Precot Meridian Ltd., Coimbatore V. ACIT, Coimbatore

ITA 1564/CHNY/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68672 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-08-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K RAVI
• Keywords: Revenue expenditure
• Section: 143(3); 246; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NOS. 1563 & 1564/MDS/2012 (ASSESSMENT YEARS : 1995-96 & 1997-98) M/S PRECOT MERIDIAN LTD., SUPREM, P.B. 7161, GREEN FIELDS, PULIAKULAM, COIMBATORE 641 045. PAN : AABCP 3038 K (APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME TAX / ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), COIMBATORE. (RESPONDENT) APPELLANT BY : SH. K. RAVI, ADVOCATE RESPONDENT BY : SH. SHAJI P. JACO B, ADDL.CIT DATE OF HEARING : 14.08.2013 DATE OF PRONOUNCEMENT : 22.08.2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THESE APPEALS, ASSESSEE IS AGGRIEVED ON THE LE VY OF INTEREST UNDER SECTION 220(2) OF INCOME-TAX ACT, 1961 (IN SH ORT 'THE ACT'). AS PER ASSESSEE, NO SUCH INTEREST COULD BE LEVIED WHEN THE ORDER RESULTING IN SUCH LEVY OF INTEREST EMANATED OUT OF A SET ASIDE PROCEEDING. I.T.A. NOS. 1563 & 1564/MDS/12 2 2. FACTS APROPOS ARE THAT AN ASSESSEE HAD, FOR BOTH THESE YEARS, FILED RETURNS WHEREIN EXPENDITURE INCURRED TOWARDS REPLACEMENT OF MACHINERY WAS CLAIMED AS REVENUE OUTGO. SUCH CLAIM WAS DISALLOWED IN THE ORIGINAL ASSESSMENT. APPEALS OF THE ASSESSEE BEFORE CIT(APPEALS) DID NOT MEET WITH ANY SUCCESS. FURTHER APPEALS OF THE ASSESSEE BEFORE TRIBUNAL, ALSO DID NOT MEET WITH ANY SUCCESS. ASSESSEE THEN MOVED THE HON'BLE JURISDICTIONAL HIGH COURT AND HON'BLE JURISDICTIONAL HIGH COURT HELD THAT THE EXP ENDITURE INCURRED ON REPLACEMENT OF MACHINERY WAS REVENUE EXPENDITURE RE LYING ITS OWN DECISION IN THE CASE OF CIT V. JANAKIRAMAN MILLS LT D. (275 ITR 403). THEREAFTER, REVENUE MOVED APPEAL BEFORE HON'BLE APE X COURT. HON'BLE APEX COURT, VIDE ITS ORDER DATED 9.4.2008, REMANDED THE MATTER BACK TO THE FILE OF THE CIT(APPEALS) FOR CON SIDERING THE ISSUE AFRESH. THE CIT(APPEALS) THEREAFTER RECONSIDERED T HE ISSUE AND HELD THAT REPLACEMENT OF MACHINERY COULD NOT BE CONSIDER ED AS REVENUE EXPENDITURE, INTER ALIA, APPLYING THE DECISION OF H ON'BLE APEX COURT IN THE CASE OF CIT V. S. MANGAYARKARASI MILLS P. LTD. (315 ITR 114). CONSEQUENT TO THE CIT(APPEALS)S ORDER, ASSESSING O FFICER PASSED GIVING-EFFECT ORDERS ON 8.9.2011 AND 17.11.2011 RES PECTIVELY. IN SUCH GIVING-EFFECT ORDERS, INTEREST UNDER SECTION 2 20(2) WAS CHARGED. I.T.A. NOS. 1563 & 1564/MDS/12 3 3. AGAINST SUCH INTEREST UNDER SECTION 220(2) OF TH E ACT, ASSESSEE MOVED IN APPEALS BEFORE CIT(APPEALS). THE CIT(APPE ALS), VIDE HIS ORDERS DATED 4.5.2012 AND 14.5.2012 RESPECTIVELY, H ELD THAT AN ORDER CHARGING INTEREST UNDER SECTION 220(2) WAS NOT APPE ALABLE. ACCORDING TO HIM, THESE ORDERS WERE NEITHER A PART OF ASSESSMENT ORDER AND THERE WAS NO PROVISION UNDER SECTION 246 OF THE ACT ENABLING AN ASSESSEE TO FILE AN APPEAL AGAINST SUCH AN ORDER. 