RASHTRIYA CHEMICAL FETILIZERS LTD, MUMBAI V. ASST CIT LARGE TAX PAYER UNIT, MUMBAI

ITA 2239/MUM/2013

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7332 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 19-01-2015
• Assessment Year: 1998-1999
• Appeal Filed On: 20-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Assessee Lawyers: S E DASTUR
• Section: 234B; 139

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -DBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND SANDEEP GOSAIN,JUDICIAL MEMBER ./I.T.A./2239/MUM/2013, /ASSESSMENT YEAR: 1998-99 RASHTRIYA CHEMICALS & FERTILIZERS LTD. PRIYADARSHINI EASTERN EXPRESS HIGHWAY KARVE ROAD, MUMBAI-400 020. PAN:AAACR 2831 H VS. ACIT-(LTU) AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI R.P. MEENA -CIT-DR ASSESSEE BY: SHRI S.E. DASTUR AND SHRI NIRAJ SHETH / DATE OF HEARING: 22/02/2018 / DATE OF PRONOUNCEMENT: 11/05/2018 ORDER , - PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 01.12.2009 OF ASSESSING OFFICER (A.O.) AND 20/12/2012,OF THE CIT(A)-24, MUMBAI THE ASSESSEE HAS FILED THE PRESEN T APPEAL.ASSESSEE-COMPANY ENGAGED IN THE MANUFACTURE OF FERTILIZER AND CHEMICALS FILED I TS RETURN OF INCOME ON 21/01/1998 DECLARING TOTAL INCOME AT RS.21,196/- LAKHS.THE ASSESSING OFF ICER COMPLETED THE ASSESSMENT VIED ORDER DATED DETERMINING THE INCOME OF THE ASSESSEE AT RS.21,189.25 LAKHS. 2. FIRST GROUND OF APPEAL IS ABOUT CHARGING OF INTERES T U/S.234B OF THE ACT.THIS IS THE SECOND ROUND OF LITIGATION. WHILE DECIDING THE APPEAL,VIDE ORDER DATED 12/06/2009 (ITA/1781/MUM/ 02), THE TRIBUNAL HAD DEALT WITH THE ISSUE OF CHARG ING OF INTEREST U/S.234B AS UNDER: 23. THE GRIEVANCE PROJECTED IN GROUND N O. 4.2 ARISES UNDER THE FOLLOWING CIRCUMSTANCES:- THE ASSESSEE PAID A SUM OF RS. 26 CRORES AND ANOTHE R SUM OF RS. 1,96,74,366/- TOWARDS TAX LIABILITY FOR A.Y. 1998-99 IN THE MONTH OF APRIL AN D MAY 1998 RESPECTIVELY. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT AND RAISING A DEMAND FOR OUTSTANDING TAX AND INTEREST ADJUSTED THE AFORESAID PAYMENT TOWARDS INTEREST U/S . 234B, ACCORDING TO THE ASSESSEE, THEY SHOULD BE ADJUSTED TOWARDS ASSESSED TAX BY DEDUCTIO N FROM THE ASSESSED TAX THE AFORESAID PAYMENT MADE BY THE ASSESSEE AND INTEREST U/S. 234 B HAS TO BE CHARGED ONLY ON THE REMAINDER. LEARNED CIT(A) REJECTED THE PLEA OF THE ASSESSEE IN THIS REGARD. 24. WE HAVE HEARD THE RIVAL SUBMISSIONS. SIMILAR IS SUE WAS CONSIDERED BY THE ITAT AHMEDABAD BENCH IN THE CASE OF PASTON TRANSFORMER LTD. VS. D CIT (2006) 6 SOT 673 (AHD), WHEREIN IT WAS HELD AS FOLLOWS :- 2239/M/13-RASHTRIYA CHEMICALS & FERTILIZERS LTD. 2 'THE CONTROVERSY UNDER CONSIDERATION RELATED TO INT ERPRETATION OF EXPLANATION TO SUB-SECTION (1) OF SECTION 140A, WHICH PROVIDES THAT WHERE THE ASSESSEE PAYS ONLY PART OF THE AMOUNT DUE AT THE TIME OF FILING THE RETURN SUCH PAYMENT SHALL FIRST BE ADJUSTED TOWARDS INTEREST PAYABLE, AND BALANCE IF ANY, SHALL BE ADJUSTED TOWARDS THE T AX PAYABLE. NOW, THE CRUX OF THE MATTER IS WHETHER THIS ADJUSTMENT IS TO BE MADE AT THE TIME O F MAKING ADHOC PAYMENT OR AT THE TIME OF FILING THE RETURN OF INCOME. THE REVENUE WAS OF THE VIEW THAT IT SHOULD BE ADJUSTED AT THE TIME OF ADHOC PAYMENT, AND THE ASSESSEE'S CASE WAS THAT IT SHOULD BE ADJUSTED AT THE TIME OF FILING RETURN I.E. WHEN PAYMENT UNDER SECTION 140A WAS DUE . THE AMENDING ACT, 1987 HAS AMENDED SUB-SECTION (1) OF SECTION 140A TO MAKE IT MANDATORY FOR A PERSON TO PAY BEFORE FURNISHING THE RETURN, T AX TOGETHER WITH INTEREST PAYABLE UNDER ANY PROVISIONS OF THE ACT FOR DELAY IN FURNISHING THE RETURN OR ANY DEFAULT OR DELAY IN PAYMENT OF' ADVANCE TAX. PROOF OF PAYMENT OF SUCH TAX AND INTER EST IS TO BE ATTACHED WITH THE RETURN. FURTHER, AN EXPLANATION HAS BEEN INSERTED IN THE SA ID SUBSECTION (1) TO CLARIFY THAT WHERE THE ASSESSEE PAYS ONLY PART OF THE AMOUNT DUE AT THE TI ME OF FILING THE RETURN, SUCH PAYMENT FIRST BE ADJUSTED TOWARDS THE INTEREST PAYABLE, AND BALAN CE, IF ANY SHALL BE ADJUSTED TOWARDS THE TAX PAYABLE. SECTION 234B AND SECTION 140A BOTH ARE SEPARATE AND INDEPENDENT SECTIONS OF THE ACT. SECTION 234B(1) PROVIDES GENERAL SITUATION OF CALCULATION OF INTEREST. THE PERIOD FOR WHICH INTEREST UNDER THIS SECTION IS LEVIABLE IS FORM THE 1 ST DAY OF APRIL NEXT FOLLOWING FINANCIAL YEAR TO THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SECTION 143(L)/REGULAR ASSESSMENT. THE AMOUNT ON WHICH INTEREST IS PAYABLE IS EQUAL TO THE ASSESSED TAX OR THE AMOUNT BY WHICH THE ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX. THE FACTS OF CONTROVERSY UNDER CONSIDERATION WERE NOT RELATED TO THE ABOVE GENERAL CALCULATION OF INTERES T BUT FELL UNDER SECTION 234B(2). THIS SUB- SECTION (2) OF SECTION 234B PROVIDES THE CALCULATIO N OF INTEREST WHERE TAX IS PAID BY THE ASSESSEE UNDER SECTION 140A OR OTHERWISE BEFORE THE DATE OF DETERMINATION OF TOTAL INCOME U/S. 143(L)/COMPLETION OF REGULAR ASSESSMENT. THE INTERE ST WOULD BE CALCULATED AS PER GENERAL CALCULATION PROVIDED IN SECTION 234B(1). THE IMPORT ANT THING PROVIDED IS THAT SIMPLE INTEREST UNDER SECTION 234B(1) IS TO BE CALCULATED AT THE PR ESCRIBED DATE. THE DIFFERENCE IN CALCULATION OF INTEREST IN SECTION 234B(1) AND IN SECTION 234B( 2) IS THAT IN SECTION 234B(2) THE SIMPLE INTEREST IS TO BE CALCULATED UP TO THE DATE ON WHIC H THE TAX IS SO PAID. IN ACCORDANCE WITH SECTION 140A, AN ASSESSEE IS REQ UIRED TO PAY TAX UNDER SECTION 140A WHERE ANY TAX IS PAYABLE ON THE BASIS OF ANY RETURN REQUI RED TO BE FURNISHED UNDER SECTION 139 OR SECTION 142 OR AS THE CASE MAY BE, SECTION 158BC, A FTER TAKING INTO ACCOUNT THE AMOUNT OF TAX, IF ANY ALREADY PAID UNDER ANY PROVISION OF THIS AC T. THUS, AT THE TIME OF FILING RETURN THE TAX PAYABLE UNDER SECTION 140A IS DUE AND ONE REQUIRED TO CALCULATE TAX PAYABLE ON THE BASIS OF THE RETURN TO BE FURNISHED. AT THE TIME OF FILING RETURN OF INCOME, EXPLANATION TO SECTION 140A IS REQUIRED TO BE CONSIDERED. THE NEWLY INSERTED (W.E.F, 1.4.1989) EX PLANATION TO SECTION 140A(1) TAKES CARE OF A SITUATION WHERE THE AMOUNT PAID BY THE ASSESSEE U NDER SECTION 140A(1) FALLS SHORT OF THE AGGREGATE OF THE TAX AND INTEREST AS MENTIONED THER EIN. IN SUCH A SITUATION, THE AMOUNT, SO PAID IS FIRST TO BE ADJUSTED TOWARDS THE INTEREST PAYABL E AND THE BALANCE IF ANY, IS TO BE ADJUSTED TOWARDS THE TAX PAYABLE. THEREFORE, THE ADJUSTMENT TOWARDS INTEREST PAYABLE UNDER SECTION 234B(2) IS TO BE CONSIDERED ONLY AT THE TIME OF FILING RETURN OF INCOME, I.E., WHEN PAYMENT OF SELF ASSESSMENT TAX UNDER SECTION 140A IS REQUIRED TO BE MADE. BEFORE THAT, I NTEREST UNDER SECTION 234B IS INDEPENDENTLY REQUIRED TO BE CALCULATED ONLY IN ACCORDANCE WITH T HE PROVISIONS PROVIDED IN SECTION 234B(2)(I). IF AT THE TIME OF FILING RETURN IT IS F OUND SHORT AFTER ADJUSTMENT OF INTEREST OUT OF TAX PAID UNDER SECTION 140A, FURTHER INTEREST IS REQUIR ED TO BE CALCULATED IN ACCORDANCE WITH SECTION 234B(2)(II), ON BALANCE AMOUNT WHICH IS ASS ESSED TO TAX MINUS ADVANCE TAX AND ADHOC PAYMENT. 2239/M/13-RASHTRIYA CHEMICALS & FERTILIZERS LTD. 3 THEREFORE THE APPROACH OF THE REVENUE FOR CALCULATI ON OF INTEREST UNDER SECTION 234B WAS NOT CORRECT. HENCE, THE ASSESSING OFFICER WAS DIRECTED TO CALCULATE INTEREST UNDER SECTION 234B AS FORESAID.' 24. RESPECTFULLY FOLLOWING-THE RATIO LAID DOWN IN T HE AFORESAID DECISION, WE DIRECT THE ASSESSING OFFICER TO CALCULATE INTEREST U/S. 234B IN THE MANN ER LAID DOWN IN THE AFORESAID DECISION. GROUND NO. 4.2 IS ALLOWED. 2.1. WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL, T HE AO TREATED THE PAYMENTS OF RS. 26 CRORES AND RS.1.99 CRORES AS SELF ASSESSMENT TAX (S AT) U/S.140A OF THE ACT AND ACCORDINGLY CALCULATED INTEREST CHARGEABLE U/S.234B. HE WAS OF THE OPINION THAT PAYMENTS MADE AFTER THE END OF THE FINANCIAL YEAR TILL THE DATE OF FILING O F INCOME WAS SAT. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND MADE ELABORATE SUBMIS SIONS. AFTER CONSIDERING THE AVAILABLE MATERIAL, HE HELD EVERY TAX PAYMENT UNDER THE ACT W AS REQUIRED AND MADE UNDER SPECIFIC SECTION, THAT ADVANCE TAX WAS PAID U/S.201-215, THA T THE TAX DEDUCTED AT SOURCE WAS PAID UNDER CHAPTER XVII OF THE ACT,THAT SAT WAS PAID U/S.140, THAT INTERESTS U/S.215, 220 AND 234B WAS PAYABLE AFTER TAKING INTO CONSIDERATION THE PAYMENT UNDER THOSE SECTIONS, THAT THERE WAS NO CATEGORY CALLED AD HOC PAYMENT UNDER THE ACT. HE RE FERRED TO THE CASE OF JINDAL EXPORTS LTD. 314 ITR 137) OF THE HONBLE DELHI HIGH COURT AND HE LD THAT INTEREST WAS PAYABLE TO THE ASSESSEE UNDER CHAPTER XIX OF THE ACT AND U/S.234D ON THE FUNDS, THAT NONE OF THE SECTIONS REFER TO ANY CATEGORY CALLED OTHERWISE, THAT WORDS OTHERWISE MENTIONED IN SECTION 234B (2) IS IN CONTRADISTINCTION TO PAYMENTS MADE U/S.140A, THA T THE PAYMENTS MADE ON 30/04/0998 AND 30/05/1998 WERE NOTHING BUT SAT, THAT INTEREST U/S. 234B WAS REQUIRED TO BE CALCULATIVE ACCORDINGLY, THAT THE ORDER OF THE TRIBUNAL IN THE CASE OF PATSON TRANSFORMERS LTD.(SUPRA) WAS QUOTED BY THE ASSESSEE OUT OF CONTEXT, THAT THE FAC TS OF THE CASE OF THE ASSESSEE WERE DIFFERENT FINALLY HELD AO HAD RIGHTLY CALCULATED THE INTEREST U/S.234B. 4. BEFORE US,THE AUTHORISED REPRESENTATIVE (AR) STATED THAT THE ASSESSEE HAD USED THE CHALLANS CALLED SAT-CHALLANS, THAT AT THAT POINT OF TIME NO CHALLANS WERE AVAILABLE FOR AD HOC PAYMENTS, THAT THE PAYMENT MADE BY THE ASSESSEE SHO ULD BE TAKEN TOWARDS TAX AND NOT AGAINST INTERESTS AS DONE BY THE AO, THAT PROVISIONS OF SEC TION 234B (II) WERE NOT PROPERLY ANALYSED AND APPLIED.HE REFERRED TO THE INCOME TAX COMPUTATI ON OF 19/01/2001 AND RELIED UPON THE CASE OF TULSYAN NEC LTD.(330 ITR 226) AND STATED CA SE RELIED UPON BY THE F AA WAS NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERA TION, THAT FAA HAD WRONGLY UPHELD THE ORDER OF AO. 2239/M/13-RASHTRIYA CHEMICALS & FERTILIZERS LTD. 4 4.1. THE DEPARTMENTAL REPRESENTATIVE (DR) STATED THAT TH ERE WAS NO PROVISION OF AD HOC PAYMENTS AS PER ACT, THAT PAYMENT WAS MADE UNDER TH E HEAD SAT. HE REFERRED TO THE CASE OF ROSHANLAL S JAIN (309 ITR 174). HE FURTHER STATED T HAT DELAY WAS ATTRIBUTABLE TO THE ASSESSEE, THAT THE INTEREST TO BE PAID TO THE ASSESSEE WAS CA LCULATED CORRECTLY. 5. IN HIS REJOINDER, THE AUTHORISED REPRESENTATIVE STA TED THAT THE BASIC ISSUE WAS THAT AS TO WHETHER THE AO HAD GIVEN EFFECT TO THE ORDER OF THE TRIBUNAL CORRECTLY, THAT THE FACTS OF THE CASE OF ROSHANLAL S JAIN WERE TOTALLY DIFFERENT, T HAT IN THAT MATTER PAYMENT WAS NOT MADE FOR SECTION 234B INTEREST. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT WHILE DECIDING THE APPEAL ON 12/06/2009, THE TRIBUNAL HAD REFERRED TO THE ORDER OF THE PATSON TRANSFORMERS LTD.(SUPRA).IT WAS SPECIFICALLY MENTIO NED THAT INTEREST WAS REQUIRED TO BE CALCULATED IN ACCORDANCE WITH SECTION 234B (2)(I), ON BALANCE AMOUNT WHICH WAS ASSESSED TO TAX MINUS ADVANCE TAX AND AD HOC PAYMENT. IN OUR OPINION, THAT THERE WAS NO AMBIGUITY IN THE ORDER OF THE TRIBUNAL. IT HAD MENTIONED AD HOC PAYMENT HAD TO BE TAKEN INTO CONSIDERATION WHIL E CALCULATING THE INTEREST U/S.234B OF THE ACT. ONE OF THE MAIN ISSUES RAISED BEFORE THE TRIBU NAL AT THAT TIME WAS LEVY OF INTEREST U/S.234B. THE TRIBUNAL HAD REFERRED TO THE ORDER OF PATSON TRANSFORMERS LTD.(SUPRA).THE AO WAS SUPPOSED TO FOLLOW THE SAID ORDER WHILE GIVI NG EFFECT. IF HE WAS NOT SATISFIED WITH THE DIRECTIONS THE MATTER SHOULD HAVE BEEN AGITATED BEF ORE THE HONBLE BOMBAY HIGH COURT, HE HAD NO OPTION TO NOT TO FOLLOW THE DIRECTIONS OF TH E TRIBUNAL. WHETHER THE PAYMENT UNDER THE HEAD AD HOC PAYMENT COULD BE CONSIDERED OR NOT WAS NOT TO BE DECIDED BY THE AO. BUT, HE AS WELL AS THE FAA HAS NOT FOLLOWED THE DIRECTIONS OF THE TRIBUNAL IN THAT REGARD. 