THE COMMISSIONER OF INCOME TAX vs. M/S STEEL STRIPS

ITA/176/2003HC Punjab & HaryanaPHHC01018425200304 March 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL7 pages
AI SummaryAllowed

What were the facts?

The Revenue (Commissioner of Income Tax) appealed against the order of the Income Tax Appellate Tribunal (ITAT) which upheld the decision of the CIT(A) to delete the demand for interest under Sections 234B and 234C. The Assessing Officer had invoked Section 115JA of the Income Tax Act, 1961, and computed tax on the book profit of M/s Steel Steips Leasing Ltd. (the assessee) for the assessment year(s) not specified. The CIT(A) deleted the interest demand, stating that the Assessing Officer could not create such a demand under Section 143(1) on deemed income under Section 115JA. The ITAT upheld this view. The Revenue's appeal to the High Court challenged this decision.

What did the High Court hold?

The High Court held in favour of the Revenue, allowing the appeals. The Court found that Section 115JA (and its successor, Section 115JB) are special provisions for Minimum Alternate Tax (MAT) companies. The Supreme Court in Jt. CIT, Mumbai v. Rolta India Ltd. had clarified that Sections 115J/115JA are special provisions, and tax shall be payable in advance during the financial year on current income. The Court noted that Section 115JA(4) and Section 115JB(5) explicitly state that all other provisions of the Act shall apply to MAT companies. Amendments to Finance Acts also provided for advance tax payments under these sections. The definition of 'assessed tax' includes tax determined on regular assessment, which encompasses tax determined under Section 115J/115JA. Therefore, there is no exclusion of Section 115J/115JA in the levy of interest under Section 234B. The Court distinguished the Karnataka High Court's decision in Kwality Biscuits Ltd. by referring to subsequent decisions, including the Karnataka High Court's own later ruling in Jindal Thermal Power Company Ltd. v. Dy. CIT, which held that Section 115JB is a self-contained code imposing liability for advance tax, making Sections 234B and 234C applicable. The Court also noted that CBDT Circular No. 13/2001, relied upon by the assessee, was not applicable as it clarified that Section 115JB is a self-contained code and interest provisions were applicable. The substantial question of law was answered in favour of the Revenue.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Hon'ble ITAT was right in law in upholding the decision of the CIT(A) that interest under Sections 234B and 234C cannot be charged in cases where income of the assessee is computed as per the provisions of Section 115JA of the Income Tax Act, 1961? Assessee's Contention: The assessee argued, relying on the Karnataka High Court's decision in Kwality Biscuits Ltd. v. CIT, that the computation of income and book profits under Section 115J (and by extension, 115JA) could only be done at the end of the financial year after accounts were audited and the balance sheet prepared. Therefore, the provisions for advance tax (Sections 207, 208, 209, 210, predecessors to Sections 234B and 234C) were not applicable until the profit was determined. The assessee also relied on the Supreme Court's dismissal of the Department's SLP against Kwality Biscuits Ltd. Revenue's Contention: The Revenue contended that the liability for interest under Sections 234B and 234C is statutory and applicable to tax calculated on book profits under Section 115JA, as held by the Supreme Court in Jt. CIT, Mumbai v. Rolta India Ltd. The Revenue argued that Section 115JA(4) and Section 115JB(5) explicitly state that all other provisions of the Act shall apply to MAT companies. Furthermore, amendments to Finance Acts provided for advance tax payments under Sections 115JA and 115JB, making the levy of interest inescapable. The Revenue also pointed to other High Court decisions (Gauhati, Madhya Pradesh, Bombay) that ruled in favour of the Department, and a subsequent decision of the Karnataka High Court in Jindal Thermal Power Company Ltd. v. Dy. CIT which distinguished its earlier ruling.

Which sections of the Income-tax Act were involved?

Section 115JA,Section 234B,Section 234C,Section 260-A,Section 143(1),Section 207,Section 208,Section 209,Section 210,Section 215,Section 115J,Section 115JB

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 4.3.2011 The Commissioner of Income Tax. -----Appellant. Vs. M/s Steel Steips Leasing Ltd. -----Respondent and connected cases being I.T.A. Nos.177 to 181 of 2003 CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present:- Ms. Urvashi Dhugga, Sr. Standing Counsel for the appellant. Mr. Akshay Bhan, Advocate for the respondent. --- ADARSH KUMAR GOEL, J.

1.

This order will dispose of I.T.A. Nos.176 to 181 of 2003 as it is stated that all the appeals involve common question of law.

2.

I.T.A. No.176 of 2003 has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh dated 18.11.2002 in I.T.A. No.81/2001 proposing to raise following substantial question of law:- “Whether on the facts and circumstances of the case, the Hon’ble ITAT is right in law in upholding the decision of the C.I.T.(A) that interest under sec.234B and 234C cannot be charged in the cases where income of the assessee is computed as per provisions of Secti

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 115JA

All 195 judgments and leading authorities on Section 115JA →

Recent GST High Court judgments

Search GST case law →