Deputy Commissioner of Income Tax (Assessment) vs Associated Crown Closures P. Ltd.

K.A. Puj, J.—The Revenue has filed this tax appeal u/s 260A of the Income Tax Act, 1961, for the assessment year 1989-90. The appeal was admitted by this Court on May 24, 2001, and the following substantial question of law was formulated by the court:

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in upholding the order of the Commissioner of Income Tax (Appeals) directing not to charge interest under Sections 234B and 234D of the Act since the total income was determined u/s 115J of the Act?

Since there is some typographical error in mentioning the relevant Section in the question of law formulated by this Court, the same is required to be rectified and the question which was proposed to be formulated and which was intended to be formulated by this Court is as under:

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in upholding the order of the Commissioner of Income Tax (Appeals) directing not to charge interest under Sections 234B and 234C of the Act since the total income was determined u/s 115J of the Act?

Heard Mr. M.R. Bhatt, learned senior standing Counsel appearing for the Revenue and Mr. S.N. Soparkar, learned senior advocate with Ms. Vaibhavi Parikh, learned advocate appearing for the assessee.

Though the court has directed this tax appeal to be heard along with Tax Appeal No. 390 of 1999, since there are several other issues involved in the said tax appeal, we are taking up this tax appeal for final hearing separately.

While allowing this issue in favour of the assessee, the Tribunal has followed its earlier decision rendered on December 8, 1997, in ITR No. 1862/Ahd/1993 in the case of Deputy CIT v. Dintex Dyechem P. Ltd., wherein the issue was adjudicated in favour of the assessee and against the Revenue. This issue also arose before the Karnataka High Court in the case of Kwality Biscuits Ltd. Vs. Commissioner of Income Tax, . An appeal filed against this judgment by the Revenue before the apex court has been dismissed and the said decision is reported in Commissioner of Income Tax Vs. Kwality Biscuits Ltd., . It is reported therein that from the decision of the Karnataka High Court to the effect, inter alia, that interest is not leviable under Sections 234B and 234C of the Income Tax Act, 1961, in the case of an assessment of a company on the basis of book profits u/s 115J, since the entire exercise of computing income u/s 115J can only be done at the end of the financial year, and the provisions of Sections 207, 208, 209 and 210 cannot be made applicable until and unless the accounts are audited and the balance-sheet prepared. The Department preferred appeals to the hon''ble Supreme Court and the hon''ble Supreme Court dismissed the appeals.

Since the decision of the Karnataka High Court has been approved by the hon''ble Supreme Court, we decide this question in favour of the asses-see and against the Revenue. We are of the view that the Tribunal has correctly decided the issue and held that interest under Sections 234B and 234C is not chargeable when income is computed u/s 115J of the Act.

This appeal is accordingly dismissed.