Case Law Details
RELEVANT PARAGRAPH
23. There are no two opinions that but for the addition of sub-section [4] in section 115JA of the Act and which was conspicuously absent in section 115J of the Act, the ruling of this court and the reasoning and ratio mentioned in KWALITY BISCUITS* case (supraj would conclusively govern the question as the Judgment of this court had come to be affirmed by the Supreme Court in an appeal preferred by the revenue, though by simply dismissing the appeal without any reasons but granting leave and converting the special leave petition into an appeal.
24. The legislature having consciously brought about a change by introducing sub-section [4] in section 115JA of the Act while replacing the provisions of section 115J of the Act by the provisions of section 115JA of the Act, there is no escape from effectuating the provisions of sub-section [M of section 115JA of the Act and It is only because learned counsel for the assessee are also aware of this change brought about by this legislation, vehement submissions are urged only in the wake of understanding and interpreting the provisions of sub-section[4) of section 115JA of the Act and that ic should be so understood and interpreted as not to involve a liability for payment of advance tax and self estimation tax as these two requirements arc impossible of compliance.
25, In so far as reliance placed on the Judgment of this court rendered on 31.01.2006 in ITA No.2416 of 2005 in SKS RE2VWZIES FTP. LTD„s case [supraj is concerned, would we notice that the assessment year in question in that case was assessment year 1998-99. The Judgment cannot be taken to be a precedent involving laying of any rat&> as it was firstly rendered based only on the Judgment of this court in KWAHTY WSCWTS’ case [supra] which involved the interpretation of the provisions of section 115J of the Act only and there is no discussion of the legislative changes brought about in section 115JA of the Act in comparison to the provision of section 115J of the Act and in the absence of examination of the question of the consequence or the effect of sub-section [4} of section 115JA of the Act which the legislature has advisedly inserted in section 115JA of the Act and which has been pressed into service by Sri Seshachala, learned standing counsel appearing for the revenue and this has not been made an issue earlier, the Judgment in the case of SKS REFINERIES FVT, LTD.,s case isupraj does not constitute a binding authority en us and therefore we are required tc examine the question and proceed with the matter.
Arguments/submissions of Sri A Shankar, learned counsel for the assessee in ITA No 320 of 2004 visa vis two questions relating to the liability of the assessee for pawnent of interest under Section 234A ~&.BoftheAct
26. Sri Shankar, learned counsel for the assessee, for the purpose of contending that there is no scope for levy of interest in terms of section 234B and C of the Act, in so far as the quantum of tax liability arising out of the application of the provisions of Section 115JA of the Act is concerned, has drawn our attention to the realities cf the matter to submit that when the assessee cannot possibly compute the book profits before the end of the accounting period, there is no way of ascertaining the book profits and offer 30% of the amount as tax and therefore it is also not possible to precisely compute the instalments of advance payment of tax and in such a situation, it is not at all reasonable to levy interest under Section 234B & C, for the reason that the payment of advance tax in any view of the matter, falls short of the requisite amount as contemplated in Sections 207, 208 and 209 of the Act and in support of the submission, seeks to rely upon the ruling of the Uttaranchal High Court in the case of CFT vs SEDCO FOREX INTERNATIONAL [(2003) 264 ITR 320j. In that said case, the Uttaranchal High Court had opined that the levy of interest in terms of Section 234B of the Act was not reasonable and therefore the tribunal was justified in deleting the interest levied on the assessee under the provisions of Section 234B of the Act and the same logic will hold good for relieving the assessee from the liability of payment of interest under the very provisions i.e. Section 234B, even in a situation where the advance payment of tax falls short of the requisite quantum of payment and the tax liability computed under the provisions of Section 115JA of the Act. In that case, the Uttaianehal high court had while agreed with the conclusion reached by the tribunal to delete interest under Section 234B, chosen to give its own reason in place of the reasons assigned by the tribunal indicating that the assessee – an employee – had been receiving salary from the employer inclusive of certain amount received by way of perquisites for supply of food, beverage, etc., while working offshore on the rigs and if the value of the perquisites had been added as part of his salary and on which premise, the assessing officer had computed the income and the estimation that was required to be made by the assessee and finding that the advance payment of tax, which in fact had been deducted at source and remitted by his employer, was falling short of and for that reason had also levied interest under Section 234B, was not justified, for the reason th^t the value of food, beverage etc., supplied to the assessee by the employer while he was working on the offsho”re rigs cannot be construed as perquisites, but a necessity provided by the employer to the employee and therefore was not necessarilv oari of his income and further even in the hands of the employer, for the purpose of deduction of tax at source, the uncertainty as to such value of so-called perquisites constitutes part of the salary or otherwise being the actual position in view of the conflicting views taken by the tribunal itself on this question and ultimately, the High Court virtually chose to accept the argument that the advance payment of tax even in terms of the tax deducted at source and remitted by the employer in itself was good enough if the estimation of the income of the assessee was to be on the premise that the value of food and other things supplied did not constitute income of the assessee and in this view of the matter, having concurred with the finding of the tribunal for deleting interest, we find that the judgment in any way advance the case of the assessee in the present case, for the reason that the uncertainty as a ground for avoiding levy of interest under Section 234 of the Act cannot be accepted for more than one reason.
