IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 18.2.2015 CORAM HON'BLE MR.JUSTICE R.SUDHAKAR AND HON'BLE MR.JUSTICE R.KARUPPIAH T.C.(A).No.1514 of 2007 Sanmar Speciality Chemicals Ltd. 9, Cathedral Road Chennai 600 086. .. Appellant Vs. Deputy Commissioner of Income Tax Company Cirlce III(2) Chennai. .. Respondent PRAYER: Appeal under Section 260A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal 'C' Bench, Chennai, dated 31.5.2007 made in I.T.A.No.1092/Mds/2003 for assessment year 2000- 2001. For Appellant : Mr.Venkat Narayanan for M/s.Subbaraya Aiyar For Respondent : Mr.M.Swaminathan JUDGMENT (Delivered by R.SUDHAKAR, J.) assessee has filed this appeal challenging order of Income Tax Appellate Tribunal 'C' Bench, Chennai, dated 31.5.2007 made in (2) I.T.A.No.1092/Mds/2003 for assessment year 2000-2001, and same was admitted on following question of law: Whether, on facts and in circumstances of case, Tribunal was right in law in holding that interest under Section 234B of Income Tax Act can be levied for default in payment of advance tax when income is computed under Section 115JA of Act? 2. learned counsel for assessee fairly submits that issue raised in this appeal is no longer res integra in view of decision of Supreme Court in Joint Commissioner of Income Tax v. Rolta India Limited, (2011) 330 ITR 450 (SC), wherein identical issue was answered against assessee and in favour of department. 3. In Rolta India Limited case, referred supra, issue considered by Supreme Court is as under: short question which arises for determination in this batch of cases is whether interest under section 234B can be charged on tax calculated on book profits under section 115JA? In other words, whether advance tax was at all payable on book profits under section 115JA? and while answering said issue, Supreme Court held as under: 6. At outset, it may be stated that sections 234B and 234C do not make any reference to section 115J/115JA. Section 234B lays down that where advance tax is required to be paid under section 208 and there is failure on that if amount of advance tax paid under section 210 is less than 90 per cent. of assessed tax, then, in that case assessee is liable to pay interest. (3) Section 234C refers to interest for deferment of advance tax. It says that if assessee has to pay advance tax on its current income on or before 15th of June and tax paid is less than 15 per cent. of tax due on returned income or amount of advance tax paid on or before 15th of September is less than 45 per cent. of tax due on returned income or amount of such advance tax paid on or before 15th of December is less than 75 per cent. of tax due on returned income, then assessee shall be liable to pay interest at specified rate on amount of shortfall from 15 per cent. or 45 per cent. or 75 per cent., as case may be, of tax due on returned income. 7. In our view, section 115J/115JA are special provisions. Section 207 envisages that tax shall be payable in advance during any financial year on current income in accordance with scheme provided in sections 208 to 219 (both inclusive) in respect of total income of assessee that would be chargeable to tax for assessment year immediately following that financial year. Section 215(5) of Act defined what is "assessed tax", i.e., tax determined on basis of regular assessment so far as such tax relates to income subject to advance tax. evaluation of current income and determination of assessed income had to be made in terms of statutory scheme comprising section 115J/115JA of Act. Hence, levying of interest was inescapable. assessee was bound to pay advance tax under said scheme of Act. Section 115J/115JA of Act were special provisions which provided that where in case of assessee, total income as computed under Act in respect of any previous year relevant to assessment year is less than 30 per cent. of book profit, total income of assessee shall be deemed to be amount equal to 30 per cent. of such book profit. object is to tax zero-tax companies. 8. Section 115J was inserted by Finance Act, 1987 with effect from April 1, 1988. This section was in force from April 1, 1988 to March 31, 1991. After April 1, 1991, section 115JA was inserted by Finance Act of 1996 with effect from April 1, 1997. After (4) insertion of section 115JA, section 115JB was inserted by Finance Act, 2000 with effect from April 1, 2001. It is clear from reading sections 115JA and 115JB that question whether company which is liable to pay tax under either provision does not assume importance because specific provision(s) is made in section saying that all other provisions of Act shall apply to MAT company (section 115JA(4) and section 115JB(5)). Similarly, amendments have been made in relevant Finance Acts providing for payment of advance tax under sections 115JA and 115JB. So far as interest leviable under section 234B is concerned, section is clear that it applies to all companies. pre- requisite condition for applicability of section 234B is that assessee is liable to pay tax under section 208 and expression "assessed tax" is defined to mean tax on total income determined under section 143(1) or under section 143(3) as reduced by amount of tax deducted or collected at source. Thus, there is no exclusion of section 115J/115JA in levy of interest under section 234B. expression "assessed tax" is defined to mean tax assessed on regular assessment which means tax determined on application of section 115J/115JA in regular assessment. 