Interest u/s.234B was not payable on advance tax liability due to sum payable on account of retrospective amendment.

The assessee, a public
limited company, in A.Y 2005-06 was not required to add back the amount set
aside for deferred tax liability to the net profits u/s.115JB. As such deferred
tax liability did not fall under any of the adjustments permitted in the first
part of the Explanation to S. 115JB. But the Finance Act, 2008 made a
retrospective amendment (from A.Y. 2001-02) whereby the book profit is required
to be increased by an amount of deferred tax and provision thereof. Interest
u/s. 234B was levied on the amount of tax payable u/s.115JB. However, the
assessee opposed such levy contending that when such retrospective amendment was
brought in, the impugned assessment year was already over and there arose no
occasion to provide for advance tax in case of deferred tax liability.

By the time the
retrospective amendment was made, the financial years 2004-05 to 2007-08 have
already been passed and hence the assessee had no occasion to add back the
deferred tax provision to compute the book profits u/s.115JB. Even though a
retrospective amendment is possible, a retrospective physical payment of advance
tax is not possible. The acclaimed principle lex non cogit ad impossibilia (law
does not command to do which is impossible to do) holds true.

Thus as the statutory
mandate to add back the deferred tax provision to the book profits u/s. 115JB
was unknown during the relevant previous year 2004-05, the levy of interest
u/s.234B on the incremental amount of tax computed u/.s115JB is not justified.