27. Firstly, the aspect of uncertainty is very much present in any estimation. Advance payment of tax de hors the orovisions of Section 115JA of the Act i.e. on the normal income of the assessee, it cannot be different only because such liability for tax is on the basis of the total income being at 30% of the book profit of the assessee. Even the book profit als o can be ascertained on estimation basis. But more importantly, if we look into the provisions of Section 115JA of the Act, it startt.with a non-absentee clause that ‘notwithstanding anything contained in any other provision of this Act …’, the total income of the assessee, which is a company, being deemed to be an amount equal to 30% cf the book profit, it is well within the knowledge of the assessee that the liability of the assessee may be either it is only tax liability when the total income computed in the normal course is more than 30% of the book profit, attracting of other provisions, and if so, in a situation, where that total income as offered to tax by the assessee is less than 30% of the book profit, then the minimum total income that has to be subjected to tax should be 30%, is also a possibility which can be arrived in the same manner as computing the normal total income of the assessee and a difficulty cr impossibility as pleaded by the learned counsel for the assessee cannot be accepted only because it :s only a liability under the provisions of Section 115JA of the Act.
28. These aspects apart, we also notice that accepting the argument on behalf of the assessee that in a situation where the Section 115JA liability is attracted, the assessee should be relieved of further liability of payment of interest in case of short payment of instalments of advance tax, will lead to an incongruous situation, where, if in the case of a fresh assessee, if the totai income offered to tax exceeding 3C% of the book profit, the assessee is bound to pay interest under Section 234B, whereas if the total income should be a little less than 30% of the book profit, then, even if the assessee has made short payment of instalment of advance tax, there is no liability under Section 234B. If this logic is to be accepted, when the assessee even otherwise liable for payment cf interest under Section 234B can easily manage his accounts in such a manner that the provisions of Section 115JA of the Act are attracted and where no advance tax is paid at all even then he will not be liable to pay interest under Section 234B or C of the At
29. This apart, the estimation cannot be an impossibility, because, in respect of companies, which ts recognized business practice in commercial paiianc* that even quarterly results of the performance of ihe company is published for the benefit of the shareholders and other members of the public and it this is a possibility, it cannot be said that it is impossible for the purpose of computation of liability m terms of the provisions of Section’ Tl&JA of the Act. For these reasons, while we hold that the judgment of the Uttaranchal high court in the case of SEDCO FORES: INTERNATIONAL {supra) is not one applicable to the ease of the present assessee with toe logic that the provisions of Section 234B & 234C of ifte A^t Le. levy of interest under these provisions, should fegfcnr the a^se^ee should be relieved iront this Sability for #ie reason that it isirapossfble tp aftive at the book profit in advance and therefore it is an impossibility to pay instalments of advance payment of tax.
