PRADESHIYA INDUSTRIAL & INVESTMENT CORPORATION OF UP LTD. v. ADDITIONAL COMMISSIONER OF INCOME TAX
[Citation -2007-LL-0427-8]

Citation 2007-LL-0427-8
Appellant Name PRADESHIYA INDUSTRIAL & INVESTMENT CORPORATION OF UP LTD.
Respondent Name ADDITIONAL COMMISSIONER OF INCOME TAX
Court ITAT
Relevant Act Income-tax
Date of Order 27/04/2007
Assessment Year 1997-98
Judgment View Judgment
Keyword Tags non-payment of advance tax • opportunity of being heard • bad and doubtful debts • computation of income • deferred payment
Bot Summary: Because in any case the entire tax liability as was attributable to the book profit under s. 115JA was overwhelmingly cover by payment of advance tax aggregating Rs. 3,13,50,000 a s had been made during the relevant financial year and no interest under s. 234C could have been charged. The second contention of the assessee is that no interest under s. 234C may be charged in view of tax liability being attributable to book profit under s. 115JA. The issue has been decided against the assessee by the Hon ble Guwahati High Court in Assam Bengal Carriers Ltd. vs. CIT 162 CTR 170: 239 ITR 862 and Hon ble MP High Court in the case of Itarsi Oils Flours Ltd. vs. CIT 170 CTR 158: 250 ITR 686. Similar provision like sub-s. in s. 115JA and sub-s. in s. 115JB was absent in s. 115J. Therefore, in our considered view provision of ss. 207 to 210 would be applicable to the computation of book profit under s. 115JA and the assessee is liable to pay advance tax and in absence of non-payment or deferred payment, the assessee is liable to pay interest under s. 234B or 234C as the case may be. Hon ble Karnataka High Court has considered the provisions of s. 115JB and held that sub-s. in that section makes material difference with s. 115J and decision of Kwality Biscuits Co. s case which was given in the context of s. 115J would not be applicable to the charging of interest under s. 234B. The provisions of sub-s. of s. 115JB are pari materia with the provisions of sub-s. of s. 115JA. Sub-s. of s. 115JA and sub-s. of s. 115JB clearly provide that the provisions of the Act would be applicable to the computation of income under these sections unless otherwise so provided therein. The decision of Hon ble Supreme Court in Kwality Biscuits Ltd. s case, relied upon by learned counsel for the assessee, was admittedly given in the context of s. 115J which did not contain the provisions similar to sub- s. of s. 115JA. Therefore, this decision does not create a binding precedence. In the present case, insertion of sub-s. in s. 115JA and sub-s. in s. 115JB have made a world of difference with s. 115J. Once a statutory provision is made by way of sub-s. of s. 115JA and sub-s. in s. 115JB to apply all the provisions of the Act unless otherwise provided in those sections, then one has to see that the assessee pays advance tax in accordance with ss.


It is submitted, in this case, by learned Authorised Representative that learned CIT(A) has not disposed of following three grounds which were raised before him as ground Nos. 3, 4 and 7. These grounds are as under: "3. Because otherwise also revised statement of account (as had been filed with revised return) showing loss of Rs. 21,42,63,384 had been prepared as per requirement of parts I and II of Sch. VI of Companies Act and no adjustment on account of above referred provisions, could have been made to same so as to compute book profit under s. 115JA. Because otherwise also said adjustment, so as to work out book profit under s. 115JA, were beyond purview of processing return under s. 143(1)(a) and computation of book profit (as result of such adjustment) as Rs. 46,88,555 is wholly erroneous and same deserves to be taken as nil as have been shown in revised return. Because in any case entire tax liability as was attributable to book profit under s. 115JA (computation of which itself is in dispute) was overwhelmingly cover by payment of advance tax aggregating Rs. 3,13,50,000 s had been made during relevant financial year and no interest under s. 234C could have been charged." We notice from grounds of appeal, taken before learned CIT(A) by assessee, that these three grounds were in fact raised by assessee. Learned CIT(A) in fact has passed following order: "Present appeal arises out of order passed by Shri. Ashu Jain, Addl. CIT, Range-I, Lucknow under s. 143(1)(a)/251 of IT Act, dt. 30th March, 2001. In response to notices Shri Prakash Narain, Advocate attended and made submissions. Shri. Prakash Narain, counsel for assessee, has taken two fold arguments before me. His