DCIT, Circle-3(1), Hyd, Hyderabad V. Shriram Life Insurance Co.Ltd., Hyd, Hyderabad

ITA 1274/HYD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6032 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 05-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: V SIVA KUMAR; E V SRIKRISHNA
• Keywords: Revised return
• Section: 154

Judgement Text

1 ITA.NO.1274/HYD/2015 M/S. SHRIRAM LIFE INSURANCE CO., LTD., HYDERABAD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1274/HYD/2015 ASSESSMENT YEAR 2007-2008 THE DCIT, CIRCLE-3(1) HYDERABAD. VS. M/S. SHRIRAM LIFE INSURANCE CO., LTD., HYDERABAD.500032 PAN AAJCS1033P (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. U. MINICHANDRAN FOR ASSESSEE : SHRI E.V. SRI KRISHNA & SHRI V. SIVAKUMAR DATE OF HEARING : 23.03.2017 DATE OF PRONOUNCEMENT : 23.03.2017 ORDER PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 19.08.2015, PASSED BY THE CIT(A)-3, HYDERABAD. 2. BRIEF FACTS, NECESSARY FOR THE DISPOSAL OF THE APP EAL, ARE STATED IN BRIEF. ASSESSEE-COMPANY, AS THE NAME SUGGESTS , IS ENGAGED IN LIFE INSURANCE BUSINESS. FOR THE YEAR UNDER CONSIDER ATION, IT DECLARED A NET TAXABLE INCOME OF RS.15.97 CRORES ON 30.10.2007 . LATER A REVISED RETURN WAS FILED ON 5 TH DECEMBER, 2007 WHEREIN TAX ON THE RETURNED INCOME WORKS-OUT AT RS.1,99,68,488, BEING 12.5% OF TH E NET TAXABLE INCOME. 2 ITA.NO.1274/HYD/2015 M/S. SHRIRAM LIFE INSURANCE CO., LTD., HYDERABAD. 2.1. THIS IS THE FIRST YEAR FROM WHICH THE COMPANY I S MANDATORILY REQUIRED TO FILE THE RETURNS OF INCOME ONLINE. WHILE E XPLAINING THE PROCEDURE TO BE FOLLOWED, IT WAS SUBMITTED THAT INFORMATIO N HAS TO BE FED IN EXCEL UTILITY , WHICH WAS PROVIDED TO THE DEPARTMENT, AND AFTER FEEDING THE RELEVANT INFORMATION THE UTILITY WOULD GEN ERATE XML FILE WHICH WAS UPLOADED TO INCOME TAX WEBSITE, TO COMPLETE E-FIL ING. BEING THE FIRST YEAR OF E-RETURN FILING, IT DID NOT CONTAIN ANY CHECKS AND BALANCES TO VERIFY THE CONTENTS OF THE AMOUNT AND OTHER INFORMATION. T HE TAX AMOUNT, RATE OF TAX ARE TO BE ENTERED INTO THE UTILITY M ANUALLY AND THERE WAS NO MECHANISM TO PROMPT ANY POSSIBLE ERROR AND MIS TAKES. DUE TO THE ABOVE REASONING, CERTAIN ERRORS HAVE CREPT IN THE RETURN FILED WHEREBY IT WAS DEPICTED THAT THE ASSESSEE WAS TO BE CHARG ED TO TAX AT NORMAL RATES I.E., 30% INSTEAD OF THE CORRECT RATE OF 1 2.5%. 2.2. THE A.O. APPEARS TO HAVE PROCESSED THE RETURN B UT NEITHER THE ORDER UNDER SECTION 143(1) NOR NOTICE OF DEMAND UN DER SECTION 156 WAS RECEIVED BY THE ASSESSEE. WHEN THE INCOME TAX REF UND ORDER - PERTAINING TO A.Y. 2009-2010 - WAS RECEIVED INDICATING THAT THE REFUND WAS ADJUSTED AGAINST THE DEMAND FOR THE A.Y. 2007-08, TH E ASSESSEE CAME TO KNOW THAT THERE WAS AN OUTSTANDING DEMAND FOR A. Y. 2007-08 DUE TO INCORRECT APPLICATION OF RATE OF TAX. IMMEDIATE LY I.E., IN AUGUST, 2011 ASSESSEE FILED APPLICATION UNDER SECTION 154 OF THE ACT SEEKING RECTIFICATION OF THE ORDER PASSED BY THE A.O SINCE IT WA S A TECHNICAL ERROR. THE A.O. REJECTED THE REQUEST BY OBSERVING THAT ASSESS EE IS ENTITLED TO SEEK SETTLEMENT OF THE GRIEVANCE AS PER LAW. IN THE SAID ORDER DATED 17.11.2014 REFERENCE WAS MADE TO THE APPLICATION DATED 16.05.2014. 2.3. IT MAY BE STATED THAT THE ORDER UNDER SECTION 143 (1) WAS ACTUALLY PASSED ON 18.03.2009 AND EVEN RECKONED FROM THAT DATE, THE APPLICATION FILED UNDER SECTION 154 DATED 23.08.2011 W AS WITHIN THE 3 ITA.NO.1274/HYD/2015 M/S. SHRIRAM LIFE INSURANCE CO., LTD., HYDERABAD. TIME PERMISSIBLE UNDER LAW BUT THE A.O. HAVING NOT ACTED UPON THE PETITION, REMINDER LETTERS WERE SENT FROM TIME TO TIME TILL 2014 AND BY MISTAKE THE A.O. HAD GIVEN REFERENCE TO THE LETTER DATED 16.05.2014. HOWEVER, THE APPLICATION WAS NOT REJECTED ON THE GROUND OF DELAY IN FILING APPLICATION UNDER SECTION 154 BUT ON MERITS BY OBSERVING AS UNDER: IT IS NOTICED FROM YOUR RETURN OF INCOME FILED THA T YOU HAVE NOT CLAIMED ANY SPECIAL RATE TAXES TO BE PAID AT THE TI ME OF FILING OF RETURN OF INCOME. THE CLAIM OF SPECIAL RATE TAX IN THE RETURN OF INCOME, AS PER COLUMN 2B OF PART-B-TTI, IS SPECIFIC ALLY STATED AS NIL. IT IS ONLY NOW THAT YOU HAVE BEEN SEEKING A LOWER R ATE OF TAXES TO BE ADOPTED. AS THERE IS NO MISTAKE APPARENT FROM RE CORD, CALLING FOR ANY ACTION FROM THIS END, YOUR REQUEST CANNOT BE AC CEDED TO U/S.154. YOU MAY SEEK FOR SETTLEMENT OF YOUR GRIEVA NCE AS PER LAW. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) CONTENDING, INTER ALIA, THAT THERE IS NO DISPUTE WITH REGARD TO THE PERCENTAGE OF TAX CHARGEABLE IN RESPECT OF LIFE INSURA NCE COMPANY AND IN FACT, THE TAX PAID BY THE ASSESSEE ON THE RETURNED INC OME EXACTLY WORKS-OUT TO 12.5% AND HENCE, THE A.O. OUGHT NOT TO HAVE GONE BY THE TECHNICAL MISTAKE COMMITTED SINCE THE NAME OF THE COMPAN Y ITSELF SUGGESTS THAT IT IS LIFE INSURANCE COMPANY ON WHICH S PECIAL RATE OF TAX IS APPLICABLE. 4. LD. CIT(A) CONSIDERED THE ISSUE AT GREAT LENGTH AN D NOTICED THAT THE ASSESSEE DECLARED ITS INCOME AND COMPUTED TAX AT THE SPECIAL RATES APPLICABLE TO HIM BUT FILLED-IN WRONG COLUMNS. SHE FURTHER OBSERVED THAT THE AMOUNT OF TAX DUE TO THE INCOME TAX DEPAR TMENT LEGITIMATELY IS ONLY 12.5% WHEREAS A.O. SOUGHT TO ENCAS H THE MINOR TECHNICAL ERROR, IN THE FIRST YEAR OF E-FILING PROCED URE, BY TAXING THE ASSESSEE AT A HIGHER RATE WHICH IS NOT PERMISSIBLE IN LAW. ACCORDINGLY, THE A.O. WAS DIRECTED TO COMPUTE THE TAX AT 12.5% AS PER SECTION 115B 4 ITA.NO.1274/HYD/2015 M/S. SHRIRAM LIFE INSURANCE CO., LTD., HYDERABAD. OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), R EVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL. 