9. question which remains to be considered is whether assessee, which is MAT company, was not in position to estimate its profits of current year prior to end of financial year on 31st March. In this connection assessee placed reliance on judgment of Karnataka High Court in case of Kwality Biscuits Ltd. v. CIT reported in [2000] 243 ITR 519 and, according to Karnataka High Court, profit as computed under Income-tax Act, 1961 had to be prepared and thereafter book profit as contemplated under section 115J of Act had to be determined and then, liability of assessee to pay tax under section 115J of Act arose, only if total income as computed under provisions of Act was less than 30 per cent. of book profit. According to Karnataka High Court, this entire exercise of computing income or book (5) profits of company could be done only at end of financial year and hence provisions of sections 207, 208, 209 and 210 (predecessors of sections 234B and 234C) were not applicable until and unless accounts stood audited and balance-sheet stood prepared, because till then even assessee may not know whether provisions of section 115J would be applied or not. court, therefore, held that liability would arise only after profit is determined in accordance with provisions of Companies Act, 1956 and, therefore, interest under sections 234B and 234C is not leviable in cases where section 115J applied. This view of Karnataka High Court in Kwality Biscuits Ltd. was not shared by Gauhati High Court in Assam Bengal Carriers Ltd. v. CIT reported in [1999] 239 ITR 862 and Madhya Pradesh High Court in Itarsi Oil and Flours (P.) Ltd. v. CIT reported in [2001] 250 ITR 686 as also by Bombay High Court in case of CIT v. Kotak Mahindra Finance Ltd. reported in [2003] 130 Taxman 730 which decided issue in favour of Department and against assessee. It appears that none of assessees challenged decisions of Gauhati High Court, Madhya Pradesh High Court as well as Bombay High Court in Supreme Court. However, it may be noted that judgment of Karnataka High Court in Kwality Biscuits Ltd. was confined to section 115J of Act. order of Supreme Court dismissing special leave petition in limine filed by Department against Kwality Biscuits Ltd. is reported in [2006] 284 ITR 434. Thus, judgment of Karnataka High Court in Kwality Biscuits stood affirmed. However, Karnataka High Court has thereafter in case of Jindal Thermal Power Co. Ltd. v. Deputy CIT reported in [2006] 154 Taxman 547 distinguished its own decision in case of Kwality Biscuits Ltd. (supra) and held that section 115JB, with which we are concerned, is self- contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under section 115JB, it was liable to pay interest (6) under sections 234B and 234C of Act. Thus, it can be concluded that interest under sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under section 115JA/115JB. For aforestated reasons, Circular No. 13 of 2001 dated November 9, 2001 issued by Central Board of Direct Taxes reported in [2001] 252 ITR (St.) 50 has no application. Moreover, in any event, para 2 of that Circular itself indicates that large number of companies liable to be taxed under MAT provisions of section 115JB were not making advance tax payments. In said circular, it has been clarified that section 115JB is self-contained code and thus, all companies were liable for payment of advance tax under section 115JB and consequently provisions of sections 234B and 234C imposing interest on default in payment of advance tax were also applicable. 4. In view of law enunciated in decision referred supra, we have no hesitation to hold that Tribunal was right in imposing interest under Section 234B of Act for default in payment of advance tax. In result, this appeal is dismissed by answering question of law against assessee and in favour of Revenue. No costs. (R.S.J.) (R.K.J.) 18.2.2015 Index : Yes Internet : Yes sasi (7) To: 1. Assistant Registrar, Income Tax Appellate Tribunal Chennai Bench "C", Chennai. 2. Secretary, Central Board of Direct Taxes, New Delhi. 3. Commissioner of Income Tax (Appeals)-V Chennai. 4. Deputy Commissioner of Income Tax Company Circle VI(1), Chennai. (8) R.SUDHAKAR,J. and R.KARUPPIAH,J. (sasi) T.C.(A).No.1514 of 2007 18.2.2015 Sanmar Speciality Chemicals Ltd. v. Deputy Commissioner of Income-tax, Company CirlceIII(2), Chennai