C I T ALWAR vs. M/S GILLETTEE INDIA LTD

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ITA/367/2005HC RajasthanRJHC02040443200531 January 20176 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that both issues are to be answered in favour of the assessee and against the department. Regarding the first issue, the judgment does not explicitly detail the reasoning for deleting the addition of Rs. 15,92,770/- under Section 234A, but it is implied that the assessee's contention regarding the filing of a revised return was accepted. For the second issue, concerning interest under Section 220(2)/143(4), the Court agreed with the CIT(A)'s observation that interest under these sections is not chargeable on a refund granted under Section 143(1)(a). The CIT(A) had noted that interest is chargeable only on a demand raised under Section 156 that remains unpaid. The Court confirmed the CIT(A)'s view that the AO was justified in holding that there was no mistake apparent from the record requiring renewal regarding this interest. Therefore, the appeal filed by the department is dismissed.

What were the facts?

The assessee, M/s Gillette India Ltd. (formerly Indian Shaving Products Ltd.), filed its return of income for Assessment Year 1992-93 on December 30, 1992, declaring a loss of Rs. 6,56,67,350/-, including an exchange loss of Rs. 2,88,91,067/-. A revised return was filed on November 1, 1993, declaring a reduced loss of Rs. 6,39,27,576/- due to adjustments in depreciation and other calculation corrections. The Assessing Officer (AO) processed the return under Section 143(1)(a) on February 24, 1993. The appeal by the Revenue (Commissioner of Income Tax, Alwar) challenges the order of the Income Tax Appellate Tribunal (ITAT) which partially reversed the benefits granted by the CIT(A) and AO. The High Court admitted the appeal and framed substantial questions of law.

What were the issues?

1. Whether the findings of the Tribunal are perverse in deleting the addition of Rs. 15,92,770/- made on account of interest under Section 234A? (Question of law) 2. Whether the findings of the Tribunal are perverse in deleting the addition of Rs. 9,88,118/- made on account of interest under Section 220(2)/143(4)? (Question of law) Assessee's Contentions: - The provisions of Section 234A of the Income Tax Act were wrongly invoked because a revised return was filed. - The provisions of Section 234D were also wrongly invoked. - Interest under Section 220(2) and 143(4) of the Income Tax Act is not chargeable on a refund granted under Section 143(1)(a), as interest is only chargeable on a demand raised under Section 156 that is not paid within the prescribed period. Revenue's Contentions: - The Tribunal committed an error in ignoring the provisions of law and wrongly allowed the assessee's appeal. - The AO correctly charged interest under Section 220(2) read with Section 143(4) because when an amount is refunded under Section 143(1), it is deemed to become tax payable at the time of regular assessment. If the refunded amount exceeds the amount refundable on regular assessment, interest under Section 220(2) is chargeable from the date of refund.

Which sections of the Income-tax Act were involved?

Section 234A,Section 220(2),Section 143(4),Section 143(1)(a),Section 156

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 367 / 2005 Commissioner of Income Tax, Alwar. ----Appellant Versus M/S Gillettee India Ltd. (Formerly Indian Shaving Products Ltd.), SPA-65A, Industrial Area, Bhiwadi, Distt. Alwar. ----Respondent _____________________________________________________ For Appellant(s) : Mrs. Parinitoo Jain. For Respondent(s) : Mr. Sanjay Jhanwar. _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHUR

Judgment Per Hon’ble Jhaveri J. 31/01/2017

1.

By way this appeal, the department has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal preferred by the assessee partially reversing the benefits granted by the CIT(A) and Assessing Officer.

2.

Counsel for the appellant Mrs. Jain has contended that the Tribunal has seriously committed an error in ignoring the provisions of law and has wrongly allowed the appeal.

3.

This Court while admitted the appeal on 02.01.2006 has framed the following substantial questions of law:

“1. Whether the findings of the Tribunal are perverse in deleting the addition of Rs.15,92,770/- made on account of interest under Section 234A?

2.

Whether the findings of the Tribunal are perverse in deleting the addition of (2 of 6) [ITA-367/2005] Rs.9,88,118/- made on account of interest under Section 220(2)/143(4)?”

4.

