APOLLO FINVEST (INDIA) LTD, MUMBAI V. ITO 9(1)(1), MUMBAI

CO 197/MUM/2009

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4934 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 06-01-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 05-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR HARGOVIND SI NGH
• Keywords: Retrospective amendment; Reasonable cause; Condonation of delay
• Section: 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI. BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER C.O. NO. 197/MUM/2009. (IN ITA NO. 776/MUM/2008) ASSESSMENT YEAR : 2004-05. APOLLO FINVEST (INDIA) LTD. THE INCOME-TAX OFFICER, C/O SHANKARLAL JAIN & ASSOCIATES, VS. 9(1)( 1), MUMBAI. 12, ENGINEER BUILDING, 265, PRINCESS SSTREET, MUMBAI 400 002. PAN AAACA-0952A CROSS OBJECTOR. RESPONDENT CROSS OBJECTOR BY : SHRI S.L. JAIN. RESPONDENT BY : DR. HARGOVIND SINGH. O R D E R PER J. SUDHAKAR REDDY, A.M. BY THIS CROSS OBJECTION THE ASSESSEE RAISED THE F OLLOWING GROUND : THE LD. C.I.T.(A) ERRED IN DISPOSING OFF GROUND N O.4 CHALLENGING IMPOSITION OF INTEREST U/S 234B MERELY AS CONSEQUENTIAL AND NOT HOLDING THAT NO INTEREST IS C HARGEABLE AS INCOME IS ASSESSED U/S 115JB AND HENCE ASSESSEE WAS NOT LIABLE FOR IMPOSITION OF INTEREST U/S 234B. 2. THERE IS A DELAY OF 60 DAYS IN FILING THE CROS S OBJECTION. THE ASSESSEE FILED AN AFFIDAVIT ALONG WITH APPLICATION FOR CONDONATION OF DELAY IN FILING THE CROSS OBJECTION. AFTER PERUSING THE A FFIDAVIT AS WELL AS THE 2 APPLICATION FOR CONDONATION, WE ARE OF THE CONSIDER ED OPINION THAT THE ASSESSEE WAS PREVENTED BY REASONABLE CAUSE IN FILIN G THE CROSS OBJECTION IN TIME. THUS WE CONDONE THE DELAY AND ADMIT THE CR OSS OBJECTION. 3. WE HAVE HERD SHRI S.L. JAIN, LEARNED COUNSEL FO R THE ASSESSEE AND DR. HARGOVIND SINGH, LEARNED DR. 4. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIR CUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS. 5. THE ASSESSEES INCOME IS COMPUTED U/S.115JB OF THE ACT. THE ASSESSEE HAD MADE A PROVISION FOR DIMINUTION FOR VA LUE OF INVESTMENTS. THE A.O. ADDED BACK THIS PROVISION TO THE BOOK PROF ITS DETERMINED UNDER SECTION 115JB OF THE ACT. 6. ON APPEAL, THE CIT(A) APPLIED THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. HCL SYSTEMS SERVICE LT D. (305 ITR 407)(SC) AND GRANTED RELIEF TO THE ASSESSEE. THE A SSESSEE HAD TAKEN A GROUND ON LEVY OF INTEREST U/S.234B OF THE ACT. TH E LEARNED CIT(A) HELD THAT THE SAME IS CONSEQUENTIAL. 7 THEREAFTER, THE INCOME-TAX ACT WAS AMENDED FIVE F INANCE BILL, 2009. THE PRESIDENTS CONSENT WAS GIVEN ON 19.8.2 009 UNDER THE PROVISIONS OF THIS FINANCE ACT, SECTION 115JB WAS A MENDED AND THE SUPREME COURT IN THE CASE OF CIT VS. HCL SYSTEMS AN D SERVICES PVT. LTD. WAS NOTIFIED WITH RETROSPECTIVE AMENDMENT. IT WAS BROUGHT INTO THE STATUTE THAT ANY AMOUNT SET ASIDE FOR DIMINUTION IN THE VALUE OF ASSETS 3 WOULD BE ADDED TO THE BOOK PROFITS WITH EFFECT FROM 1.4.2001. AS A RESULT OF THE AMENDMENTS TO SECTION 115JB WITH RETROSPECTI VE EFFECT, PROVISIONS MADE BY THE ASSESSEE FOR DIMINUTION IN THE VALUE OF INVESTMENTS WILL NOW BE REQUIRED TO BE ADDED TO THE BOOK PROFITS. THE A SSESSEE SUBMITS THAT THE INTEREST CANNOT BE LEVIED UNDER SECTION 234B IN VIE W OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF KWALITY BI SCUITS 284 ITR 434 (SC) WHICH HAS BEEN FOLLOWED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF SNOWCHEM INDIA LTD. (313 ITR 170)(BOM.). THE ASS ESSEE ALSO PLEADS IMPOSSIBILITY OF PERFORMANCE, AS IT COULD NOT ANTI CIPATE THE RETROSPECTIVE AMENDMENT. 8 WE FIND THAT THE ISSUE OF LEVY OF INTEREST UNDER SECTION 234B, WHERE INCOME IS COMPUTED UNDER SECTION 115JB HAS BEEN ADJ UDICATED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE JURI SDICTIONAL HIGH COURT IN THE CASE OF SNOWCHEM INDIA LTD. (313 ITR 170). RE SPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO NOT TO IMPOSE LEVY OF IN TEREST U/S.234B WHEN BOOK PROFITS ARE COMPUTED UNDER SECTION 115JB OF TH E ACT. 10. IN THE RESULT, THE CROSS OBJECTION OF THE ASSES SEE IS ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JULY, 2010. SD. SD. (D.K. AGARWAL) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI, DATED : 30 TH JULY, 2010. KN 4 COPY FORWARDED TO : 1. CROSS OBJECTOR. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, A-BENCH (TRUE COPY) BY ORDER ASSTT .REGISTRAR, I TAT, MUMBAI BENCHES, MUMBAI.