Income Tax Appellate Tribunal - Lucknow
Pradeshiya Industrial And Investment ... vs Additional Cit, Spl. Range I on 27 April, 2007
ORDER
D.C. Agrawal, Accountant Member
1. It is submitted, in this case, by learned A.R. that learned Commissioner (Appeals) has not disposed of following three grounds which were raised before him as ground Nos. 3, 4 and 7. These grounds are as under:
3. Because otherwise also the revised statement of account (as had been filed with the revised return) showing the loss of Rs. 21,42,63,384 had been prepared as per the requirement of Parts I and II of Schedule VI of the Companies Act and no adjustment on account of above referred provisions, could have been made to the same so as to compute the book profit under Section 115JA.
4. Because otherwise also the said adjustment, so as to work out the book profit under Section 115JA, were beyond the purview of processing the return under Section 143(1)(a) and computation of book profit (as a result of such adjustment) as Rs. 46,88,555 is wholly erroneous and the same deserves to be taken as nil, as have been shown in the revised return.
5. Because in any case the entire tax liability as was attributable to the 'book profit' under Section 115JA (computation of which itself is in dispute) was overwhelmingly cover by payment of advance tax aggregating Rs. 3,13,50,000 as had been made during the relevant financial year and no interest under Section 234C could have been charged.
2. We notice from grounds of appeal, taken before learned Commissioner (Appeals) by the assessee, that these three grounds were in fact raised by the assessee. Learned Commissioner (Appeals) in fact has passed following order:
Present appeal arises out of order passed by Shri Ashu Jain, Addl. CIT, Range-I, Lucknow under Section 143(l)(a)/251 of the Income Tax Act, dated 30-3-2001. In response to the notices Shri Prakash Narain, Advocate attended and made submissions.
2. Shri Prakash Narain, counsel for the assessee, has taken two foldarguments before me. His first submission is that addition of Provision ofBad and Doubtful Debts of Rs. 5,74,446 is bad in law inasmuch as the samehas already been allowed in assessment order passed under Section 143(3). To me it appears that it would be incorrect to disallow an amount as prima facie adjustments which after detailed scrutiny has been allowed under Section 143(3) proceedings. The allowance would prove that the issue was debatable and not disallowable under Section 143(l)(a). Therefore, addition of Rs. 5,74,446 on account of Provision of Bad and Doubtful Debts is deleted.
3. The second contention of the assessee is that no interest under Section 234C may be charged in view of tax liability being attributable to 'Book Profit' under Section 115JA. The issue has been decided against the assessee by the Hon'ble Guwahati High Court in Assam Bengal Carriers Ltd v. CIT 239 ITR 862 and Hon'ble M.P. High Court in the case of Itarsi Oils and Flours (P) Ltd v. CIT 250 ITR 686. It may be appropriate to quote a passage from the decision of Lord Asquith in East End Dwellings Co. Ltd v. Finsbury Borough Council (1951) 2 All ER 587, 599 (HL) to the effect:
If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real, the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. The statute says that you must imagine a certain state of affairs, it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.
4. In view of aforesaid decisions the charging of interest by the assessing officer is uphelearned
5. In result the appeal for assessment year 1997-98 is Partly Allowed.
3. In this short order, we do not find any reference to these three grounds. The learned A.R., in addition to above, has taken the following grounds before the Tribunal:
1. The learned Commissioner (Appeals)-III Lucknow had erred in holding that the appellant was liable to pay interest under Section 234C of Income Tax Act, 1961 even though its income had been computed under Section 115JA of the above Act.
2. The appellant seeks permission to modify and/or add any other ground or grounds of appeal as the circumstances of the case might require or justify.
4. Thus, learned Commissioner (Appeals) had in fact disposed of the appeal filed before him only on the question of charging of interest under Section 234C. The charging of interest was upheld by him following the decision of Hon'ble M.P. High Court in the case of Itarsi Oils & Flours (P.) Ltd. v. CIT as well as decision of Hon'ble Guwahati High Court in the case of Assam Bengal Carriers Ltd. v. CIT . Against this, learned A.R. submitted that Hon'ble Supreme Court has now decided the issue in CIT v. Kwality Biscuits Ltd in which they have affirmed the order of Hon'ble Karnataka High Court in Kwality Biscuits Ltd v. CIT wherein it was held that in the case of an assessment of a company on the basis of book profit under Section 115J, since the entire exercise of computing income under Section 115J can only be done at the end of the financial year and the provision of Sections 207 to 210 cannot be made applicable until and unless the accounts are audited and the balance sheet prepared, the department could not charge interest under Section 234B/234C. Thus, according to learned A. R. the decision is covered in favour of the assessee. He therefore pleaded that the issue be decided in his favour whereas for other grounds, which are not adjudicated by learned Commissioner (Appeals), matter be restored to his file.
