LexJT. C. I. T., MUMBAI versus M/S ROLTA INDIA LTD.
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A B c (2011] 1 S.C.R. 146 JT. C. I. T., MUMBAI V. MIS ROLTA INDIA LTD. (Civil Appeal No. 135 of 2011 etc.) JANUARY 7, 2011 [S.H. KAPADIA,CJI, K.S. PANICKER RADHAKRISHNAN AND SWATANTER KUMAR, JJ.] Income TAX ACT, 1961: ss. 115JA/115JB and 2348!234C - MAT Companies - Interest on tax calculated on book profits - HELD: Interest u/ ss 2348 and 234C shall be payable on failure to pay advance tax in respect of tax payable u/ss 115JA/115JB - Circular No. 0 1312001 dated 9.11.2001 issued by CBDT. The assessee in C.A. No. 135 of 2011 furnished a return of income on 28.11.1997 declaring total income as Nil. On 28.3.2000, an order u/s 143(3) of the Income Tax Act, 1961 was passed determining the total income as nil E after set off of unabsorbed business loss and depreciation. The tax was levied on book profits determined as per the provisions of s.115JA. The interest u/s 2348 was charged on tax on book profits as worked r out in the order of assessment. The assessee's appeal F was dismissed by the CIT (A) as also by the Income Tax Appellate Tribunal. The High Court following the judgment of Karnataka High Court in the case of Kwality Biscuits Ltd.1 held in favour of the assessee that interest u/s 2348 could not be charged on the tax calculated on book G profits. H In the instant appeals, the question for consideration before the Court was: whether interest u/s 2348 can be 1. Kwality Biscuits Ltd. Vs. CIT (2000) 243 !TR 519 .. 146 JT. C. I. T., MUMBAI v. ROLTA INDIA LTD. 147 charged on the tax calculated on book profits u/s 115JA? A -~ Allowing the appeals of Revenue and dismissing those of the assesses, the Court HELD: 8 1.1 Sections 115J/115JA of the Income Tax Act, 1961 are special provisions, which provide that where in the case of an assessee, the total income as computed under the Act in respect of any previous year relevant to the assessment year is less than 30% of the book profit, the c total income of the assessee shall be deemed to be an amount equal to 30% of such book profit. The object is to tax zero-tax companies. [para 7] [156-E-FJ 1.2 The pre-requisite condition for applicability of s. D 2348 is that the assessee is liable to pay tax u/s 208 and the expression "assessed tax" is defined to mean the tax on the total income determined u/s143(1) or u/s 143(3) as reduced by the amount of tax deducted or collected at source. Thus, there is no exclusion of ss.115J/115JA in E the levy of interest u/s 2348. The expression "assessed tax" is defined to mean the tax assessed on regular assessment which means the tax determined on the application of s. 115J/115JA in th_e regular assessment. [para 8] [157-8-D] F 1.3 The view of the Karnataka High Court in Kwality Biscuits Ltd. that interest u/s 234·8 could not be charged on the tax calculated on book profits, was not shared by the Gauhati High Court in Assam Bengal Carriers* Ltd and Madhya Pradesh High Court in /tarsi Oil and Flours G (P.) Limited as also by the Bombay High Court in the case of Kotak Mahindra Finance Ltd. which decided the issue in favour of Revenue _.and against the assessee. It appears that none of the assessees challenged the decisions of the Gauhati High Court, Madhya Pradesh H 148 SUPREME COURT REPORTS [2011] 1 S.C.R. A High Court as well as Bombay High Court in the Supreme Court. The judgment of the Karnataka High Court in Kwality Biscuits Ltd., which was confined to s.115J of the Act, was challenged by Revenue and its special leave petition was dismissed by the Suprem_e Court in limine. B [(2006) 284 ITR 434). However, the Karnataka High Court has thereafter in the case of Jindal Thermal Power Company Ltd. distinguished its own decision in case of Kwality Biscuits Ltd. and held that s. 115JB is a self- contained code pertaining to MAT, which imposed liability c for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable u/s 115JB, it was liable to pay interest u/ss 2348 and 234C of the Act. [para 9) [158-B-H; 159-A-G) D 1.4 Thus, it can be concluded that interest ulss 2348 and 234C shall be payable on failure to pay advance tax in respect of tax payable ulss 115JAl115JB. Therefore, Circular No. 1312001 dated 9.11.2001 issued by CBDT reported in 252 ITR (St.)50 has no application. Moreover, E in any event, para 2 of that Circular itself indicates that a large number of
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