7. WE WOULD ALSO LIKE TO DEAL WITH THE CASES RELIED UP ON BY THE DR. IN THE CASE OF BHAGAT CONSTRUCTION COMPANY LTD.,THE ISSUE OF NATURE OF AD HOC TAX HAS NOT BEEN DISCUSSED AT ALL.IT LAYS DOWN CERTAIN RULES ABOUT SECTION 234B,BUT DOES NOT DEAL WITH THE ISSUE BEFORE US.IN THE MATTER OF ROSHANLAL S JAIN( SUPRA),THE PROVISIONS O F SECTION 234B(2)(I) HAVE NOT BEEN DELIBERATED UPON.IN SHORT,THE CASES RELIED UPON BY THE DR ARE OF NO HELP. 8. CONSIDERING THE ABOVE,WE HOLD THAT THE AO HAD NOT F OLLOWED THE ORDER OF THE TRIBUNAL,THAT HE WAS SPECIFICALLY DIRECTED TO CONSIDER THE AD HOC PAYMENT,THAT HE SHOULD NOT HAVE ADJUSTED THE PAYMENTS IN QUESTION (RS.26 CRORES AND RS. 1.99 CRORES) AGAINST THE PAYMENTS OF INTEREST U/S. 234B OF THE ACT.GROUND NO.1 IS DECIDED IN FAVO UR OF THE ASSESSEE. 2239/M/13-RASHTRIYA CHEMICALS & FERTILIZERS LTD. 5 9. GROUND NUMBER TWO IS ABOUT INTEREST TO BE ALLOWED T O THE ASSESSEE U/S.244 OF THE ACT. BEFORE US, THE AR STATED THAT THE AO AND FAA HAVE D ENIED INTEREST FOR THE PERIOD FROM 03/10/20 TO 29/11/2009, THAT THERE WAS NO DELAY ON PART OF THE ASSESSEE, THAT THE ASSESSEE HAD FURNISHED ALL THE DETAILS ON 30/11/2009. ALTERNATIV ELY,HE STATED THAT EVEN IF THERE WAS DELAY ON PART OF THE ASSESSEE,IT WAS ONLY FOR 23 DAYS. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS.WE FIND THAT WH ILE THE ASSESSEE FORWARDED THE COPY OF THE ORDER OF THE TRIBUNAL DATED 12.06. 2009,THAT ON 30.10.2009 THE ASSESSEE RECEIVED A LETTER FROM THE AO,DTD.23.09.2009 ASKING IT TO FILE NECESSARY DETAILS FOR GIVING EFFECT TO THE ORDER OF THE DETAILS,THAT IT FILED THE DETAILS ON 3 0.11.2009,THAT THE AO HELD THAT NO INTEREST WAS ALLOWABLE FOR THE PERIOD FROM 03.11.2009 TO 29.11.2 009,AS THE DELAY WAS ATTRIBUTABLE TO THE ASSESSEE,THAT THE FAA CONFIRMED THE ORDER OF THE AO . 11. FROM THE ABOVE DISCUSSION IT IS CLEAR THAT THE LETT ER OF THE AO(DTD.23.09.2009)WAS RECEIVED BY THE ASSESSEE ON 30.10.2009 AND THE AO HAD NOT RE FUTED SAID FACT.AS PER THE LETTER IT WAS SUPPOSED TO FILE THE DETAILS BY 06.11.2009 AND IT F ILED THE REQUISITE DETAILS ON THE LAST DAY OF THE MONTH.IN OUR OPINION,DELAY FOR THE PERIOD OF 03 .10. 2009 TO 30.10.2009 WAS NOT AT ALL ATTRIBUTABLE TO IT.WE FIND THAT IN ALTERNATE GROUND THE ASSESSEE HAS ADMITTED THAT MAXIMUM DELAY ATTRIBUTABLE TO IT WAS OF 23 DAYS ONLY AND NO T OF THE ENTIRE PERIOD.THEREFORE,REVERSING THE ORDER OF THE FAA,WE PARTLY ALLOW THE GROUND RAI SED BY THE ASSESSEE.WE HOLD THAT EXCEPT FOR THE DELAY OF 23 DAYS THERE WAS NO DELAY ON PART OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. !'#$ !'#$ !'#$ !'#$ . .. . ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2018. % % % % & ! & ! & ! & ! 11 , 2018 SD/- SD /- ( / SANDEEP GOSAIN ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 11.05.2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR D BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.