M/s. Maya Trade Links Ltd, Kolkata V. DCIT, Circle - 8, Kolkata, Kolkata

ITA 1510/KOL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70510 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2011
• Court: TRIBUNAL
• Department Lawyers: V A RAJU
• Keywords: Retrospective amendment; Bad and doubtful debts
• Section: 143(3); 234B; 115JB; 11

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 1510/KOL/2011 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2007-08 M/S. MAYA TRADE LINKS LTD., VS. DEPUTY COMMISSI ONER OF INCOME-TAX, (PAN: AAACM2192G) CIRCLE-8, KOLKATA (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 12.12.2013 DATE OF PRONOUNCEMENT: 19.12.2013 FOR THE APPELLANT: SHRI RAJEEVA KUMAR FOR THE RESPONDENT: SHRI V. A. RAJU, SR. DR $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-VIII, KOLKATA IN APPEAL NO. 186/CIT(A)-VIII/KOL/09-10 DATED 10.08.2011. ASSESS MENT WAS FRAMED BY DCIT, CIRCLE-8, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DATED 17.11. 2009. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS NOT PRESSING THE FIRST ISSUE OF DISALLOWANCE OF PROVISION FOR DOUBTFUL DEBTS AND PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS. FOR THIS, ASSESSEE RAISED FOLLOWING G ROUND NO.1: 1. THAT THE LD. CIT(A) ERRED IN CONFIRMING DISALLO WANCE OF PROVISION FOR DOUBTFUL DEBTS OF RS.34,21,220/- & PROVISION FOR DIMINUTION IN VA LUE OF INVESTMENTS OF RS.69,05,402/- MADE BY THE A.O. WHILE COMPUTING THE TOTAL INCOME U /S. 115JB OF THE I. TAX ACT, 1961. THE SAME IS WRONG AND NEEDS TO BE DELETED. 3. AS THE ASSESSEE HAS MADE ENDORSEMENT IN THE GROU ND OF APPEAL THAT HE IS NOT PRESSING THIS ISSUE, THE SAME IS DISMISSED AS NOT PRESSED. 2 ITA NO. 1510/K/2011 M/S. MAYA TRADE LINKS LTD., AY:2007-08 4. THE SECOND ISSUE IN THIS APPEAL OF ASSESSEE IS A GAINST THE CHARGING OF INTEREST U/S. 234B OF THE ACT, WHILE COMPUTING INCOME U/S. 115JB OF TH E ACT. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. THAT THE LD. CIT(A) ERRED IN CONFIRMING INTERES T OF RS.4,43,985/- CHARGED U/S. 234B OF THE I. TAX ACT, 1961 THOUGH THE SAME SHOULD HAVE BEEN RS.11,047/- ONLY. THE DIFFERENTIAL INTEREST OF RS.4,32,938/- HAS ARISEN D UE TO THE AMENDMENT IN SECTION 115JB BY THE FINANCE (NO.2) ACT, 2009 ON ACCOUNT OF PROVISIO NS OF DOUBTFUL DEBTS & DIMINUTION IN VALUE OF INVESTMENTS. AS SUCH, CHARGING INTEREST O F RS.4,32,938/- U/S. 234B FOR THE ADDITION MADE IN COMPUTATION OF TOTAL INCOME U/S. 1 15JB DUE TO THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2009 IS ARBITRARY, ILLOGICAL & UNJUSTIFIED AND NEEDS TO BE DELETED. 