SPAZE TOWERS PVT. LTD. ETC. vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II

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ITA/40/2015HC Punjab & HaryanaPHHC01110051201517 November 2016Author: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE AVNEESH JHINGAN3 pages
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What did the High Court hold?

The High Court held that the questions of law are answered in favour of the appellant/assessee. The Court was bound by its previous judgments in ITA-261-2014 (CIT vs. Sh. Sandeep Jain and others) and ITA-425-2014 (CIT (Central), Ludhiana vs. M/s Cosmos Builders and Promoters Ltd.), which held that Explanation 2 to Section 132B of the Income Tax Act, 1961, is prospective in nature, effective from 01.06.2013. The Supreme Court had also dismissed the department's SLP against the Cosmos Builders and Promoters Ltd. judgment. Therefore, Explanation 2 would not be applicable to the assessee's case for assessment year 2008-2009. The Court explicitly stated it was bound by these judgments and did not consider the Revenue's argument that the judgment did not lay down the correct law. The order of the Tribunal was liable to be set aside and was accordingly set aside. No issue was expressly left undecided.

What were the facts?

This appeal by Spaze Towers Pvt. Ltd. (the assessee) is against an order of the Income Tax Appellate Tribunal (Tribunal) which had allowed the department's (respondent's) appeal against the order of the CIT (Appeals). The assessment year in question is 2008-2009. The assessee had raised specific questions of law concerning the charging of interest and the retrospective or prospective nature of Explanation 2 to Section 132B of the Income Tax Act, 1961. The appeal was admitted solely on these substantial questions of law.

What were the issues?

1. Whether, under the facts and circumstances, the Tribunal's order is unsustainable as no interest could be charged when the department did not respond to the assessee's request for adjustment of cash seized against self-assessment tax, as per Section 132B of the Income Tax Act, 1961? (Assessee's contention: No interest should be charged). 2. Whether, under the facts and circumstances, Explanation 2 to Section 132B of the Income Tax Act, 1961, inserted by the Finance Act, 2013 w.e.f. 01.06.2013, is prospective in nature? (Assessee's contention: It is prospective). 3. Whether, under the facts and circumstances, Explanation 2 to Section 132B of the Income Tax Act, 1961, though inserted by the Finance Act, 2013, is prospective in nature, pursuant to the judgment of this Hon'ble Court in CIT vs. Sh. Sandeep Jain & others and CIT (Central) Ludhiana vs. Cosmos Builders & Promoters Ltd.? (Assessee's contention: It is prospective, as per cited judgments). The Revenue did not record any specific arguments on these issues in the judgment, other than Mr. Sethi's argument that the cited judgment does not lay down the correct law and that Explanation 2 is retrospective based on the memorandum explaining the Finance Bill.

Which sections of the Income-tax Act were involved?

Section 132B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-40-2015 (O&M) Date of decision:- 17.11.2016 Spaze Towers Pvt. Ltd. ...Appellant Versus Deputy Commissioner of Income Tax, Central Circle-II, Faridabad. ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE A.B. CHAUDHARI Present:- Mr. Pankaj Jain, Senior Advocate, Mr. Girish Agnihotri, Senior Advocate, with Mr. Sachin Bhardwaj, Advocate, and Mr. Ishaan Bhardwaj, Advocate, for the appellant. Mr. Rajesh Sethi, Senior Standing Counsel, and Mr. Arun Biriwal, Advocate, for the respondent. * * * * S.J. VAZIFDAR, C.J. (ORAL) This is an appeal against the order of the Tribunal allowing the department/respondent’s appeal against the order of the CIT (Appeals) in respect of the assessment year 2008-2009. 2. By a Civil Miscellaneous Application No. 15326-CII of 2015, the appellant/assessee raised the following questions contending that the same are substantial questions of law:- “I. Whether under the facts & circumstances of the case, the Tribunal order is unsustainable, as no interest could be charged in the event of department not responding to the assessee’s request for adjustment of cash seized against self assessment tax constituting Amodh Sharma 2016.11.18 14:18 I attest to the accuracy and authenticity of this document chandigarh

ITA-40-2015 (O&M) 2 the existing liability as per specific provisions u/s 132B of the Income Tax Act, 1961? II. Whether under the facts & circumstances of the case, the Tribunal order is unsustainable, as Explanation 2 to Section 132B of the Income Tax Act, 1961 inserted by the Finance Act, 2013 w.e.f. 01.06.2013 is ‘prospective’ in nature? III. Whether under the facts & circumstances of the case, Explanation 2 to Section 132B of the Income Tax Act, 1961, though inserted by the Finance Act, 2013 is ‘prospective’ in nature, pursuant to the judgement of this Hon’ble Court in the case of CIT vs. Sh. Sandeep Jain & others in ITA 261 of 2014, CIT (Central) Ludhiana vs. Cosmos Builders & Promoters Ltd., in ITA No. 425 of 2014?”

3.

The appeal is pressed only in respect of these questions of law and not in respect of the questions of law raised in the original appeal.

4.

The appeal is admitted on the above questions of law. The judgement of a Division Bench of this Court dated 29.09.2014 in ITA-261-2014 titled as in respect of the assessment year 2008-2009. In view of the said judgement, Explanation 2 would not be applicable to the assessee’s case. This judgement was followed by another judgement of a Division Bench of this Court dated 14.07.2015 to which one of us (S.J. Vazifdar, CJ) was a party titled as Amodh Sharma 2016.11.18 14:18 I attest to the accuracy and authenticity of this document chandigarh

ITA-40-2015 (O&M) 3 Commissioner of Income Tax (Central), Ludhiana Vs M/s Cosmos Builders and Promoters Ltd. By an order dated 06.05.2016, the Petition for Special Leave to Appeal against that judgement filed by the department was dismissed by the Supreme Court.

5.

We are bound by the above judgements. In fact, in M/s Cosmos Builders and Promoters Ltd. case, the judgement in Sh. Sandeep Jain and others was followed. We follow the same in this appeal also. As we are bound by that judgement, we have not considered Mr. Sethi’s argument on behalf of the respondent that the judgement does not lay down the correct law. He also relied upon the memorandum explaining the Finance Bill to contend that Explanation 2 to Section 132B is retrospective.

6.

In these circumstances, the questions of law are answered in favour of the appellant/assessee. It is admitted that the order of the Tribunal is liable to be set aside and is accordingly set aside. (S.J. VAZIFDAR) CHIEF JUSTICE (A.B. CHAUDHARI) JUDGE 17.11.2016 Amodh Whether speaking/reasoned Yes/No Whether reportable Yes/No Amodh Sharma 2016.11.18 14:18 I attest to the accuracy and authenticity of this document chandigarh

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