CIT, FARIDABAD vs. AMTEK AUTO LTD. GURGAON

This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961, (in short, “the Act”) against the order dated 19.2.2009, Annexure A.III, passed by the Income Tax Appellate Tribunal, Delhi Bench 'A' New Delhi (in short, “the Tribunal”) in ITA No.3956/D/07, for the assessment year 2003-04, claiming following substantial questions of law:- I) Whether, the learned ITAT was justified in law in holding that the expenditure incurred on upfront fee for obtaining term loan for the expansion was a revenue expenditure even though the assessee failed to fulfil the conditions laid down by the Board's Circular F.No.32/6/62-ITAT dated 16.1.1963 and the upfront fee was related to the term loan and has to be treated as capital expenses? II)Whether, on the facts and circumstances of the case, the learned ITAT is justified in law in restoring the matter regarding fee paid to ROC, to the file of the Assessing Officer for verifying the purpose for which the expenses other than the registration fee, have been paid to the ROC Singh Gurbax 2013.11.29 14:58 integrity of this document High Court Chandigarh whereas, the assessee has already failed to avail the opportunity afforded by the AO and the CIT(A) to him, by remanding the matter to the AO for verification of the purpose of the said expenditure? III)Whether, the learned ITAT is justified in law in holding that interest under Section 234B and 2134C of the Income Tax Act, 1961, is not chargeable while computing the income in terms of section 115JB of the Income Tax Act, 1961 by relying upon the judgment of Hon'ble Supreme Court in the case of CIT v. Quality Biscuits Limited, 284 ITR 434 (SC) and the judgment of the ITAT Delhi Bench in the case of Amtek Auto Limited v. ACIT (2007) 112 (Del) 464 whereas in those judgments the issue is regarding chargeability of interest under section 234B and 234C on the book profit computed under Section 115JA whereas in the instant case the minimum alternate tax is payable under Section 115JB of the Income Tax Act, 1961 and interest under section 234B and 234C is chargeable as clarified by the CBDT circular No.13 of 2001 dated 9.11.2001 stating that companies liable to pay tax under Section 115JB have to pay interest under Section 234B and 234C in case of short payment of advance tax? IV) Whether, on the facts and in the circumstances of the case, the learned ITAT is right in law in holding that the interest under section 234D was not chargeable for the year under appeal and such levy of interest is contrary to the law applicable for the year under consideration disregarding the facts that section 234D was inserted by the Finance Act, 2003 w.e.f 1.6.2003 and as such Section 234D became operative from 1.6.2003 and interest under section 234D is chargeable from 1.6.2003 onwards?:”

A few facts relevant for the decision of the controversy involved, as narrated in the appeal, may be noticed. Return declaring Income of ` 7,78,32,011/- was filed by the assessee on 31.10.2003. The Singh Gurbax 2013.11.29 14:58 integrity of this document High Court Chandigarh assessment was completed vide order 29.3.2006, Annexure A.I under Section 143(3) of the Act at an income of ` 5,17,03,090/-. The Commissioner of Income Tax (Appeals) [CIT(A)] as well as the Tribunal vide orders dated 6.8.2007 and 19.2.2009, Annexures A.II and A.III respectively partly allowed the appeals filed by the assessee. The Assessing Officer made an addition of `20,90,000/- on account of upfront fees on the ground that it was related to capital expenditure. On appeal, the CIT(A) sustained the disallowance made by the Assessing Officer. The Tribunal held that the expenditure incurred on upfront fee for obtaining term loan for the expenses was revenue expenditure. Accordingly, the first part of the issue was decided in favour of the assessee. As regards second part of the issue relating to allowability of the expenditure, the Tribunal held that in case of term loans, the incidental expenditure incurred was allowable only in case the assessee was able to fulfil the conditions of the Board's circular dated 16.10.1963. The Assessing Officer also made an addition of `10,15,500/- on account of rates, fees and taxes which were incurred by the assessee for increasing share capital from `15 crores to ` 35 crores. The Assessing Officer disallowed these expenses treating the same to be capital in nature as it gave the assessee company enduring benefit. On appeal, the CIT(A) remanded the matter to the Assessing Officer. After considering the matter, the CIT(A) confirmed the addition. On further appeal, the Tribunal remanded the matter to the Assessing Officer for verification. The Assessing officer further levied interest under sections 234B and 234C of the Act amounting to ` 13,72,602/- and ` 8,97,429/- for short payment of advance tax. On appeal, the CIT(A) upheld the interest levied. The Tribunal held that interest under Sections 234B and 234C of the Act was not leviable while computing the Income in terms of section 115JB of the Singh Gurbax 2013.11.29 14:58 integrity of this document High Court Chandigarh Act. The Assessing Officer also levied interest under section 234D of the Act. On appeal, the Tribunal held that interest was chargeable from the assessment year 2004-05 onwards and could not be charged for the earlier assessment years. Aggrieved thereby, the revenue is before this Court through the present appeal.

We have heard learned counsel for the parties and perused the record.

At the time of admission of the appeal on January 17, 2012, it was observed that as regards question Nos. (1) and (II) are concerned, the counsel for the parties were ad idem that the issues had been referred back to the Assessing Authority by the Tribunal and therefore, they did not require determination by this Court. In so far as question No.(III) is concerned, it was observed that the controversy stood already concluded by this Court in the case of the assessee in M/s Amtek Auto Limited v. The Commissioner of Income Tax, Gurgaon, ITA No.589 of 2006 decided on 25.3.2011. Additionally, it may be stated that with regard to question No. (III), besides the aforesaid judgment, judgment of a Division Bench of this Court in Commissioner of Income Tax v. Nahar Spinning Mills Limited, (2011) 339 ITR 557 is also applicable to the present case and accordingly the question is answered against the assessee.

Adverting to Question No.(IV), the matter is no longer res integra. In CIT, Faridabad v. M/s NHPC Limited, Sector 33, Faridabad, ITA No.324 of 2009, decided by this Court on 24.9.2013, it was observed that in view of judgments reported as CIT v. Kerala Chemicals and Proteins Limited, (2010) 323 ITR 584 (Ker.), Commissioner of Income tax and another v. FANUC India Limited, (2011) 57 DTR 340 (Karnataka), CIT v. Infrastructure Development Singh Gurbax 2013.11.29 14:58 integrity of this document High Court Chandigarh Finance Co. Limited, (2012) 340 ITR 580 (Mad.) and The Commissioner of Income Tax v. M/s Indian Oil Corporation Limited, ITA No.2012 of 2011, decided on 12.9.2012 (Bombay) where the regular assessment had been completed after 1.6.2003 and since Section 234D came into effect from 1.6.2003, therefore, interest could be charged for the assessment years falling prior to the introduction of the Section for the period commencing on 1.6.2003 till the date of regular assessment.

In view of the above, question No.(IV) is answered in favour of the revenue and against the assessee.

Accordingly, the appeal stands allowed in the manner indicated above. Ajay Kumar Mittal) Judge November 14, 2013 (Mehinder Singh Sullar) 'gs'