5. AS NOTICED FROM THE GROUNDS OF APPEAL, THE FIRST P OINT URGED WAS THAT THE RECTIFICATION APPLICATION FILED WAS BEYOND THE TIME LIMIT PRESCRIBED, OVERLOOKING THE FACT THAT THE ORIGINAL RECTIF ICATION PETITION WAS FILED IN 2011 WHILE THE RETURN WAS PROCESSED ON 1 8.03.2009 AND THUS, IT WAS WITHIN THE TIME LIMIT PROVIDED UNDER THE ACT. 6. LD. D.R. FAIRLY ADMITTED THE MISTAKE. HOWEVER, LD. D.R. SUBMITTED THAT THE ASSESSEE HAVING NOT FILLED-IN COLUMNS CORRECTLY THE A.O. HAS NOT COMMITTED ANY MISTAKE IN ADOPTING THE TAX RA TE AT 30%. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY PERUSED THE RECORD. IT IS WELL SETTLED THAT UNDER ARTICLE 265 OF THE CONSTITUTION OF INDIA NO TAX CAN BE COLLECTED WITHOUT THE AUTHORITY O F LAW. IN THE INSTANT CASE, THE LAW PROVIDES FOR COLLECTION OF TAX AT 1 2.5% ONLY IN THE CASE OF LIFE INSURANCE COMPANIES WHICH ARE REGISTERE D WITH THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA ). APART FROM THAT THE CBDT HAS ISSUED CIRCULAR NO.14(XL) 35 DATED 11 .04.1955 WHEREIN THE DEPARTMENT WAS ADVISED NOT TO TAKE ADVANTAGE OF IGNORANCE OF ASSESSEE TO COLLECT MORE TAX THAN WHAT IS LEGITIMATELY DUE. IN OTHERWORDS, THE SAID CIRCULAR CASTS A DUTY UPON THE A.O . TO ADVISE THE ASSESSEE/GUIDE HIM AND NOT TO TAKE ADVANTAGE OF ANY ER ROR OR MISTAKE COMMITTED BY THE ASSESSEE INADVERTENTLY AND SUCH MISTAK ES SHOULD BE RECTIFIED UNDER SECTION 154 OF THE ACT. (SEE LATEST JUDGMENT OF DELHI HIGH COURT IN THE CASE OF VIJAY GUPTA VS. CIT - WP(C) NO .1572 OF 2013 DATED 23.03.2016). IN CASE OF ANY MISTAKE IN THE RETURN THE REVENUE SHOUL D NOT ENCASH ON THE MISTAKE COMMITTED BY THE ASSESSEE AND IT IS THE DUTY OF THE A.O. TO COLLECT PROPER TAX PERMISSIBLE UNDER LAW . 5 ITA.NO.1274/HYD/2015 M/S. SHRIRAM LIFE INSURANCE CO., LTD., HYDERABAD. 7.1. IN FACT, THE VERY NAME OF THE ASSESSEE SUGGESTS TH AT IT IS LIC AND IT IS TAXABLE AT 12.5% AND THUS THE MISTAKE, IF ANY , IN THE ORIGINAL RETURN AND THE TAX LEVIED ON THE BASIS OF THE ORIGINAL R ETURN CAN BE CONSIDERED AS A MISTAKE APPARENT FROM RECORD AND THE A .O. IS DUTY BOUND TO CORRECT THE SAME. SINCE THE LD. CIT(A) HAS GI VEN A DIRECTION ON THE SAME LINES, WE DO NOT FIND ANY INFIRMITY IN THE OR DER PASSED BY THE CIT(A) AND ACCORDINGLY, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.03.2 017. SD/- SD/- (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED 23 RD MARCH, 2017 VBP/- COPY TO 1. THE DCIT, CIRCLE-3(1), 7 TH FLOOR, B BLOCK, IT TOWERS, A.C. GUARDS, HYDERABAD. 2. M/S. SHRIRAM LIFE INSURANCE CO., LTD., PLOT NO.31 & 32, 5 TH FLOOR, RAMKY SELENIUM, FINANCIAL DISTRICT, BESIDES ANDHRA BA NK TRAINING CENTRE, GACHIBOWLI, HYDERABAD 500 032. 3. CIT(A)-3, HYDERABAD. 4. PR. CIT-3, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE