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.
