ORDER
N.L. Kalra, AM.
The assessee has filed this appeal against the order of learned CIT(A)-VI, Bangalore dated 22-11-2002.
2. The first grievance of the assessee is that the learned CIT(A) has erred in holding that learned assessing officer was justified in not deleting interest charged under sections 234B, 234C and 154 of the Income Tax Act.
3. Assessment in this case was completed under section 143(3) on 19-3-2000. The assessing officer while making the assessment, gave direction for charging of interest under sections 234B and 234C. It was mentioned by the assessing officer that income is being determined under section 115JA and the issue of levying interest under sections 234B and 234C in a case where income is determined under section 115JA has not become final. In spite of this categorical finding in the assessment order, the assessee moved an application under section 154 before the assessing officer. Vide this application under section 154, the assessee contended that interest under sections 234B and 234C cannot be charged in view of the decision of jurisdictional High Court in the case of Kwality Biscuits Ltd. v. CIT (2000) 243 ITR 519 (Kar). This application was rejected by the assessing officer, as according to him, this mistake was not apparent from record. In the assessment order, it was clearly mentioned that charging of interest under sections,234B and 234C in a case where income is determined under section 115JA has not become final.
4. The assessee filed an appeal before the learned CIT(A). The learned CIT(A) observed that decision of the jurisdictional High Court in the case of Kwality Biscuits Ltd. (supra) is in the context of interpretation of provisions of section 115J. There is an important departure from the earlier provisions of section 115J while enacting new section 1155JA. Sub-section (4) of section 115JA mentions that all other provisions of the Act shall apply to every assessee, being a company mentioned in this section. It was therefore held by the learned CIT(A) that assessing officer was justified in not deleting the interest charged under section 154.
5. During the course of proceedings before us, the learned Authorised Representative submitted that special provisions like section 115JA cannot be applied to general provisions like sections 207 to 219. Deemed income has been assessed under section 115JA and the assessee cannot be held liable for payment of advance tax. The learned AR relied on the decision of the jurisdictional High Court in the case of Kwality Biscuits Ltd. (supra). It was mentioned by the learned AR that provisions of section 115JA are similar to that of section 115J and the decision of jurisdictional High Court is squarely applicable.The learned AR relied that on the book of Income-tax by Kanga & Palkhiwala in which it has been mentioned at page No that section 115JA is similar to section 115J.
6. The learned DR on the other hand contended that section 115JA is different from section 115J, as sub-section (4) under section 115JA makes it clear that other provisions of the Act are also applicable. It was also argued that the assessing officer has given his finding in the assessment order, that the decision of jurisdictional High Court is not applicable and under these circumstances the proper remedy before the assessee was to have filed an appeal against the assessment order. It was argued that in view of the finding recorded in the order, there is no mistake apparent from records.
7/8. We have heard both the parties. It is true that jurisdictional High Court in the case of Kwality Biscuits Ltd. (supra) has held that interest under sections 234B and 234C is not chargeable in case income is determined under section 115J. The relevant para from the order of the learned High Court is reproduced for ready reference :
“The liability of assessee for payment of tax under section 115J arises if the total income as computed under the provisions of the Act is less than 30 per cent of its book profits. This exercise for determining the total income in accordance with the provisions of the Act and that of book profit can be only after the end of the relevant assessment year. It is only the deemed income for which the provisions of section 115J have been incorporated. When a deeming fiction is brought under the statute it is to be carried to its logical conclusion but without creating further deeming fiction so as to include other provisions of the Act which are not specifically been made applicable. Since the entire exercise of computing the income or that of book profit could be only at the end of the financial year, the provisions of section 207, 208, 209 or 210 cannot be made applicable. Until and unless the amounts are audited and the balance sheet is prepared even the assessee may not know whether the provision of section 115J would be applicable or not. The liability would be after the book profits are determined in accordance with the Companies Act. The words “for the purposeof this section” in the Explanation to section 115J(1A) are relevant and cannot be construed to extend beyond the computation of liability of tax. Accordingly we are of the view that the Tribunal was not justified in directing the charge interest under sections 234B and 234C of the Income Tax Act”.
9. From the above, it is clear that the learaed Karnataka High Court held that interest is not chargeable under sections 234B and 234C, as Explanation to section 115J made it clear that section will apply to computation of liability of tax and not beyond. It is true that High Courts of Bombay in CIT v. Kotak Mahindra Finance Ltd. (2004) 265 ITR 119, Kerala 182 ITR 307, Assam Bengal Carriers Ltd. v. CIT (1999) 239 ITR 862 (Gauh.),
Itarsi Oils & Flours (P.) Ltd. v. CIT (2001) 250 ITR 686 (MP) and CIT v. Holiday Travels (P.) Ltd. (2003) 263 ITR 307 (Mad.) have held that interest under sections 234B and 234C are chargeable under section 115J.
10. It is not disputed that income of the assessee has been computed as per provisions of section 115JA. Section 115JA(4) states as under :
“Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section.”
11. Section 207 states that advance tax is payable on the total income which could be chargeable to tax. Section 115JA(1) says that 30 per cent of book profit will be total income of the assessee chargeable to tax. Since section 207 will be applicable in view of -section 11 5JA(4), assessee will be liable to advance tax, if their income is becoming taxable in view of section 115JA. Section 115JAA allows credit of tax paid under section 115JA, if in subsequent years, income is computed in accordance with other provisions of the Act. Cochin Bench in the case of Synthetic Industrial Chemicals Ltd. v. Dy. CIT(2004) 270 ITR 98 (AT) held that interest under sections 234B and 234C will be charged after credit of tax paid under section 115JA as per provisions of section 115JAA. It therefore, impliedly means that interest under sections 234B and 234C can be charged in case income is computed under section 115JA.
12. From the above discussion, it is clear that section 115JA is not exactly similar to section 115J. There is no decision of jurisdictional High Court that interest is not chargeable in case income is computed under section 115JA. Moreover, the assessing officer in his order has clearly mentioned that issue has not become final. The learned AR has relied on the order of this Bench in the case of assessee for assessment year 1999-2000. In that, case revenue attempted to charge interest under sections 234B and 234C vide order under section 154. Order under section 154 was set aside. Hence, we see no reason to interfere with the finding of learned CIT(A) who held that assessing officer was justified in refusing to delete the interest charged under sections, 234B and 234C on the application filed by assessee under section 154. The issue is debatable and assessing officer was justified in refusing to rectify a debatable issue.
13. Another grievance of the assessee is that assessment order dated 19-3-2002 is passed beyond the period of limitation. No arguments were advanced. It is seen that appeal has been filed against order under section 154. It is also noticed that assessment order has been passed within the time period allowed as per provisions of section 153(1)(a). Hence there is no merit in the grievance of the assessee.
In the result, the appeal is dismissed.