5. On the other hand, learned D. R. submitted that the decision of Hon'ble Supreme Court in Kwality Biscuits Ltd.'s case (supra) was given on the provisions of Section 115J whereas in the present case the interest is being charged during assessment under Section 115JA which is materially different.
6. We have considered the rival submissions and have also perused the material available on record. We notice that under the provision of Section 115JA there is Sub-section (4) which provides that "Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section." Similar provision like Sub-section (4) in Section 115JA and Sub-section (5) in Section 115JB was absent in Section 115J. Therefore, in our considered view provision of Sections 207 to 210 would be applicable to the computation of book profit under Section 115JA and, therefore, the assessee is liable to pay advance tax and in absence of non-payment or deferred payment, the assessee is liable to pay interest under Section 234B or 234C as the case may be. We are supported by the decision of the Tribunal in the case of Rohan Dyes & Intermediates (P.) Ltd. v. ITO (2007) 12 SOT 554 (Mum.) and Asstt. CIT v. Crystal Granite & Marble Ltd. (2007) 12 SOT 577 (Mum.) in which the decision of Hon'ble Karnataka High Court in Jindal Thermal Power Co. Ltd. v. Dy. CIT has been relied upon. Hon'ble Karnataka High Court has considered the provisions of Section 115JB and held that Sub-section (5) in that section makes material difference with Section 115J and, therefore, decision of Kwality Biscuits Co.'s case (supra) which was given in the context of Section 115J would not be applicable to the charging of interest under Section 234B. The provisions of Sub-section (5) of Section 115JB are pari materia with the provisions of Sub-section (4) of Section 115JA. Sub-section (4) of Section 115JA and Sub-section (5) of Section 115JB clearly provide that the provisions of the Act would be applicable to the computation of income under these sections unless otherwise so provided therein. As no contrary view is provided in these sections, the provisions relating to computation of advance tax would be applicable and, therefore, for non-payment of advance tax and deferment thereof, interest under Section 234B or 234C, as the case may be, would be applicable. The decision of Hon'ble Supreme Court in Kwality Biscuits Ltd.'s case (supra), relied upon by learned Counsel for the assessee, was admittedly given in the context of Section 115J which did not contain the provisions similar to Sub-section (4) of Section 115JA. Therefore, this decision does not create a binding precedence. The courts are obliged to employ an intelligent technique in the use of precedence bearing in mind that a decision of the court takes its colour from the question involved in the case in which it was rendered. It is so held by Hon'ble Supreme Court in State of Punjab v. Baldeo Singh . Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. It is so held by Hon'ble Supreme Court in Padma Sundara Rao v. State of Tamil Nadu . In Union of India v. Maj. Bahadur , Hon'ble Supreme Court held that circumstantial flexibility, one addition or different fact may make a world of difference between conclusions in two cases. Dismissal of case by blindly placing reliance on a decision is not proper. In Hemalatha Gargya v. CIT (2003) 259 ITR 10 (SC), it was held by Hon'ble Supreme Court that a precedence has to be followed provided the facts are the same, no new facts are brought on record, there is no change in the circumstances under which earlier decision was given, there is no decision of higher court, and there is no change in the statutory provisions of law. In the present case, insertion of Sub-section (4) in Section 115JA and Sub-section (5) in Section 115JB have made a world of difference with Section 115J. Once a statutory provision is made by way of Sub-section (4) of Section 115JA and Sub-section (5) in Section 115JB to apply all the provisions of the Act unless otherwise provided in those sections, then one has to see that the assessee pays advance tax in accordance with Sections 207 to 210 and in case he does not pay so or differs the payment, he pays interest under Section 234B or 234C which is a mandatory levy as held by Hon'ble Supreme Court in CIT v. Anjum M.H. Ghaswala (2001) 252 ITR 1 which is further followed in CIT v. Kelvinator of India Ltd. (2002) 256 ITR l (Delhi) (FB), CIT v. Hindustan Bulk Carriers (2003) 259 ITR 449 (SC) and CIT v. Sant Ram Mangat Ram Jewellers (2003) 264 ITR 5644 (SC). In view of the above, we are of the considered opinion that decision of Hon'ble Supreme Court in Kwality Biscuits Ltd's case (supra) would not be applicable for computation of income under Section 115JA/115JB in view of the changed statutory provisions of those sections. The assessee is liable to pay interest under Section 234C for deferment of payment of advance tax. As a result, we uphold the order of Commissioner (Appeals) in confirming the charging of interest under Section 234C. This ground of assessee is rejected.
7. Regarding other three grounds which are not disposed of by learned Commissioner (Appeals), the matter is restored to the file of Commissioner (Appeals) for disposing of these grounds in accordance with law after giving opportunity of being heard to the assessee.
8. As a result, the appeal is allowed in part for statistical purposes.