M/s Sudha Agro Oil & Chemical Inds Ltd, Kakinada V. The ACIT, Circle-1., Kakinada

ITA 288/VIZ/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6987 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 04-06-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Keywords: Set aside
• Section: 234B; 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.288/VIZAG/2007 ASSESSMENT YEAR : 2004-05 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD. SAMALKOT ACIT, CIRCLE-1 KAKINADA (APPELLANT) VS. (RESPONDENT) PAN NO.AADCS1177N APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI G.S.S. GOPINATH, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) MAINLY ON TWO GROUNDS WHICH ARE AS UNDER:- 1) THE LD. CIT(A) HAS ERRED IN NOT GIVING CREDIT TO TA XES PAID BETWEEN 01 APRIL 2004 AND 31 DECEMBER 2004, WHILE CALCULATI NG INTEREST U/S 234A, 234B AND 234C OF THE INCOME TAX ACT. 2) THE LD. CIT(A) HAVE ERRED IN DIRECTING THAT THE INT EREST U/S 234A, 234B AND 234C OF THE INCOME TAX ACT SHOULD BE CALCU LATED IN SERIATUM INSTEAD OF ALLOWING THE CALCULATION TO THE BENEFIT OF THE ASSESSEE IN THE ABSENCE OF ANY METHOD PRESCRIBED UN DER THE INCOME TAX ACT. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS PLACED ON RE CORD. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS IN VITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN THE CASE OF MRS. SHEELA JA ISINGH VS. ACIT 13 SOT 617 AND THE JUDGEMENT OF DELHI HIGH COURT IN THE CASE O F DR. PRANOY ROY AND OTHERS AND ANOTHER VS. CIT 254 ITR 755. IN SUPPORT OF THE CONTENTION THAT WHILE CALCULATING THE INTEREST U/S 234A A CREDIT OF ADVANCE TAX PAID AFTER DUE DATE HAS TO BE GIVEN. BUT THE A.O. DID NOT CONSIDE R THE TAX PAID AFTER 31 ST MARCH, 2004 AND BEFORE 31 ST DECEMBER, 2004. COPY OF THE ORDER OF THE TRIBUNAL IS ALSO PLACED ON RECORD. 2 3. THE LD. D.R. SIMPLY PLACED RELIANCE UPON THE ORD ER OF THE CIT. WE HAVE CAREFULLY EXAMINED THE LEGAL PROVISIONS AND TH E ORDER OF THE TRIBUNAL AND WE FIND THAT TRIBUNAL HAS CONSIDERED ALL RELEVA NT PROVISIONS WHILE HOLDING THAT ADVANCE TAX PAID AFTER DUE DATE HAS TO BE GIVE N CREDIT WHILE CHARGING INTEREST U/S 234A OF THE ACT. FOR THE SAKE OF REFE RENCE, WE EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL: SEC. 234A OF THE IT ACT REQUIRES THE AO TO CHARGE I NTEREST UNDER S. 234A ON THE AMOUNT OF THE TAX ON THE TOTA L INCOME AS DETERMINED UNDER SUB-S.