30. Though in this regard, Sri Shankar, learned counsel for the assessee, has drawn our attention to the Board circular No 13/2001 dated 9-11 2001. which had been issued in the context of introduction of provisions of Section 115JB of the Act with effect from 1-4-2001 by the Central Act No 10 of 2000, and would submit that the circular having made a reference to rate of tax, whereas in terms of the provisions of Section 115JA of the Act, as it prevailed earlier, the rate at which the tax is to be paid being in turn linked to the liability to rate of tax as provided tor in the Finance Act 2000, and also having linked to the rate of tax at which the company had offered its total income to tax, the computation of instalment of advance tax was almost an impossibility earlier, even in the wake of the circular having clarified this position, it should be taken that in the absence of any such earlier period, there is no way of the assessee to know the probable income and in turn probable tax liability and also the possible advance payment of tax.
31. This argument does not help the assessce, for the simple reason that the circular had been issued in the context of introduction of the provisions of Section i J 5JB of the Act by Finance Act 2000 [Central Act No 10 of 2000] with effect from 1-4-2001, that circular cannot have any bearing on the earlier statutory provision in terms of Section 115JA of the Act and at any rate cannot regulate or even use for ijnderstanding the scope of the provision.
32. Secondly, the estimation of total income for the purpose of pa3Tiient of advance tax in any situation being an estimation and even earlier the rate of tax being provided by the Finance Act, whether for advance in&tairnent of tax for the current year or for the assessment year, the situation cannot be said to be different for the purpose of estimation of the total income at 30% of the book profits of the assessee. The only difference in a situation under Section 115JA of the Act is minimum total income is taken at 30% of the book profit, which has again is not an impossibility on the basis of the estimation, as discussed above. Therefore, the argument fails for the purpose of holding that the provisions of Section 234B or C of the Act are not attracted to a situation where the tax liability of the assessee is determined in terms of the provisions of Section 115JA of the Act.
33. We may, at the outset, clarify with utmost respect that we are net inclined to agree with the view taken by the division Bench of the Bombay High Court in SNOW OEM’s case Isupral for the simple reason that holding section 115J of the Act and section 115JA of the Acr are all one and the same in pari materia and therefore the decision of the Supreme Court rendered while dismissing the appeal of the revenue against the Judgment of this court in KWAJUTY BISCUITS’ case (supra} equally governs the issue which only amounts to totally ignoring the provisions of sub-section [4] of section 115JA of the Act. Even on a reading of the provisions of sub-section [11 of section 115JA of the Act, it is quite clear that the fiction is called in aid to indicate as to what is the total income of an assessee that can be brought to tax which is a total income artificially arrived at as provided under sub-section [lj of section 115JA of the Act though even otherwise total income is ascertained in the normal course and that is not an impossibility. In fact, it is only after ascertaining the total income in the normal course and after ascertaining the consequential tax liability one has to examine as to whether the provisions of section 1I5JA[1J of the Act are attracted. The situation is quite simple, in the sense, if the total income as arrived ill the normal course happens to be less than 30% of the book profits as arrived at in terms of section 115JA[1J & [2j of the Act, then 30% of the book profits is artificially deemed to be the total income of the assessee for the year in question. All other things remain the same. When once the total income is known, the tax liability also can very well be computed and it cannot be lost sight of that for the payment of installments of advance tax which is well within the completion of the year during which an assessee earns profits and which in turn becomes income and assessable to tax there is an element of estimation and projection of income and it is not as though such elements of estimation or projection is brought about only by the provisions of sub-section flj of section 115JA of the Act. If it is a question of ascertaining the possible total income of the year extent by projection or on an estimation even in respect of cases not covered by section 115JA of the Act, it is not logical to say that such projection or estimation fails only for the purpose of computation under section 115JA of the Act. In either situations, it is only guess work and projection and not based on actuals
