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Before: SHRI AMIT SHUKLA & SHRI RAMIT KOCHAR
Assessee by : Shri Ashwin Kashinath Revenue by : Dr. P.Daniel सुनवाई क� तार�ख /Date of Hearing : 16-11-2015 घोषणा क� तार�ख /Date of Pronouncement : 08-02-2016 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee company, being 17/01/2013 passed by the learned Commissioner of Income Tax (Appeals)- 40, Mumbai (Hereinafter called “the CIT(A)”), for the assessment year 2010-11.
The grounds raised by the assessee company in the memo of appeal filed with the Tribunal read as under:-
“1 The learned Commissioner of Income-tax(Appeals) has erred in law and in facts in passing the order u/s. 250 of the Act.
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2. The learned Commissioner of Income-tax(Appeals) has erred in law and in facts in passing the order in gross violation of principles of natural justice.
3.The learned Commissioner of Income-tax(Appeals) has erred in law and in facts in not appreciating that no income from attached assets can be assessed in the hands of the appellant.
4. The learned Commissioner of Income-Tax(Appeals) has erred in law and in facts in not granting relief of liability amounting to Rs.1,57,85,366/-, towards interest expenditure claimed by the appellant.
5. The learned Commissioner of Income-tax(Appeals ) has erred in law and in facts in calculating book profit u/s 115JB amounting to Rs.1,77,97,551/- .
The learned Commissioner of Income-tax(Appeals) has erred in law and in facts in charging interest u/s 234A, 234B and 234C of the Act.”
3. At the outset, the ld. Counsel for the assessee company mentioned that there is a delay of 47 days in filing the appeal before the Tribunal for the assessment year 2010-11. The Ld. Counsel submitted that affidavit is filed by the assessee company dated 16-09-2014 explaining the reasons for not filing the said appeals in time before the Tribunal and praying for condonation of the delay. In this regard, the said affidavit along with application for condonation filed by the assessee company is brought to our attention by the Ld. Counsel and the relevant extract of the affidavit read as under:
ITA 4358/Mum/2013 3 “2. The Appellant is a notified person u/s. 3 of the Special Court (Trial of offences Relating to Transactions in Securities) Act ,1992 , hereinafter referred to as “Said Act” . The appellant come to be notified by custodian on 8.6.1992 on and from which date all the asset of the Appellant got attached in terms of Section 3(4) of the said Act, they can be dealt with by the Custodian only under the directions of Hon’ble Special Court. That the Hon’ble Court has earlier permitted Custodian to release the requisite fees out of the attached account of Appellant and the Appellant applied for release of the same to Custodian within one day from receipt of order.
I say that the appeal fees so released by the Custodian was received on 24.05.2013 . Your Honours would observed that the appellant has taken all the initiatives to address letters and reminders to the Custodian for the release of the appeal fee for filing the appeal; and that upon receipt of counterfoil of the paid challan , the appeal was submitted before Your Honours . Thus, so far as the applicant was concerned , we were very much diligent and anxious about our obligation . The delay was caused for reasons which were beyond the control of the applicant. As a result of the above, the appeal was filed on 31.05.2013 i.e. late by 47 days.
4. I state that Appellant was prevented by a reasonable cause in filing the appeal for A.Y. 2010-11 in time and there was no deliberate delay or any malafide intention on Appellant part as per facts disclosed in the accompanying application seeking condonation of delay”
Considering the above, we are of considered view that there is a reasonable cause that prevented the assessee company to file the aforementioned appeal before the Tribunal within prescribed time and with a delay of 47 days for the ITA 4358/Mum/2013 4 assessment year 2010-11. Considering the same , we condone the delay under consideration and proceed to adjudicate the appeal on merits.
At the outset, ld Counsel for the assessee company mentioned that ground nos. 1,2 and 3 are not pressed . After hearing the ld. Special Counsel for the Revenue, the said grounds are dismissed as not pressed.
6. Ground No. 4 relates to the disallowance of interest expenditure of Rs.1,57,85,366/-. In this regard the Ld. Counsel of the assessee company submitted that the Tribunal in the assessee company’s own case for the assessment year 1995-96 to 1999-2000 , 2003-04 , 2004-05 , 2005-06 and 2007-08 in vide orders dated 20.11.2013, ITA no. 5203/Mum/ 2013 vide orders dated 18.12.2004 , ITA No. 4629/Mum/2011 dated 06.11.2013 , ITA no. 4020/Mum/2011 dated 20.11.2013 and ITA no. 8478/Mum/2010 dated 20.11.2013 on identical issue has set aside the matter to the file of the CIT(A) for fresh adjudication of the issue. The said orders of the Tribunal are placed in the paper book filed by the assessee company with the Tribunal.
The Ld. Special counsel of the Revenue admitted that the issue involved in the aforestated orders of the Tribunal is identical and the Tribunal for the said assessment years has set aside the issue for fresh adjudication to the file of the CIT(A).
Having regard to the circumstances of the case and after hearing both the parties, we set aside the issue to the file of the CIT(A) , who is directed to adjudicate the matter afresh in accordance with law and in the lines indicated in the aforementioned orders of the Tribunal. Needless to say that the assessee company shall be granted a reasonable opportunity of being heard by the CIT(A). We order accordingly.
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9. Ground No. 5 relates to the calculating of book profit u/s 115JB amounting to Rs.1,77,97,551/- . The ld. Counsel for the assessee company submitted that this ground is consequential to ground no 4, arising due to disallowance of interest expenditure of Rs. Rs.1,57,85,366/- by the Revenue and as confirmed by the CIT(A), which is agitated by the assessee company vide ground no.4 . Ld. Senior Counsel for the revenue agreed that this ground is consequential.
We have heard both the counsel’s and perused the material on record. We have observed that this ground relating to the calculating of book profit u/s 115JB amounting to Rs.1,77,97,551/ is consequential to our decision in the ground no 4 raised by the assessee company, which we have adjudicated in preceding para’s of this order . We order accordingly.
Ground No 6 relates to levy of interest u/s 234A, 234B and 234C of the Act. The ld. Counsel for the assessee company submitted that interest u/s 234A , 234B and 234C is mandatory but the interest liability to be calculated after taking into account Tax deducted at source . The Ld. Counsel for the assessee company relied upon decisions of the Tribunal in the case of DCIT v. Smt Rasila S. Mehta in vide orders dated 21.10.2015, Divine Holding Pvt. Ltd. v. ACIT in ITA no. 560/Mum/2013 dated 21.10.2015 and Aatur Holdings Private Limited v. DCIT in ITA no. 846 , 1032 , 2147/Mum/2010 dated 23-09-2015 , whereby Tribunal has restored the issue to the file of the learned assessing officer who would levy the interest as per provisions of Section 234 after reducing the amount of tax deductible at source and decide as per the provision of law. The Tribunal decision in ITA no. 846,1032,2147/ Mum/ 2010 dated 23-09-2015 is reproduced below :
ITA 4358/Mum/2013 6 “6. Last ground of appeal for all the three assessment years pertain to levy of interest u/s 234A, 234B and 234C of the Act. Before us, the representatives of both the sides agreed that identical issue was decided in the cases of Topaz Holdings Pvt. Limited ( ITA/2146/Mum/2013, A.Y. 2001-02 dtd.18.06.2014) and Eminent Holdings Pvt. Ltd. (ITA/2139/Mum/2013, A.Y.2002-03, dated 18.06.2014), that the Tribunal had upheld the levy of interest in principal, that it had set aside the issue for calculating the interest to the file of the AO with direction that the tax deducted at source should be reduced while calculating the interest. We find that the issue was discussed in the case of Eminent Holdings Pvt. Ltd.(supra) 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 consideration was subjected to the provisions of TDS, that the chargeability of 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 ITA 4358/Mum/2013 7 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)), Vijay Gopal Jindal (ITA No. 4333/Del/2009) & Emillo Ruiz Berdejo (320 ITR 190(Bom.) . DR relied upon the cases of Divine Holdings Pvt. Ltd. . 3.1 We have heard the rival submissions and perused the material before us. We find that in the case of Divine 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.
Respectfully, following the above order we restore back the issue to the file of the AO who would levy the interest as per the provisions of section 234 of the Act and give credit for the TDS amounts. Ground no. 6 for all the three A.Y.s stands partly allowed.”
The Ld. Counsel for the assessee company submitted that the Tribunal has in the assessee company’s own case has adjudicated the issue in for assessment year 2003-04, vide orders dated 18.12.2014 as under:
Ground No. 5 relates to charging of interest u/s 234A and 234B of the Act. In connection with the charge of interest u/s 234B of the Act, Ld. ITA 4358/Mum/2013 8 Counsel for the assessee submitted that the assessee being a ‘notified person’, there is no charge of interest. It is his further submissions that the receipts of the assessee are subjected to TDS. On the contrary, Special Counsel for the Revenue filed various decisions of the Tribunal in support of charge of interest. The judgment of the jurisdictional High Court in the case of CIT vs. Divine Holding Pvt. Ltd. was relied on by the Spl. Counsel for the Revenue. During the rebuttal time, Ld. Counsel submitted that this issue should also revisit the file of the AO for removal of certain inaccuracies in calculating the interest. We order accordingly. Thus, ground no.6 is allowed for statistical purposes.
10. In the result, assessee’s appeal is partly allowed for statistical purposes.”
Ld. Special counsel of the Revenue submitted that the leviability of Interest u/s 234A, 234B and 234C of the Act is mandatory. He Relied upon decision of the Hon’ble jurisdictional High Court in the case of Divine Holdings Private Limited in of 2010 , whereby Hon’ble Bombay High Court has held that in case of notified parties under the Special Court Act , interest u/s 234A , 234B and 234C of the Act has to be levied and contended that the interest u/s 234 is mandatory.
After hearing both the parties and carefully considering the material on records including relied upon case , Respectfully , following the above order’s of the Tribunal , we restore the issue back to the file of learned assessing officer who would levy interest as per provisions of Section 234 of the Act and give credit for the TDS amount. We order accordingly.
In the result, the appeal filed by the assessee company is partly allowed for statistical purposes.
ITA 4358/Mum/2013 9 Order pronounced in the open court on 08th February, 2016. आदेश क� घोषणा खुले �यायालय म� �दनांकः 8-02-2016 को क� गई ।