The Commissioner of Income Tax, V. I.T.W. Signode India Limited,

SCLP/1/2011

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The case involves the Commissioner of Income Tax, Andhra Pradesh, Hyderabad as the petitioner and I.T.W. Signode India Limited, Hyderabad as the respondent. The core issue was whether the High Court was justified in its earlier decision that interest under Sections 234B and 234C of the Income Tax Act, 1961, cannot be levied for non-payment of advance tax on 'Book Profits' under Section 115J. The Revenue sought a certificate of leave to appeal to the Supreme Court against this decision. The High Court's decision was influenced by the precedent set by the Karnataka High Court and affirmed by the Supreme Court in Kwality Biscuits case. However, the Revenue argued that a subsequent Supreme Court decision in Rolta India Ltd. contradicted this precedent. The High Court, after considering the arguments and the constitutional provisions, decided to grant the leave to appeal, emphasizing the independence of Section 261 of the Income Tax Act from Article 134A of the Constitution.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 734717 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 10-02-2012
• Assessment Year: misc
• Other Referred Cases: Kwality Biscuits v. Commissioner of Income-tax, Commissioner of Income Tax v. Kwality Biscuits Ltd, Joint Commissioner of Income Tax v Rolta India Ltd
• Laws Referred To: Income Tax Act, 1961, Companies Act, 1956, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: Advance tax; Book Profits; Extra shift allowance; Income Tax; Interest; Decapitalisation
• Section: 234B; 234C; 134A; 115J; 261

Judgement Text

"THE HON'BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN SUPREME COURT LEAVE PETITION No.1 of 2011 Dated:10.02.2012 Between: The Commissioner of Income Tax, Andhra Pradesh, Hyderabad. … Petitioner And I.T.W.Signode India Limited, Hyderabad. ... Respondent THE HON'BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN SUPREME COURT LEAVE PETITION No.1 of 2011 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) This application by the Revenue is under Section 261 of the Income Tax Act, 1961 (the Act), seeking a certificate of leave to appeal to the Supreme Court against the order dated 27.09.2010 in R.C.No.44 of 1996. The Referred Case at the instance of the assessee required the opinion of this Court on two questions, which read as follows. 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Assessing Officer was justified in making adjustments for decapitalisation of interest and/or extra shift allowance and re-casting the profit and loss account to arrive at the profit in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956, for the purpose of determining “Book Profits” as provided in Sub-Sec. (1A) of sec.115J of the Income-tax Act, 1961? For asst. Year 1990-91: 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that interest under Secs.234B and 234C of the Income-tax Act, 1961, are attracted for non-payment of advance tax on “Book Profits” under sec.115J of the Act? Following the decision of the Karnataka High Court in Kwality Biscuits v. Commissioner of Income-tax[1], which stood affirmed by the decision of the Supreme Court in Commissioner of Income Tax v. Kwality Biscuits Ltd[2], this Court held that when the company’s income is computed as per Section 115J of the Act, the interest under Section 234B and 234C of the Act cannot be levied for failure to pay the advance tax on the total income computed as per Section 115J of the Act. In this application the Revenue would contend that in view of the decision of the Supreme Court in Joint Commissioner of Income Tax v Rolta India Ltd.[3] this Court is not justified in holding that interest cannot be levied. The Counsel for the respondent opposed the grant of certificate. She would submit that in view of Article 134A of the Constitution of India, as amended by the Constitution (Forty-fourth Amendment) Act, 1978, Section 261 of the Act enabling the High Court to certify a referred case as a fit one to appeal to Supreme Court, has to be read subject to the procedure contemplated under Article 134A of the Constitution. In effect, she would commend that the last part of Section 261 of the Act be ignored and the leave to appeal to Supreme Court be denied, as the Revenue failed to seek leave immediately after pronouncement of the order in R.C.No.44 of 1996. There is no dispute that in Rolta India Ltd., a Division Bench of the Supreme Court took a view that even where the income is computed under Section 115J of the Act, the interest under Section 234B and 234C of the Act is attracted. This is a matter, however, to be finally agitated by the Revenue before the Supreme Court as the opinion of this Court in the Referred Case has become final. Insofar as the maintainability of the application is concerned, we are convinced that Article 134A of the Constitution does not in any manner bar the grant of certificate by this Court to either party of the Referred Case to appeal to the Supreme Court. It is well settled that no provision of the Act, especially a fiscal statute, can be interpreted in a manner which renders it redundant or ineffective. Parliament is deemed to have been aware of the law before the Income Tax Act was enacted in 1961, and in the absence of any amendment to Section 261 of the Act after amendment of Article 134A, we are afraid, we cannot accept the submission of the Counsel for the respondent. In the result, this application is allowed and we hereby certify that it is a fit case for grant of leave to appeal to the Supreme Court. The Supreme Court Leave Petition shall stand disposed of accordingly. ________________ (V.V.S. RAO, J _______________________________ (RAMESH RANGANATHAN, J 10.02.2012 vs [1] (2000) 243 ITR 519 (Karnataka) [2] (2006) 248 ITR 434 (SC) [3] (2011) 330 ITR 470 (SC) "