Gujarat High Court
Sabarmati Paper Udyog Ltd vs Deputy Commissioner Of Income Tax on 10 March, 2017
Author: Harsha Devani
Bench: Harsha Devani, R.M.Chhaya
O/OJMCA/15/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
MISC. CIVIL APPLICATION (OJ) NO. 15 of 2015
In TAX APPEAL NO. 31 of 2003
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SABARMATI PAPER UDYOG LTD.....Applicant(s)
Versus
DEPUTY COMMISSIONER OF INCOME TAX....Respondent(s)
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Appearance:
MR MANISH J SHAH, ADVOCATE for the Applicant
MR NITIN K MEHTA, ADVOCATE for the Respondent
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CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR.JUSTICE R.M.CHHAYA
Date : 10/03/2017
ORAL ORDER
(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. Rule. Mr. Nitin Mehta, learned Senior Standing Counsel waives service of notice of rule on behalf of the respondent.
2. By this application, the applicant seeks recall of the judgment and order dated 24.06.2011 made by this court in Tax Appeal No.31 of 2003, whereby the order dated 23.08.2001 passed by the Income Tax Appellate Tribunal, Ahmedabad (hereinafter referred to as "the Tribunal") has been quashed and set aside, and the question has been answered in favour of the revenue and against the assessee. It has been further held that the Tribunal had erred in holding Page 1 of 7 HC-NIC Page 1 of 7 Created On Mon Aug 14 08:28:27 IST 2017 O/OJMCA/15/2015 ORDER that the interest under sections 234B and 234C is not chargeable if the total income is assessed to tax under section 115J of the Income Tax Act, 1961 (hereinafter referred to as "the Act").
3. Vide order dated 23.08.2001, the Tribunal had allowed the appeal of the assessee by following the decision of the Karnataka High Court in the case of Kwality Buscuits Ltd. v. Commissioner of Income Tax, (2000) 243 ITR 519 (Karnataka) and held that no interest under sections 234B and 234C of the Act would be chargeable on the basis of the income determined by invoking the provisions of section 115J of the Act.
4. On 24.06.2011, when the appeal was listed for hearing, on behalf of the revenue, the learned Senior Standing Counsel had submitted before the court that the controversy involved in the present case stands concluded by the decision of the Supreme Court in the case of Joint Commissioner of Income Tax v. Rolta India Limited, (2011) 330 ITR 470 (SC) in favour of the revenue. In view thereof, despite the fact that the applicant/respondent - assessee was not represented, the court had passed an ex-parte order based on the above submission made by the learned Senior Standing Counsel for the revenue and following the above decision of the Supreme Court, had answered the question in favour of the revenue and against the assessee.
5. The applicant has filed the present application for recall of the above judgment and order passed by this court, stating that the decision of the Supreme Court in the case of Joint Page 2 of 7 HC-NIC Page 2 of 7 Created On Mon Aug 14 08:28:27 IST 2017 O/OJMCA/15/2015 ORDER Commissioner of Income Tax v. Rolta India Limited (supra) would not be applicable to the facts of the present case and therefore, the said judgment and order is required to be recalled.
6. Mr. Manish Shah, learned advocate for the applicant invited the attention of the court to the decision of the Karnataka High Court in the case of Kwality Buscuits Ltd. v. Commissioner of Income Tax (supra), to point out that the court had after considering the provisions of section 115J of the Act, had held that since the entire exercise of computing the income or that of book profit could only be at the end of the financial year, the provisions of sections 207, 208, 209 and 210 of the Act cannot be made applicable unless and until the accounts are audited and the balance sheet is prepared. Even the assessee may not know whether the provisions of section 115J of the Act would be applicable or not. The court held that the words "for the purposes of this section" in the explanation to section 115J(1A) are relevant and cannot be construed to extend beyond the computation of liability of tax and was, accordingly, of the view that the Tribunal was not justified in directing the charge of interest under sections 234B and 234C of the Act. It was submitted that the above referred decision came to be carried in appeal by the department before the Supreme Court and that the Supreme Court after admitting the appeal, by its decision in the case of Commissioner of Income Tax v. Kwality Biscuits Ltd., (2006) 284 ITR 434 (SC), dismissed the appeal of the revenue. It was submitted that therefore, the above referred decision of the Karnataka High Court, which was followed by the Tribunal, stands confirmed by the decision of the Supreme Court.
