Commissioner Of Income Tax-I v. Bayer Abs Ltd.....opponent(S

O/TAXAP/1825/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1825 of 2006 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI andHONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX-I....Appellant(s) Versus BAYER ABS LTD.....Opponent(s) ================================================================Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1MR SN DIVATIA, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKER Date : 05/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘C’ (hereinafter referred to as ‘the Tribunal’) dated 26.05.2006 in ITA No. 598/Ahd/2003 for the Assessment Year 2000-01, the revenue has preferred the present Tax Appeal. 1.1This appeal was admitted by this Court on 27.07.2007 for consideration of the following substantial question of law: “(A) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that no interest u/s.234B and 234C was leviable on the deemed total income computed u/s.115JA, without taking note of sub-section (4) of section 115JA and by applying the ratio relevant to section 115J which did not contain a provision analogous to section 115JA(4) specifically taking care of this aspect??” 2. During the course of assessment proceedings, the assessing officer charged interest u/s 234B and 234C of the I.T. Act. On appeal, the CIT (Appeals) deleted the interest charged with reference to deemed total income computed u/s 115JA of the Act. On appeal before the Tribunal, by impugned order, the Tribunal confirmed the order of CIT(A). Being aggrieved and dissatisfied with the impugned order passed by the Tribunal, the revenue has preferred the present Tax Appeal for consideration of the aforesaid substantial question of law. 3. Mr. K.M. Parikh, learned advocate appearing for the revenue submitted that the issue involved in the present Tax Appeal is now not res integra in view of the decision of the Honble Supreme Court in the case of Joint Commissioner of Income-Tax vs, Rolta India Ltd reported in [2011] 330 ITR 470 (SC) wherein the Hon’ble Supreme Court has held as under: 3. Mr. K.M. Parikh, learned advocate appearing for the revenue submitted that the issue involved in the present Tax Appeal is now not res integra in view of the decision of the Honble Supreme Court in the case of Joint Commissioner of Income-Tax vs, Rolta India Ltd reported in [2011] 330 ITR 470 (SC) wherein the Hon’ble Supreme Court has held as under: “Section 115J was inserted by Finance Act, 1987 w.e.f. 1.4.1988. This section was in force from 1.4.1988 to 31.3.1991. After 1.4.1991, Section 115JA was inserted by Finance Act of 1996 w.e.f. 1.4.1997. After insertion of Section 115JA, Section 115JB was inserted by Finance Act, 2000 w.e.f. 1.4.2001. It is clear from reading Sections 115JA and 115JB that the question whether a company which is liable to pay tax under either provision does not assume importance because specific provision(s) is made in the section saying that all other provisions of the Act shall apply to the MAT Company (Section 115JA(4) and Section 115JB(5)). Similarly, amendments have been made in the relevant Finance Acts providing for payment of advance tax under Sections 115JA and 115JB. So far as interest leviable under Section 234B is concerned, the section is clear that it applies to all companies. The pre-requisite condition for applicability of Section 234B is that assessee is liable to pay tax under Section 208 and the expression "assessed tax" is defined to mean the tax on the total income determined under Section 143(1) or under Section 143(3) as reduced by the amount of tax deducted or collected at source. Thus, there is no exclusion of Section 115J/115JA in the levy of interest under Section 234B. The expression "assessed tax" is defined to mean the tax assessed on regular assessment which means the tax determined on the application of Section 115J/115JA in the regular assessment.” 4.Section 115JA of the Income Tax Act reads as under: “115JA. (1) Notwithstanding anything contained in any other provisions of this Act, where in the case of an assessee, being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 [but before the 1st day of April, 2001] (hereafter in this section referred to as the relevant previous year) is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit. (2) Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VIto the Companies Act, 1956 (1 of 1956) : Provided that while preparing profit and loss account, the depreciation shall be calculated on the same method and rates which have been adopted for calculating the depreciation for the purpose of preparing the profit and loss account laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 1956 (1 of 1956) : Provided further that where a company has adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under the Act, the method and rates for calculation of depreciation shall correspond to the method and rates which have been adopted for calculating the depreciation for such financial year or part of such financial year falling within the relevant previous year. Explanation.—For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by— (a) the amount of income-tax paid or payable, and the provision therefor; or Provided further that where a company has adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under the Act, the method and rates for calculation of depreciation shall correspond to the method and rates which have been adopted for calculating the depreciation for such financial year or part of such financial year falling within the relevant previous year. Explanation.