The facts of the case are that the assessee company has filed its return of income on 30th December, 1992, declaring a loss of Rs.6,56,67,350/- after making various adjustments. The assessee company has also claimed the exchange loss on foreign currency of Rs.2,88,91,067/-. The return was accompanied with certified printed copies of balance-sheet, profit & loss account and its various schedules and also a copy of Tax Audit Report in Form of total income. The assessee company, subsequently, has also filed a revised return on 01.11.1993, declaring a loss of Rs.6,39,27,576/-. In revising the return, the assessee has reduced the depreciation of amalgamating company Sharp Edge Limited from Rs.88,84,393/- to Rs.86,16,369/- and corrected other mistakes in calculation by the assessee company. The case was already stood selected for scrutiny by issuance of a notice u/s 143(2) dated 24.02.1993 fixing hearing for 17.03.1993. The return was processed u/s 143(1)(a) on 24.02.1993. 5. Counsel for the appellant has taken us to the order of Assessing Officer, CIT(A) and the Tribunal and contended that the Tribunal has seriously committed an error and misconstrued the provisions of law and therefore, the appeal deserves to be allowed.

6.

On the other hand Mr. Jhanwar counsel for the assessee has pointed out the provisions of Section 234A of the Income Tax Act, can be invoked only on the following contingency.

(3 of 6) [ITA-367/2005] “Interest for defaults in furnishing return of income. 234A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,— (a) where the return is furnished after the due date, ending on the date of furnishing of the return; or (b) where no return has been furnished, ending on the date of completion of the assessment under section 144, on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the amount of,— (i) advance tax, if any, paid; (ii) any tax deducted or collected at source; (iii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iv) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (v) any deduction, from the Indian income- tax payable, allowed under section 91, on account of tax paid in a country outside India; and (vi) any tax credit allowed to be set off in accordance with the provisions of section 115JAA or section 115JD. Explanation 1.—In this section, "due date" means the date specified in sub-section (1) of section 139 as applicable in the case of the assessee. Explanation 2.—In this sub-section, "tax on the total income as determined under sub- section (1) of section 143" shall not include the additional income-tax, if any, payable

(4 of 6) [ITA-367/2005] under section 143. Explanation 3.—Where, in relation to an assessment year, an assessment is made for the first time under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 4.—[* * *] (2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section. (3) Where the return of income for any assessment year, required by a notice under section 148 or section 153A issued after the determination of income under sub-section (1) of section 143 or after the completion of an assessment under sub-section (3) of section 143 or section 144 or section 147, is furnished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid, and,— (a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) where no return has been furnished, ending on the date of completion of the reassessment or recomputation under section 147 or reassessment under section 153A, on the amount by which the tax on the total income determined on the basis of such reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the basis of the earlier assessment aforesaid. Explanation.—[* * *] (4) Where as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub- section (4) of section 245D, the amount of tax on which interest was payable under sub-section (1) or sub-section (3) of this section has been increased or reduced, as the case may be, the interest shall be (5 of 6) [ITA-367/2005] increased or reduced accordingly, and— (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.”

7.

The revised return was filed and the provisions of Section 234A of the Income Tax Act, have wrongly been invoked. The provisions of Section 234D have also been wrongly invoked.

8.

We have heard counsel for both the sides.

9.

We gone through the order of the CIT(A) and the CIT(A) while considering the case of the assessee has considered the provisions of Section 220(2) and 234 of the Act and has rightly observed as under: “(ii) In regard to charging of interest u/s 220(2) and 143(4) of the Income Tax Act it has been pleaded that the AO made a mistake in his order U/s 154 of the Income Tax Act dated 2-5-1995 by charging interest under these provisions from the date of granting of original refund u/s 143(1)(a) of the Income Tax Act. No interest u/s. 220(2) of the Income Tax Act and 143(4) of the Income Tax Act is chargeable on the refund granted u/s 143(1)(a) of the Income Tax Act because the interest is chargeable only on the demand raised u/s 156 of the Income Tax Act and not paid within the prescribed period. It was pleaded therefore that the AO should be directed to delete this (6 of 6) [ITA-367/2005] interest charged u/s. 220(2) vais 143(4) of the Income Tax Act. (iii) I have considered the arguments of the appellant and the facts of the case. As per the provisions of Section 143(4) of the Income Tax Act if any amount is refunded u/s 143(1) of the Income Tax Act then at the time of passing of regular assessment the amounts so refunded is deemed to become tax payable and if the amount refunded u/s 143(1) exceeds the amount refundable on regular assessment then the interest u/s 220(2) of the Income Tax Act is to be charged from the date of granting of the refund. Therefore, the interest u/s 220(2) read with section 143(4) has been correctly charged by the AO and the AO was justified in holding that there is no mistake apparent from the record which required to be renewed. The order of the AO on this issue is therefore, confirmed.”

10.

In that view of the matter, both the issues are answered in favour of the assessee and against the department.

11.

The appeal stands dismissed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. Asheesh Kr. Yadav/18

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