THE COMMISSIONER OF INCOME TAX vs. VED SINGH

ITA/240/2004HC Punjab & HaryanaPHHC01051378200415 July 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL10 pages
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What were the facts?

The revenue filed an appeal under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal (Tribunal) for assessment year 1997-98. The assessee, M/s Rana Sugars Ltd., had filed its return declaring a loss, but its income was computed at Rs. 60,44,810/- under Section 115JA. The tax due was Rs. 26,17,917/-. The assessee paid Rs. 25,99,269/- under Section 140A. The case was processed under Section 143(1)(a), and interest under Sections 234B and 234C was levied. The assessee's application for rectification under Section 154 regarding interest was declined. The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the appeal, deleting the interest under Sections 234B and 234C, holding that advance tax was not payable on deemed income. The Tribunal upheld the CIT(A)'s order.

What did the High Court hold?

The High Court, in view of the Supreme Court's decision in Joint Commissioner of Income Tax v. Rolta India Ltd., held that Section 115J/115JA are special provisions, but all other provisions of the Act apply to a Minimum Alternate Tax (MAT) company, as stated in Section 115JA(4) and Section 115JB(5). The Supreme Court affirmed that Section 207 of the Act mandates payment of advance tax on current income, and the 'assessed tax' includes tax determined on regular assessment based on special provisions like Section 115J/115JA. The Court found no exclusion for the levy of interest under Section 234B for companies liable under Section 115J/115JA. The reasoning in Kwality Biscuits Ltd. was distinguished, and it was clarified that Section 115JB is a self-contained code imposing liability for advance tax. Therefore, interest under Sections 234B and 234C is leviable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB. The Court also noted that Circular No. 13/2001 dated 9.11.2001 has no application, as the circular itself clarifies that companies are liable for advance tax under Section 115JB and consequently for interest under Sections 234B and 234C.

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 provisions of Section 115JA of the Income Tax Act, 1961? Assessee's Contention (as inferred from the Tribunal's decision upheld): The assessee contended that interest under Sections 234B and 234C is not leviable when income is computed under Section 115JA, as the computation of book profit and the determination of liability under Section 115J (predecessor to 115JA) could only be done at the end of the financial year after accounts were audited and balance sheets prepared. Reliance was placed on the Karnataka High Court's decision in Kwality Biscuits Ltd. v. CIT. Revenue's Contention: The revenue contended that Section 115JA is a special provision, and the general provisions of the Act regarding advance tax and interest are applicable. They argued that the assessee was liable to pay advance tax and consequently interest for default.

Which sections of the Income-tax Act were involved?

Section 260A,Section 115JA,Section 143(1)(a),Section 154,Section 143(3),Section 234B,Section 234C,Section 207,Section 215,Section 115J,Section 115JB

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 5.9.2011 The Commissioner of Income tax-I, Chandigarh ....Appellant. Versus M/s Rana Sugars Ltd. ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Senior Standing Counsel, for the appellant. AJAY KUMAR MITTAL, J.

1.

This order shall dispose of ITA Nos. 250 of 2004 and 111 of 2005 as, according to the learned counsel, identical question of law is involved therein. For brevity, the facts are being extracted from ITA No. 250 of 2004. 2. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 13.2.2004 passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafter referred to as “the Tribunal”) in ITA No. 333/CHANDI/99, for the assessment year 1997-98, raising the following substantial question of law:- “Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in upholding the -2- decision of the CIT(A) that inter

The order continues below.

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