IMPORTANT POINT
Interest u/ss 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB.

JUDGMENT

S.H. Kapadia, CJI

Leave granted.

2. A short question which arises for determination in this batch of cases is - whether interest under Section 234B can be charged on the tax calculated on book profits under Section 115JA? In other words, whether advance tax was at all payable on book profits under Section 115JA?

3. The lead matter in this batch of cases is Joint CIT v. Rolta India Ltd. (Civil Appeal arising out of S.L.P. (C) No. 25746/09).

4. Assessee furnished a return of income on 28.11.1997 declaring total income of Rs. Nil. On 28.3.2000, an order under Section 143(3) was passed determining the total income at nil after set off of unabsorbed business loss and depreciation. The tax was levied on the book profit worked out at Rs. 1,52,61,834/- determined as per the provisions of Section 115JA. The interest under Section 234B of Rs. 39,73,167/- was charged on the tax on the book profit as worked out in the order of assessment. Aggrieved by the said order, the assessee went in appeal before CIT (A). The appeal on the question in hand was dismissed. On charging of interest under Section 234B the appeal was dismissed by the Tribunal on the ground that the case fell under Section 115JA and not under Section 115J, hence, judgment of the Karnataka High Court in the case of M/s Kwality Biscuits Ltd. was not applicable. At one stage the Bombay High Court decided the matter in favour of the Department but later on by way of review it took the view following the judgment of Karnataka High Court in the case of Kwality Biscuits Ltd. that interest under Section 234B cannot be charged on tax calculated on book profits, hence, the CIT has come to this Court by way of Civil Appeal(s).

5. We quote hereinbelow Sections 234B and 234C of the Income Tax Act, 1961 (in short “the Act”):

“Interest for defaults in payment of advance tax.

234B. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax.

Explanation 1.—In this section, “assessed tax” means,—

(a) for the purposes of computing the interest payable under section 140A, the tax on the total income as declared in the return referred to in that section;

(b) in any other case, 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.

Explanation 2.—Where, in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section.

Explanation 3.—In Explanation 1 and in sub- section (3) “tax on the total income determined under sub-section (1) of section 143” shall not include the additional income-tax, if any, payable under section 143.

(2) Where, before the date of determination of total income under sub-section (1) of section 143 or completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,—

(i) interest shall be calculated in accordance with the foregoing provisions of this section up to the date