The Commissioner of Income Tax vs Synthite Industrial Chemicals Ltd.

Ramachandran Nair, J.—The only question raised is whether the Tribunal was justified in holding that the respondents were entitled to seek for set off of credit available in the previous year''s assessment completed u/s 115JAA against assessed tax for the purpose of determination of interest liability u/s 234B and Section 234C of the I.T. Act. In fact, in the course of completion of assessment, the assessing officer allowed set off and worked the interest under Sections 234B and C on the net deficiency. However, the Commissioner in exercise of suo motu revisional power u/s 263 cancelled the assessment against the assessees filed appeals before the Tribunal. We notice that subsequent to the order issued by the Tribunal, there has been a decision of the Delhi High Court in Commissioner of Income Tax Vs. Jindal Exports Ltd. and Others, , followed by the Madras High Court reported in (2009) 120 ITD 182 , which are rendered based on later amendment introduced to Section 234B by Finance Act 2006 with effect from 1.4.2007. It is seen that corresponding amendment is made to Section 234A also, so that credit available can be set off against liability to pay tax u/s 140A along with return. Even though amended provision which authorises set off of credit available u/s 115JAA is not retrospective, the Delhi High Court has held that the provision is only clarificatory in nature. Standing counsel contended that the provision introduced is substantive and is expressly made prospective. However, we are unable to accept this contention for the simple reason that such an interpretation will cause heavy hardship to the parties because if credit is available for adjusting against tax liability, we see no reason why it should not be permitted to be set off against tax liability before determination of liability for interest due under Sections 234B and C. There is also no express bar against assessees reckoning the credit available u/s 115JAA while making payment of advance tax. We therefore find no ground to deviate from the view of the Delhi and Madras High Courts in the decisions above referred. Consequently taking the view that the amended provision is clarificatory in nature, we dismiss the two appeals filed by the department.