Oil and Natural Gas Corporation Ltd., Surat V. The ACIT,TDS Circle, Surat

ITA 1964/AHD/2015

• Counselvise Citation: 196420514 RSA 2015
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Assessee Lawyers: URVASHI SHODHAN; S N SOPARKAR

Judgement Text

ITA NO S .1955 TO 1965/AHD/201 5 ASS ESSMENT YEARS : 1997 - 98 TO 2006 - 07 AND 2009 - 10 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO. 1 955 TO 1965 / AHD / 2 0 1 5 ASSESSMENT YEARS : 1997 - 98 TO 2006 - 07 AND 2009 - 10 OIL & NATURAL GAS COMMISSION ....... .. . ..... APPELLANT HAZIRA PLANT, SUR AT [ TAN: SRTO00158 E ] VS. ASSITANT COMMISSIONER OF INCOME TAX (TDS), SURAT .......... ..................RESPONDENT APPEARANCES BY: S N SOPARKAR AND URVASHI SHODHAN , FOR THE APPELLANT ANIL KUMAR FOR THE RESPONDENT DATE OF CONCLUDING THE H EARING : SEPTEMBER 15 , 201 5 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 15, 2015 O R D E R 1. THESE ELEVEN APPEALS, FILED BY THE ASSESSEE, ARE DIRECTED AGAINST A CONSOLIDATED ORDER DATED 10 TH APRIL 2015, PASSED BY THE CIT(A) IN THE MATTER OF ORDER UNDER SECTION 154(1) R.W.S. 201(1A) OF THE INCOME TAX ACT, 1961, FOR THE ASSES SMENT YEARS 1997 - 98 TO 2006 - 07, AND 2009 - 10. 2. THE SHORT ISSUE THAT I AM REQUIRED TO ADJUDICATE IN THESE APPEALS AS TO WHAT IS THE CONNOTATION OF EVERY MONTH O R PART THEREOF APPEAR ING IN SECTION 201(1A) - DOES IT MEAN A CALENDAR MONTH OR PART THEREOF, OR DOES IT MEAN A PERIOD OF ONE MONTH OR PART THEREOF. 3. THE BACKGROUND IN WHICH THIS CONTROVERSY ARISES IS LIKE THIS. HON BLE SUPREME COURT HAD, VIDE JUDGMENT DATED 7 TH NOVEMBER 2012 IN THIS CASE, HAD DIRECTED THE ASSESSEE CAN T BE HELD AS AN ASSESSEE IN DEFAULT, IN VIEW OF THE ITA NO S .1955 TO 1965/AHD/201 5 ASS ESSMENT YEARS : 1997 - 98 TO 2006 - 07 AND 2009 - 10 PAGE 2 OF 5 DIRECTIONS OF THE HIGH COURT, FOR THE PERIOD FROM 20.02.1996 TO 15.3.2010 AND HENCE WAS LIABLE TO INTEREST ONLY WITH EFFECT FROM 16 TH NOVEMBER 2010 . ACC ORDINGLY, THE INTEREST UNDER SECTION 201(1A) WAS REQUIRED TO BE COMPUTED FOR A PERIOD OF 16 TH NOVEMBER 2010 TO 14 TH DECEMBER 2012. WHEN THE INTEREST WAS, ON THIS BASIS, REQUIRED TO BE RECOMPUTED, THE A SSESSING OFFICER COMPUTED IT FOR A PERIOD OF 26 MONTHS ON THE BASIS THAT THERE WAS 24 CALENDAR MONTHS IN THIS PERIOD AND THIS PERIOD INCLUDED A PART OF C ALENDAR MONTH NOVEMBER 2010 AS ALSO A PART OF CALENDAR MONTH DECEMBER 2012. THE ASSESSEE MOVED A RECTIFICATION PETITION AGAINST THE AO S SO GIVING EFFECT TO THE DIRECTIONS OF HON BLE SUPREME COURT. THE STAND OF THE ASSESSEE WAS THAT SINCE THE TOTAL PERIOD WAS OF 24 MONTHS AND 28 DAYS, THE PERIOD FOR WHICH INTEREST UNDER SECTION 201(1A) COULD BE LEVIED WAS ONLY 25 MONTHS. THE ASSESSING OFFICER, HOWEVER, WAS NO T IMPRESSED WITH THIS PLEA. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON R ECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. SECTION 201(1A), FOR READY REFERENCE, IS REPRODUCED BELOW: (1A) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB - SECTION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN THAT SUB - SECTION DOES NOT DEDUCT THE WHOLE OR ANY PART OF THE TAX OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTEREST, (I) AT ONE PER CENT FOR EVERY MON TH OR PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS DEDUCTED; AND (II) AT ONE AND ONE - HALF PER CENT FOR EVERY MONTH OR PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON W HICH SUCH TAX WAS DEDUCTED TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID, AND SUCH INTEREST SHALL BE PAID BEFORE FURNISHING THE STATEMENT IN ACCORDANCE WITH THE PROVISIONS OF SUB - SECTION (3) OF SECTION 200: ITA NO S .1955 TO 1965/AHD/201 5 ASS ESSMENT YEARS : 1997 - 98 TO 2006 - 07 AND 2009 - 10 PAGE 3 OF 5 PROVIDED THAT IN CASE ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFA ULT UNDER THE FIRST PROVISO TO SUB - SECTION (1), THE INTEREST UNDER CLAUSE (I) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH RESIDENT 6. THE PROVISION IS QUITE SIMPLE AND UNAMBIGUOUS INASMUCH AS INTEREST IS TO BE CHARGED FOR EVERY MONTH OR PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS DEDUCTED . THE CONTEXT IN WHICH THE EXPRESSION MONTH IS USED HERE IS A MEA SUREMENT OF PERIOD FOR WHICH TIME VALUE OF MONEY IS TO BE COMPENSATED. IF A PERSON OUGHT TO HAVE DEDUCTED THE TAX ON, SAY, 21 ST OF OCTOBER AND HE ACTUALLY DOES SO ON 3 RD OF NOVEMBER, THE PERIOD FOR WHICH THE GOVERNMENT IS DEPRIVED OF ITS LEGITIMATE TAXES IS LESS THAN A MONTH. HOWEVER, IF WE GO BY THE INTERPRETATION CANVASSED BY THE ASSESSING OFFICER, WHICH HAS THE APPROVAL OF THE CIT(A) AS WELL, THIS WILL BE A PERIOD OF TWO MONTHS I.E. A PART OF OCTOBER AS ALSO A PART OF NOVEMBER. SUCH A RESULT IS CLEAR LY INCONGRUOUS. AS FOR THE ALTERNATE CONTENTION OF THE REVENUE, I.E. THE PERIOD OF A MONTH COULD AT BEST BE TAKEN AS THIRTY DAYS AND, THEREFORE, THE PERIOD OF 7 TH NOVEMBER 2010 TO 14 TH DECEMBER 2012 SHOULD BE CONSTRUCTED AS 26 MONTHS, IT IS ALSO DEVOID O F ANY MERITS. IF THAT IS THE PRINCIPLE TO BE FOLLOWED, WHEN A PERSON REQUIRED TO DEDUCT TAX AT SOURCE ON 21 ST MARCH, ACTUALLY DEDUCTS THE TAX AT SOURCE ON 18 TH MARCH IN THE SUBSEQUENT YEAR, THE PERIOD OF DELAY WILL HAVE TO BE TAKEN AS 13 MONTHS (I.E. 12X30 = 360 DAYS PLUS 2 DAYS AS PART OF THE MONTH). THIS APPROACH ALSO , THUS , LEADS TO INCONGRUOUS, AND, IF I MAY SAY SO, SOMEWHAT ABSURD RESULTS. CLEARLY, THEREFORE, APPROACH FOLLOWED BY THE AUTHORITIES BELO W DOES NOT MERIT MY APPROVAL 7. THERE IS NO DISPUTE THAT THE EXPRESSION MONTH IS NOT DEFINED FOR THE PURPOSE OF SECTION 201 (1A) NOR THERE IS ANY DIRECT JUDICIAL AUTHORITY IN TH E CONTEXT OF SECTION 201 . SECTION 3 (35) OF THE GENERAL CLAUSES ACT DEFINES MONTH AS, UNLESS THERE IS ANYTHING REPUGNANT IN THE SUBJECT OR THE CONTEXT, A MONTH RECKONED ACCORDING TO THE BRITISH CALENDAR . THE EXPRESSION RECKONED , IN PLAIN ENGLISH, REFERS TO COUNT, COMPUTE OR CALCULATE . IN SUBSTANCE THUS, THE MANDATE ITA NO S .1955 TO 1965/AHD/201 5 ASS ESSMENT YEARS : 1997 - 98 TO 2006 - 07 AND 2009 - 10 PAGE 4 OF 5 OF SECTION 3 (35) IS TO COUNT, COMPUTE OR CALCULATE ACCORDIN G TO, OR AS PER, THE BRITISH CALENDAR. IT IS ALSO IMPORTANT TO NOTE THAT EVEN THIS DEFINITION IS NOT IN ABSOLUTE TERMS INASMUCH AS WHEN THERE IS ANYTHING REPUGNANT IN THE SUBJECT OR THE CONTEXT , THIS DEFINITION CAN BE DISCARDED. IT IS THE CONTEXT IN WHIC H THE MATTER IS BEING EXAMINED THAT MUST BE TREATED AS DECISIVE FACTOR. THE LEVY OF INTEREST UNDER SECTION 201(1A) IS COMPENSATORY IN NATURE AND IT REPRESENTS THE TIME VALE OF MONEY ATTRIBUTABLE TO DELAY IN DEDUCTION OF TAX AT SOURCE. WHAT IS TO BE THUS SE EN IS THE GAP OF TIME BETWEEN THE POINT OF TIME WHEN TAX OUGHT