Ajay Kumar Mittal, J.:— C.M NO. 23598-CII of 2006
2. This is an application under section 5 of the Limitation Act for condonation 117 days' delay in filing the appeal. The application is supported by the affidavit. Having heard learned counsel for the parties and perusing the application which is supported by an affidavit, the delay of 117 days in filing the appeal is condoned.
3. C.M stands disposed of accordingly.
I.T.A No. 600 of 2006
4. In this appeal by the assessee under section 260A of the Income-tax Act, 1961 (for short “the Act”) against the order of the Income-tax Appellate Tribunal, Delhi Bench “G”, Delhi (hereinafter referred to as “the Tribunal”) passed in I.T.A No. 325 (Delhi)/2002 on February 24, 2006, for the assessment year 1991–92, it has been claimed that the following substantial questions of law arise for consideration of this court:
“1. Whether the appellant having paid the tax payable as per return, to visit him with a liability of interest which he could not have imagined and as held in J.K Synthetic's case, (1994) 4 SCC 276 : AIR 1994 SC 2393, would be asking him to do the rare impossible?
2. Whether the learned Tribunal was justified to dispose of the matter in the case of pendency of Insilco's case before the Delhi High Court as remanded by the hon'ble apex court?
3. Whether the learned Tribunal was justified to impose interest on solely depending on the amendment of Explanation 1 to section 234B in view of the decision of the hon'ble Supreme Court in J.K Synthetic's case, [1994] 94 STC 422 : (1994) 4 SCC 276 : AIR 1994 SC 2393?
4. Whether in view of the fact that the return of the appellant had been accepted under section 143(1) of the Act, interest could be charged even on the basis of the amended Explanation when it specifically defines assessed tax as the tax on total income determined under sub-section (1) of section 143 of the Act?”
5. The facts as narrated in the statement of case are that the assessee filed a return of income for the assessment year 1991–92 declaring a loss of Rs. 31,130 and advance tax of Rs. 1,37,808 was paid. The case of the assessee was processed under section 143(1) of the Act and refund was made. Later on, the Assessing Officer, vide his order dated August 30, 1993, assessed the income of the assessee at Rs. 12,17,990 which was rectified to Rs. 11,86,330 under section 154 of the Act. Accordingly, a notice of demand was issued in which interest had also been charged under section 234B of the Act. The assessee moved an application under section 154 of the Act on February 9, 1994, and the same was dismissed by the Assessing Officer observing that where the advance tax paid is less than 90 per cent. of the assessed tax, the interest under section 234B of the Act is chargeable. The assessee filed an appeal before the Commissioner of Income-tax (Appeals) who, vide his order dated November 9, 1999, allowed the appeal and deleted the interest charged under section 234B of the Act. Aggrieved with the same, the Revenue filed an appeal before the Tribunal and the Tribunal, vide its order dated February 24, 2006, allowed the appeal of the Revenue holding the charging of interest under section 234B of the Act to be proper. Hence, the present appeal by the assessee.
6. Learned counsel for the assessee has vehemently contended that the Tribunal was in error in reversing the order of the Commissioner of Income-tax (Appeals) thereby holding the assessee exigible to interest under section 234B of the Act especially when the assessee had filed the return of loss and was not liable to pay advance tax. According to learned counsel, the assessee had been incurring losses in the past and it could not foresee that the positive income would accrue during the previous year relevant to the assessment year 1991–92 and, therefore, there was no liability to pay advance tax and consequently no interest under section 234B of the Act could be levied. Reliance had been placed on the apex court judgment in J.K Synthetics Ltd. v. CTO, [1994] 94 STC 422 : (1994) 4 SCC 276 : AIR 1994 SC 2393, CIT v. Ranchi Club Ltd., [2001] 247 ITR 209 (SC) : [2000] 164 CTR 200 and a judgment of the Patna High Court in Ranchi Club Ltd. v. CIT, [1996] 217 ITR 72. Mr. Yogesh Putney, learned counsel for the Revenue drew our attention to Explanation 1 to section 234B of the Act. According to learned counsel, the aforesaid Explanation 1 to section 234B of the Act has been amended by the Finance Act, 2001, with retrospective effect from April 1, 1989, and the vires of the same stands upheld by this court in Raj Kumar Singal v. Union of India, [2002] 255 ITR. 561. As per the amended provisions which are applicable to the present assessment year 1991–92 as well, interest under section 234B of the Act is to be charged with reference to assessed tax. He supported the order passed by the Tribunal and further submitted that the judgments relied upon by the assessee do not support its case any longer after the aforesaid amendment which has been made applicable with retrospective effect from April 1, 1989.
7. We have thoughtfully considered the respective submissions made by learned counsel for the parties and do not find any force in the appeal.
8. It is no doubt true that prior to the amendment brought by the Finance Act, 2001, which has been made effective retrospectively from April 1, 1989, the interest under section 234B of the Act was chargeable with reference to the total income as had been declared by the assessee in its return and not on the assessed income. Explanation 1 to section 234B of the Act was amended by the Finance Act, 2001. It reads thus:
“Explanation 1.—In this section, ‘assessed tax’ means the tax on the total income determined under sub-section (1) of section 143 or on regular assessment as reduced by the amount of tax deducted or collected at source in accordance with the 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.”
9. The said Explanation was the subject-matter of challenge before this court in Raj Kumar Singal's case, [2002] 255 ITR 561 where the Division Bench while upholding the validity of the said provision, interpreted it as under (page 562):
“A comparison of the two provisions shows that under the original provision interest was leviable on the income as declared in the return filed by the assessee. By the amended provision, the interest is leviable on the income as determined by the assessing authority minus the income on which the tax has been paid or deducted. The amendment is only calculated to clarify the ambiguity that was felt in the original provision. It is not arbitrary or unreasonable.”
10. Now, referring to the case law cited by the learned counsel for the assessee, it would be sufficient to notice that the apex court in J.K Synthetics Ltd.'s case, [1994] 94 STC 422 : (1994) 4 SCC 276 : AIR 1994 SC 2393, was interpreting the provisions of the sales tax law and, therefore, the same does not advance the case of the assessee. Equally, the judgments of the apex court in Ranchi Club Ltd.'s case, [2001] 247 ITR 209 and that of the Patna High Court in Ranchi Club Ltd.'s case, [1996] 217 ITR 72 relied upon by the assessee relate to the case prior to the aforesaid amendment and, thus, do not help the assessee's case any longer.
11. In view of the above, the questions of law as claimed by the assessee are answered against it. Finding no merit in this appeal, the same is hereby dismissed. No costs.