CONTINENTAL CONSTRUCTION LTD.,NEW DELHI vs. ACIT, NEW DELHI

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ITA 3662/DEL/2017Status: DisposedITAT Delhi09 November 2023AY 1983-84Bench: SH. N. K. BILLAIYA (Accountant Member), MS. ASTHA CHANDRA (Judicial Member)5 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the AO should recompute the interest by first giving full credit for taxes paid and then levying interest on the remaining demand. Interest should not be levied on the demand stayed by the High Court.

What were the facts?

The assessee, engaged in construction work abroad, faced issues with tax demand and interest calculation for AY 1983-84 due to non-repatriation of funds caused by geopolitical events. The Assessing Officer (AO) initially granted waiver of interest but later revoked it, creating a fresh demand. The assessee challenged this, and the Delhi High Court stayed a portion of the demand.

What were the issues?

The key issues were the correctness of charging interest under Section 220(2) on a demand that was subject to waiver and subsequent revocation, and the proper method of calculating interest on tax paid.

Which sections of the Income-tax Act were involved?

Section 220(2),Section 220(7),Section 154

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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI

Before: SH. N. K. BILLAIYA & MS. ASTHA CHANDRA

Hearing: 09/11/2023Pronounced: 09/11/2023

BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER Assessment Year: 1983-84 Continental Constructions ACIT Ltd., 28, Nehru Place Circle – 4 (2) New Delhi-110019 Vs. New Delhi PAN No.AAACC2309R (APPELLANT) (RESPONDENT) Appellant by Sh. M.P. Rastogi, Advocate Respondent by Sh. T. James Singson, CIT DR Date of hearing: 09/11/2023 Date of Pronouncement: 09/11/2023 ORDER

PER N. K. BILLAIYA, AM:

1.

This appeal by the assessee is preferred against the order of the CIT(A)-2, New Delhi dated 28-02-2017 pertaining to A.Y.1983- 84.

2. The grievance of the assessee read as under :- 1. On facts and circumstances and in law, learned assessing officer and CIT(A) have erred and were not justified in charging of interest u/s 220(2) in respect of the Impugned amount of Rs 14,15,99,180/- (which was determined by order u/s 220(7) dated 05/01/2001) for any period prior to the date of revocation of the said order u/s 220(7) i.e 12/06/2007.

2.

Learned assessing officer has failed to appreciate the law that interest u/s 220(2) is chargeable only when there is an un-discharged demand notice, which in the case of appellant could be said to have arisen only on 12/06/2007, consequent to the order of revocation and thus interest should have been chargeable only on default of payment of demand stated in the notice u/s 156 dated 12/06/2007.

3. On facts & circumstances of the case and in law, learned assessing officer & CIT(A) have failed to correctly appreciate the ratio of the judgement of the Apex Court in the case of Vikrant Tyres Ltd reported in 247 ITR 821 (SC)

4.

The above grounds of appeal are independent without prejudice to each other.

5.

The assessee craves to add, modify any new ground of appeal or adduce any new evidence during the course of appeal, as may be necessary, for the disposal of appeal and discharge of due justice to the appellant.

3.

Briefly stated the facts of the case are that the assessee is in the business of construction work at various projects in Iraq and other countries.

4. The original assessment for the year under consideration was made on 27.09.85 on an income of Rs.894135103/-. The assessment was challenged first before the CIT(A) and then before the ITAT. 5. After the order of the ITAT appeal effect was given by the AO vide order dated 19.05.86 wherein the income finally assessed was at Rs.78,58,66,520/-and the tax was determined at Rs.58,05,73,840/-. After giving the credit of tax paid by the assessee Rs.45769917/- the balance tax payable was determined at Rs.53,48,03,923/- and the interest u/s. 220 (2) of the Act was charged at Rs.15,91,63,740/- determining the tax demand of Rs.69,39,67,663/- . 6. Further order u/s. 154 of the Act was made on 31.08.87 giving effect to the consequential appeal order for A.Y. 1982-83 in which the income was determined at Rs.56,12,79,010/- and demand of Rs.46,32,53,389/- which included interest u/s. 220 of the Act at Rs.17,78,80,125/-. 7. Assessee moved an application u/s. 220 (7) of the Act for the waiver of interest in respect of the amount which could not be repatriated to India on account of Iran-Iraq war, invasion of Kuwait by Iraq and then finally the invasion of Iraq by UN led forces.

8.

The AO accepted the claim of the assessee but lateron revoking its order and fresh demand was created. In this fresh demand the AO allowed the credit of tax paid after charging interest u/s. 220 (2) of the Act.

9.

The assessee challenged this action of the AO by way of the writ petition before the Hon’ble High Court in WP(C) No. 7660 / 2007 and the Hon’ble High Court of Delhi stayed recovery of the demand of Rs.5,59,36,029/- . 10. The quarrel before us is the denial of the full tax credit and charging of interest u/s. 220(2) of the Act. 11. Having heard the rival submissions, we are of the considered view that the AO should recompute the levy of interest after giving full credit of taxes paid by the assessee first and then levy interest u/s. 220 (2) of the Act on every date of payment of taxes by the assessee. 12. Since Hon’ble High Court of Delhi has stayed the recovery of the demand of Rs.55936029/-, the AO is directed not to levy interest on the demand stayed by the Hon’ble High Court. 13. It is made clear that the AO shall give a computation sheet of charging of interest u/s. 220 (2) of the Act and decide the issue after affording a reasonable and adequate opportunity of being heard to the assessee. 14. In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on 09.11.2023.

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