Deputy Commissioner of Income Tax (Asstt.) vs Bhopal Motors Ltd.

A.K. Patnaik, C.J.—This appeal u/s 260A of the Income Tax Act, 1961 (for short "the Act"), was admitted on February 5, 2003. By order dated February 5, 2003, the court formulated the following substantial question of law which arises for decision in this case:

Whether the Income Tax Appellate Tribunal was justified in holding that no interest under Sections 234B and 234C of the Act is leviable once Income Tax is determined u/s 115J of the Act?

In Kwality Biscuits Ltd. Vs. Commissioner of Income Tax, , the Kamataka High Court held that since the entire exercise of computing the income or that of book profit could be only at the end of the financial year, the provisions of Section 207, 208, 209 or 210 cannot be made applicable, until and unless the accounts are audited and the balance-sheet is prepared because even the assessee may not know whether the provisions of Section 115J would be applicable or not and, therefore, the Income Tax Appellate Tribunal in that case was not justified in directing to charge interest u/s 234B and 234C of the Act. The aforesaid judgment of the Karnataka High Court was challenged by the Commissioner of Income Tax before the Supreme Court in Civil Appeals Nos. 1284 and 1285 of 2001 and as reported in Commissioner of Income Tax Vs. Kwality Biscuits Ltd., the Supreme Court dismissed the appeals.

In view of the aforesaid decisions of the Karnataka High Court and the Supreme Court, we hold that the Income Tax Appellate Tribunal was justified in holding that no interest under Sections 234B and 234C of the Act is leviable once the Income Tax is determined u/s 115J of the Act.

The appeal is accordingly dismissed.