34. We find one another reason as to why submissions made by learned counsel for the assessees does not commend our acceptance and that is the acceptance of the logic and arguments on behalf of the assessees as made by learned counsel would lead to an incongruous situation of even assessees who otherwise have though complied with the requirements of payment of installments of advance tax and self estimation tax so long as their total income should exceed the total income computed under section 115JA of the Act being absolved of all such requirements the moment it is found that the total income computed artificially in terms of section 115JA of the Act is higher than the total income of the assessec otherwise computed in the normal course. We say this for the reason that if the logic and arguments advanced on behalf of the assessees should be accepted, ti;e assessees can claim a relief from the operation of the provisions of payment of installments of advance tax and self estimation tax and paying it within due dates even in respect of the normal tax liability computed in the usual course only because the total income as computed in terms of section 115JA[1] of the Act happens to be slightly higher. This can be illustrated by an example such as, m a case where the total income of a company as computed and indicated by the assessee itself is say Rs. 100 crores, but 30% of the book profits of the assessee as computed, in terms of section 115JA of the Act is Rs 105 crores, the assessee can claim exemption from tiie operation of the statutory provisions requiring payment of installments of advance tax and self estimation tax even in respect of Rs.100 crores total income which otherwise would definitely attract all these provisions and the post facto ascertainment of book profits and computation of 30% of book profits being found higher than the total income arrived at in the normal course, operating retrospectively to relieve the assessee from the consequence of non-adherence to the requirements of other statutory provision which would operate on the usual total income of the assessee being Rs. 100 crores and not adhering to the requirement of payment of installments of advance tax and self estimation tax.
35. Such an understanding not only brings about an incongruity but also leads to a situation where it brings about a discrimination between the assessces who are compelled to conform to the requirements of payment of installments of advance tax and self estimaiion tax and facing the consequence for not complying the requirement vis-a-vis the assessees who pay taxes in terms of section 115JA of ihe Act, who nevcriheless escape from the consequence of non-adheience to the very requirements which they would have to otherwise conform in respect of their liability assessed in the normal course. It is a well settled cannon of interpretation that any interpretation of a 2>rovision which can lead to rendering the provision unconstitutional by attributing an element of discrimination should be avoided and it is for this reason that we reject the submissions of the learned counsel for the assessees to interpret the provisions of sub-section [4J of section 115JA of the Act so as to understand that it can operate only in situations where regulatory procedures are provided for under the Act and not in respect of other provisions of the Act which may have an effect of creating a burden or liability or in the sense can be described as a charging section.
36. When once sub-section [4] to section 115JA of the Act cannot be ignoied and has to be interpreted as discussed above, there is no escape from understanding thatfsub-section [4] of section 115JA of the Act does make a difference in comparison to the provisions of section 115J of tne Act and definitely ensures that except to the extent of the artificial calculation of total income as provided in sub-sections (1] and [2J of section 115JA of the Act, all other provisions of the Act including sections 2340 or 234C of the Act applies to every assessee envisaged within the scheme of section 115JA]of the Act.
- It is for this reason, we hold that the respondents -assessees are liable to pay interest in terms of sections 234B or 234C of the Act and the assessing officer as well as the first appellate authority were right in holding so whereas the tribunal was in error in thinking that interest was not leviable in terms of the Judgment rendered in the case of ‘KWALITr BISCUITS LIMITED vs. COMMISSIONER OF INCOME TAX’ reported in 243 JTR 519.
- The arguments on the premise that the provisions of sections 234B and 234C of the Act is in the nature of compensatory payment tor loss suffered by the revenue and therefore in a situation where there is no loss to the revenue, the provisions of sections 234B and 234C of the Act are not attracted is an argument not acceptable in the present situation and the authority supporting this proposition of law are of no relevance for two reasons. Firstly, as to the nature of levy is taken into question for understanding a statutory provision and while examining
- the validity of the levy of the provision is challenged as not a valid provision and in the present case, what is examined is not either the validity of provisions of sections 234B or 234C of the Act or even the scope and ambit of this provision but only the scope and ambit of provisions of sub-section [4] of section 115JA cf the Act and as to how Section 115JA should be understood, interpreted and applied. In the present cases, court is not examining the validity of the provisions of section 115JA of the Act leave alone the validity of sections 234B or 234C of the Act but only the manner and understanding the extent of applicability of section 115JA of the Act. The argument also fails for the reason that the assumption there is no loss to the revenue if the provisions of sections 234B and 234C of the Act are kept out of purview of section 115JA of the Act.
