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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI G.S.PANNU & SHRI RAVISH SOOD
ORDER PER G.S.PANNU,A.M:
The captioned appeal filed by the assessee pertaining to assessment year 1992-93 is directed against an order passed by CIT(A)-40, Mumbai dated 05/11/2014, which in turn, arises out of an order passed by the Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short ‘the Act’) dated 20/03/2003.
In this appeal, assessee has raised the following Grounds of appeal:-
The Ld. Commissioner of Income-tax (Appeals) has erred in law and in facts in not appreciating that the reopening of the assessment u/s.147 of the Act was invalid.
2. The Ld. Commissioner of Income-tax (Appeals) has erred in law and in facts in confirming the levy of interest u/s. 234A, 234B and 234C of the Act.
3. The Ld. Commissioner of Income-tax (Appeals) has erred in law and in facts in not appreciating that the income assessed in the hands of the appellant was subjected to the provisions of TDS and hence on the said amount of tax, no interest can be levied u/s. 234B and 234C of the Act.
At the time of hearing, the Ld. Representative for the assessee did not press Ground No.1, therefore, the same is dismissed as not pressed.
Grounds of appeal No.2 & 3 relate to charging of interest under section 234A, 234B and 234C of the Act and are being taken up together. In brief, the background of the case is that the assessee is a company incorporated under the provisions of the Companies Act, 1956, and is a notified entity under the Special Court(Trial of Offences Relating to Transaction in Securities) Act, 1992 and all the assets including bank accounts have been attached and vested in the hands of the Custodian by virtue of such notification.
On this aspect, the Ld. Representative for the assessee pointed out that in the cases of the other entities of the same group, the Tribunal has already decided similar issues. A reference has been made to the decision of Tribunal in the case of M/s. Cascade Holding Pvt. Ltd. in for assessment year 2010-11 dated 29/09/2014. The following discussion in the order of the Tribunal is relevant:-
3.Ground no.6 is about interest to be charged u/s.234A,234B and 234 C of the Act. At the time of the hearing before us, it was agreed by the representatives of both the sides that the identical issue was deliberated upon and decided by the Tribunal in the case of M/s. Topaz Holdings Pvt. Ltd. (ITA No.2146/Mum/2013,AY.2001-
02,dated 18.06.2014).We find that in the matter of Topaz Holdings Pvt.Ltd.(supra),one of the group concerns, the Tribunal had decided the issue as under:
“3.Next ground of appeal is about levy of interest u/s. 234 of the Act.Before us, AR stated that the assessee was a notified entity,that the provisions of s. 234A, 234B and 234C of the Act were deemed to have complied with,that the assets were already in attachment of the Custodian appointed under the provisions of the Special Courts Act,that the Tribunal in the case of the appellant and several other entities had held the view in favour of the appellant,that the Hon’ble Bombay High Court in the case of Divine Holdings Pvt. Ltd. and Cascade Holdings Pvt. Ltd. had held that the provisions of sections 234A,234B and 234C of the Act were mandatory and were applicable to the notified entities also, that the assessee was in the process of filing an appeal against the said order before the Hon’ble Supreme Court,that the income earned in the year under 3. Cascade Holdings P. Ltd. consideration was subjected to provisions of TDS,that the changeability of the section 234A, 234B and 234C of the Act should be after considering the amount of tax deductible at source on the income assessed. The appellant relies in this regard on the following decisions. He relied upon the cases of Motorola inc. v. DCIT [95 ITD 269 (Del.(SB)], Sedco Fores Drilling Co. Ltd. [264 ITR 320],NGC Network Asia LLC [313 ITR 187] ,Summit Bhatacharya [ 300 ITR (AT) 347 (Bom)(SB)], Vijal Gopal Jindal [ITA No. 4333/Del/2009] & Emillo Ruiz Berdejo [320 ITR 190 (Bom)].DR relied upon the cases of Devine Holdings Pvt. Ltd.
3.1.We have heard the rival submissions and perused the material before us.We find that in the case of Devine Holdings Pvt. Ltd. Hon’ble Bombay High Court has held that provisions of section 234A, 234B and 234C were applicable to the notified person also.Therefore, upholding the order of the FAA to that extent,we hold that provisions of section 234 of the Act are applicable. As far as calculation part is concerned, we find merits in the submission made by the assessee. Therefore, we are restoring back the issue to the file of the AO for fresh adjudication who would decide the issue after considering the amount taxed deductible at source on the income assessed and after affording a reasonable opportunity of hearing to the assessee. Ground no.5 is allowed in part in favour of the assessee.”
5.1 Respectfully following the aforesaid decision, in so far as the issue relating to the applicability of the provisions of section 234A,234B and 234C of the Act is concerned, the same is held against the assessee in view of the judgment of the Hon'ble Bombay High Court in the case of Divine Holdings Pvt. Ltd. So however, so far as it relates to recomputing the interest chargeable under section 234A, 234B and 234C of the Act is concerned, the same is restored back to the file of Assessing Officer, who shall recompute the same after considering the amount of tax deductible at source on the income assessed. Needless to mention, Assessing Officer shall allow the assessee a reasonable opportunity of being heard before passing an order afresh charging interest under section 234A, 234B and 234C of the Act, as per law. Thus, Grounds of appeal No.2 & 3 are partly allowed.
Resultantly, the appeal of the assessee is partly allowed.