COMMISSIONER OF INCOME TAX, DELHI v. M/S. BHAGAT CONSTRUCTION CO. PVT. LTD
[Citation -2015-LL-0806-1]

Citation 2015-LL-0806-1
Appellant Name COMMISSIONER OF INCOME TAX, DELHI
Respondent Name M/S. BHAGAT CONSTRUCTION CO. PVT. LTD.
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 06/08/2015
Judgment View Judgment
Keyword Tags advance tax • payment of interest
Bot Summary: On the facts of the present case, it is an admitted position that the assessment order dated 29.03.1995 of the Assistant Commissioner of Income Tax, New Delhi, does not contain any direction for the payment of interest. The appellate order in the present case merely stated that interest is payable under Section 234B of the Income Tax Act , without more. In an appeal to the High Court of Delhi under Section 260 A of the Act, the impugned judgment dated 23.07.2003 merely reiterates that the present issue has been decided by the judgment in 'Commissioner of Income Tax Ors. The practice is that after the assessment order is made by the ITO, the tax is calculated and the necessary columns of I.T.N.S. 150 are filled up showing the net amount payable in respect of the assessment year. I.T.N.S. 150 is also a form for determination of tax payable and when it is signed or initialed by the ITO it is certainly an order in writing by the ITO determining the tax payable within the meaning of Section 143(3). After repelling the challenge to the vires of the two sections, the High Court found that interest had been levied on tax payable after assessment and not on the tax as per the return. Given the above controversy, it is necessary to set out the provisions contained in Section 234B. The relevant portion of Section 234B reads as under: - 234B. Interest for defaults in payment of advance tax.


IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1169 OF 2006 COMMISSIONER OF INCOME TAX, DELHI ... Appellant VERSUS M/S. BHAGAT CONSTRUCTION CO. PVT. LTD. ... Respondent WITH CIVIL APPEAL NO. 1198 OF 2006 COMMISSIONER OF INCOME TAX, DELHI-XVII ... Appellant VERSUS M/S. M.R.G. PLASTIC TECHNOLOGIES AND ORS. ... Respondent O R D E R Civil Appeal No. 1169 of 2006 present appeal by Revenue raises question which lies within very narrow compass. On facts of present case, it is admitted position that assessment order dated 29.03.1995 of Assistant Commissioner of Income Tax, New Delhi, does not contain any direction for payment of interest. appellate order in present case merely stated that interest is payable under Section 234B of Income Tax Act (hereinafter referred to as 'Act'), without more. Signature Not Verified Digitally signed by Suman Wadhwa In first round, before Income Tax Appellate Date: 2015.08.13 17:20:14 IST Reason: Tribunal (hereinafter referred to as 'ITAT'), ITAT's C.A. No. 1169/2006 1 attention was not drawn to payment of interest at all. On application made, ITAT by its order dated 12.11.2002 specifically held that since no direction had actually been given in assessment order for payment of interest, present case would be covered by decision of this Court reported in 'Commissioner of Income Tax & Ors. v. Ranchi Club Ltd' [(2001) 247 ITR 209] which merely dismissed appeal affirming High Court judgment reported in 'Ranchi Club Ltd. v. Commissioner of Income Tax' [(1996) 217 ITR 72]. In appeal to High Court of Delhi under Section 260 of Act, impugned judgment dated 23.07.2003 merely reiterates that present issue has been decided by judgment in 'Commissioner of Income Tax & Ors. v. Ranchi Club Ltd' [(2001) 247 ITR 209] referred to above. Shri Guru Krishna Kumar, learned senior counsel appearing for Revenue, presented three submissions before us and relied upon decision contained in 'Kalyankumar Ray v. Commissioner of Income Tax, West Bengal-IV, Calcutta [1992 Supp (2) SCC 424]. According to him, interest under Section 234B is, in any case, part of Form I.T.N.S. 150 which is not only signed by assessing officer but it is really part of assessment order itself. His other submissions are that judgment in Ranchi Club Ltd.'s case is distinguishable C.A. No. 1169/2006 2 inasmuch as it arose only in writ petition and arose in context of best judgment assessment whereas on facts