39. This again proceeds on precarious assumption that non-payment of advance installment tax or self estimation tax within the stipulated date does not result loss to the revenue. While interpreting the scope of provisions of sections 234B, 234C and 115JA of the Act, we have to look into and interpret the background of section 115J of the Act and if at all the legislative history behind the provisions of section 115JA of the Act. The object of introducing section 115JA or Section 115J of the Act was to ensure that minimum tax liability is created on the company assessed for the year in question even when the company was not liable to pay any tax or tax upto the amount as computed on the deemed total income of the assessee and the entire exercise is to augment the revenue to the State. As Ion*; as the tax amount as envisaged under the provisions of section 115JA of the Act does not reach the colfers of the State, there is loss to the revenue.
40. While interpreting or understanding the provisions which solely seeks to increase and enhance the revenue to the State even by employing the fiction and by deeming the minimum amount of 30% of book profit of the
assessee as the computation of income has been made under Section 115JA of the Act?
b) Whether the tribunal was correct in taking Into consideration irrelevant circumstances like ‘bona, fides of the assessee’, ‘whether the default was committed deliberately’ in falling to pay advance tax under Section 2QS of the Act when Section 234B interest is levied automatically as there is no discretion?
The appellant in this case by way o an application dated
08-09-2008 has raised the following two additional
substantial questions of law •
c) Whether the Tribunal was correct in holding that ttte transfer of soft drink unit of the assessee was a slum (sic) sale, when the individual valuation of the assets has been made by the expert valuer before arriving at the total sale consideration for transfer of the unit?
d) Whether the Tribunal was correct in holding that there was no default u/s. 208 of the Act in not paying the advance tax on the ground that entire transaction of sale was a stum (sic) sale and no capital gains are chargeable, when the levy of interest u/s. 234 B of the Act was mandatory?
ITA Nos 325 and 597 of 2004 are by the assessee. While ITA No 325 of 2004 by the assessee is also against the very order dated 8-1-2004 passed by the tribunal, which, in turn had allowed the appeal in part and against that part of the appeal which had not been allowed by the tribunal. It appears the assessee had preferred a miscellaneous petition subsequent tc the order passed by the tribunal seeking for modification of the order and to allow this appeal in full and that having caffle to be rejected in terms oi the order dated 28-6-2004 and that order is made subject matter of appeal in ITA No 597 of 2004. In these two appeals by the assessee, the following further substantial questions of law are raised for examination:
In FTA No 597 of 2004:
a) Whether the tribunal was justified in law in holding that there are no mistake apparent from the face of records on the facts and circumstance of the case and application made by the appellant would amount to a review?
b) Whether the tribunal was justified in taking that non-applying of the decision of the Hon’ble Supreme Court in Apollo Tyres in 255 FTR 273 would not constitute apparent mistake liable for rectification under Section 254(2) of the Income Tax Act?
c) Whether the tribunal is justified in holding that the surplus on the sale cf the undertaking as a whole requires to be credited to the profit and toss account in accordance with part-.U and 11 of Schedule-VI of the Companies Act wtien the case is not part and parcel of tlie working results and consequently whether such finding constitutes apparent mistake on the facts of the case?
d) Whether the finding of the tribunal that the transaction ofslunyy sale is taxable for the assessment year 1999-2000 when the provisions of Section SOB of the Act was introduced from 1-4-2000 and consequently constitute an apparent mistake recUfxable under Section 254(2) of ttie income Tax Act?
