Eastern India Powertech Ltd., Gurgaon V. DCIT, New Delhi

ITA 3010/DEL/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69598 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEL A YRS
• Keywords: Retrospective amendment; Bad and doubtful debts
• Section: 234B; 115JB

Judgement Text

ITA NOS. 3010 & 3034/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI ABY. T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 3010 & 3034/DEL/2013 A.YRS. : 2009-10 & 2008-09 EASTERN INDIA POWERTECH LTD., (EARLIER KNOWN AS DLF POWER LTD.) DLF GALLERIA (12 TH FLOOR), DLF CITY, PHASE-IV, GURGAON-122002 (PAN: AAACD0187C) VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 11(1), 312- CR BUILDING, IP ESTATE, NEW DELHI - 110 002 (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. R.S. SINGHVI, CA DEPARTMENT BY : DR. SUDHA KUMARI, CIT(DR) ORDER ORDER ORDER ORDER PER PER PER PER BENCH BENCH BENCH BENCH THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2008-09 & 2 009-10. SINCE THE ISSUES ARE COMMON AND THE APPEALS WERE HEARD TOGETHER AND THEY ARE BEING CONSOLIDATED FOR THE SAKE OF CONVENIENCE. 2. THE FIRST COMMON ISSUE RAISED IS THAT LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER IN EN HANCING THE BOOK PROFIT U/S. 115JB OF THE I.T. ACT ON ACCOUNT OF PRO VISION FOR DOUBTFUL DEBT. 3. IN THIS CASE ASSESSEE COMPANY IS ENGAGED IN THE B USINESS OF GENERATION OF POWER AND EXECUTING TURNKEY PROJECT PROVIDING FACILITY MANAGEMENT. ASSESSEE HAS CLAIMED FOR PROVISION OF DOUBTFUL DEBT ITA NOS. 3010 & 3034/DEL/2013 2 AND THE SAME WAS NOT INCLUDED IN THE BOOK PROFIT. T HE ASSESSING OFFICER INCLUDED THIS PROVISION FOR DOUBTFUL DEBT F OR BOOK PROFIT WHILE CALCULATING THE BOOK PROFIT U/S. 115JB OF THE I.T. ACT. THE ASSESSING OFFICER HELD THAT THIS WAS THE PROVISION FOR UNASCE RTAINED LIABILITY. ASSESSING OFFICER FURTHER HELD THAT THE PROVISION F OR DOUBTFUL DEBT IS COVERED BY THE AMENDMENT MADE BY THE FINANCE ACT, 200 9 VIDE CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB WIT H RETROSPECTIVE EFFECT FROM 1.4.2001. 4. UPON ASSESSEES APPEAL, LD. CIT(A) HELD THAT PRO VISION FOR DOUBTFUL DEBT HAS TO BE ADDED BACK TO THE BOOK PR OFIT, AS PER THE AMENDED PROVISIONS OF SECTION 115JB W.E.F. 1.4.2001 . HENCE, LD. CIT(A) HELD THAT ASSESSING OFFICER WAS JUSTIFIED IN ADDING BACK THE PROVISION FOR DOUBTFUL DEBT AND THE SAME WAS CONFIR MED. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. LD. COUNSEL OF THE ASSESSEE FAIRLY CONCEDED THAT IN VIE W OF THE AMENDMENT MADE IN THE FINANCE ACT BY THE FINANCE ACT, 2009 VIDE CLAUSE (I) TO SECTION 115JB WITH RETROSPECTIVE EFFECT FROM 1.4.200 1, THE ISSUE HAS TO BE DECIDED AGAINST THE ASSESSEE. ACCORDING TO THE A MENDED PROVISIONS AMOUNTS SET ASIDE AS PROVISION FOR DIMINUTION IN VALU E OF ANY ASSET IS REQUIRED TO BE ADDED IN THE BOOK PROFIT CLAUSE (I) HAS BEEN INSERTED RETROSPECTIVELY W.E.F. 1.4.2001 MEANING THEREBY THAT FROM A.Y. 2001- 02, SUCH PROVISION FOR BAD DEBTS HAS TO BE ADDED IN THE BOOK PROFIT WHILE COMPUTING THE BOOK PROFIT U/S. 115JB. THIS PR OPOSITION WAS UPHELD BY THE HONBLE DELHI HIGH COURT IN THE CASE O F C.I.T. VS. ILPA PARAMOUNT PVT. LTD. VIDE ORDER DATED 18.2.2010. ACCOR DINGLY, HE ITA NOS. 3010 & 3034/DEL/2013 3 SUBMITTED THAT THE ISSUE HAS NOW TO BE DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 7. UPON CAREFUL CONSIDERATION OF THE SUBMISSIONS AS ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE AUTHORIT IES BELOW ON THIS ISSUE, ACCORDINGLY, WE CONFIRM THE SAME. 8. ANOTHER ISSUE RAISED IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN CHARGING INTERES T U/S. 234B. 9. ON THIS ISSUE, THE ASSESSING OFFICER HAS CHARGED INTEREST U/S. 234B OF THE I.T. ACT. ASSESSEE HAD RAISED THE GRO UND AGAINST THIS BEFORE THE LD. CIT. HOWEVER, LD. CIT(A) DID NOT AD JUDICATE THE ISSUE AND HELD THAT THE GROUND OF APPEAL WAS CONSEQUENTI AL IN NATURE. 10. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 11. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE IN THE PAYMENT OF ADVANCE TAX U /S. 208 TO 210. HENCE, NO INTEREST IS LEVIABLE U/S. 234B OF THE I.T . ACT. LD. COUNSEL IN THIS REGARD FURTHER REFERRED THAT IN SIMILAR SITUATI ON THIS TRIBUNAL IN THE CASE OF DCIT VS. RAMA TEXTILES LTD. [2012] 53 SOT 515 (DEL.) HAS HELD THAT NO INTEREST IS LEVIABLE U/S. 234B OF THE I.T. AT. WE HAVE HEARD THE LD. D.R. ALSO. 12. UPON CAREFUL CONSIDERATION, WE FIND THAT WE CAN GAINFULLY REFER HERE THE PROVISIONS OF SUB-SECTION (1) OF SECTION 2 34B OF THE I.T. ACT WHICH READS AS UNDER:- (1) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION , WHERE, IN ANY FINANCIAL YEAR, AN ASSESSEE WHO IS ITA NOS. 3010 & 3034/DEL/2013 4 LIABLE TO PAY ADVANCE TAX UNDER SECTION 208 HAS FAILED TO PAY SUCH TAX OR, WHERE THE ADVANCE TAX PAID BY SUCH ASSESSEE UNDER THE PROVISIONS OF SECTION 210 IS LESS THAN NINETY PER CENT OF THE ASSESSED TAX, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF ONE PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1 ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR TO THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SUB-SECTION (1) OF SECTION 143 AND WHERE A REGULAR ASSESSMENT IS MADE, TO THE DATE OF SUCH REGULAR ASSESSMENT, ON AN AMOUNT EQUAL TO THE ASSESSED TAX OR, AS THE CASE MAY BE, ON THE AMOUNT BY WHICH THE ADVANCE TAX PAID AS AFORESAID FALLS SHORT OF THE ASSESSED TAX. 13. ON PERUSAL OF THE AFORESAID, WE FIND THAT IN TERMS OF SECTION 234B OF THE I.T. ACT INTEREST IS LEVIABLE IN A CASE WHER E THE ASSESSEE DEFAULTS IN THE PAYMENT OF ADVANCE TAX. IN TERMS OF SECTION 208 TO 210 OF THE ACT, IT IS FURTHER NOTICED THAT THE ASSESSEE IS REQ UIRED TO COMPUTE AND ITA NOS. 3010 & 3034/DEL/2013 5 PAY THE ADVANCE TAX DURING THE RELEVANT PREVIOUS YE AR ON THE ESTIMATED INCOME OF THE ASSESSEE. 14. IN THE PRESENT CASE, THE ASSESSEE HAS PAID ADVA NCE TAX BY ESTIMATING ITS INCOME DURING THE PREVIOUS YEAR 2008- 09 AND 2009-10, IN ACCORDANCE WITH THE THEN PREVAILING POSITION AND PROVISIONS OF THE ACT. IT IS ONLY ON ACCOUNT OF SUBSEQUENT RETROSPE CTIVE AMENDMENT IN LAW THAT THE ADVANCE TAX PAID BY THE ASSESSEE WOUL D FALL SHORT OF THE TAX PAYABLE ON THE INCOME, AS PER THE AMENDED LAW. IN THIS CASE THE AMENDMENT WAS BROUGHT IN BY THE FINANCE ACT, 2009. T HE BILL IN THIS REGARD WAS INTRODUCED ON 06.7.2009 AND THE ASSENT W AS GIVEN ON 19.8.2009. THUS, IT WAS NOT POSSIBLE FOR THE ASSE SSEE TO FORESEE THE RETROSPECTIVE AMENDMENT TO TAKE PLACE AS AT THE END OF THE RELEVANT PREVIOUS YEAR AND ACCORDINGLY, THE ASSESSEE COULD N OT HAVE PAID ANY ADVANCE TAX. THUS, BY NO STRETCH OF IMAGINATION, I T CAN BE HELD THAT THERE WAS ANY DEFAULT ON THE PART OF THE ASSESSEE I N PAYMENT OF ADVANCE TAX, IN ACCORDANCE WITH THE PROVISIONS OF S ECTION 208 TO 210 DURING THE FINANCIAL YEAR 2008-09 AND 2009-10. HEN CE, WE HOLD THAT INTEREST U/S. 234B IN THIS CASE IS NOT LEVIABLE. T HE DECISION OF THE CITED BY THE LD. COUNSEL OF THE ASSESSEE IN DCIT VS. RAMA TEXTILES LTD. [2012] 53 SOT 515 (DEL.) (SUPRA) ALSO SUPPORTS THE CASE OF THE ITA NOS. 3010 & 3034/DEL/2013 6 ASSESSEE. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO PAY ANY INTEREST U/S. 234B OF THE I.T. ACT. 15. OTHER ISSUE IN THE APPEAL FOR THE ASSESSMENT YE AR 2008-09 IS REGARDING INTEREST LEVIABLE U/S. 234D AND WITHDRAWAL OF INTEREST GRANTED U/S. 244A. 16. ON THESE ISSUES, WE FIND THAT BOTH THE COUNSE L FAIRLY AGREED THAT THESE ISSUES ARE CONSEQUENTIAL IN NATURE. ACCORDIN GLY, THESE ISSUES ARE TREATED AS CONSEQUENTIAL. 17. IN THE RESULT, BOTH THE APPEALS FILED BY THE A SSESSEE STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/11/2013. SD/- SD/- [ [[ [ABY. T. VARKEY ABY. T. VARKEY ABY. T. VARKEY ABY. T. VARKEY] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE:- 22/11/2013 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NOS. 3010 & 3034/DEL/2013 7