JOINT COMMISSIONER OF INCOME TAX vs. SUMIT INDUSTRIES LTD.

Facts

The assessee, Sumit Industries Ltd., filed its return for Assessment Year 1998-99 on July 31, 1998, declaring a total income of Rs. 54,15,971. The Assessing Officer determined the total income at Rs. 68,76,282. The assessee appealed to the CIT(A), who allowed the appeal. The Revenue then appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the Revenue's appeal. The Revenue filed Tax Appeal No. 676 of 2006 before the High Court of Gujarat against the ITAT's order dated September 29, 2005, concerning ITA No. 1892/Ahd/2001. Tax Appeal No. 677 of 2006 concerns a similar order dated November 11, 2005, in ITA No. 88/Ahd/2001. The facts of both appeals were identical, and the opponent (assessee) did not appear.

Held

The High Court held that the substantial question of law is no longer res integra, having been decided by this Court in CIT v. Nahar Spg. Mills Ltd., which followed the Supreme Court's decision in Jt. CIT v. Rolta India Ltd. These decisions concluded that interest under Sections 234B and 234C is payable on the failure to pay advance tax in respect of tax payable under Section 115JA/115JB. Therefore, the assessee was liable to pay interest under Sections 234B and 234C on the tax determined on the basis of Section 115JA. The substantial questions of law were answered in favour of the Revenue and against the assessee. The appeals were accordingly allowed.

Key Issues

1. Whether, on the facts and in the circumstances of the case, and in law, the Income Tax Appellate Tribunal was right in deleting interest charged under Sections 234B and 234C of the Income Tax Act on the income charged to tax under the provisions of Section 115JA of the Income Tax Act? The Revenue contended that Section 234B is applicable to all companies and that the definition of 'assessed tax' includes tax determined under Section 115JA in a regular assessment, with no exclusion for Section 115JA. The Revenue relied on the decision in Swaraj Mazda Ltd. v. Commissioner of Income-tax. The Assessee did not appear to present its arguments.