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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI G.S. PANNU & SHRI JOGINDER SINGH
PER G.S. PANNU, AM :
The captioned appeals by the assessee are directed against the separate orders of CIT(A)-24, Mumbai, both dated 23.07.2014, pertaining to the Assessment Years 2003-04 & 2004-05, which in turn have arisen from separate orders passed by the Assessing Officer, both dated 02.04.2013 under section 154 of the Income Tax Act, 1961 (in short ‘the Act’).
In both the appeals, a common issue has been raised which relates to charging of interest u/s 234B of the Act. Since the facts and 2 Indian Petrochemicals Corporation & 6514/Mum/2014 circumstances in both the appeals stand on an identical footing, we may refer to the appeal for Assessment Year 2003-04 for appreciation of the relevant facts. The appellant before us is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of manufacturing and selling of petrochemical products. The assessee-company submitted its return of income on 29.11.2003 declaring income of Rs. Nil under normal provisions and Rs.240,50,25,600/- u/s 115JB of the Act. Assessment u/s 143(3) of the Act was made vide order dated 28.2.2006 determining the taxable income at Rs. Nil after setting-off brought forward losses and income u/s 115JB of the Act was computed at Rs.298,45,51,667/-. The CIT(A) passed an order dated 26.11.2007 and thereafter assessee approached the Tribunal, which passed an order dated 29.6.2012. Pursuant to the order of the Tribunal, Assessing Officer passed an order dated 4.10.2012 giving effect to the Tribunal’s order determining the taxable income at Rs. Nil under normal provisions and Rs.257,32,69,273/- u/s 115JB of the Act. In the said order, the tax liability determined by the Assessing Officer included interest u/s 234B of the Act of Rs.37,78,678/-. The assessee-company approached the Assessing Officer by filing an application u/s 154 of the Act on various grounds, inter-alia, contending that the interest u/s 234B of the Act was wrongly charged. The plea set-up by the assessee was that interest u/s 234B of the Act has been charged on the tax payable on the income determined u/s 115JB of the Act on account of addition made for Provision for bad and doubtful debts, which was made in the light of a retrospective amendment made by the Finance Act (No. 2) of 2009 to Sec. 115JB of the Act with retrospective effect from 1.4.2001. It was, therefore,
3 Indian Petrochemicals Corporation & 6514/Mum/2014 contended that in such a situation, where the addition is made on the basis of a retrospective amendment, interest u/s 234B of the Act is not chargeable. Though the Assessing Officer accepted some of the rectifications sought, but so far as the plea for deletion of interest charged u/s 234B of the Act was concerned, the Assessing Officer rejected the same vide order dated 2.4.2013. Against such an action of the Assessing Officer, assessee carried the matter in appeal before the CIT(A). As per the CIT(A) there is no provision in the Act which specifies that interest u/s 234B of the Act could not be charged on the additions made consequent to any retrospective amendment to any of the provisions of the Act. Thus, he upheld levy of interest u/s 234B of the Act.
Before us, there is no dispute to the fact that the interest u/s 234B of the Act has been charged in the present case as a consequence of an addition made to the total income u/s 115JB of the Act in view of a retrospective amendment. In other words, as on the end of the previous year relevant to the assessment year under consideration, the relevant provision was not in the statute book but was introduced subsequently by Finance Act (No. 2) of 2009 to Sec. 115JB of the Act with retrospective effect from 1.4.2001. The plea of the assessee is that in such a situation, interest u/s 234B of the Act is not chargeable and in support, he has relied upon various decisions as under :- i) Emami Ltd. v. CIT (2011), 63 DTR 301 (Cal) ii) CIT v. Revathi Equipment Ltd. (2008), 298 ITR 67 (Mad) iii) Trinity Forge v. ACIT (2001), 73 TTJ 582 (ITAT Pune)
4 Indian Petrochemicals Corporation & 6514/Mum/2014 iv) Priyanka Overseas Ltd. v. DCIT (2001), 79 ITD 353 (Delhi ITAT) v) Hindson International v. ITO (2010), 133 TTJ 83 (Chd) vi) Canara Bank v. ITO (2009), 121 ITD 1 (Nagpur Bench) vii) DCIT v. Uttam Sugar Mills Ltd. (2011), 137 TTJ 517 (Delhi ITAT) viii) Sankhla Polymers (P) Ltd. v. ITO (2013), 84 DTR 154 (Kar) ix) Reliance Industries Ltd., dt. 3.6.2016
On the other hand, the ld. DR has supported the orders of the authorities below by reiterating the same argument, which we have already noted in the earlier part of this order and is not being repeated for the sake of brevity.
We have carefully considered the rival submissions. The sum and substance of the argument advanced on behalf of the appellant is that interest u/s 234B of the Act could not be charged in a situation where the addition made by the income-tax authorities is based on a subsequent amendment in law. According to the assessee, during the previous year related to the assessment year under consideration, it could not have visualized the subsequent amendment made by Finance Act No. 2 of 2009 to Sec. 115JB of the Act with retrospective effect from 1.4.2001 whereby the Provision for bad and doubtful debts was liable to be assessed for determining the income u/s 115JB of the Act. The aforesaid argument of the assessee cannot be faulted and in fact, the aforesaid decisions relied upon by the assessee clearly support the assertion that interest u/s 234B of the Act is not chargeable in such situations. Therefore, we find no merit in the objections raised by the Revenue. Accordingly, we set-aside the order of CIT(A) and direct the 5 Indian Petrochemicals Corporation & 6514/Mum/2014 Assessing Officer not to levy interest u/s 234B of the Act with respect to the addition relating to Provision for bad and doubtful debt made while computing the tax liability u/s 115JB of the Act. Thus, the assessee succeeds on this aspect.
Before parting, we may also note another point made out by CIT(A) in order to sustain the levy of interest. According to CIT(A), the issue raised by the assessee was not a mistake which could be rectified within the limited scope of Sec. 154 of the Act. At the time of hearing, the ld. DR also reiterated the above plea and contended that being a debatable issue, the Assessing Officer could not have set-aside levy of interest u/s 234B of the Act while dealing with an application made by the assessee u/s 154 of the Act. It is pointed out that u/s 154 of the Act only mistakes which are apparent from record can be rectified and not debatable issues.
We have considered the aforesaid objection and find no merit in the same. In fact, the action of Assessing Officer in the course of disposing of assessee’s impugned application u/s 154 of the Act belies the stand of the Revenue. Notably, in its application seeking rectification of the interest charged u/s 234B of the Act, assessee also claimed that interest u/s 234D of the Act was wrongly charged, and also that the credit for tax was not correctly granted. The impugned order of the Assessing Officer dated 2.4.2013 reveals that so far as assessee’s pleas for rectification relating to charging of interest u/s 234D of the Act and non-granting of credit of tax is concerned, same have been accepted. Thus, the inconsistency on the part of Revenue does not lend
6 Indian Petrochemicals Corporation & 6514/Mum/2014 any credence to its objection of not rectifying the order with respect to the interest charged u/s 234B of the Act. Thus, on this aspect also, we find no reason to uphold the stand of the Revenue. As a consequence, appeal of the assessee for Assessment Year 2003-04 is allowed, as above.
Since the issues and the facts and circumstances in Assessment Year 2004-05 are pari materia to those considered by us in assessee’s appeal for Assessment Year 2003-04 in the earlier paragraphs, our decision in appeal for Assessment Year 2003-04 shall apply mutatis mutandis in Assessment Year 2004-05 also.
Resultantly, captioned appeals of the assessee are allowed.
Order pronounced in the open court on 22nd July, 2016.