Interest for shortfall in payment of advance tax leviable while computing book profit under MAT provisions

DCIT v. Bharat Aluminium Company Ltd (ITAT Delhi)- The Delhi Tribunal in this case  has held that interest for deferment of advance tax is leviable under Section 234C of the Act where there is a shortfall in payment of advance tax while computing ‘book profit’ under the existing MAT provision under Section 115 JB of the Act.

The Supreme Court in the decision of Kwality Biscuits Ltd held that interest cannot be leviable under Section 234 B and 234 C of the Act, in the case of assessment done on the basis of book profits under Section 115 J of the Act, since the entire exercise of computing income under Section 115J of the Act can only be done at the end of the financial year and relevant provisions of the Act cannot be made applicable until and unless the accounts are audited and balance-sheet is prepared.

In view of the specific provisions of Section 115JB(5) of the Act and in view of the Supreme Court decisions in the case of Rolta India Ltd and Saurashtra Kutch Stock Exchange Limited, the Karnataka High Court in Jindal Thermal Power Co Ltd and Sankala Polymers P Ltd and the Madras High Court in Geetha Ramakrishna Mills P Ltd, interest under Section 234 C of the Act is leviable. The Delhi Tribunal observed the difference between the erstwhile MAT provisions under Section 115 J of the Act and existing MAT provisions under Section 115J B of the Act where in the latter provisions it has been provided that all other provisions of the Act shall apply to every company which is subject to MAT provisions. Therefore, in view of the Delhi Tribunal, interest under Section 234 B and 234 C would be applicable if there is a shortfall in the payment of advance tax computed under Section 115 JB of the Act.

 INCOME TAX APPELLATE TRIBUNAL, DELHI

ITA No. 2825/Del/201 0
Assessment Year: 2007-08

D.C.I.T.,Circle 2(1), New Delhi

V/s.

Bharat Aluminium Company Ltd.,

Date of pronouncement – 09-12-2011

 O R D E R

A.N. Pahuja:- This appeal filed on 7^th June, 2010 by the Revenue on against an order dated 29.03.2010 of the learned CIT(A)-V, New Delhi, raises the following grounds:-

1. “The learned CIT(A) erred on facts and in law in directing to delete the interest of  Rs. 2,24,28, 120/- charged u/s 234C of the Income-tax Act on the account of deferred payment of advance tax ignoring the provisions of sub­section 5 of Section 115JB of the Income-tax Act, which clearly implies that in a case where tax is payable under the special provisions of Income-tax Act (here MAT case), all provisions of the Income-tax Act shall apply to the assessee and hence the provisions of section 207 to 211 are applicable in the assessee’s case.

2. That the appellant craves leave for reserving the right to amend, modify or alter add or forego any ground(s) of appeal at any time before or during the hearing of the appeal. “

2. This appeal, earlier disposed vide order dated 29.10.2010 ,was recalled in MA no.121/del./2011 vide order dated 5.8.2011. Adverting now to ground no.1 in the appeal, facts, in brief, as per relevant orders are that return declaring book profits of  Rs. 923,02,07,861/- in terms of provisions of sec. 115JB of the Income-tax Act, 1961 (hereafter referred to as the Act) filed on 27^th October, 2007 by the assessee, was processed on 25^th February, 2009 u/s 143(1) of the Act, resulting in refund of Rs. 3,84,20,761/-. While processing the return, the Assessing Officer (in short A.O.) noticed that the assessee paid following amount of advance tax: