TAXAP/14520/2001 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 145 of 2001 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- HONOURABLE MR.JUSTICE R.H.SHUKLA Sd/- ==================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ==================================== DY. C.I.T. (ASSTT.) - Appellant Versus MADHUSUDAN INDUSTRIES LTD. - Opponent ==================================== Appearance : MR MAUNA M. BHATT for Appellant. MR RK PATEL for Opponent. ==================================== TAXAP/14520/2001 2/5 JUDGMENT CORAM : HONOURABLE MR.JUSTICE K.A.PUJ and HONOURABLE MR.JUSTICE R.H.SHUKLA Date : 18/07/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE K.A.PUJ) 1. The revenue has filed this Tax Appeal under Section 260-A of the Income Tax Act, 1961 for assessement year 1989 – 90. The appeal was admitted by this Court on 18.06.2001 and following substantial question of law was formulated by the Court :- “Whether the Appellate Tribunal is right in law and on facts in holding that interest under Section 234B is not chargeable when income is computed under Section 115J of the Act ?” 2. Heard Mrs. Mauna M. Bhatt, learned Standing Counsel appearing for the revenue and Mr. R. K. Patel, learned advocate appearing for the assessee. 3. Though the Court has directed this tax appeal to be heard along with Tax Appeal No. 390 of 1999, since there are several other issues involved in the said tax appeal, we are taking up this tax appeal for final hearing separately. TAXAP/14520/2001 3/5 JUDGMENT 4. While allowing this issue in favour of the assessee, the Tribunal has followed the decision of the Karnataka High Court in the case of Kwality Biscuits Limited V/s. Commissioner of Income-Tax, 243 ITR 519. An appeal filed against this judgment by the revenue before the Apex Court has been dismissed and the said decision is reported in (2006) 284 IRT 434. It is reported therein that from the decision of the Karnataka High Court to the effect, inter alia, that interest is not leviable under Sections 234B and 234C of the Income-tax Act, 1961, in the case of an assessment of a Company on the basis of book profits under Section 115J, since the entire exercise of computing income under Section 115J can only be done at the end of the financial year, and the provisions of Sections 207, 208, 209 and 210 cannot be made applicable until and unless the accounts are audited and the balance-sheet prepared. The department preferred appeals to the Hon'ble Supreme Court and the Hon'ble Supreme Court dismissed the appeals. TAXAP/14520/2001 4/5 JUDGMENT 5. Since the Tribunal has followed the judgment of the Karnataka High Court and the said decision has been approved by the Hon'ble Supreme Court, we decide this question in favour of the assessee and against the revenue. We are of the view that the Tribunal has correctly decided the issue and held that interest under Section 234B is not chargeable when income is computed under Section 115J of the Act. 6. This appeal is accordingly dismissed. 7. After the above order is dictated, Sheristedar has pointed out that in this matter, appearance of one of us (Coram :- K. A. Puj, J.) was filed way back on 21.07.2001. Thereafter, appearance of Mr. R. K. Patel is filed. This Bench was not inclined to take up the matter. However, the learned advocate appearing for the assessee as well as learned Standing Counsel appearing for the revenue submits that since this bench is not deciding any fresh issue and only the judgment of the Hon'ble Supreme Court is followed in TAXAP/14520/2001 5/5 JUDGMENT the matter, there would not be objection for taking up this matter by this Bench. Accordingly, this Bench has thought it fit not to change the decision taken by the Court. Sd/- Sd/- [K. A. PUJ, J.] [R.H. SHUKLA, J.] Savariya