of present case, there was shortfall of advance tax that was paid, which, therefore, led to automatic levy of interest under Section 234B. In addition, he argued before us that not only is Section 234B provision which is parasitic in nature, in that, it applies moment there is shortfall of advance tax or income tax payable under Act but that it is compensatory in nature. Countering this submission, Ms. Shipra Ghosh, learned counsel appearing for respondent, supported judgment of ITAT and High Court by stating that judgment in Ranchi Club Ltd.'s case squarely covers facts of this case. We have heard learned counsel for parties. We do not feel need to go into various submissions made by Mr. Guru Krishna Kumar as this appeal can be disposed of on short ground. In three-Judges Bench decision, viz., 'Kalyankumar Ray v. Commissioner of Income Tax, West Bengal-IV, Calcutta' [1992 Supp (2) SCC 424], this Court took note of similar submission made by assessee in that case and repelled it as follows: - 6. In this context, one may take notice of fact that, initially, Rule 15(2) of Income Tax Rules prescribed Form 8, sheet containing computation of tax, though there was no form prescribed for assessment of income. This sub-rule was dropped in 1964. Thereafter, matter has been governed by departmental instructions. Under these, two forms are in vogue. One is form of, what is described as, assessment order , (I.T. 30 or I.T. N.S.65). other is what is C.A. No. 1169/2006 3 described Income Tax Computation Form or Form for Assessment of Tax/Refund (I.T.N.S.150). practice is that after assessment order is made by ITO, tax is calculated and necessary columns of I.T.N.S. 150 are filled up showing net amount payable in respect of assessment year. This form is generally prepared by staff but it is checked and signed or initialed by ITO and notice of demand follows thereafter. statute does not in terms require service of assessment order or other form on assessee and contemplates only service of notice of demand. It seems that while assessment order used to be generally sent to assessee, other form was retained on file and copy occasionally sent to assessee. I.T.N.S. 150 is also form for determination of tax payable and when it is signed or initialed by ITO it is certainly order in writing by ITO determining tax payable within meaning of Section 143(3). It may be, as stated in CIT v. Himalaya Drug Co. only tax calculation form for departmental purposes as it also contains columns and code numbers to facilitate computerisation of particulars contained therein for statistical purposes but this does not detract from its being considered as order in writing determining sum payable by assessee. We are unable to see why this document, which is also in writing and which has received imprimatur of ITO should not be treated as part of assessment order in wider sense in which expression has to be understood in context of Section 143(3). There is no dispute in present case that ITO has signed form I.T.N.S. 150. We therefore, think that statutory provision has been duly complied with and that assessment order was not in any manner vitiated. Supreme Court judgment in Ranchi Club Ltd.'s case, is one line order which merely states: - We have heard learned counsel for appellant. We find no merit in appeals. civil appeals are dismissed. No order as to costs. High Court judgment which was affirmed by this Court as aforesaid arose in context of challenge to C.A. No. 1169/2006 4 vires of Sections 234A and 234B of Act. After repelling challenge to vires of two sections, High Court found that interest had been levied on tax payable after assessment and not on tax as per return. Following this Court's judgment in JK Synthetics Ltd. [(1994) 94 STC 422], High Court held that assessee is not supposed to pay interest on amount of tax which may be assessed in regular assessment under Section 143(3) or best judgment under Section 144 as he is not supposed to know or anticipate that his return of income would not be accepted. High Court further held that interest is payable in future only after dues are finally determined. Given above controversy, it is necessary to set out provisions