—For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by— (a) the amount of income-tax paid or payable, and the provision therefor; or (b) the amounts carried to any reserves by whatever name called; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (d) the amount by way of provision for losses of subsidiary companies; or (e) the amount or amounts of dividends paid or proposed; or (f) the amount or amounts of expenditure relatable to any income to which any of the provisions of Chapter III applies; [(g) the amount or amounts set aside as provision for diminution in the value of any asset, if any amount referred to in clauses (a) to (g) is debited to the profit and loss account, and as reduced by,—] (i) the amount withdrawn from any reserves or provisions if any such amount is credited to the profit and loss account : Provided that, where this section is applicable to an assessee in any previous year (including the relevant previous year), the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 [but ending before the 1st day of April, 2001] shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation; or (ii) the amount of income to which any of the provisions of Chapter III applies, if any such amount is credited to the profit and loss account; or [(iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. Explanation.—For the purposes of this clause,— (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil; or] (iv) the amount of profits derived by an industrial undertaking from the business of generation or generation and distribution of power; or (v) the amount of profits derived by an industrial undertaking located in an industrially backward State or district as referred to in [sub-section (4) and sub-section (5) of section 80-IB], for the assessment years such industrial undertaking is eligible to claim a deduction of hundred per cent of the [profits and gains under sub-section (4) or sub-section (5) of section 80-IB]; or (vi) the amount of profits derived by an industrial undertaking from the business of developing, maintaining and operating any infrastructure facility [81][as defined in the Explanation to sub-section (4) of section 80-IAand subject to fulfilling the conditions laid down in that sub-section]; or (vii) the amount of profits of sick industrial company for the assessment year commencing from the assessment year relevant to the previous year in which the said company has become a sick industrial com-pany under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses. (vi) the amount of profits derived by an industrial undertaking from the business of developing, maintaining and operating any infrastructure facility [81][as defined in the Explanation to sub-section (4) of section 80-IAand subject to fulfilling the conditions laid down in that sub-section]; or (vii) the amount of profits of sick industrial company for the assessment year commencing from the assessment year relevant to the previous year in which the said company has become a sick industrial com-pany under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses. Explanation.—For the purposes of this clause, "net worth" shall have the meaning assigned to it in clause (ga) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986); [or] 83[(viii) the amount of profits eligible for deduction under section 80HHC, computed under clause (a), (b) or (c) of sub-section (3) or sub-section (3A), as the case may be, of that section, and subject to the conditions specified in sub-sections (4) and (4A) of that section;under section 80HHC, computed under clause (a), (b) or (c) of sub-section (3) or sub-section (3A), as the case may be, of that section, and subject to the conditions specified in sub-sections (4) and (4A) of that section; (ix) the amount of profits eligible for deduction undersection 80HHE, computed under sub-section (3) of that section.] (3) Nothing contained in sub-section (1) shall affect the determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years under the provisions of sub-section (2) of section 32or sub-section (3) of section 32Aor clause (ii) of sub-section (1) of section 72or section 73or section 74 or sub-section (3) of section 74A. (4) Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section.] 4.1In the present case, the Tribunal has applied the raio laid down in respect of Section 115J to section 115JA without taking note of the fact that the language of the two sections is materially different and the change in the language was effected by the Legislature keeping in mind the controversy regarding leviability of interest u/s 234B and 234C with reference to deemed total income under MAT provisions. By virtue of the provisions of section 115JA(4) , it is mandatory to levy interest u/s 234B and 234C in respect of deemed total income u/s 115JA. 4.2 Having heard learned advocates appearing on behalf of the revenue and the question posed for consideration before us reproduced hereinabove and considering the decision of the Hon’ble Supreme Court in the case of Rolta India Ltd (Supra), the question which is raised in the present appeal is required to be answered in favour of the revenue. We are not giving further elaborate reasons for the same as in the case of Rolta India Ltd (Supra) it is held by the Hon’ble Supreme 4.2 Having heard learned advocates appearing on behalf of the revenue and the question posed for consideration before us reproduced hereinabove and considering the decision of the Hon’ble Supreme Court in the case of Rolta India Ltd (Supra), the question which is raised in the present appeal is required to be answered in favour of the revenue. We are not giving further elaborate reasons for the same as in the case of Rolta India Ltd (Supra) it is held by the Hon’ble Supreme Court that the pre-requisite condition for applicability of Section 234B is that assessee is liable to pay tax under Section 208 and the expression "assessed tax" is defined to mean the tax on the total income determined under Section 143(1) or under Section 143(3) as reduced by the amount of tax deducted or collected at source. Thus, there is no exclusion of Section 115J/115JA in the levy of interest under Section 234B. The expression "assessed tax" is defined to mean the tax assessed on regular assessment which means the tax determined on the application of Section 115J/115JA in the regular assessment and that interest under section 234B is payable on failure to pay advance tax in respect of tax payable under section 115JA. Accordingly, the question raised in the present appeal is answered in the negative i.e. in favour of the appellant – revenue and against the assessee. 5. In view of the above, the impugned judgment and order passed by the Tribunal as well as CIT(A) are quashed and set aside. Assessment proceedings be completed afresh accordingly. The present Tax Appeal is allowed accordingly. (K.S.JHAVERI, J.) divya (K.J.THAKER, J)