4. NOW BEFORE US, LEARNED A.R., STRONGLY ASSAILING THE ORDERS OF CIT(APPEALS), SUBMITTED THAT IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2006-07 IN I.T.A. NO. 1870/MDS/2012, IT WAS HE LD BY THIS TRIBUNAL THAT BY VIRTUE OF CIRCULAR NO.334 OF CBDT DATED 3.4.1982, ANY PART OF THE GIVING-EFFECT ORDER COULD BE ASSAIL ED BY THE ASSESSEE. ACCORDING TO HIM, THE GIVING-EFFECT ORDERS PASSED B Y THE ASSESSING OFFICER WERE NOTHING BUT ORDERS UNDER SECTION 143(3 ) READ WITH SECTION 251 OF THE ACT. RELIANCE WAS ALSO PLACED O N THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF S UPER SPINNING MILLS LTD. V. JCIT IN I.T.A. NOS. 414 TO 416/MDS/2012 DAT ED 27 TH NOVEMBER, 2012. I.T.A. NOS. 1563 & 1564/MDS/12 4 5. PER CONTRA, LEARNED D.R. SUBMITTED THAT EVEN IF THE GIVING-EFFECT ORDERS OF THE CIT(APPEALS) WERE CONSIDERED TO BE AP PEALABLE, IT WAS THE ORIGINAL DEMAND WHICH STOOD REVIVED BY VIRTUE O F CIT(APPEALS)S ORDERS. ACCORDING TO HIM, CASE OF THE ASSESSEE WAS NOT THAT IT HAD PAID THE FULL TAX AS DEMANDED IN THE ORIGINAL NOTIC E OF DEMAND, PURSUANT TO THE ORIGINAL ASSESSMENTS, WHICH WAS LAT ER REFUNDED TO IT BASED ON APPELLATE ORDERS. ASSESSEE NEVER PAID ANY MONEY AS PER THE ORIGINAL DEMAND. THEREFORE, ACCORDING TO HIM, DURING THE PERIOD IN WHICH APPEALS WERE IN VOGUE, THE ORIGINAL ASSESS MENT ORDERS WERE ONLY KEPT IN ABEYANCE. HAD THE ASSESSEE PAID THE F ULL DEMAND BASED ON THE ORIGINAL DEMAND NOTICE ISSUED ON COMPLETION OF ORIGINAL ASSESSMENTS, THEN IT COULD BE SAID THAT ASSESSEE WA S NOT AT FAULT. ACCORDING TO HIM, THIS POSITION WAS CLEARLY ELABORA TED BY HON'BLE DELHI HIGH COURT IN THE CASE OF GIRNAR INVESTMENT LTD. V. CIT (340 ITR 529). RELIANCE WAS ALSO PLACED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEE'S OWN CASE RE PORTED IN 244 ITR 814. 6. IN REPLY, LEARNED A.R. SUBMITTED THAT BASED ON G IVING-EFFECT ORDERS, ASSESSING OFFICER HAD ISSUED A FRESH DEMAND NOTICE ON 17.11.2011. ACCORDING TO HIM, THE CBDT CIRCULAR NO .334 DATED I.T.A. NOS. 1563 & 1564/MDS/12 5 3.4.1982 WAS A MITIGATING FACTOR AND THE ASSESSING OFFICER COULD NOT GO AGAINST THIS. NOTHING STOPPED THE ASSESSEE FROM TAKING ADVANTAGE OF SUCH A CIRCULAR WHICH HELPED IT TO MIT IGATE ITS TAX WOES. 7. AD LIBITUM, REPLY OF THE LEARNED D.R. WAS THAT T HE CIRCULAR APPLIED ONLY WHERE ORIGINAL ASSESSMENT ORDER WAS CA NCELLED OR SET ASIDE AND NOT WHERE IT WAS ONLY KEPT IN ABEYANCE. 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. FIRST QUESTION BEFORE US IS WHETHER THE GIVING-EFFE CT ORDER IN WHICH DEMAND FOR INTEREST UNDER SECTION 220(2) HAS BEEN M ADE, IS AN APPEALABLE ONE OR NOT. THE GIVING-EFFECT ORDERS FO R BOTH THE YEARS ARE TYPICALLY WORDED EXCEPT IN CHANGE OF DATE AND AMOUN TS. THE FIRST TOP PARA READS AS UNDER:- GIVING EFFECT TO THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBATORES NO.107/09-10 D ATED 28- 03-2011, THE TOTAL INCOME DETERMINED IN THE REVISIO N ORDER DATED 05.09.2005 BY GIVING EFFECT TO THE ORDER OF T HE HIGH COURT, MADRAS FOR THE A.Y. 1995-96 IS REVISED AS UN DER:- XXXX XXXX XXXX XXX XXX XXX XXX XXXX XXXX XXXX XXX XXX XXX XXX THE LAST ITEM IS THE INTEREST UNDER SECTION 220(2) IN THE REVISED DETERMINATION OF TOTAL INCOME. THE SECTION UNDER W HICH GIVING-EFFECT I.T.A. NOS. 1563 & 1564/MDS/12 6 ORDERS WERE PASSED BY THE ASSESSING OFFICER HAS NOT BEEN MENTIONED. IT IS NOT AS THOUGH THESE ARE ORDERS PA SSED ONLY FOR LEVYING INTEREST UNDER SECTION 220(2) OF THE ACT. THE ORDERS SHOW REVISED COMPUTATION OF TOTAL INCOME BASED ON APPELL ATE ORDERS. NO DOUBT, IF THESE WERE SIMPLY ORDERS LEVYING INTEREST UNDER SECTION 222(2) OF THE ACT, IT MIGHT NOT HAVE BEEN APPEALABL E. BUT, THIS PARTICULAR LEVY OF INTEREST UNDER SECTION 220(2) IS ONLY ONE OF THE MANY ITEMS CONSIDERED IN THESE ORDERS. IT CAN THER EFORE BE DEEMED EITHER AS AN ORDER PASSED UNDER SECTION 154 OR PASS ED UNDER SECTION 143(3) READ WITH SECTION 250 AND 251 OF THE ACT. B E THAT AS IT MAY, IT DEFINITELY FALLS WITHIN THE APPEALABLE ORDERS UNDER SECTION 246(1) OF THE ACT. NO DOUBT, CIT(APPEALS) HAS RELIED ON THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF ANZ GRINDLAYS BA NK V. CIT (241 ITR 269), WHICH HELD THAT AN ORDER CHARGING INTERES T UNDER SECTION 220(2) WAS NOT APPEALABLE. NEVERTHELESS, IN THE CA SE OF CIT V. CHIKA OVERSEAS PVT. LTD. (2012) 66 DTR 398, BOMBAY HIGH COURT HAD CONSIDERED A TAX-APPEAL ASSAILING LEVY OF INTER EST UNDER SECTION 220(2) OF THE ACT. SINCE THERE ARE CONFLICTING DEC ISIONS ON THIS ISSUE, WE ARE OF THE OPINION THAT CIT(APPEALS) OUGHT HAVE CONSIDERED THE APPEALS OF THE ASSESSEE AND DISPOSED THEM OF ON ME RITS, ESPECIALLY SO, SINCE ASSESSEE APPEAR TO BE SUPPORTED BY THE C IRCULAR NO.334 I.T.A. NOS. 1563 & 1564/MDS/12 7 DATED 3.4.1982 OF CBDT. WE, THEREFORE, SET ASIDE T HE ORDERS OF CIT(APPEALS) AND REMIT THE ISSUE OF LEVY OF INTERES T UNDER SECTION 220(2) OF THE ACT BACK TO HIS FILE FOR CONSIDERATIO N AFRESH, IN ACCORDANCE WITH LAW. 9. IN THE RESULT, APPEALS FILED BY THE ASSESSEE FOR BOTH THE YEARS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 22 ND OF AUGUST, 2013, AT CHENNAI. SD/- SD/- (V.DURGA RAO) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 22 ND AUGUST, 2013. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)/CIT(A)-I, COIMBATORE (4) CIT/CIT-I, COIMBATORE (5) D.R. (6) GUARD FILE