Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Mahavir Singh, JM & Shri M. Balaganesh, AM]
ORDER
Per Shri Mahavir Singh, JM:
1. This appeal by revenue is arising out of order of CIT(A), Central-II, Kolkata vide Appeal No. 8/CC-XIII/CIT(A)-C-II/12-13 dated 27.11.2012. Assessment was framed by DCIT, CC-XIII, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2006-07 vide his order dated 13.06.2008.
The only issue in this appeal of revenue is against the order of CIT(A) in deleting the levy of interest u/s. 234B and 234C of the Act. For this, revenue has raised following ground no.1:
1. That on the facts and circumstances in the case, the CIT(A) has erred in allowing interest u/s. 234B and 234C of the Act. As the assessee is a corporate assessee, tax shall be payable in advance tax during any financial year in accordance with the provisions of sections 208 to 219 (both inclusive) in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year.”
Briefly stated facts are that the appeal originally arose out of charging of interest u/s. 234B and 234C of the Act on the basis of tax calculated u/s. 115JB of the Act after adjustment for deferred tax under Explanation (i)(h) to sub-section (2) of the Act. The CIT(A) decided the appeal in favour of the assessee vide his order dated 31.10.2008 in appeal no. 19/CC-XIII/CIT(A)-C-II/08-09. This order of the CIT(A) was upheld by ITAT, Kolkata vide order dt. 24.06.09 in in view of the order of the Hon’ble Supreme Court of India in the case of Kwality Biscuits Ltd. Vs. CIT (2006) 284 ITR 434 (SC). The Department filed appeal u/s 260A before Hon'ble High Court of Calcutta which was pleased to dismiss the appeal of the Department vide order dated 2 Jai Balaji Sponge Ltd. AY 2006-07 20.04.2010 in ITAT No. 1/2010 in view of its own order dated 04.03.2010 in the case of Binani Industries Ltd. Vs. CIT (ITA No. 504 of 2010). Against the order of the Hon'ble High Court of Calcutta, the department filed SLP to Appeal (Civil) No.4522/2011 before Hon'ble Supreme Court which inter-alia restored the matter in the file of CIT(A) to examine the question of shortfall, if any, in payment of Advance Tax on the basis of the judgement in the case of Rolta India Ltd. reported in (2011) 330 ITR 470 (SC).
We find that the assessee company filed return of income on 13.11.2006 declaring a loss of Rs.17,60,786/-. The assessment was completed u/s 143(3) on 13.06.2008 determining total income of Rs.2,49,680/-. However, tax was charged on book profit which was determined at Rs.40,91,46,563/- u/s 115JB of the Act. We further find that in arriving at book profit an adjustment for Deferred Tax of Rs.10,34,37,589/- was made as per provision to Sec.115JB(2) read with Explanation (i)(h) of the Act as amended by the Finance Act, 2008 w.e.f. 01.04.2001. The Finance Act got assent of Hon'ble President of India only on 10.05.0208. On the basis of the said amendment, tax was determined u/s 115JB of the Act & interest was charged u/s 234B & 234C of the Act after giving due credit for TDS and Advance Tax. However, such liability to pay interest u/s 234B & 234C of the Act, which are penal in nature has been arrived at after adjustment of Deferred Tax as per provision of Explanation (i)(h) to Sub-section (2) as mentioned above. The amendment to the Explanation by way of adding another clause i.e. Clause (i)(h), which did not exist during the AY under consideration, has come into existence by virtue of the enactment of Finance Act, 2008, on 10.05.2008, much after the date of filing of return by the assessee on 13.11.2006. This amendment brought into existence a procedure for determination of MAT after adjustment of a new item i.e. "Deferred Tax" provision. It is this amendment that enhanced the book profit of the assessee by Rs.10,34,37,589/- resulting in payment of bigger liability of advance-tax. But by the time the amendment was brought in, the financial year was already over. Under the circumstances, the payment of advance tax before the due date was impossible and for such failure to pay advance tax, the A.O. charged interest u/s 234B & 234C of the Act. The CIT(A) reversed the order of AO and against the same revenue came in second appeal before the Tribunal.
In view of the above facts and circumstances of the case, we find that the issue now stands covered by the decision of Hon’ble jurisdictional High court in the case of 3 Jai Balaji Sponge Ltd. AY 2006-07 Emami Ltd. Vs. CIT (2011) 337 ITR 470 (Cal) wherein Hon’ble High Court after going through the judgment of Hon’ble Supreme Court in the case of JCIT Vs. Rolta India Ltd. (2011) 330 ITR 470 (SC) held that the assessee has no liability to pay any advance tax which did not exist on the date of payment of such tax or on the last date of the financial year but it arises subsequently by virtue of amendment in the Finance Act, 2008. Hon’ble High Court ruled as under: “A mere reading of those provisions leaves no doubt that the advance tax is an amount payable in advance during any financial year in accordance with the provisions of the Act in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year. Thus, in order to hold an assessee liable for payment of advance tax, the liability to pay such tax must exist on the last date of payment of advance tax as provided under the Act or at least on the last date of the financial year preceding the assessment year in question. If such liability arises subsequently when the last date of payment of advance tax or even the last date of the financial year preceding the assessment year is over, it is inappropriate to suggest that still the assessee had the liability to pay "advance tax" within the meaning of the Act."
In view of the above judgment of Hon’ble jurisdictional High Court in the case of Emami Ltd., supra, we are of the view that there is no dispute about the proposition that assessee was liable to pay advance tax on income determined in accordance with the provisions of section 115JB of the Act. However, whether there is any liability to pay interest u/s. 234B and 234C of the Act will depend upon the position of law in regard to a particular issue as prevailing on the date and filing of return of income and not on the basis of subsequent event i.e. retrospective amendment by virtue of Finance Act, 2008 w.r.e.f. 01.04.2001. The assessee cannot be asked to do impossible. Here, in the present case the relevant assessment year is 2006-07 and assessee filed its return of income on 29.11.2006 i.e. much prior to the amendment brought out by Finance Act, 2008 retrospectively w.e.f. 01.04.2001 bringing into a procedure for determination of MAT after adjustment of new item i.e. deferred tax provision. Accordingly, we are of the view that Hon'ble Calcutta High Court has answered this question by holding that an assessee is liable for payment of advance tax if the liability to pay such tax exists on the last date of payment of advance tax as provided under the Act or at least on the last date of financial year; preceding the assessment year in question. According to Hon'ble High Court if such a liability arises subsequently when the last date for payment of advance tax or even the last date of financial year preceding the assessment year is over, assessee has no liability to pay advance tax. Where this is the position, interest u/s. 234B and 4 Jai Balaji Sponge Ltd. AY 2006-07 234C cannot be charged in this case. Accordingly, we confirm the order of CIT(A) and this issue of revenue’s appeal is dismissed. 6. In the result, appeal of revenue is dismissed. 7. Order is pronounced in the open court. Sd/- Sd/- (M. Balaganesh) (Mahavir Singh) Accountant Member Judicial Member
Dated : 15th December, 2015 Jd.(Sr.P.S.) Copy of the order forwarded to:
APPELLANT – DCIT, CC-XIII, Kolkata. 2 Respondent –M/s. Jai Balaji Sponge Ltd., 5, Bentinck Street, Kolkata-700 001. . 3. The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata