Precot Meridian Ltd., Coimbatore V. DCIT, Coimbatore

ITA 1864/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90348 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-12-2014
• Assessment Year: 1997-1998
• Appeal Filed On: 27-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G T VENKATESWARA RAOCIT
• Assessee Lawyers: K RAVI
• Keywords: Revenue expenditure
• Section: 143(3); 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NOS. 1856 & 1864/MDS/2014 ( / ASSESSMENT YEARS: 1995-96 & 1997-98) M/S. PRECOT MERIDIAN LTD., SUPREM PB NO.7161 GREEN FIELDS, PULIAKULAM COIMBATORE-641 045. VS ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE-I(2), COIMBATORE. PAN:AABCP3038K ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. K.RAVI, ADVOCATE /RESPONDENT BY : MR. G.T.VENKATESWARA RAO,CIT DR /DATE OF HEARING : 17 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 15 TH MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I,COIMBATORE DATED 23.04.2014 FOR THE ASS ESSMENT YEARS 1995-96 AND 1997-98. THE ONLY GRIEVANCE OF T HE ASSESSEE IN BOTH THESE APPEALS IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING LEVY OF IN TEREST UNDER SECTION 220(2) OF THE ACT. 2 ITA NOS.1856 & 1864 /MDS/2014 2. BRIEF FACTS ARE THAT ASSESSMENTS FOR THE ASSESSM ENT YEARS 1995-96 AND 1997-98 WERE COMPLETED UNDER SEC TION 143(3) OF THE ACT DISALLOWING EXPENDITURE ON REPLAC EMENT OF MACHINERY. ASSESSEE PREFERRED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WHO CONFIRMED THE ASSESSMENTS IN DISALLOWING SUCH EXPENDITURE. FURTHE R APPEALS WERE FILED BEFORE THE TRIBUNAL. THE TRIBUNA L CONFIRMED THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS). THE ASSESSEE FILED APPEALS BEFORE THE HI GH COURT AND THE HIGH COURT HELD THAT EXPENDITURE INCURRED O N REPLACEMENT OF MACHINERY WAS REVENUE IN NATURE. TH E REVENUE PREFERRED SLP WHEREIN THE SUPREME COURT REM ITTED THE APPEALS BACK TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) TO CONSIDER THE ISSUE AFRESH. THE COMMISSIONER OF INCOME TAX (APPEALS) PASSED ORDER O NCE AGAIN HOLDING THAT REPLACEMENT OF MACHINERY COULD N OT BE CONSIDERED AS REVENUE EXPENDITURE APPLYING THE DECI SION OF THE HONBLE SUPREME COURT IN THE CASE OF MANGAYAKA RASAI MILLS PVT. LTD. (315 ITR 114) CONSEQUENT TO THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSING OFFICER PASSED ORDER LEVYING INTEREST UNDER SECTION 220(2) OF THE ACT 3 ITA NOS.1856 & 1864 /MDS/2014 FROM THE DATE OF ORIGINAL ASSESSMENT ORDER. THE ASS ESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), WHO CONFIRMED THE LEVY OF INTEREST UNDER SECTION 220(2) OF THE ACT FROM THE DATE OF ORIGINAL ASSESSM ENT ORDER. THE ASSESSEE PREFERRED APPEALS BEFORE US. 3. AT THE TIME OF HEARING, COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ISSUE IN APPEALS HAS BEEN DECIDED IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1994-9 5 AND 1999-2000 BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.1562 & 1565/MDS/2012 DATED 8.5.2013 HOLDING THA T INTEREST UNDER SECTION 220(2) SHOULD BE CHARGED FR OM THE FRESH ASSESSMENT ORDER AND NOT FROM THE ORIGINAL AS SESSMENT ORDER. A COPY OF THE ORDER IS PLACED BEFORE US. 4. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDERS OF LOWER AUTHORITIES IN CHARGING INTEREST UN DER SECTION 220(2) OF THE ACT FROM THE DATE OF ORIGINAL ASSESSM ENT ORDER. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE DECISIONS RELIED ON. THE CO-ORDINATE BENCH OF THIS 4 ITA NOS.1856 & 1864 /MDS/2014 TRIBUNAL IN ASSESSEES OWN CASE CONSIDERED A SIMILA R ISSUE FOR THE ASSESSMENT YEARS 1994-95 &1999-2000 HOLDING AS UNDER:- 5. THE SECOND GROUND RAISED BY THE ASSESSEE IN THE APPEALS RELATES TO LEVY OF INTEREST UNDER SECTION 220(2) OF THE ACT. WE FIND THAT THE ISSUE IS ALSO ADJUDICATED IN ASSESSEE'S OWN CASE IN ITA NO.1870/MDS./12 DECIDED ON 20.02.13, THE RELEVANT EXTRACT OF THE ORDER OF THE TRIBUNAL DEALING WITH THIS ISSUE IS REPRODUCED HEREIN BELOW: 12. THE NEXT ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO LEVY OF INTEREST UNDER SECTION 220(2) OF THE ACT. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 21.12.2011 HAS LEVIED INTEREST UNDER SECTION 220(2) FOR THE PERIOD OF 35 MONTHS FROM 1.2.2009 TO 31.12.2011 . 13. THE COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT SINCE THE ORIGINAL ASSESSMENT ORDER WAS SET ASIDE A ND THE TRIBUNAL HAD REMANDED THE MATTER BACK TO THE ASSESSING OFFICER FOR DECIDING THE ISSUE AFRESH AFT ER TAKING INTO CONSIDERATION THE JUDGEMENT PASSED BY T HE HONBLE SUPREME COURT OF INDIA, INTEREST UNDER SECT ION 220(2) CANNOT BE LEVIED FROM THE DATE OF ORIGINAL ASSESSMENT ORDER I.E. DATED 30.12.2008. WHEREAS THE LEARNED DR HAS VEHEMENTLY ARGUED THAT LEVY OF INTER EST UNDER SECTION 220(2) CANNOT BE A SUBJECT MATTER OF APPEAL AS THE SAME IS NOT APPELLABLE. TO SUPPORT HI S CONTENTIONS THE DR HAS RELIED ON THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C IT VS. SURESH GOKULDAS (SUPRA) . 14. A PERUSAL OF THE AFORESAID JUDGEMENT WOULD SHOW THAT THE HONBLE HIGH COURT HAS HELD THAT THE ASSES SEE WAS ASKED TO PAY INTEREST UNDER SECTION 220(2) OF T HE ACT BY DEMAND NOTICE ISSUED UNDER SECTION 156. NOTICE O F DEMAND ISSUED UNDER SECTION 156 CANNOT BE CONSIDERE D TO BE AN ORDER. THEREFORE, IF ANY MISTAKE HAS OCCUR RED THEREIN, IT CAN BE CORRECTED BY AN ADMINISTRATIVE O RDER. ANY ORDER PASSED BY INCOME TAX OFFICER UNDER SECTIO N 154 FOR RECTIFYING ANY MISTAKE IN THE ORIGINAL DEMA ND 5 ITA NOS.1856 & 1864 /MDS/2014 NOTICE UNDER SECTION 154 IS NON-EST IN THE EYE OF LAW. THEREFORE, NO APPELLATE PROCEEDINGS LIE AGAINST SUC H ORDER. THE RATIO LAID DOWN BY THE HONBLE MADRAS HI GH COURT IN THE CASE OF SURESH GOKULDAS (SUPRA) IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE. IN THE PRESENT CASE, THE ASSESSING OFFICER HA S SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER PASS ED UNDER SECTION 143(3) READ WITH SECTION 254 OF THE A CT ABOUT THE LEVY OF INTEREST UNDER SECTION 220(2). TH ERE IS NO BAR FOR ASSAILING ANY ISSUE WHICH IS PART OF THE ASSESSMENT ORDER. THEREFORE, THE CONTENTION OF THE DR THAT INTEREST LEVIED U/S.220(2) IS NOT APPELLABLE I N THE PRESENT CASE IS NOT TENABLE. 15. MOREOVER, IN CIRCULAR NO.334 DATED 3.4.1982 TH E DEPARTMENT HAS CLARIFIED THAT WHERE AN ASSESSMENT ORDER IS CANCELLED U/S.146 OR CANCELLED/SET ASIDE BY AN APPELLATE/ REVISIONAL AUTHORITY AND THE CANCELLATIO N/SETTING ASIDE BECOMES FINAL, NO INTEREST UNDER SECTION 220 (2) CAN BE CHARGED PURSUANT TO THE ORIGINAL DEMAND NOTI CE. THE NECESSARY COROLLARY OF THIS POSITION WILL BE TH AT EVEN WHEN THE ASSESSMENT IS REFRAMED, INTEREST CAN BE CHARGED ONLY AFTER THE EXPIRY OF 35 DAYS FROM THE D ATE OF SERVICE OF DEMAND NOTICE PURSUANT TO SUCH FRESH ASSESSMENT ORDER. 16. THE ASSESSING OFFICER HAS LEVIED INTEREST UNDER THE PROVISIONS OF SECTION 220(2) FROM THE DATE OF P ASSING OF THE ORIGINAL ASSESSMENT ORDER WHEREAS THE ORIGIN AL ASSESSMENT ORDER WAS SET ASIDE BY THE TRIBUNAL AND THE SAME WAS REMITTED BACK TO THE ASSESSING OFFICER FOR DECIDING THE MATTER AFRESH. SINCE A FRESH ASSESSME NT ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER, THE DEMAND NOTICE PERIOD SPECIFIED UNDER SECTION 220 (1) HAS TO BE TAKEN INTO CONSIDERATION FROM THE DATE OF PASSING OF THE FRESH ASSESSMENT ORDER. THE ASSESSE E IS LIABLE TO PAY DEMAND WITHIN THIRTY DAYS FROM THE SE RVICE OF THE DEMAND NOTICE IN PURSUANCE OF THE ASSESSMENT OR DER DATED 21.12.2011. IF THE ASSESSEE FAILS TO PAY THE AMOUNT DEMANDED WITHIN THE PERIOD SPECIFIED UNDER SECTION 220(1), THE ASSESSEE IS LIABLE TO PAY INTEREST U/S. 220(2) OF THE ACT. ON THIS ISSUE, WE DO NOT AGREE WITH THE FI NDINGS OF CIT(A). OUR VIEW IS FURTHER FORTIFIED BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CHIKA OVERSEAS (P) LTD. (SUPRA) AND THE JUDGEMENT OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF VIKRA NT TYRES LTD. (SUPRA). IN VIEW OF OUR ABOVE FINDING, T HIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 6 ITA NOS.1856 & 1864 /MDS/2014 THE PERIOD SPECIFIED UNDER SECTION 220(1) HAS TO BE TAKEN INTO CONSIDERATION FROM THE DATE OF PASSING OF THE FRESH ASSESSMENT ORDER AND NOT THE EARLIER ASSESSMENT ORDER, WHICH HAS BEEN SET ASIDE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. THIS GROUND OF APPEALS OF ASSESSEE IS ALLOWED.' RESPECTFULLY FOLLOWING THE SAID DECISION OF THIS TR IBUNAL, WE ALLOW THE APPEALS OF THE ASSESSEE. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MAY, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 15 TH MAY, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .