M/S SWARAJ MAZDA LTD vs. COMMISSIONER OF IT

This order shall dispose of ITA Nos.406, 515 and 516 of 2005 as according to the learned counsel for the parties, the issue involved is identical in all the appeals. However, the facts are being extracted from ITA No.406 of 2005. 2. ITA No.406 of 2005 has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 17.12.2004, Annexure A.1 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (for brevity, “the Tribunal”) in ITA No.805/CHD/2000, for the assessment year 1998- 99, claiming following substantial questions of law:- i) Whether under the facts and circumstances of the case on the true and correct interpretation of the provisions of Section 115JA the interest under Sections 234B and 234C is to be charged under Section 143(1)(a) as a prima facie adjustment whereby no such charge made under Section 143(3)? ii)Whether on the true and correct interpretation of the provisions of Sections 115JA, 234B, 234C debatable issues can be covered under Section 143(1) (a)?

Briefly, the facts as narrated in ITA No.406 of 2005 may be noticed. The assessee filed its return of income for the assessment year 1998-99 on 27.11.1998 at ` 7,45,47,871/- after excluding brought forward losses of ` 10,23,33,050/-. Since after claiming brought forward losses of ` 10,23,33,050/-, the taxable income worked out to be less than 30% of the book profit, the assessee filed its return of income at ` 2,23,69,890/- by applying the provisions of Section 115JA of the Act. The return was processed under Section 143(1)(a) of the Act on 31.5.1999. While processing the return, the Assessing Officer vide order dated 14.11.2000, Annexure A.3, made an adjustment to the returned income for an amount of ` 5,80,579/- being the capital expenditure debited to profit and loss account and additional tax of ` 40,640/- was levied on the same and also interest under Sections 234B and 234C of the Act amounting to `12,50,250/- and `5,91,911/- respectively was charged. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 5.7.2000, Annexure A.2, the appeal was allowed. Aggrieved by the order, the revenue filed an appeal before the Tribunal. Vide order dated 17.12.2004, Annexure A.1, the Tribunal allowed the appeal, set aside the order of the CIT (A) and restored that of the Assessing Officer. Hence the present appeal by the assessee.

Learned counsel for the parties are ad-idem that the solitary issue involved in all the three appeals is whether interest under Sections 234B and 234C of the Act can be charged in respect of income which has been determined on the basis of book profit under Section 115JA of the Act.

The matter is no longer res integra. This Court in Commissioner of Income Tax v. Nahar Spinning Mills Limited, (2011) 339 ITR 557, following the judgment of the Hon'ble Supreme Court in CIT(Joint) v. Rolta India Limited, (2011) 330 ITR 470 came to the conclusion that interest under Sections 234B and 234C of the Act would be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB of the Act.

In view of the above, it is held that the appellant was liable to pay interest under Sections 234B and 234C of the Act in respect of tax determined on the basis of Section 115JA of the Act. The substantial questions of law are answered against the assessee and in favour of the revenue. Consequently, all the three appeals are dismissed.