The case between the Deputy Commissioner of Income Tax (DCIT), Central Circle -30, New Delhi, and M/s. Prakash Industries Ltd., Haryana, revolves around the issue of charging interest under Sections 234B and 234C of the Income Tax Act, 1961, for the assessment year 2008-09. This case, filed on October 29, 2021, and concluded with a final tribunal order pronounced on December 2, 2022, highlights critical aspects of tax liability and the procedural nuances associated with rectification and appeal processes.
The original return of income for the assessment year 2008-09 was filed by Prakash Industries Ltd. on September 30, 2008, which was subsequently revised on February 26, 2010. Both returns reported tax based on book profits computed under Section 115JB of the Income Tax Act, also known as Minimum Alternate Tax (MAT). The return was initially processed without charging interest under Sections 234B and 234C.
Upon receiving an audit objection related to non-levy of interest, the Assessing Officer (AO) issued a rectification order under Section 154 of the Income Tax Act on November 23, 2020, charging interest under Sections 234B and 234C for the first time. This led to the dispute, with Prakash Industries Ltd. appealing against the rectification order.
Prakash Industries Ltd., represented by Sh. Ajay Wadhwa and Ms. Ayushi Gupta, argued that:
The Revenue, represented by Sh. Rajesh Kumar and Ms. Rajeshwari R., argued that:
The Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘H’, comprising Sh. C. N. Prasad (Judicial Member) and Dr. B. R. R. Kumar (Accountant Member), examined the arguments and the procedural history in detail.
The Tribunal noted that:
The Tribunal concluded that the rectification order issued by the AO was not legally sustainable and allowed the appeal of Prakash Industries Ltd. Consequently, the Tribunal deleted the interest charged under Sections 234B and 234C, providing significant relief to the assessee.
This case underscores the importance of adhering to procedural timelines and the complexities involved in the application of interest on MAT under the Income Tax Act. The judgment reinforces the principles of natural justice and the necessity for timely rectifications within the framework of the law.
Order Pronounced in the Open Court on December 2, 2022.
Judges: Sh. C. N. Prasad (Judicial Member), Dr. B. R. R. Kumar (Accountant Member)
Date of Pronouncement: December 2, 2022
DCIT vs. Prakash Industries Ltd.: Interest on MAT and Advance Tax Issue for AY 2008-09
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