contained in Section 234B. relevant portion of Section 234B reads as under: - 234B. Interest for defaults in payment of advance tax. - (1) Subject to other provisions of this section, where, in any financial year, assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where advance tax paid by such assessee under provisions of section 210 is less than ninety per cent of assessed tax, assessee shall be liable to pay simple interest at rate of one per cent for every month or part of month comprised in period from 1st day of April next following such financial year to date of determination of total income under sub-section (1) of section 143 and where regular assessment is made, to date of such regular assessment, on amount equal to assessed tax or, as case may be, on amount by which advance tax paid as aforesaid falls short of assessed tax. Explanation 1 In this section, assessed tax C.A. No. 1169/2006 5 means tax on total income determined under sub-section (1) of section 143 and where regular assessment is made, tax on total income determined under such regular assessment as reduced by amount of, - (i) any tax deducted or collected at source in accordance with provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income; (ii) any relief of tax allowed under section 90 on account of tax paid in country outside India; (iii) any relief of tax allowed under section 90A on account of tax paid in specified territory outside India referred to in that section; (iv) any deduction, from Indian income-tax payable, allowed under section 91, on account of tax paid in country outside India; and (v) any tax credit allowed to be set off in accordance with provisions of section 115JAA or section 115JD. It will be seen that under provisions of Section 234B, moment assessee who is liable to pay advance tax has failed to pay such tax or where advance tax paid by such assessee is less than 90 per cent of assessed tax, assessee becomes liable to pay simple interest at rate of one per cent for every month or part of month. Shri Guru Krishna Kumar is right in stating that levy of such interest is automatic when conditions of Section 234B are met. We are of view that facts of present case are squarely covered by decision contained in Kalyankumar Ray's case inasmuch as it is undisputed that C.A. No. 1169/2006 6 Form I.T.N.S.150 contained calculation of interest payable on tax assessed. This being case, it is clear that as per said judgment, this Form must be treated as part of assessment order in wider sense in which expression has to be understood in context of Section 143, which is referred to in Explanation 1 to Section 234B. This being case, we set aside judgment of High Court and allow appeal of Revenue. There will be no orders as to cost. CIVIL APPEAL NO. 1198 OF 2006 appeal is disposed of in terms of abovesaid order in Civil Appeal No. 1169 of 2006. ......................, J. [ A.K. SIKRI ] ......................, J. [ ROHINTON FALI NARIMAN ] New Delhi; August 06, 2015. C.A. No. 1169/2006 7 ITEM NO.113+116 COURT NO.11 SECTION IIIA S U P R E M E C O U R T O F I N D I RECORD OF PROCEEDINGS Civil Appeal No. 1169/2006 COMMNR. OF INCOME TAX, DELHI Appellant(s) VERSUS M/S. BHAGAT CONSTURCTION CO. PVT. LTD. Respondent(s) (With office report) WITH Civil Appeal No. 1198/2006 CIT, DELHI-XVII Appellant(s) VERSUS M/S. M.R.G. PLASTIC TECHNOLOGIES AND ORS. Respondent(s) (With office report) Date : 06/08/2015 This appeal was called on for hearing today. CORAM : HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN For Appellant(s) Mr. Guru Krishna Kumar, Adv. Mr. Rupesh Kumar, Adv. Mr. T. M. Singh, Adv. Mr. Jitin Singhal, Adv. Ms. Anil Katiyar, Adv. Mr. B. V. Balaram Das, Adv. Ms. Rashmi Malhotra, Adv. Mr. S. A. Haseeb, Adv. For Respondent(s) Ms. Shipra Ghose, Adv. UPON hearing counsel Court made following O R D E R Civil Appeal No. 1169 of 2006 is allowed and Civil Appeal No. 1198 of 2006 is disposed of in terms of signed order. (Nidhi Ahuja) (Suman Jain) COURT MASTER COURT MASTER [Signed order is placed on file.] C.A. No. 1169/2006 8 COMMISSIONER OF INCOME TAX, DELHI v. M/S. BHAGAT CONSTRUCTION CO. PVT. LTD
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