first submission is that addition of provision of bad and doubtful debts of Rs. 5,74,446 is bad in law inasmuch as same has already been allowed in assessment order passed under s. 143(3). To me it appears that it would be incorrect to disallow amount as prima facie adjustments which after detailed scrutiny has been allowed under s. 143(3) proceedings. allowance would prove that issue was debatable and not disallowable under s. 143(1)(a). Therefore, addition of Rs. 5,74,446 on account of provision of bad and doubtful debts is deleted. second contention of assessee is that no interest under s. 234C may be charged in view of tax liability being attributable to book profit under s. 115JA. issue has been decided against assessee by Hon ble Guwahati High Court in Assam Bengal Carriers Ltd. vs. CIT (2000) 162 CTR (Gau) 170: (1999) 239 ITR 862 (Gau) and Hon ble MP High Court in case of Itarsi Oils & Flours (P) Ltd. vs. CIT (2001) 170 CTR (MP) 158: (2001) 250 ITR 686 (MP). It may be appropriate to quote passage from decision of Lord Asquith in East End Dwellings Co. Ltd vs. Finsbury Borough Council (1951) 2 All ER 587, 599 (HL) to effect: If you are bidden to treat imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real, consequences and incidents which, if putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. statute says that you must imagine certain state of affairs, it does not say that having done so, you must cause or permit your imagination to boggle when it comes to inevitable corollaries of that state of affairs. In view of aforesaid decisions charging of interest by AO is upheld. In result appeal for asst. yr. 1997-98 is partly allowed." In this short order, we do not find any reference to these three grounds. T h e learned Authorised Representative, in addition to above, has taken following grounds before Tribunal: "1 learned CIT(A)-III Lucknow had erred in holding that appellant was liable to pay interest under s. 234C of IT Act, 1961 even though its income had been computed under s. 115JA of above Act. appellant seeks permission to modify and/or add any other ground or grounds of appeal as circumstances of case might require or justify." grounds of appeal as circumstances of case might require or justify." Thus, learned CIT(A) had in fact disposed of appeal filed before him only on question of charging of interest under s. 234C. charging of interest was upheld by him following decision of Hon ble MP High Court in case of ltarsi Oils & Flours (P) Ltd. vs. CIT (2001) 170 CTR (MP) 158: (2001) 250 ITR 686 (MP) as well as decision of Hon ble Gauhati High Court in case of Assam Bengal Carriers Ltd. vs. CIT (2000) 162 CTR (Gau) 170: (1999) 239 ITR 862 (Gau). Against this, learned Authorised Representative submitted that Hon ble Supreme Court has now decided issue in CIT vs. Kwality Biscuits Ltd. (2006) 205 CTR (SC) 122: (2006) 284 ITR 434 (SC) in which they have affirmed order of Hon ble Karnataka High Court in Kwality Biscuits Ltd. vs. CIT (2000) 159 CTR (Kar) 316: (2000) 243 ITR 519 (Kar) wherein it was held that in case of assessment of company on basis of book profit under s. 115J, since entire exercise of computing income under s. 115J can only be done at end of financial year and provision of ss. 207 to 210 cannot be made applicable until and unless accounts are audited and balance sheet prepared, Department could not charge interest under s. 234B/234C. Thus, according to learned Authorised Representative decision is covered in favour of assessee. He therefore pleaded that issue be decided in his favour whereas for other grounds, which are not adjudicated by learned CIT(A), matter be restored to his file. On other hand, learned Departmental Representative submitted that decision of Hon ble Supreme Court in Kwality Biscuits Ltd. s case (supra) was given on provisions of s. 115J whereas in present case interest is being charged during assessment under s. 115JA which is materially different. We have considered rival submissions and have also perused material available on record. We notice that under provision of s. 115JA there is sub-s. (4) which provides that "save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being company, mentioned in this section." Similar provision like sub-s. (4) in s. 115JA and sub-s. (5) in s. 115JB was absent in s. 115J. Therefore, in our considered view provision of ss. 207 to 210 would be applicable to computation of book profit under s. 115JA and, therefore, assessee is liable to pay advance tax and in absence of non-payment or deferred payment, assessee is liable to pay interest under s. 234B or 234C as case may be. We are supported by decision of Tribunal in case of Rohan Dyes & Intermediates (P) Ltd. vs. ITO (2007) 12 SOT 554 (Mumbai) and Asstt. CIT vs. Crystal Granite & Marble Ltd. (2007) 12 SOT 577 (Mumbai) in which decision of Hon ble Karnataka High Court in Jindal Thermal Power Co. Ltd. vs. Dy. CIT (2006) 203 C T R (Kar) 381: (2006) 286 ITR 182 (Kar) has been relied upon. Hon ble Karnataka High Court has considered provisions of s. 115JB and held that sub-s. (5) in that section makes material difference with s. 115J and, therefore, decision of Kwality Biscuits Co. s case (supra) which was given in context of s. 115J would not be applicable to charging of interest under s. 234B. provisions of sub-s. (5) of s. 115JB are pari materia with provisions of sub-s. (4) of s. 115JA. Sub-s. (4) of s. 115JA and sub-s. (5) of s. 115JB clearly provide that provisions of Act would be applicable to computation of income under these sections unless otherwise so provided therein. As no contrary view is provided in these sections, provisions relating to computation of advance tax would be applicable and, therefore, for non-payment of advance tax and deferment thereof, interest under s. 234B or 234C, as case may be, would be applicable. decision of Hon ble Supreme Court in Kwality Biscuits Ltd. s case (supra), relied upon by learned counsel for assessee, was admittedly given in context of s. 115J which did not contain provisions similar to sub- s. (4) of s. 115JA. Therefore, this decision does not create binding precedence. Courts are obliged to employ intelligent technique in use of precedence bearing in mind that decision of Court takes its colour from question involved in case in which it was rendered. It is so held by Hon ble Supreme Court in State of Punjab vs. Baldeo Singh (1999) 6 SCC 172, 204-205. Circumstantial flexibility, one additional or different fact may make world of difference between conclusions in two cases. It is so held by Hon ble Supreme Court in Padmasundara Rao (Decd.) vs. State of Tamil Nadu (2002) 176 CTR (SC) 104: (2002) 255 ITR 147 (SC). In Union of India vs. Maj. Bahadur (2006) 1 SCC 368, Hon ble Supreme Court held that circumstantial flexibility, one addition or different fact may make world of difference between conclusions in two cases. Dismissal of case by blindly placing reliance on decision is not proper. In Hemalatha Gargya vs. CIT (2003) 182 CTR (SC) 107: (2003) 259 ITR 1 (SC), it was held by Hon ble Supreme Court that precedence has to be followed provided facts are same, no new facts are brought on record, there is no change in circumstances under which earlier decision was given, there is no decision of higher Court, and there is no change in statutory provisions of law. In present case, insertion of sub-s. (4) in s. 115JA and sub-s. (5) in s. 115JB have made world of difference with s. 115J. Once statutory provision is made by way of sub-s. (4) of s. 115JA and sub-s. (5) in s. 115JB to apply all provisions of Act unless otherwise provided in those sections, then one has to see that assessee pays advance tax in accordance with ss. 207 to 210 and in case he does not pay so or differs payment, he pays interest under s. 234B or 234C which is mandatory levy as held by Hon ble Supreme Court in CIT vs. Anjum M.H. Ghaswala (2001) 171 CTR (SC) 1: (2001) 252 ITR 1 (SC) which is further followed in CIT vs. Kelvinator of India Ltd. (2002) 174 CTR (Del)(FB) 617: (2002) 256 ITR 1 (Del)(FB), CIT vs. Hindustan Bulk Carriers (2003) 179 CTR (SC) 362: (2003) 259 ITR 449 (SC) and CIT vs. Sant Ram Mangat Ram Jewellers (2004) 186 CTR (SC) 115: (2003) 264 ITR 564 (SC). In view of above, we are of considered opinion that decision of Hon ble Supreme Court in Kwality Biscuits Ltd. s case (supra) would not be applicable for computation of income under s. 115JA/115JB in view of changed statutory provisions of those sections. assessee is liable to pay interest under s. 234C for deferment of payment of advance tax. As result, we uphold order of CIT(A) in confirming charging of interest under s. 234C. This ground of assessee is rejected. Regarding other three grounds which are not disposed of by learned CIT(A), matter is restored to file of CIT(A) for disposing of these grounds in accordance with law after giving opportunity of being heard to assessee. As result, appeal is allowed in part for statistical purposes. *** PRADESHIYA INDUSTRIAL & INVESTMENT CORPORATION OF UP LTD. v. ADDITIONAL COMMISSIONER OF INCOME TAX
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