STERIPLATE PVT. LTD.,NEW DELHI vs. ACIT, FARIDABAD

Sole effective ground raised is as under: “The ld CIT(A) erred, in law and on facts and circumstances of the case, in holding that interest under section 234B of the Income-tax Act is chargeable on the incremental amount of tax computed u/s 115JB which arose due to retrospective amendment from 1st April, 2001 by insertion of clause (i) to the Explanation 1 of Section 115JB(2) by the Finance (No. 2) Act, 2009.”

Brief facts of the case are that while giving effect to the order in ITA 931/2008 dated 30.05.2011 of the Hon’ble Punjab & Haryana High Court, 2 2808/Del/2014 the AO, inter alia, added to the total book profit of Rs. 15,71,738/- ‘provision of diminution in value of investment’ amounting to Rs. 87,42,414/- and, accordingly, determined the book profit u/s 115JB at Rs. 90,89,860/-. He levied interest u/s 234B, 234D and also withdrew interest allowed u/s 244A.

Assessee filed rectification application u/s 154 claiming therein that interest u/s 234B was not payable for the reason that the demand had arisen consequent to the amendment made in the Finance (No. 2) Act, 2009, made effective retrospective from 1.4.2001 by inserting clause (i) to the Explanation 1 of Section 115JB(2) of the Act. The AO, however, rejected the assessee’s claim. Ld. CIT(A) confirmed the AOs action. 5. At the time of hearing, ld. counsel submitted that in the sister concern’s case of assessee viz. M/s Steriplast Pvt. Ltd. the ITAT Delhi Bench vide its order dated 22.6.2012 in has allowed the assessee’s claim following Hon’ble Calcutta High Court’s decision in the case of Emami Ltd. Vs. CIT 337 ITR 470 (Cal.). He further submitted that the Hon’ble Bombay High Court in the case of CIT Vs. JSW Energy Ltd. 379 ITR 36 has also taken the same view observing in para 17 as under: “17. In the present case, what the assessee has pointed out is that some of the amounts included in the book profits as per Explanation (h) to section 115JB were brought in by the Finance Act, 2008 with retrospective effect from 1st April, 2001. The assessee cannot be held to be liable for failing to make a provision for payment of advance tax which was not possible on the last date as per the law then prevailing. Thus, clause (h) which is reproduced above having been brought in with retrospective effect but Finance Act 2008, the advance tax computation by the assessee for the year 2006-07 cannot be faulted and it cannot be said that the assessee is in default and, 3 2808/Del/2014 therefore, there is any liability to pay interest in terms of section 234B of the Income-tax Act, 1961.”

In this view of the matter and respectfully following the decisions of Hon’ble High Courts, I set aside the orders of authorities below on the issue in question and allow the assessee’s claim and delete the interest levied u/s 234B of the Act.

In the result, assessee’s appeal is allowed. Order pronouncement in open court on 21/06/2016.