In ITA No 325 of 2004:
a) Wliether the tribunal is justified in holding that the transaction of. slump sale is taxable when the provisions of Section 50B of the Act was introduced from 1 -4-2000 and thus not applicable to the assessment year 1999-2000?
b) hether the tribunal, on facts of the case, is correct in law, in holding that the capital gain on the transfer of entire undertaking as a whole has to be computed?
c) Whether the slump sale cunount received on the facts and circumstance of the appellant case constitute capital receipt?
d) Whether, on facts and circumstance of die case, is the tribunal, justified in law, in holding that recomputaiion by the assessing officer for the purpose of determining book profit under Section 115JB of the Act, is in accordance with law?
e) Whether the surplus on the sale of the undertaking as o. whole requires to be credited to t:ie profit and loss account in accordance with part-II and III of Schedule Vi of the Companies Act?
f) Whether the tribunal is justified in law in holding that the decision of the Supreme Court in case of Apollo Tyres Ltd VS CTT in 255 ITR 273 is not applicable to the appellant’s case?
43. Brief minimum background to appreciate the circumstance and the manner in which the questions arose for our consideration in these three appeals are as under:
44. During the accounting period relevant for the assessment year i.e. during the year between 1-4-1998 and 31-3-1999, the assessee claimed to have sold its soft drinks bottling unit to M/s Hindustan Coco-cola Bottling (Southwest) Private Limited for a total consideration of Rs 55,44,90,899/-. This had been preceded by an agreement for sale with the buyer entered into on 4-6-1998, agreeing to sell the soft drink beverage business undertaking of the assessee for a consideration of Rs 48,00,00,000/-. On assessee’s own admission, the consideration was later enhanced to Rs 55,44,90,899/-The assessee claimed that the sale of the asset was in the nature of ‘slump sale’ and the surplus receipt for transfer of this asset which was in a sum of Rs 43,16,59,811.69, which was in the nature of capital receipt, had been credited to its capital reserve account as surplus of sale of soft drink undertaking and had not offered any part of the amount for tax, in the return filed by it for the assessment year in question.
45. The income tax department took up the case of the assessee as a scrutiny case and therefore notice under Section 143(2) of the Act was issued on 22-12-2000. The assessee came forward with material information and the income tax department as a follow-up measure, collected information from the buyer M/s Hindustan Coco-cola Bottling Southwest Private Limited to ascertain as to whether the sale price represented one slump amount or as to whether it represented the value cf individual items and noticed that the transfer had been effected in favour of M/s Hindustan Coco-cola Bottling Southwest Private Limited only after a valuer by name John Foord (Asia) Pvt Ltd., of Singapore had at the instance of the buyer, examined different assets of the assessee company and had valued if after elaborate discussion by valuer with the officials of the assessee-company and based upon information sc gathered from the management of the seller i.e. M/s Bridavan Beverages Ltd, the assessee-company had forwarded the report of valuation to the officials of the buyer, wherein some of the individual assets of the company had been valued as under:
I I ., , I Existing VSE~ . . Value per , & Asset „ . .. ,.r value open . _ Description section . . * . category r market basis 6 J rupees ^
Land Hebbal plant 144.011.250^ (market Ulsoor Depot 33.999,980 value) K R Puram depot 15.778.165 193.783.395 Buildings Hebbal plant 65377.912 I Ulsoor Depot 3.485.101 K R Puram depot 25.050.293 93.853,306 Plant & equipment 62,377.550 Office Main boTtfing 487,500 equipment plant Ulsoor & K R Pu;*am 687,500 1,75,000 SGA’S I Refrigerators f 57806.688 Vlsi-coolers 7,188,175 Bottle coolers 10.125.975 Ice boxes 3,246.750 Fountain equipment 2.738.266 Miscellaneous 867.188 29,973,042 Bottles & Lotties 56.153.649 Shells Wooden shells 8.836,808 64.990.457 ^Advertising | material 33.946,250 Motor vehicles 20,795.000 L Grand total [ J I 500,700,000
46. In the wake of such information gathered by the department, a further notice was issued to the assessee as to why the transaction should not be treated as a transfer of assets as reported earlier in the report of the valuer and not as a single transaction but characterized it as a slump sale, which in turn would disentitle the assessee the benefits that could arise to the assessee if the transaction was to be treated as slump sale. The assessing officer was alsc of the view that the assessee should have oftered tiie surplus amount as capital gain. The assessing officer found that the assessee elsewhere had valued the land and building for the purpose of transfer of land and building and while obtaining the permission for effecting the transfer of land and building etc., from the appropriate authority at Bangalore. On such premise, the assessing officer did not agree with the claim of the assessee that the transfer of the bottling unit of the assessee is a transaction in the nature of slump sale, but was of the view that the book profits of the assessee was required to be ascertained for the purpose of computing the tax payable by the assessee in terms of the provisions of Section 115JA of the Act and tor such purpose, made necessary additions to the value as indicated by the assessee to be the asoessee’s book profits in terms of the provisions of Section 115-JA(2) of the Act and finalized the assessment on the premise that the total income of the assessee, as being 30% of the book profit and quantified the tax liability at the relevant rates on such amount. The computation included the interest levied under Section 234B of the Act for the period April and May 1999 at 2% [Rs 13.05.436]. interest for the period from June 1999 to May 2001 at 1,5% [Rs 1.17,89,236j and a further interest of Rs 40.79,487/- for the period from June 2001 to March 2002 at 1.25%. The total tax liability was thus arrived at Rs 4,98.10,058/- in . terms of the assessment order dated 28-3-2002. 47. Th* assessee being aggrieved by this computation and the demand for payment of tax liability of Rs 4.98,10,058/- appealed to the commissioner of income tax (appeals). The assessee had contended that not only the computation of total income of the assessee at Rs 55.44,90,899/- was incorrect, but also the computation of total income of the assessee under the provisions of Section 115-JA of the Act computed at a sum of Rs 14,35.83.002/- is wrong, by not treating the sale as a slump sale and further contended that the levy of interest under Section 234B of the Act was incorrect.
- All the contentions of the assessee failed before the appellate commissioner and the appeal was dismissed in toto as per the order dated 28-11-2002. It is thereafter, the assessee, being aggrieved by the orders passed by the assessing officer and the affirming appellate order, preferred an appeal before the income tax appellate tribunal.
- 1 he tribunal, under the impugned order while agreeing with the view of the assessing officer and the appellate commissioner to the extent that the sale was not a slump sale and for taking this view relied upon the ratio in the decision of the Supreme Court in the case of COMMISSIONER OF INCOME TAX vs ELECTRIC CONTROL GEAR MANUFACTURING COMPANY [(1997) 141 ITR (SC) 302], as this decision was attracted to the facts and circumstance of the case, was also of the view that the ratio of the decision of the Supreme Court in the case of COMMISSIONER OF INCOME TAX vs ARTEX MANUFACTURING CO [227 ITR 29Qh was not attracted to the facts and circumstance of the present case. The tribunal further opined that the fact situation prevailing in the case of the assessee attracted the ratio of the decision rendered by the Bombay High Court in the case of COMMISSIONER OF INCOME TAX vs PREMIER AVTOMOBIUES LTD [2006 ITR 1 (BOM), the decision of this court in SYNDICATE BANK LTD vs ADDITIONAL COMMISSIONER OF INCOME TAX [155 ITR 681] and the decision of the Delhi high court in the case of PUNJAB NATIONAL BANK FINANCE LTD us COMISSIONER OF INCOME [252 ITR 491 (DEL), and for such reasons, even selling the business undertaking as a going concern also amounts to transfer of the capital asset within the meaning of Section 2(14) of the Act, in which event, the capital gain has to be ascertained and offered to tax with reference to the value of the business undertaking as a whole and for determining the tax liability of the assessee after going through the process, the matter was remanded to the assessing officer. In so far as the question of levy of interest under Section 234B of the Act was concerned, following the decision of this court in the case of COMMISSIONER OF INCOME TAX v> KWAUTY BISCUITS LTD 1(2000) 243 ITR 519], directed deletion of interest charged under Section 234B of the Act.
50. It is as against this order of the tribunal, both the revenue and the assessee are in appeal. Even against the order passed on the miscellaneous petition filed by the assessee for rectification of the earlier order on the premise thai the tribunal had committed a mistake in not following and applying ratio in the decision of the Supreme Court in the case of APOLLO TYRJSS LTD vs COMMISSIONER [(2002) 255 ITR 2731 the tribunal has examined this question and noticing that the assessee though had cited this decision of the Supreme Court even earlier and the tribunal had in fact examined the applicability of the same, and on noticing that the judgment of the Bombay High Court in the case of COMMISSIONER OF INCOME TAX vs VEEKAYLAL INVESTMENT CO (P) LTD [(2001) 166 CTR (BOM) 96] was more apt to the facts of the case, having expressly rejected the claim of the asscssec. it is not as though the judgment suffers from any mistake apparent on the face of record amenabie for correction under Section 254(2) of the Act. but may be an error of opinion and that cannot be corrected in rectification jurisdiction and therefore dismissed the miscellaneous petition. It is against this order also, the assessee has come up with an appeal raising the questions as referred to above.
51. In the appeal of the assessee against the order of the tribunal in only partly allowing the appeal and partly accepting the contentions of the assessee, it is contended that the tribunal has committed an error in holding that the capital gain can be computed even on slump sale and for such computation of capital gain, remanding the matter to the assessing officer and aJso that the tribunal has committed a gr^ve error in law in upholding the computation of total Income by the assessing officer and affirmed by the first appellate authority for the purpose of quantifying the total income of the assessee in terms of Section 115JA of the Act to be corrected for the reason that the tribunal has not only totally misunderstood the ratio of the decision of the Supreme Court in the case of APOLLO TYRES LTD (supraj but also thinking that the decision of the Bombay High Court in the case of VEEKAYLAL INVESTMENT CO (P) LTD [supra] covers the case of the assessee.
52. It is also contended that the tribunal has failed to notice that the possibility of computation of capital gains arising out of the slump sale is a possibility only on and after 1-4-2000, whereafter the provisions of Section 50B of the Act has become operative by Finance Act of 1999 and the provisions having no application for the assessment year 3999-2000, the tribunal could not have directed the assessing officer to compute the capital gain of the assessee for the assessment year 1990-2000 even after taking the view that the transaction of transfer of the bottling unit of the assessee is a going concern, amounted to slump sale and not an item-wise sale of individual assets arid for this reason also the order of the tribunal is bad.
53. The assessee also contended that it was not open to the assessing officer to recompute or redetermine the book profit of the assessee on the premise that the computation was not fully in consonance with the requirement of Part-II & III of Schedule-Vi to the Companies Act, 1956, in the wake of the authoritative pronouncement of the Supreme Court in the case of APOLLO TYRES LTD [supra] etc., it is on such premise the substantial questions as indicated above have been raised for our answer in this appeal [ITA 325 of 2004).
54. The other question relating to the levy of interest under Section 234B or C of the Act to a situation of computation of tax liability in terms of the provision of Section 115JA of the Act, which arises in the present appeals also at the instance of the revenue, has already been discussed by us in the appeal of the revenue [in ITA No 2971 of 2005] and it has been answered in the negative m favour of the revenue and against the assessee, holding that the interest under Section 234B of the Act and for that matter any other analogous provision is attracted to a situation of computation of tax under Section 115JA of the Act also and that the circumstance which can be explained justifying the delay in payment of instalment of advance tax or payment of self-assessment tax are of no consideration and the interest is levied statutorily and is automatic on the non-compliance of ihe requirement of the relevant provision of the Act and therefore answered so in the present appeals also, holding that the tribunal could not have directed deletion of interest levied under Section 234B of the Act on the premise that the assessee had a legitimate explanation and justification for not having paid the installments of advance tax in time or short payment. It is held in this regard that the question is not one of offering explanation or justification for either short payment of the amount or delayed payment of amount, but one of applicability or non-applicability of the provision of Section 234B and 234C of the Act etc., to a situation where the assessee’s tax liability is computed in terms of the provisions of Section 115JA of the Act and once it is answered that levy of interest under Section 234B or 234C or any other analogous provisions, are attracted as being within the scopeysub-section (4) of Section 115JA of the Act. Levy of interest is by operation of statute, which the assessing officer is bound to compute and add irrespective of the explanation or circumstance pointed out by the assessee.