5. BRIEFLY STATED FACTS ARE THAT THE AO MADE DISALL OWANCE OF DIMINUTION IN VALUE OF SHARES AT RS.69,05,402/- AND ALSO DISALLOWED PROVISIONS FO R DOUBTFUL DEBTS AT RS.36,21,220/- PURSUANT TO AMENDMENT IN SECTION 115JB OF THE ACT BY FINANCE ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.04.2001. DUE TO DISALLOWANCE THE ASSESSEES INC OME BECAME TAXABLE AND ASSESSEE WAS HELD TO BE IN DEFAULT FOR NON-PAYMENT OF ADVANCE TAX AND THEREBY AO CHARGED INTEREST U/S. 234B OF THE ACT AT RS.4,43,985/-. ACCORDING TO ASSESSEE, T HE DIFFERENTIAL INTEREST OF RS.4,32,938/- HAD ARISEN DUE TO THE AMENDMENT IN SECTION 115JB OF THE ACT BY THE FINANCE NO.2 ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.04.2001. THIS CHARGIN G OF INTEREST BY THE AO HAS ARISEN CONSEQUENT TO RETROSPECTIVE AMENDMENT. THE ASSESSE E BEFORE AO AS WELL AS BEFORE CIT(A) STATED THAT INTEREST HAS BEEN CHARGED DUE TO RETROS PECTIVE EFFECT OF THE AMENDMENT AND THERE WAS NO FAULT ON THE PART OF ASSESSEE AND FOR WHICH ASSE SSEE SHOULD NOT BE PENALISED. THE CIT(A) RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF JCIT VS. ROLTA INDIA LTD. (2011) 330 ITR 470 (SC) CONFIRMED THE CHARGING OF I NTEREST BY THE AO BY HOLDING THAT THE ISSUE WHETHER COMPANY IS LIABLE FOR BOOK PROFIT U/S . 115JB OF THE ACT OR SECTION 115JA OF THE ACT SHOULD PAY ADVANCE TAX STAND FULLY RESOLVED BY A BENCH OF HONBLE SUPREME COURT CONSISTING OF THREE JUDGES. BEFORE US, LD. COUNSEL FOR THE ASSESSEE STATED THAT WHILE CHARGING OF INTEREST U/S. 234B OF THE ACT THE RETROSPECTIVE AME NDMENT OF LAW, THE ASSESSEE DOES NOT COMPREHEND THAT THERE WILL BE LIABILITY OF THE ASSE SSEE TO MAKE PAYMENT OF ADVANCE TAX ON THE LAST DAY OF THE FINANCIAL YEAR I.E. 31 ST MARCH, 2001, WHEN ITS BOOK PROFIT WAS NIL ACCORDIN G TO THE COMPUTATION OF ASSESSEE AND ACCORDING TO THE PR OVISIONS OF SECTION 115JB OF THE ACT AS STOOD ON THAT DATE. ACCORDING TO LD. COUNSEL, THE P ROVISION OF SECTION 115JB OF THE ACT HAVING BEEN AMENDED BY FINANCE ACT, 2009 WITH RETROSPECTIV E EFFECT FROM 01.04.2001 THE ASSESSEE CANNOT BE HELD DEFAULTER OF PAYMENT OF ADVANCE TAX, WHERE ON THE LAST DAY OF THE FINANCIAL YEAR PRECEDING THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAS NO LIABILITY TO PAY ADVANCE TAX. HE 3 ITA NO. 1510/K/2011 M/S. MAYA TRADE LINKS LTD., AY:2007-08 CANNOT BE ASKED TO PAY INTEREST IN TERMS OF SECTION 234B AND 234C OF THE ACT FOR DEFAULT IN MAKING PAYMENT OF ADVANCE TAX, WHICH WAS PHYSICALLY , MENTALLY OR LEGALLY IMPOSSIBLE. FOR THIS PROPOSITION, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF EMAMI LTD. VS. CIT (2011) 337 ITR 47 0 (CAL). WE FIND FROM THE ABOVE PROVISIONS I.E. PROVISIONS OF SECTION 115JB OF THE ACT AS AMENDED BY THE FINANCE ACT, 2009 W.E.F. 01.04.2001 AND CHARGING OF INTEREST U/S. 234 B AND 234C OF THE ACT, THE RELEVANT PROVISIONS LEAVES NO DOUBT THAT THE ADVANCE TAX IS AN AMOUNT PAYABLE IN ADVANCE DURING ANY FINANCIAL YEAR IN ACCORDANCE WITH THE PROVISIONS OF ACT IN RESPECT OF THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD BE CHARGEABLE TO TAX FOR THE A SSESSMENT 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 PAYM ENT 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 DA TE 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 'A DVANCE TAX' WITHIN THE MEANING OF THE ACT. IN THE INSTANT CASE, THE LAST DATE OF THE RELEVANT FIN ANCIAL YEAR WAS MARCH 31, 2007, AND ON THAT DAY, ADMITTEDLY, THE APPELLANT HAD NO LIABILITY TO PAY ANY AMOUNT OF ADVANCE TAX IN ACCORDANCE WITH THE THEN LAW PREVAILING IN THE COUNTRY. CONSEQ UENTLY, THE APPELLANT PAID NO ADVANCE TAX AND SUBMITTED ITS REGULAR RETURN ON OCTOBER 31, 200 7, WITHIN THE TIME FIXED BY LAW WHEREIN IT DECLARED ITS TOTAL INCOME AND THE BOOK PROFIT BOTH AS NIL. 6. WE HAVE GONE THROUGH THE CASE OF LAW OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF EMAMI LTD. (SUPRA) AND GONE THROUGH THE PRINCIPLE A S LAID DOWN AS UNDER: 8. A MERE READING OF THOSE PROVISIONS LEAVES NO DO UBT THAT THE ADVANCE TAX IS AN AMOUNT PAYABLE IN ADVANCE DURING ANY FINANCIAL YEAR IN ACC ORDANCE WITH THE PROVISIONS OF THE ACT IN RESPECT OF THE TOTAL INCOME OF THE ASSESSEE WHIC H WOULD BE CHARGEABLE TO TAX FOR THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING THAT FINANCIA L YEAR. THUS, IN ORDER TO HOLD AN ASSESSEE LIABLE FOR PAYMENT OF ADVANCE TAX, THE LIA BILITY TO PAY SUCH TAX MUST EXIST ON THE LAST DATE OF PAYMENT OF ADVANCE TAX AS PROVIDED UND ER 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 ADVAN CE TAX OR EVEN THE LAST DATE OF THE FINANCIAL YEAR PRECEDING THE ASSESSMENT YEAR IS OVE R, IT IS INAPPROPRIATE TO SUGGEST THAT STILL THE ASSESSEE HAD THE LIABILITY TO PAY ADVANC E TAX WITHIN THE MEANING OF THE ACT. IN THE PRESENT CASE, THE RELEVANT ASSESSMENT YEAR I NVOLVED IS 2007-08 AND CONSEQUENT TO THE AMENDMENT OF THE PROVISIONS CONTAINED IN SECTION 11 5JB OF THE ACT BY VIRTUE OF FINANCE ACT, 4 ITA NO. 1510/K/2011 M/S. MAYA TRADE LINKS LTD., AY:2007-08 2009 GIVING RETROSPECTIVE EFFECT TO THE AMENDMENT F ROM 01.04.2001 THE ASSESSEE DECLARED NIL BOOK PROFIT U/S. 115JB OF THE ACT, WHILE FILING ITS RETURN OF INCOME AND THERE IS NO OCCASION FOR PAYMENT OF ADVANCE TAX ON THAT DATE. THE AO SHOULD RECALCULATE THE INTEREST U/S. 234B OF THE ACT BEING DIFFERENTIAL INTEREST ONLY IN CONSEQUENCE TO AMENDMENT. ACCORDINGLY, THIS APPEAL OF ASSESSEE IS PARTLY ALLOWED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED IN PART. 8. ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH DEC., 2013. SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19TH DECEMBER, 2013 12 '3' 4 JD.(SR.P.S.) $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT M/S. MAYA TRADE LINKS LTD., VAIBHAV, 4F , 4 LEE ROAD, KOLKATA-700 020. 2 ./,- / RESPONDENT DCIT, CIRCLE-8, KOLKATA. 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .