Adarsh Kumar Goel, J.@mdashThis appeal has been preferred by the assessee u/s 260A of the Income Tax Act, 1961 (for short, ""the Act"")
against order dated 31st July, 2008 of the Tribunal, Chandigarh in ITA No. 318/Chd/2008 for the assessment year 2001-02, proposing following
substantial questions of law:
(1) Whether Tribunal was justified in setting aside the issue of charging of interest u/s 234B of the Income Tax Act, 1961 for fresh adjudication to
the file of Commissioner (Appeals) having decided the issue in favour of the appellant in view of the judgment of CIT v. Haryana State Co
operative Supply & Marketing Federation Ltd. (2007) 34 IT.R 441 (P&H) with a rider that once the assessee is found to have defaulted in
payment of advance tax on the basis of law as prevalent in the relevant financial year, its subsequent variation on account of further disallowances
suffered because of changed legal position would still empower the assessing officer to charge interest u/s 234B of the Act, which is illegal,
perverse and leads to allowing a second innings to the lower authorities which is unwarranted and uncalled for ?
(2) Whether, on the facts and circumstances of the case, the findings of Tribunal, are perverse and against the evidences on record thus
unsustainable in law ?
(3) Whether the Tribunal has misdirected itself in being influenced by irrelevant factors and applying erroneous criteria while deciding the issue of
eligibility for claiming deduction u/s 80IB of the Income Tax Act, 1961 ?
2. Facts necessary for adjudication of this appeal may be noticed. The assessee did not pay advance tax as per provisions of Section 208 of the
Act on the ground that its income was not liable to be taxed in view of provisions under Sections 80HHC and 80IB of the Act. Claim of the
assessee was not accepted for deduction under the said provisions by the assessing officer. Demand of interest was also raised u/s 234B of the
Act. On appeal, the Commissioner (Appeals) upheld the plea of the assessee that since advance tax was not paid under a bona fide belief, interest
u/s 234B of the Act was not attracted. On appeal by the revenue to the Tribunal, the view of the Commissioner (Appeals) was reversed. It was
held that bona fide belief of the assessee to estimate taxability of income could not be valid ground to avoid liability to pay interest u/s 234B of the
Act on advance tax ultimately found due.
3. We have heard learned Counsel for the parties and perused the record.
4. Learned Counsel for the assessee submitted that the Tribunal is in error in holding that even if the assessee on a bona fide calculation found that
no advance tax was payable, still liability of interest u/s 234B of the Act will be attracted. He relied upon following judgments:
(i) CIT v. Haryana State Co-operative Supply & Marketing Federation Ltd. (2007) 34 IT R 441 (P&H);
(ii) Commissioner of Income Tax Vs. Kanti Kumar Sharma, ;
(iii) United Commercial Bank Vs. Commissioner of Income Tax, ;
(iv) Saurashtra Packaging Pvt. Ltd. Vs. Commissioner of Income Tax, ;
(v) Kewalchand Kailashchand Jain (HUF) v. CWT (2008) 5 DTR (MP) 342.
5. On the other hand, learned Counsel for the revenue argued that Finance Act, 2001 has amended Explanation 1 to Section 234B of the Act
retrospectively with effect from 1-4-1989 and has laid down that assessed tax would mean tax on total income determined u/s 143(1) or Section
143(3) of the Act as reduced by certain amount mentioned therein. He relied upon judgments of this Court in Raj Kumar Singal Vs. Union of India
(UOI) and Others, and Parkash Agro Industries v. Dy. CIT (2008) 2 DTR (P&H) 356 : (2008) 170 Taxman 479 (P&H)
6. It would be advantageous to reproduce Explanation 1, as amended by Finance Act, 2001 retrospectively with effect from 1-4-1989, which
reads as under:
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.
7. The matter is no longer res integra. This Court in Parkash Agros case (supra), while considering the effect of amendment to Explanation 1
retrospectively with effect from 1-4-1989 had held that an assessee is liable to pay interest u/s 234B of the Act on the amount of income assessed
u/s 143(1) or 143(3) of the Act and not on the basis of income declared in the return by the assessee. The relevant observations read as under:
9. It is no doubt true that prior to the amendment brought by Finance Act, 2001, which has been made effective retrospectively from 1-4-1989,
the interest u/s 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 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.
(b) in Sub-section (3), for the words one and one-half per cent, the words one and one-fourth per cent shall be substituted with effect from 1-6-
2001.
10. The said Explanation was subject-matter of challenge before this Court in Raj Kumar Singhals case (supra) where the Division Bench while
upholding the validity of the said provision, interpreted it as under:
�1/2�1/2�1/2..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�1/2�1/2�1/2�1/2...
8. The judgments relied upon by the assessee are distinguishable as the effect of amendment by Finance Act, 2001 was not under consideration in
those cases. In view of clear provision incorporated in the Explanation and judgment of this Court in Parkash Agros case (supra), chargeability of
interest is beyond question.
9. As regards question No. 3, a perusal of impugned order shows that there was no ground raised relating to claim u/s 80IB of the Act before the
Tribunal and, therefore, the same does not arise from the said order.
10. Accordingly, we do not find any merit in the appeal. No substantial question of law arises.
The appeal is dismissed.