(1) OF S.143 OR ON REGULAR A SSESSMENT AS REDUCED BY THE ADVANCE TAX, IF ANY, PAID ANY ANY TA X DEDUCTED OR COLLECTED AT SOURCE. INTEREST UNDER S. 234B CAN BE LEVIED IN TWO SITUATIONS. FIRST SITUATION DEALS WITH A CASE WHER E AN ASSESSEE LIABLE TO PAY ADVANCE TAX UNDER S. 208 HAS FAILED TO PAY S UCH TAX.. IN SUCH A SITUATION, INTEREST IS CHARGED FOR FAILURE TO PAY ADVANCE TAX OR, IN OTHER WORDS, FOR NON-PAYMENT OF ADVANCE TAX ON DUE DATES. THE SHORT QUESTION IS WHETHER THE ASSESSEE CONTINUES TO BE LI ABLE TO PAY INTEREST EVEN AFTER HE HAS PAID THE ADVANCE TAX THOUGH BELAT EDLY. THE DEPARTMENT WANTS TO CHARGE INTEREST EVEN AFTER THE ASSESSEE HAS PAID ADVANCE TAX ON THE GROUND THAT THE PAYMENT NOT MADE ON THE DUE DATE IS NOT IN THE NATURE OF ADVANCE TAX, PAID. SECOND SITUATION DEALS WITH A CASE WHERE THERE IS SHORT PAYMENT OF A DVANCE TAX, I.E., WHERE THE ADVANCE TAX PAID BY THE ASSESSEE UNDER TH E PROVISIONS OF S. 210 IS LESS THAN 90 PERCENT OF THE ASSESSED TAX. I N SUCH A CASE, THE ASSESSEE IS REQUIRED TO PAY INTEREST ON THE DIFFERE NCE BETWEEN THE ASSESSED TAX AND THE AMOUNT OF ADVANCE TAX PAID B Y THE ASSESSEE. HERE TOO, THE DEPARTMENT WANTS TO LEVY INTEREST EVE N AFTER THE DEFICIENCY IN PAYMENT OF ADVANCE TAX HAS BEEN MADE GOOD ON THE GROUND THAT THE DEFICIENCY SO MADE GOOD CANNOT BE T REATED TO BE THE AMOUNT OF ADVANCE TAX PAID UNLESS IT IS PAID ON THE DUE DATE ITSELF. THE FACTUAL MATRIX OF THE CASE IS CLEAR THAT THE AF ORESAID SUM OF RS.2,44,704 PAID ON 25 TH APRIL, 1996 WAS NOT PAID ON THE DUE DATE PRESCRIBED FOR PAYMENT OF INSTALMENT OF ADVANCE TAX UNDER CHAPTER XVII-C AND MORE SPECIFICALLY S.211 OF THE I.T. ACT. CAN IT BE SAID THAT THE AMOUNT OF ADVANCE TAX PAID AFTER THE DUE DATE P RESCRIBED UNDER S.211 WILL CEASE TO BE PAYMENT OF ADVANCE TAX MEREL Y ON THE GROUND THAT THE PAYMENT WAS NOT MADE ON THE DATES PRESCRIB ED UNDER S. 211? TAKE A CASE WHERE A PARTICULAR SUM IS REQUIRED TO B E PAID AS ADVANCE TAX INSTALMENT ON 15 TH MARCH, 1996 BUT IT IS PAID ON 1 ST APRIL, 1996 INSTEAD OF 15 TH MARCH, 1996. IS IT A CASE OF NON-PAYMENT OF ADVANC E TAX OR A CASE OF BELATED PAYMENT OF ADVANCE TAX. I T IS A CASE OF NON- PAYMENT OF ADVANCE TAX DUE FOR PAYMENT ON 15 TH MARCH, 1996 HAS NOT BEEN PAID OR IS STILL OUTSTANDING. THE ELEMENT OF NON-PAYMENT OR SHORT PAYMENT WOULD CEASE AS SOON AS THE PAYMENT IS MADE IN FULL. THE RESOLUTION OF DISPUTE DOES NOT REQUIRE TO FIND OUT THE MEANING OF THE TERM ADVANCE TAX BUT TO FIND OUT AS TO WHEN I T HAS BEEN PAID. 3 ONCE THE ADVANCE TAX IS PAID, WHETHER ON DUE DATE O R BELATED, THE PAYMENT SO MADE HAS TO BE TREATED AS ADVANCE TAX PA ID. IN BOTH THE SECTIONS, ONE IS CONCERNED WITH THE SITUATION AS TO WHETHER ADVANCE TAX HAS BEEN PAID OR NOT. IF IT HAS BEEN PAID BELAT EDLY, THE INTEREST UNDER S. 234A/234B WOULD BE CHARGEABLE UPTO THE DAT E OF PAYMENT OF ADVANCE TAX AND NOT AFTER THE PAYMENT HAS BEEN MADE . IN LAW, INTEREST IS A CONSIDERATION PAID EITHER FOR USE OF MONEY OR FOR FORBEARANCE IN DEMANDING IT AFTER IT HAS FALLEN DUE . IT IS A COMPENSATION ALLOWED BY LAW OR FIXED BY PARTIES OR PERMITTED BY CUSTOM OR USAGE FOR USE OF MONEY, BELONGING TO ANOT HER, OR FOR THE DELAY IN PAYING THE MONEY AFTER IT HAS BECOME PAYAB LE. INTEREST IS AWARDED IN FAVOUR OF A PERSON WHO IS DEPRIVED OF TH E USE OF MONEY WHILE IT IS PAID BY A PERSON WHO USES OR RETAINS TH AT MONEY. IF A PERSON DOES NOT USE OR RETAIN THE MONEY OF OTHERS, HE CANNOT BE SADDLED WITH THE LIABILITY TO PAY INTEREST TO THEM. LIKEWISE, INTEREST CANNOT BE ALLOWED IN FAVOUR OF A PERSON WHO HAS NOT BEEN DEPRIVED OF THE USE OF HIS MONEY. IT IS FOR THIS REASON THAT S UB-S. (1) OF S.234A REQUIRES THE INTEREST TO BE CHARGED ON THE AMOUNT OF THE TAX ON THE TOTAL INCOME AS DETERMINED UNDER SUB-S. (1) OF S.14 3 OR ON REGULAR ASSESSMENT AS REDUCED BY THE ADVANCE TAX, IF ANY, P AID AND ANY TAX DEDUCTED OR COLLECTED AT SOURCE. SEC. 234A CHARGES INTEREST ON THE AMOUNT OF THE TA X ON THE TOTAL INCOME AS DETERMINED UNDER SUB-S.(1) OF S.143 OR ON REGULAR ASSESSMENT AS REDUCED BY THE ADVANCE TAX, IF ANY PA ID, AND ANY TAX DEDUCTED OR COLLECTED AT SOURCE. IT CAN BE PAID, IN ADVANCE OF THE ANTICIPATED LIABILITY, BEFORE SUBMISSION OF RETURN OF INCOME IN THREE WAYS, NAMELY, BY WAY OF ADVANCE TAX BEFORE THE EX PIRY OF THE FINANCIAL YEAR CONCERNED UNDER S.211 OF THE IT ACT; BY WAY OF DEDUCTION OF TAX AT SOURCE UNDER CHAPTER XVII-B OF T HE IT ACT; AND BY WAY OF PAYMENT OF TAX AFTER THE EXPIRY OF THE CONCE RNED FINANCIAL YEAR BUT BEFORE THE SUBMISSION OF THE RETURN OF INCOME. ALL OF THEM HAVE ONE COMMON FEATURE IN THAT THEY ALL ARE PAYMENTS, I N ADVANCE, OF ANTICIPATED TAX LIABILITY ON THE RETURNED INCOME. THE UNDERLYING OBJECT OF S. 234A IS TO COMPENSATE THE STATE EXCHEQUER FOR THE DELAY IN PAYMENT OF SELF ASSESSMENT TAX DUE TO BELATED SUBMI SSION OF THE RETURN. IT IS RELEVANT TO MENTION HERE THAT PENALTY IS SEPARATELY PROVIDED FOR IN S.271F FOR FAILURE TO FURNISH THE R ETURN OF INCOME, WHICH IS COMPENSATED BY LEVY OF INTEREST UNDER S. 234A. IT THEREFORE STANDS TO LOGIC THAT TAXES ALREADY PAID SHOULD BE EXCLUDED WHILE WORKING OUT THE INTEREST UNDER S.234A FOR THE SIMPLE REASON THA T THE ASSESSEE CANNOT BE ASKED TO PAY INTEREST ON THAT AMOUNT WHIC H HE HAS NEITHER RETAINED NOR USED. INTEREST IS CHARGED FOR RETENTI ON OF MONEY TO PREVENT UNJUST ENRICHMENT. IT FOLLOWS AS A NATURAL COROLLARY THAT INTEREST CANNOT BE CHARGED WHEN THERE IS NO RETENTI ON OF MONEY AS THERE CAN BE NO UNJUST ENRICHMENT IN SUCH A CASE. IT WILL LEAD TO UNJUST RESULT IF THE DEPARTMENT IS PERMITTED TO LEV Y INTEREST UNDER S. 234A ON THAT AMOUNT ALSO, WHICH THE ASSESSEE HAS AL READY PAID. IT IS THEREFORE IN THIS CONTEXT THAT THE TERM ADVANCE TA X USED IN S. 234A(1) REQUIRES TO BE INTERPRETED IN ITS GENERIC SENSE. S O INTERPRETED, THE TERM ADVANCE TAX USED IN S.234A WOULD COVER ALL T HE TAXES PAID IN 4 ADVANCE OF THE TAX LIABILITY ANTICIPATED BY THE ASS ESSEE FOR THE CONCERNED ASSESSMENT YEAR. AO IS DIRECTED TO GIVE CREDIT FOR A SUM OF RS.2,44,704 PAID ON 25 TH APRIL, 1996 WHILE WORKING OUT THE INTEREST PAYABLE UNDER S. 234ADR. PRANNOY ROY & ANR. VS. CI T (2002) 172 CTR (DEL) 465: (2002) 254 ITR 755 (DEL) RELIED ON. 4. WE THEREFORE FOLLOWING THE AFORESAID ORDER OF TH E TRIBUNAL DIRECT THE A.O. TO RECALCULATE THE INTEREST U/S 234A AFTER GIV ING A CREDIT OF TAX PAID AFTER THE DUE DATE AND ALSO IN ACCORDANCE WITH THE PROVIS IONS OF THE ACT. 5. SO FAR AS INTEREST CHARGED U/S 234B IS CONCERNED , THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THIS INTEREST WAS N OT CALCULATED AS PER THE PROVISIONS OF THE ACT. WHILE CALCULATING THE INTER EST U/S 234B, THE CREDIT OF PAYMENTS OF TAX AFTER DUE DATE SHOULD ALSO BE TAKEN INTO ACCOUNT AS PER THE AFORESAID JUDGEMENT OF THE TRIBUNAL. MOREOVER, THE PROVISIONS OF THIS SECTION 234B ARE CRYSTAL CLEAR AND HAS LAID DOWN THE MODE O F CALCULATION OF THE INTEREST BUT THE ASSESSING OFFICER HAS NOT EVEN CAL CULATED AS PER THE PROVISIONS OF SECTION 234B OF THE ACT. THE LD. D.R . ON THE OTHER HAND HAS PLACED A RELIANCE UPON THE ORDER OF THE CIT(A). 6. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE MODE O F CALCULATION U/S 234B IS VERY CLEAR AND THERE IS NO AMBIGUITY THEREIN. MORE OVER, THE TRIBUNAL HAS EXAMINED THIS ASPECT OF ALLOWABILITY OF CREDIT OF A DVANCE TAX PAID AFTER THE DUE DATE WHILE CALCULATING INTEREST U/S 234B IN THE CASE OF MRS. SHEELA JAISINGH (SUPRA). WE HAVE ALSO EXAMINED THE CALCUL ATION MADE BY THE A.O. AND WE FIND THAT IT WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) WHO HAS WRONGLY CONFIRMED THE ORDER OF THE A.O. AND RESTORE THE MATTER TO THE FIL E OF THE A.O. WITH A DIRECTION TO RECALCULATE THE INTEREST U/S 234B AS P ER THE PROVISIONS OF SECTION 234B AND ALSO IN THE LIGHT OF AFORESAID ORDER OF TH E TRIBUNAL IN THE CASE OF MRS. SHEELA JAISINGH. WITH REGARD TO THE INTEREST CHARGED U/S 234C THE LD. COUNSEL FOR THE ASSESSEE DID NOT RAISE ANY DISPUTE. WE THEREFORE FIND NO INFIRMITY IN THE CALCULATION OF INTEREST U/S 234C O F THE ACT. 5 7. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 29.3.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 29 TH MARCH, 2010 COPY TO 1 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LIMITED, G. RAGAMPETA, KAKINADA 2 ACIT, CIRCLE-1, KAKINADA 3 THE CIT, RAJAHMUNDRY 4 THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM