DY.CIT (ASSESSMENT) V. ASSOCIATED CROWN CLOSURES PVT.LIMITED

TAXAP/391/1999

AI Insights

The case revolves around a tax appeal concerning the assessment year 1989-90, where the Deputy Commissioner of Income Tax challenged the decision regarding the non-charging of interest under Sections 234B and 234C of the Income Tax Act, 1961. The core issue was whether such interest should be levied when the total income was determined under Section 115J, which pertains to the computation of income on the basis of book profits. The Income Tax Appellate Tribunal had previously ruled in favor of the assessee, Associated Crown Closures Pvt. Limited, a decision that was influenced by similar cases and precedents, including a significant ruling by the Karnataka High Court, which was later upheld by the Supreme Court.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 799379 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 18-07-2008
• Assessment Year: misc
• Other Referred Cases: Dy. CIT V/s. Dintex Dyechem (P) Limited, Kwality Biscuits Limited V/s. Commissioner of Income-Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S N SOPARKAR; VAIBHAVI PARIKH
• Assessee Lawyers: M R BHATT
• Keywords: Book Profits; Income computation; Interest Charge; Tax appeal
• Section: 234 B; 234 C; 115J; 260-A

Judgement Text

"TAXAP/391/1999 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 391 of 1999 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- HONOURABLE MR.JUSTICE R.H.SHUKLA Sd/- ====================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ====================================== DY.CIT (ASSESSMENT) - Appellant Versus ASSOCIATED CROWN CLOSURES PVT.LIMITED - Opponent ====================================== Appearance : MR MR BHATT for Appellant. MR SN SOPARKAR, SENIOR COUNSEL with MS VAIBHAVI PARIKH for Opponent. ====================================== TAXAP/391/1999 2/4 JUDGMENT CORAM : HONOURABLE MR.JUSTICE K.A.PUJ and HONOURABLE MR.JUSTICE R.H.SHUKLA Date : 18/07/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE K.A.PUJ) 1. The revenue has filed this Tax Appeal under Section 260- A of the Income Tax Act, 1961 for assessement year 1989–90. The appeal was admitted by this Court on 24.05.2001 and following substantial question of law was formulated by the Court :- “Whether on 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 (A) directing not to charge interest under Section 234-B and 234-D of the Act since the total income was determined under Section 115J of the Act ?” 2. 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 (A) directing not to charge interest under Section 234-B and 234-C of the Act since the total income was determined under Section 115J of the Act ?” TAXAP/391/1999 3/4 JUDGMENT 3. 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. 4. 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. 5. While allowing this issue in favour of the assessee, the Tribunal has followed its earlier decision rendered on 08.12.1997 in ITR No. 1862/Ahd/1993 in the case of Dy. CIT V/s. Dintex Dyechem (P) Limited, 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 Limited V/s. Commissioner of Income-Tax, 243 ITR 519. An appeal filed against this judgment by the revenue before the Apex Court has been dismissed and the said decision is reported in (2006) 284 IRT 434. 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 under Section 115J, since the entire exercise of computing income under Section 115J can only be done at the end of the financial year, and the provisions of Sections 207, 208, 209 and 210 cannot be TAXAP/391/1999 4/4 JUDGMENT 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. 6. 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 assessee and against the revenue. We are of the view that the Tribunal has correctly decided the issue and held that interest under Section 234B & 234C is not chargeable when income is computed under Section 115J of the Act. 7. This appeal is accordingly dismissed. Sd/- Sd/- [K. A. PUJ, J.] [R.H. SHUKLA, J.] Savariya "