TO HAVE BEEN DEDUCTED AT SOURCE VIS - - VIS THE POINT OF TIME WHEN THE TAX WAS ACTUALLY DEDUCTED, AND IT IS IN THIS CONTEXT THAT CONNOTATION OF EXPRESSION MONTH IS TO BE EXAMINED. NOW, IF ONE H AS TO COMPUTE THE MONTHS AS PER THE BRITISH CALENDAR, THE PERIOD FROM 21 ST OCTOBER TO 3 RD NOVEMBER, AS TAKEN IN THE FIRST EXAMPLE, IS LESS THAN A MONTH BECAUSE IT IS ONLY WHEN THE SAME DATE COMES IN THE NEXT MONTH, THE PERIOD OF ONE MONTH CAN BE SAID TO HA VE ELAPSED. SIMILARLY, THE PERIOD OF 21 ST MARCH TO 18 TH MARCH OF THE SUBSEQUENT YEAR, AS PER THE BRITISH CALENDAR, IS LESS THAN 12 MONTHS SINCE THE PERIOD OF TWELVE MONTHS HAS NOT ELAPSED IN BETWEEN THESE TWO DATES. COMING TO THE CASE IN HAND, THE PERIO D OF TIME GAP BETWEEN 16 TH NOVEMBER 2010 TO 14 TH DECEMBER 2012 IS LESS THAN 2 5 MONTHS BECAUSE , ON 14 TH DECEMBER 2012, THE PERIOD OF 2 5 MONTHS HAS NOT ELAPSED FROM 16 TH NOVEMBER, 2010 . THE PERIOD WHICH IS ELAPSED BETWEEN THESE TWO DATES IS 2 4 MONTHS AND 28 DAYS. GOING BY THE PROVISIONS OF THE GENERAL CLAUSES ACT, THEREFORE, THE PERIOD OF TIME BETWEEN 16 TH NOVEMBER 2010 TO 14 TH DECEMBER 2012 IS LESS THAN 25 MONTHS, AND, ACCORDINGLY, INTEREST UNDER SECTION 201(1A) COULD NOT HAVE BEEN LEVIED FOR A PERIOD OF MO RE THAN 25 MONTHS. 8. DURING THE COURSE OF ARGUMENTS BEFORE ME, THE CONNOTATIONS OF CALENDAR MONTH WERE ARGUED AT LENGTH BUT THESE DISCUSSIONS PROCEEDED ON THE FALLACIOUS ASSUMPTION THAT THE EXPRESSION MONTH , APPEARING IN SECTION 201(1A), IS EITHER RE QUIRED TO BE INTERPRETED AS A CALENDAR MONTH OR A PERIOD OF THIRTY DAYS. AS A MATTER OF FACT, AS EVIDENT FROM THE DISCUSSIONS ABOVE, THE EXPRESSION MONTH REFERS TO A MONTH RECKONED ACCORDING TO THE BRITISH CALENDAR . A MONTH AS PER THE BRITISH CALENDAR AND A MONTH RECKONED (EMPHASIS SUPPLIED BY ME) AS PER BRITISH CALENDAR ARE NOT THE SAME THING AND CANNOT BE USED INTERCHANGEABLY. ITA NO S .1955 TO 1965/AHD/201 5 ASS ESSMENT YEARS : 1997 - 98 TO 2006 - 07 AND 2009 - 10 PAGE 5 OF 5 WHILE FORMER REFERS TO A CALENDAR MONTH BY ITSELF, THE LATTER REFERS TO A PERIOD OF TIME WHICH QUALIFIED TO BE TREATED AS A MONTH . THE SUBTLE DISTINCTION BETWEEN THE SCOPE OF THESE TWO EXPRESSIONS CANNOT BE IGNORED. 9. AS I HAVE DECIDED THE MATTER ON THE FIRST PRINCIPLES AND IN THE LIGHT OF THE PLAIN MEANINGS OF THE STATUTORY PROVISIONS IN THE GIVEN CONTEXT , AND AS LEARNE D DEPARTMENTAL REPRESENTATIVE HAS NOT INVITED MY ATTENTION TO ANY JUDICIAL PRECEDENT HOLDING TO THE CONTRARY IN THIS CONTEXT , IT IS NOT REALLY NECESSARY TO DEAL WITH JUDICIAL PRECEDENTS IN SOMEWHAT SIMILAR SITUATIONS OR TO DRAW STRENGTH FROM THOSE JUDICIAL PRECEDENTS . I LEAVE IT AT THAT. 10. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, I UPHOLD THE GRIEVANCE OF THE ASSESSEE THAT, ON THE FACTS OF THIS CASE, INTEREST UNDER SECTION 201(1A) COULD NOT HAVE BEEN CHARGED FOR MOR E THAN 25 MONTHS. THE ASSESSING OFFICER IS, ACCORDINGLY, DIRECTED TO RECOMPUTE THE INTEREST UNDER SECTION 201(1A) IN THE LIGHT OF MY OBSERVATIONS ABOVE. 11. IN THE RESULT, ALL THE ELEVEN APPEALS ARE ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 15 TH DAY OF SEPTEMBER, 2015. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD , THE 15 TH DAY OF SEPTEMBER , 201 5 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER ( 4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD