JT.C.I.T.,MUMBAI vs. M/S.ROLTA INDIA LTD

C.A. No.-000135-000135 - 2011Supreme Court07 January 2011Bench: S.H. KAPADIA K.S. PANICKER RADHAKRISHNAN SWATANTER KUMAR16 pages
For Petitioner: B. V. BALARAM DASFor Respondent: K J JOHN AND CO
AI SummaryAllowed

What were the facts?

The assessee, M/s Rolta India Ltd., filed a return of income for Assessment Year 1997-98 declaring Nil income. An order under Section 143(3) determined the total income as Nil after set-off of losses and depreciation. However, tax was levied on book profits of Rs. 1,52,61,834/- as per Section 115JA. Interest under Section 234B amounting to Rs. 39,73,167/- was charged on this tax on book profits. The assessee appealed, and the CIT(A) dismissed it. The Tribunal initially dismissed the appeal on the ground that Section 115JA applied, not Section 115J, making the Karnataka High Court's judgment in M/s Kwality Biscuits Ltd. inapplicable. The Bombay High Court, after an initial decision in favour of the Revenue, reviewed its order and followed the Kwality Biscuits Ltd. judgment, holding that Section 234B interest could not be charged on book profits. The Revenue appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that interest under Section 234B is leviable on tax calculated on book profits under Section 115JA. The Court reasoned that Sections 115JA(4) and 115JB(5) clearly state that all other provisions of the Act shall apply to companies liable to pay tax under these sections. Amendments to the Finance Acts also provided for advance tax payments under these sections. The definition of 'assessed tax' in Section 234B does not exclude tax determined under Section 115J/115JA. The Court noted that while the Karnataka High Court in Kwality Biscuits Ltd. had held otherwise concerning Section 115J, subsequent judgments from other High Courts and the Supreme Court's dismissal of the SLP against Kwality Biscuits Ltd. did not preclude a re-examination, especially considering the distinction made in Jindal Thermal Power Company Ltd. regarding Section 115JB. The Court concluded that Section 115JB is a self-contained code imposing liability for advance tax, making Sections 234B and 234C applicable. Therefore, CBDT Circular No. 13/2001 was held to have no application. The appeals filed by the Revenue were allowed.

What were the issues?

1. Whether interest under Section 234B of the Income Tax Act, 1961, can be charged on the tax calculated on book profits under Section 115JA of the Act? (Question of law) Assessee's Contention: The assessee, relying on the Karnataka High Court's decision in M/s Kwality Biscuits Ltd. v. CIT, argued that the determination of book profits under Section 115J (and by extension, 115JA) could only be done after the accounts were audited and the balance sheet prepared. Therefore, the liability to pay advance tax under Sections 207-210 (predecessors to Sections 234B and 234C) arose only after this determination, making interest under Sections 234B and 234C not leviable in cases where Section 115J/115JA applied. Revenue's Contention: The Revenue contended that Section 115JA(4) and Section 115JB(5) explicitly state that other provisions of the Act shall apply to MAT companies. Amendments to Finance Acts provided for advance tax payments under Sections 115JA and 115JB. The definition of 'assessed tax' in Section 234B includes tax determined under Section 115J/115JA in regular assessment, with no exclusion for these provisions. The Revenue also referred to judgments from the Gauhati High Court, Madhya Pradesh High Court, and Bombay High Court which held in favour of the Revenue. CBDT Circular No. 13/2001 was also cited as clarifying that Sections 234B and 234C are applicable to MAT companies.

Which sections of the Income-tax Act were involved?

Section 115JA,Section 115JB,Section 234B,Section 208,Section 143(3),Section 207,Section 209,Section 210,Section 115J,Section 234C

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.135 OF 2011 (arising out of S.L.P. (C) No. 25746 of 2009) Jt. C. I. T., Mumbai … Appellant(s) versus M/s Rolta India Ltd. … Respondent(s) with Civil Appeal No.136 of 2011 @ S.L.P. (C) No. 18367 of 2010, Civil Appeal No. 459 of 2006 and Civil Appeal No. 7429 of 2008.

J U D G M E N T S.H. KAPADIA, CJI Leave granted.

2.

A short question which arises for determination in this batch of cases is – whether interest under Section 234B can be charged on the tax calculated on book profits under Section 115JA? In other words, whether advance tax was at all payable on book profits under Section 115JA?

3.

The lead matter in this batch of cases is Joint CIT v. Rolta India Ltd. (Civil Appeal arising out of S.L.P. (C) No. 25746/09).

4.

Assessee furnished a return of income on 28.11.1997 declaring total income of Rs. Nil. On 28.3.2000, an order under Section 143(3) was passed determining the total income at nil after set off of unabsorbed business loss and depreciation. The tax was levied on the book profit worked out at Rs. 1,52,61,834/- deter

The order continues below.

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