The Tax Publishers2020 TaxPub(DT) 0987 (Mum-Trib)

INCOME TAX ACT, 1961

Section 234B

No interest under section 234B could be levied for shortfall in payment of advance tax, when such shortfall in payment of taxes was on account of additions made to total income, consequent to retrospective amendment made to the Act.

Interest under section 234B - Chargeability - Shortfall in payment of advance tax - Shortfall on account of additions made to total income, consequent to retrospective amendment

Assessee-company filed its return of income declaring total income under normal provisions as well as under section 115JB. It claimed deduction under section 80HHC, which was disallowed by AO in view of sun-set clause under section 80HHC(1B). Further, the AO levied interest under section 234B on addition made in Book Profit under MAT with respect to deduction on export profit under section 80HHC. Assessee contended that the interest under section 234B could not be charged as a consequence for an addition made to the book profit, in view of retrospective amendment by the Finance Act, 2011 with retrospective effect from 1-4-2005. Held: In instant case, addition was made to book profit computed under section 115JB, towards deduction claimed on eligible profit under section 80HHC on the basis of retrospective amendment to section 115JB, by omitting clause (iv) to (vii) to explanation 1 by the Finance Act, 2011 with effect from 1-4-2005. At the time of payment of advance tax, said provisions were very much was on statute, and the assessee was entitled to deduct amount claimed as deduction under section 80HHC from book profit under section 115JB. Thus, the assessee took the advantage of provisions as was there in statue at the time of payment of advance tax and therefore, it could not be expected to pay advance tax on the part of disputed amount. Accordingly, it was concluded that no interest could be levied under section 234B for shortfall in payment of advance tax on the basis of retrospective amendment to law.

REFERRED : CIT-16 v. KPMG [ITA No. 690/2017, dated 24-9-2009] The CIT, Mumbai v. M/s. JSW Energy Ltd. (2015) 379 ITR 36 (Bom) : 2015 TaxPub(DT) 2369 (Bom-HC) Reliance Industries Limited v. Asst. CIT 2016 TaxPub(DT) 3214 (Mum-Trib)

FAVOUR : In assessee's favour

A.Y. : 2005-06

IN THE ITAT, MUMBAI BENCH

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT