Income Tax Appellate Tribunal - Chandigarh
Avery Cycle Industries Ltd.,, Ludhiana vs Assessee on 9 January, 2009
I N T H E I N C O M E T AX AP P E L L AT E T R I B U N AL
C H AN D I G AR H B E N C H ( A)
BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER
A ND MS.S US HMA CHOW LA, JUDICIAL ME MBE R
ITA No. 194/CHANDI/2009
Assessment Year .: 2004-05
M/s Avery Cycle Industries Ltd., V DCIT, C-V,
Ludhiana. Ludhiana.
PAN :AABCA-4141Q
(Appellant) (Respondent)
Appellant by: Shri Subhash Aggarwal
Respondent by: Shri N.K.Saini
ORDER
Per G.S.Pannu, AM
This appeal by the assessee pertaining to the assessment year 2004-05 is directed against the order of the CIT(Appeals) dated 09.01.2009 whereby levy of interest under Sections 234B and 234C of the Income Tax Act, 1961 ( in short 'the Act') has been held.
2. In this case, assessment u/s 143(3) of the Act was completed on 22.12.2006 at the income shown u/s 115B of the Act. As per assessee, the charging of interest u/s 234B and 234C of the Act is against law and on facts. The learned counsel for the assessee relied upon the decision of the Hon'ble Supreme Court in the case of Kwality Biscuits Ltd. V CIT, 284 ITR 434(S.C) to support his contention that where income has been determined in terms 2 of Section 115JB of the Act, no interest u/s 234B and 234C is chargeable. On the other hand, learned DR, appearing for the Revenue has contended that interest under Sections 234B and 234C of the Act is chargeable even where an income is assessed in terms of Section 115JB of the Act, following the judgement of the Hon'ble Karnataka High Court in the case of Jindal Thermal Power Co.Ltd. Vs DCIT & another, 286 ITR 182 (Kar). It is contended that the judgement of the Hon'ble Supreme Court in the case of Kwality Biscuits Ltd. (supra) is in context of Section 115J of the Act, which is different than Section 115JB, which is the subject matter of consideration in this case.
3. W e have considered the rival submissions carefully. In this case, the impugned order has been passed by the authorities below in terms of directions of the Tribunal in assessee's own case vide ITA No. 177/Chandi/2008 dated 26.06.2008, which reads as under :
"12. We have given our careful consideration to the rival contentions. In our view, the learned Commissioner of Income-tax (A) has erred in relying upon the decision of the Hon'ble Supreme Court in the case of Kwality Biscuits Ltd. (supra) as the said decision relates to provisions of Section 115J. The Hon'ble Karnataka High Court in the case of Jindal Thermal Power Co.Ltd. Vs DCIT & another, 286 ITR 182 has held that as per provisions of Section 115JB introduced by Financial Act 2000 the assessee is liable to pay interest u/ss 234B and 234C. This judgment of the Karnataka High Court has been overlooked by the Commissioner of Income-tax (A). Since the assessee has voluntarily paid the interest u/s 234B and 234C and the Assessing Officer had not levied any interest in excess of what was paid by the assessee the Commissioner of Income-tax (A) was not justified in directing the Assessing Officer to follow the decision of the Hon'ble Supreme Court in the case of Kwality Biscuits Ltd. (supra). Since the 3 assessee was not confronted with the decision of the Karnataka High Court in the case of Jindal Thermal Power Co.Ltd. (supra), we consider it appropriate to modify the order of the Commissioner of Income-tax (A) and direct the Assessing Officer to decide the issue relating to levy of interest u/s 234B and 234C afresh in the light of the various decisions some of which have been mentioned above after giving reasonable opportunity of being heard to the assessee.
13. Before parting with this appeal, it would be pertinent to mention that assessee's counsel had also argued that the Assessing Officer had not given any direction in the assessment order for levy of interest u/s 234B and 234C and there was also no mention of interest under the aforementioned provisions of the Act in the demand notice. Copy of the demand notice was produced before us. In our considered view, since the assessee had voluntarily paid interest u/s 234B and 234C and the Assessing Officer had simply accepted the return and issued nil demand after adjustment of interest paid, there is no infirmity in this order. This contention raised by the assessee is accordingly dismissed. We direct accordingly."
