore, interest under Sections 234B and 234C is not leviable in cases where Section 115J applied. This view of the Karnataka High Court in Kwality Biscuits Ltd. was not shared by the Gauhati High Court in Assam Bengal Carriers Ltd. v. CIT reported in (1999) 239 ITR 862 and Madhya Pradesh High Court in Itarsi Oil and Flours (P.) Limited v. CIT reported in (2001) 250 ITR 686 as also by the Bombay High Court in the case of CIT v. Kotak Mahindra Finance Ltd.
reported in (2003) 130 TAXMAN 730 which decided the issue in favour 5 I.T.A. No.234 No.234/M/ 234/M/11 /M/11 of the Department and against the assessee. It appears that none of the assessees challenged the decisions of the Gauhati High Court, Madhya Pradesh High Court as well as Bombay High Court in the Supreme Court. However, it may be noted that the judgment of the Karnataka High Court in Kwality Biscuits Ltd. was confined to Section 115J of the Act. The Order of the Supreme Court dismissing the Special Leave Petition in limine filed by the Department against Kwality Biscuits Ltd. is reported in (2006) 284 ITR 434. Thus, the judgment of Karnataka High Court in Kwality Biscuits stood affirmed. However, the Karnataka High Court has thereafter in the case of Jindal Thermal Power Company Ltd. v. Dy. CIT reported in (2006) 154 TAXMAN 547 distinguished its own decision in case of Kwality Biscuits Ltd. (supra) and held that Section 115JB, with which we are concerned, is a self-contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under Section 115JB, it was liable to pay interest under Sections 234B and 234C of the Act. Thus, it can be concluded that interest under Sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB. For the aforestated reasons, Circular No. 13/2001 dated 9.11.2001 issued by CBDT reported in 252 ITR(St.)50 has no application. Moreover, in any event, para 2 of that Circular itself indicates that a large number of companies liable to be taxed under MAT provisions of Section 115JB were not making advance tax payments. In the said circular, it has been clarified that Section 115JB is a self- contained code and thus, all companies were liable for payment of advance tax under Section 115JB and consequently provisions of Sections 234B and 234C imposing interest on default in payment of advance tax were also applicable."
8. The Hon'ble Supreme Court held that the interest chargeable under section 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under section 115JA and 115JB of the Act. Respectfully following the decision of the Hon'ble Supreme Court in the case of JCIT vs. Rolta India Ltd. (supra), we agree with the view taken by the Commissioner of Income Tax (Appeals) in upholding the levy of interest 6 I.T.A. No.234 No.234/M/ 234/M/11 /M/11 under section 234B and 234C while computing the book profits under section 115JB of the Act. The grounds of appeal are rejected.
9. In the result, the appeal of the assessee is dismissed.
Order pronounced on Tuesday, the 26th of June, 2012 at Chennai.
Sd/- Sd/- (ABRAHAM P. GEORGE) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, the 26.06.2012 Vm/- To: The assessee//A.O./CIT(A)/CIT/D.R.