Balasore Alloys Limited, Balasore V. ACIT, Balasore

ITA 312/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4398 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 25-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-08-2010
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: D K SETH
• Keywords: Depreciation; Retrospective amendment; Revised return; Unabsorbed depreciation
• Section: 143(3); 234B; 115JB

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL,CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 312/CTK/2010 (ASSESSMENT YEAR 2006 - 07) BALASORE ALLOYS LTD., BALGOPALPUR, BAL ASORE 756 020,ORISSA PAN:AAACI 13967 P VERSUS THE ASST.COMMISSIONER OF INCOME - TAX, BALASORE CIRCLE, BALASORE. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI D.K.SETH, AR FOR THE RESPONDENT SMT. PARAMITA TRIPATHY, DR ORDER SHRI K.K.GUPTA, ACCOUNTAN T MEMBER : THIS APPEAL BY THE ASSESSEE AGITATES THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX U/S.263 OF THE INCOME - TAX ACT,1961. 2. ASSESSMENT WAS PASSED U/S.143 ( 3) BY THE ASSESSING OFFICER WHEN THE ASSESSEE HAVING FILED THE RETURN OF LOSS WAS CONS IDERED FOR DISALLOWANCE OF CERTAIN EXPENSES CLAIMED THEREIN RESULTING IN DECREASE OF THE LOSS TO BE ADJUSTED AGAINST BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION TO BE ASSESSED U/S.143(3) AT NIL. HOWEVER, THE ASSESSING OFFICER PASSED ORDER U/S .115 JB BY PERUSING THE BOOK PROFITS TO BE ADJUSTED AS PROVIDED UNDER LAW WHICH INTER ALIA INCLUDED THE ASSESSEES CLAIM OF INTEREST PAID UNDER THE PROVISIONS OF SECTION 234B TO BE ENHANCED AFTER ADJUSTMENT OF TAX PAID UNDER THE PROVISIONS OF SECTION 140A. THE ASSESSING OFFICER, THEREFORE, HAD CALCULATED ADDITIONAL INTEREST U/S.234B FROM 1.5.2008 TO THE DATE OF ASSESSMENT ORDER I.E., 31.12.2008. 3. THE LEARNED CIT ISSUED SHOW CAUSE NOTICE U/S.263 WHEN THE ISSUES LIKE APPLICABILITY OF THE PROVISIONS OF SECTIO N 195 IN RESPECT OF DIRECT IMPORT OF RAW MATERIAL AND VARIOUS OTHER ISSUES WERE CONSIDERED NOT FIT FOR ADJUDICATION DURING THE COURSE OF HEARING BEFORE HIM. HOWEVER, THE LEARNED CIT RECALCULATED THE INTEREST TO BE CHARGED U/S.234B AND 234C FOR THE ITA NO. 312/CTK/2010 2 IMPUGNED ASSESSMENT YEAR ON THE PREMISE THAT THE FINANCE ACT, 2008 PROVIDED FOR RETROS PECTIVE AMENDMENT FROM 1.4.2001 WHEN PROVISIONS WERE TO BE DEDUCTED FROM THE BOOK PROFIT AS PER THE AMENDMENT. HE HIMSELF COMPUTED THE ENHANCED INTEREST TO BE CHARGED U/S.234B AND DIRECTED THE ASSESSING OFFICER TO ISSUE DEMAND NOTICE FOR THE RESIDUAL TO BE PAID AND COLLECTED BY HIM FORTHWITH. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE THE LEARNED CIT IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE IS REQUIRED TO PAY ENHANCED INTEREST AMOUNTING TO RS.14,75,661 U/S.234B ON ACCOUNT OF REVISION OF MAT LIABILITY U/S.115JB DUE TO AMENDMENT MADE BY THE FINANCE ACT, 2008 WITH RE TROSPECTI VE EFFECT FROM 1.4.2001 I.E., FROM ASSESSMENT YEAR 2001 - 02 WHICH WAS TO BE GIVEN CREDIT FOR BY WAY OF SELF ASSESSMENT TAX PAID WAS APPROPRIATELY CONSIDERED BY THE LEARNED ASSESSING OFFICER IN HIS ORDER ALREADY . THIS CREDIT OUGHT NOT TO HAVE BEEN DEDUCTED F ROM THE BOOK PROFIT WHICH HE ASSUMED WAS PROVIDED FOR. THE LEARNED CIT WAS, THEREFORE, NOT JUSTIFIED IN LEVYING INTEREST U/S.234 B HIS OWN CALCULATION AS PERIOD CONSIDERED BY HIM IN HIS ORDER AS THE AMOUNT OF DEFERRED TAX CHARGES REQUIRED TO BE ADDED TO THE BOOK PROFIT ONLY DUE TO THE RETROSPECTIVE AMENDMENT MADE IN EXPLANATION 1 TO SECTION115JB WHICH WAS BEYOND ANY APPREHENSION OR COMPREHENSION TO THE ASSESSEE COMPANY. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NEITHER AN ERROR HAS BEEN COMMITTED B Y THE ASSESSING OFFICER AND NOR A PREJUDICE, IF ANY, HAS BEEN CAUSED TO THE REVENUE BUT TO THE ASSESSEE INSOFAR AS THE LEARNED CIT COULD NOT THRUST UPON HIS VIEW OF CHARGING INTEREST BEYOND THE PERMISSIBLE LIMIT AS PROVIDED IN LAW. HE POINTED OUT THAT TH E CHARGING OF INTEREST U/S.234B CANNOT BE INCREASED WHEN THE FAULT DOES NOT LIE WITH THE ASSESSEE. THE ITA NO. 312/CTK/2010 3 RETROSPECTIVE AMENDMENT, THEREFORE, WAS NOT DUE TO THE ASSESSEES INACTION IN NOT PAYING ADVANCE TAX ACCORDING TO THE BOOK PROFIT DECLARED WHEN THE ASSES SING OFFICER CALLED FOR A REVISED RETURN FOR COMPUTATION FOR LEVY OF INTEREST U/S.234B IN ACCORDANCE WITH THE PROVISIONS OF THE ACT WHEN THE INTERVENING PERIOD I.E., FROM 1.5.2008 TO 31.12.2008 WAS CHARGED @1% WAS SOUGHT TO BE INCREASED BY THE LEARNED CIT TO 25 MONTHS CAN NEITHER BE AN ERROR NOR PREJUDICE CAUSED TO THE REVENUE AND ALREADY OTHERWISE OUGHT TO HAVE BEEN RECTIFIED BY THE ASSESSING OFFICER HIMSELF UNDER THE PROVISIONS OF SECTION 154. HE CITED PLETHORA OF JUDGMENTS TO INDICATE THAT ASSUMPTION O F JURISDICTION U/S.263 BY THE CIT HAS TO BE FIRST BY ESTABLISHING AN ERROR COMMITTED BY THE ASSESSING OFFICER WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE. A VIEW TAKEN BY THE ASSESSING OFFICER WHICH IS TENABLE IN LAW CANNOT BE CHANGED BY CIT BY HOLDIN G A DIFFERENT VIEW WHICH VIEW ONLY LEANS IN FAVOUR OF THE REVENUE FOR A PERIOD WHICH INTEREST HAS BEEN CHARGED DUE TO PASSAGE OF TIME LIES ON THE PROCEEDINGS UNDERTAKEN AFTER RETURN HAD BEEN FILED. THE ASSESSEE THEREFORE BECOMES NOT LIABLE TO PAY INTEREST ON SUCH AMOUNTS WHICH CREDIT HAS NOT BEEN TAKEN BY THE DEPARTMENT DUE TO ITS OWN SAID PROCEDURES. THE LEARNED CIT THEREFORE ERRED IN PUSHING A VIEW TO THE ASSESSING OFFICER BY NOT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE ERROR, IF ANY, COMMITTED BY HIM IN HIS ORDER WHICH HE FULLY JUSTIF IED IN CHARGING INTEREST U/S.234B IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND MORE SO AFTER THE AMENDMENT HAD BEEN INSERTED WITH RETROSPECTIVE EFFECT SEEKING FOR CHARGING FOR INTEREST U/S.234B TILL S UCH DATE THE ASSESSING OFFICER WAS PROCEEDING TO PASS ORDER U/S. 143(3) . 5. THE LEARNED DR OPPOSED THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. SHE SUBMITTED THAT THE AMENDMENT WITH RETROSPECTIVE EFFECT DOES NOT IN ANY WAY EFFECT THE FACTS AS AL READY BEEN CONSIDERED BY THE ITA NO. 312/CTK/2010 4 ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2006 - 07. IT IS UNDISPUTED THAT THE ASSESSEE WAS NOT AWARE OF THE RETROSPECTIVE AMENDMENT TILL IT FILED ITS RETURN THEREFORE WAS TO BE SUBJECTED TO INTEREST U/S.234B IN ACCORDANCE WITH T HE PROVISIONS OF LAW WHICH ERROR WAS TAKEN NOTE OF BY THE LEARNED CIT ASSUMING JURISDICTION U/S.263. THE LEARNED CIT, THEREFORE, HIMSELF COMPUTED THE INTEREST TO BE CHARGED U/S.234B VIS - - VIS THE INTEREST CHARGED BY THE ASSESSING OFFICER U/S.11 5JB.THE AC TION OF THE ASSESSEE IN FILING THE REVISED RETURN OUGHT TO HAVE BEEN TAKEN NOTE OF BY THE ASSESSING OFFICER WHO SHOULD HAVE ALSO CALCULATED THE INTEREST TO BE PAID ON ACCOUNT OF ENHANCEMENT OF BOOK PROFIT DUE TO RETROSPECTIVE AMENDMENT IN THE PROVISIONS O F SECTION 115JB. SHE SUPPORTED THE ORDER OF THE LEARNED CIT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD . ON OUR CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO AGREE WITH THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE CALCULATION OF INTE RE ST IS NOT AN ERROR TO ASSUME JURISDICTION U/S.263 MORE SO BECAUSE THE CALCULATION OF INTEREST HAS BEEN DONE BY THE LEARNED CIT IN HIS ORDER ITSELF AND HAS BEEN DIRECTED TO BE CHARGED BY THE ASS ESSING OFFICER WITHOUT GIVING THE ASSESSING OFFICER ANY OPPORTUNITY TO AFFORD A CHANCE TO VERIFYING HIS ERROR AND ALSO TO THE ASSESSEE ON THE BASIS OF A DIRECTION BY THE CIT. THE ASSESSING OFFICER HAS TO EXPLAIN WHY HE ADOPTED CHARGING OF INTEREST U/S.234B IN ACCORDANCE WITH THE LAW IN PURSUANCE TO THE REVISED RETURN WHICH INCORPORATED THE AMENDED PROVISION OF SECTION 115JB TO BE ENHANCED BY RETROSPECTIVE AMENDMENT BY THE FINANCE ACT, 2008. IN OTHER WORDS, WE FIND NO INFIRMITY IN THE CONTENTION OF THE LEARN ED COUNSEL FOR THE ASSESSEE THAT NEITHER IT WAS A CASE OF THE ASSESSING OFFICER TO ENHANCE INTEREST AUTOMATICALLY ON THE AMENDED PROVISION WHEN THE ASSESSMENTS WERE TO BE CONDUCTED UNDER THE REGULAR ITA NO. 312/CTK/2010 5 PROVISIONS OF THE I.T.ACT. THE ASSESSING OFFICER, THEREFO RE, COULD NOT HAVE MOVED BEYOND THE BOOK PROFIT WHICH ALREADY STOOD RETURNED AS IT IS BUT FOR THE AMENDED PROVISIONS TO BE INCORPORATED BY WAY OF A REVISED RETURN ACCEPTABLE TO THE ASSESSING OFFICER FOR ENHANCED CHARGING OF INTEREST U/S.234B WAS NOT TO BE DISTURBED BY HOLDING A VIEW OTHERWISE BY THE LEARNED CIT U/S.263 WITHOUT INDICATING ITS TENABILITY IN LAW TO DEMOLISH ITS RECOMPUTA TION BY THE ASSESSING OFFICER. THERE WAS NO ERROR COMMITTED BY THE AO TO BE SUBJECTED TO ASSUME JURISDICTION U /S.263 AS MORE SO THE PREJUDICE, IF ANY, COULD NOT BE SAID TO HAVE BEEN CAUSED TO THE LOSS OF THE REVENUE WHEN THE PERIOD LEVY OF INTEREST HAS BEEN DONE IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT. WE SEE NO REASON , AS OBSERVED BY THE LEARNED CIT , TO THRUST HIS VIEW I N RECALCULATING THE INTEREST LEVIED FOR NO FAULT OF THE ASSESSEE. THE CREDIT WAS GIVEN BY THE LEARNED ASSESSING OFFICER AGAINST WHICH NO INFIRMITY HAS BEEN NOTED BY THE LEARNED CIT. WE, THEREFORE, HOLD THAT THERE WAS NO OCCASION TO ASSUME JURISDICTION U /S.263 MORE SO BECAUSE THE OTHER ISSUES RAISED IN THE SHOW CAUSE NOTICE HAD BEEN DROPPED IN HIS ORDER U/S.263 BY HIM SELF . THE ORDER U/S.263, THEREFORE, HAS NO MERIT AND IS HEREBY DIRECTED TO BE QUASHED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. THIS ORDER PRONOUNCED IN OPEN COURT ON DT. 27 TH MAY, 2011 SD/ - SD/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 27 TH MAY, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY . ITA NO. 312/CTK/2010 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: BALASORE ALLOYS LTD., BALGOPALPUR, BALASORE 756 020,ORISSA 2. THE RESPONDENT: THE ASST.COMMISSIONER OF INCOME - TAX, BALASORE CIRCLE, BALASORE. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. G UARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.