[Snowcem India Ltd. v. Dy. CIT, 221 CTR
594 (Bom.)]
In the instant case income of the assessee
company was computed u/s.115JA of the Income-tax Act, 1961. The Assessing
Officer also levied interest u/s. 234B and u/s.234C of the Act. Levy of
interest was upheld by the Tribunal.
In appeal, the assessee raised the following
question : “Whether on the facts and in the circumstances of the case and in
law, the Tribunal was right in holding that interest u/s.234B and u/s.234C was
leviable in case of computation of income under the provisions of S. 115JA of
the Act ?”
The Bombay High Court noted that in CIT v.
Kotak Mahindra Finance Ltd., 265 ITR 119 (Bom.), the Bombay High Court has
taken a view that even in a case covered by S. 115J the provisions of S. 234B
and S. 234C are attracted and also noted that in that case the Bombay High
Court had disagreed with the judgment of the Karnataka High Court in the case
of Kwality Biscuits Ltd. v. CIT, 243 ITR 519 (Kar.) wherein it was held
that where the income is computed u/s.115J of the Act, interest u/s.234B and
u/s.234C are not attracted.
In the instant case the Bombay High Court noted
that the appeal against the said judgment of the Karnataka High Court has been
dismissed by the Supreme Court and held as under :
“(i) In the instant case we are concerned with S.
115JA under Chapter XII-B. The terminology used
in S. 115JA is the same or similar as contained in S. 115J.
(ii) The judgment of the Karnataka High Court was
taken in appeal by way of Special Leave to the Supreme Court in CIT v.
Kwality Biscuits Ltd., 284 ITR 434 (SC), and the following order was
passed :
“The appeals are dismissed.”
(iii) If the Special Leave Petition had only been
dismissed, then perhaps it would have been possible to say that there was no
merger of the judgment of the Karnataka High Court and the Supreme Court had
refused to grant Special Leave to appeal and consequently it was not an order
of affirmation. See Kunhayammed v. State of Kerala, (2000) 162 CTR (SC)
97. However, the order passed by the Supreme Court is “The Appeals are
dismissed” being Civil Appeal Nos. 1284 and 1285 of 2001. Once the Appeals are
dismissed then it can be said that the judgment of the Karnataka High Court
has been affirmed by the Supreme Court. That would not be the case in the
event only Special Leave Petitions had been dismissed, in which event it would
be said that the Supreme Court chose not to interfere with the judgment of the
Karnataka High Court. In such an event the doctrine of merger would not apply.
Once the judgment of the Karnataka High Court in Kwality Biscuits Ltd. (supra)
has been affirmed by the Supreme Court by dismissing the appeals, in our
opinion, the law binding on us would be the judgment in Quality Biscuits. (supra).
(iv) Considering the above, in our opinion, the
appeal will have to be allowed. Accordingly, the question as framed is
answered in the negative against the Revenue and in favour of the assessee.”