4. Further, it is noted that similar controversy was subject matter of consideration by the Chandigarh Bench of the Tribunal in the case of M/s Ind-Sphinx Precision Ltd. (ITA Nos 286,287 & 288/Chandi/2005) dated 21.05.2007 whereby the levy of interest u/s 234B & 234C of the Act in the event of income being computed u/s 115JB of the Act has been upheld. The following discussion in the order of the Tribunal is note worthy :
"8. We have given our careful consideration to the rival submissions. The Hon'ble Supreme Court in the case of Kwality Biscuits Ltd. (supra) has held that the assessee whose income has been computed u/s 115J cannot be held to have defaulted in the payment of advance tax when the income under the said provision of the Act is computed only after the end of the previous year during which advance tax was payable. The said decision of the Hon'ble Supreme Court has been interpreted by the Madras High Court in the case of CIT V M/s Geetha Ramakrishna Mills P.Ltd.4
(supra), and in last para of the judgement their Lordships have held as under :
"10. That apart, in view of the introduction of Sections 115JA and 115JB of the Act w.e.f. April 1,1997 by the Finance (Nos2) 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 Section 115J of the Act is no more available for the assessee for delaying the payment of advance tax in view of the insertion of Sections 115JA and 115JB of the Act."
The Karnataka High Court in the case of Jindal Thermal Power Co.Ltd. vs. DCIT, 286 ITR 182 (Karnataka) upheld the levy of interest u/s 234B/234C when the income was computed u/s 115JB. Their Lordships held that the companies governed by the provisions of Section 115JB are required to pay advance tax w.e.f. 1.4.2001 upon introduction of the provisions itself. Their Lordships of the Karnataka High Court have also considered its own decision in the case of Kwality Biscuits Ltd. v. CIT, 243 ITR 519 (Kar) which has been affirmed by the Hon'ble Supreme Court. It is, therefore, evident that the decision of the Hon'ble Supreme Court in the case of CIT v. Kwality Biscuits Ltd., 284 ITR 434 (S.C) is inapplicable when the income is computed with reference to the provisions of Section 115JA or u/s 115JB. We accordingly hold that the companies whose income is assessable u/s 115JA or u/s 115JB are liable to pay advance tax and in case of default, provisions of Section 234B/234C are attracted. In this case, for the assessment year 2000-01, income has been computed u/s 115JA. For the assessment years 2001-02 and 2002-03, the income has been computed with reference to Section 115JB. Since as per the decision of the Madras High Court in the case of M/s Geetha Ramakrishna Mills P.Ltd. (supra), the decision of the Supreme Court in any case is not applicable when the income is computed u/s 115JA or u/s 115JB in respect of levy of interest u/s 234B and 234C and as per the Karnataka High Court in the case of Jindal Thermal Power Co. (supra), interest u/s 234B/234C is chargeable when income is computed under Section 115JB. We respectfully following the same, uphold the levy of interest in this case under Sections 5 234B and 234C for the assessment year 2000-01 for which income has been computed u/s 115JA and for the assessment years 2001-02 and 2002-03 for which income has been computed u/s 115JB. The common ground raised by the assessee in the cross objections for all the three assessment years under appeal by means of Ground No.2 in assessment year 2000-01, ground No.3 in assessment year 2001-02 and ground No.4 in assessment year 2002- 03 are accordingly dismissed."
5. A perusal of the aforesaid precedent reveals that the judgement of the Hon'ble Supreme Court in the case of Kwality Biscuits Ltd. (supra), which is sought to be relied by the appellant, is inapplicable to a case relating to Section 115JB of the Act. Following the aforesaid precedent, which has been rendered by our Co-ordinate Bench, we hereby affirm the order of the CIT(Appeals) sustaining levy of interest under Sections 234B and 234C of the Act in the instant case.
6. In the result, appeal of the assessee is dismissed.
Order pronounced in the Open Court on 28-09-2010.
Sd/- Sd/- (S US HMA CHOW LA ) (G.S.PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 28th Sept.,2010. 'Poonam'
Copy to : The Appellant/The Respondent/The CIT (A)/The CIT/The DR.