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7. The attention of the court was invited to the decision of the Supreme Court in the case of Joint Commissioner of Income Tax v. Rolta India Limited (supra), to point out that the Supreme Court has specifically observed in the said decision that the judgment of the Karnataka High Court in Kwality Biscuits Ltd. v. Commissioner of Income Tax (supra) was confined to section 115J of the Act, which stood affirmed by the Supreme Court in the decision Commissioner of Income Tax v. Kwality Biscuits Ltd. (supra). The court has observed that the Karnataka High Court has thereafter in the case of Jindal Thermal Power Co. Ltd. v. Deputy CIT, (2006) 154 Taxman 547 has distinguished its own decision in the case of Kwality Biscuits Ltd. (supra) and held that section 115JB, with which it was 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. It was submitted that thus, the Supreme Court in the case of Rolta India Limited (supra) has not interfered with its earlier decision in the case of Kwality Biscuits Ltd. (supra). It was submitted that the Supreme Court after having said that the decision of the Karnataka High Court in Kwality Biscuits Ltd. (supra) stood affirmed, has not disturbed the proposition of law laid down therein and hence, there is a re-affirmation of the decision of the Karnataka High Court in the case of Kwality Biscuits Ltd. (supra). It was submitted that under the circumstances, the decision of the Supreme Court in the case of Rolta India Limited (supra) having no applicability to the Page 4 of 7 HC-NIC Page 4 of 7 Created On Mon Aug 14 08:28:27 IST 2017 O/OJMCA/15/2015 ORDER facts of the present case, the ex-parte judgment and order dated 24.06.2011 passed by this court is required to be recalled.
8. On the other hand, Mr. Nitin Mehta, learned Senior Standing Counsel for the respondent has very fairly submitted that the controversy involved in the present case is no longer res integra, inasmuch as, this court in the case of Deputy C.I.T. (Assistant) v. Farmson Pharmaceuticals Guj. Ltd., rendered on 07.04.2011 in Tax Appeal No.390 of 1999, has followed the decision of the Karnataka High Court in Kwality Biscuits Ltd. (supra) as affirmed by the Supreme Court in Commissioner of Income Tax v. Kwality Biscuits Ltd. (supra) and has held that interest could not be charged under sections 234B and 234C of the Act when the total income was determined under section 115J of the Act. It was, accordingly, submitted that the court may pass such order as it deems fit in the facts and circumstances of the case.
9. In the light of the facts and submissions noted hereinabove, it is evident that the earlier ex-parte judgment and order dated 24.06.2011 had been made by this court on an erroneous impression that the controversy involved in this case stands concluded by the decision of the Supreme Court in the case of Rolta India Limited (supra). A perusal of the decision of the Supreme Court in the case of Rolta India Limited (supra) makes it evident that the same was rendered in the context of the provisions of sections 115JA and 115JB of the Act, whereas the facts of the present case relate to the provisions of section 115J of the Act. The decision of the Karnataka High Court in the case of Kwality Biscuits Ltd.
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(supra) which was affirmed by the Supreme Court was delivered in the context of section 115J of the Act. A conjoint reading of section 115J of the Act as it stood at the relevant time, with sections 115JA and 115JB of the Act reveals that insofar as sections 115JA and 115JB are concerned, they are a complete code in themselves. Sub-section (4) of section 115JA and sub-section (5) of section 115JB of the Act specifically provide that save as otherwise provided in the section, all other provisions of the Act shall apply to every assessee, being a company, mentioned in the section; whereas, no similar provision is found in section 115Jof the Act. Moreover, the Supreme Court in the case of Rolta India Limited (supra) has specifically referred to the decision of the Karnataka High Court in the case of Kwality Biscuits Ltd. (supra) as having been affirmed by the Supreme Court in Kwality Biscuits Ltd. (supra) and has not disturbed the position of law enunciated therein.
10. In Rolta India Limited (supra), the Supreme Court, in the context of the provisions of sections 115JA and 115JB of the Act, which are held to be a self-contained code pertaining to MAT, held that interest under sections 234B and 234C of the Act shall be payable on failure to pay advance tax in respect of tax payable under those sections. Apparently therefore, the judgment and order dated 24.06.2011 made by this court in Tax Appeal No.31 of 2003 has been rendered on a misreading of the decision of the Supreme Court in the case of Rolta India Limited (supra). Moreover, this court in the case of Farmson Pharmaceuticals Guj. Ltd (supra) has followed the decision of the Karnataka High Court in Kwality Biscuits Ltd. (supra) as affirmed by the Supreme Court and has held Page 6 of 7 HC-NIC Page 6 of 7 Created On Mon Aug 14 08:28:27 IST 2017 O/OJMCA/15/2015 ORDER that interest cannot be charged under section 234B and 234C of the Act where the total income is determined under sec 115J of the Act. The said decision has been rendered on 07.04.2011, that is, prior in point of time to the judgment and order dated 24.06.2011 which is sought to be recalled. In the aforesaid premises, the application deserves to be allowed.
11. For the foregoing reasons, the application succeeds and is, accordingly, allowed. The judgment and order dated 24.06.2011 made by this court in Tax Appeal No.31 of 2003 is hereby recalled and the appeal is restored to file. Rule is made absolute accordingly with no order as to costs.
(HARSHA DEVANI, J.) (R.M.CHHAYA, J.) parmar* Page 7 of 7 HC-NIC Page 7 of 7 Created On Mon Aug 14 08:28:27 IST 2017