JCIT, V. IBM India Pvt. Ltd.,

ITA 383/BANG/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8542 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-09-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 22-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.383/BANG/2013 ASSESSMENT YEAR : 2001-02 THE JOINT COMMISSIONER OF INCOME TAX, LARGE TAXPAYERS UNIT (LTU), BANGALORE. VS. M/S. IBM INDIA PVT. LTD., (EARLIER KNOWN AS IBM GLOBAL SERVICES INDIA PVT. LTD.), BANNERGHATTA MAIN ROAD, BANGALORE 560 029. PAN: AAACI 4403L APPELLANT RESPONDENT APPELLANT BY : SHRI SANJAY KUMAR, CIT(DR)(ITAT)-3, BENGALURU RESPONDENT BY : SHRI SHARATH RAO, CA DATE OF HEARING : 07.12.2016 DATE OF PRONOUNCEMENT : 22.02.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL WAS DISPOSED OF BY THE TRIBUNAL VIDE ITS ORDER DATED 24.01.2014. AGGRIEVED BY THE ORDER OF TRIBUNAL WIT H REGARD TO ITS FINDING ON LEVY OF INTEREST U/S. 234D OF THE I.T. ACT, 1961 [H EREINAFTER REFERRED TO AS THE ACT], THE REVENUE FILED AN APPEAL BEFORE THE HONBLE HIGH COURT OF ITA NO.383/BANG/2013 PAGE 2 OF 5 KARNATAKA AND WHILE DISPOSING OF THIS APPEAL, THE H ONBLE HIGH COURT HAS REMANDED THE ISSUE I.E., QUESTION NO.2 FOR LEVY OF INTEREST U/S. 234D OF THE ACT TO THE TRIBUNAL FOR ITS READJUDICATION IN THE L IGHT OF THE OBSERVATIONS OF THE HONBLE HIGH COURT AND ALSO IN THE LIGHT OF REL EVANT PROVISIONS OF THE ACT. 2. ACCORDINGLY THE APPEAL WAS LISTED FOR HEARING AN D THE ARGUMENTS WERE ADVANCED BY THE LD. COUNSELS FOR THE PARTIES. 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS INVITED OUR ATTENTION THAT THE ASSESSING OFFICER HA S CHARGED THE INTEREST U/S. 234D WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT VIDE HIS ORDER DATED 30.3.2004. THE CHARGEABILITY OF INTEREST WAS CHALLENGED BEFORE THE CIT(APPEALS) AND THE CIT(APPEALS) BEING CONVINCED W ITH THE ARGUMENTS OF THE ASSESSEE, HAS HELD THAT THE PROVISIONS OF SECTI ON 234D WAS INTRODUCED BY THE FINANCE ACT, 2003 W.E.F. 01.06.2003 AND HENC E APPLICABLE FROM THE ASSESSMENT YEAR 2004-05. SINCE THE PROVISIONS OF S ECTION 234D OF THE ACT ARE SUBSTANTIAL IN NATURE AND THEY CANNOT BE RETROS PECTIVELY APPLIED AS THE ASSESSMENT YEAR IN QUESTION IS 2001-02. THIS ORDER OF THE CIT(APPEALS) WAS REVERSED BY THE TRIBUNAL BY HOLDING THAT PROVIS IONS OF SECTION 234D IS CONSEQUENTIAL IN NATURE. 4. CONSEQUENT TO THE TRIBUNALS ORDER, THE AO HAS R ECOMPUTED THE INTEREST VIDE HIS ORDER DATED 24.05.2011 AND CALCUL ATED THE INTEREST U/S. ITA NO.383/BANG/2013 PAGE 3 OF 5 234D FROM 01.06.2003 TO 06.01.2005 FOR 20 MONTHS AN D FROM MARCH, 2005 TO MAY, 2011 FOR 75 MONTHS. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CALCULATION MADE BY THE AO, CONSEQUENT TO THE TRIBUNALS DIRECTIONS, IS TOTALLY INCORRECT AS IT IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 234D OF THE ACT. HE FURTHER INVITED OUR ATTENTION TO EXPLANATION 2 TO S ECTION 234D WITH THE SUBMISSION THAT THIS EXPLANATION WAS INSERTED BY TH E FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 1.6.2003 AND THEREFO RE, IT WOULD BE APPLICABLE TO ASSESSMENT YEAR COMMENCING BEFORE THE 1 ST DAY OF JUNE, 2003 IF THE PROCEEDINGS IN RESPECT OF SUCH ASSESSMENT YEAR IS C OMPLETED AFTER THE SAID DATE. IN THE IMPUGNED CASE, THE ASSESSMENT WAS INI TIATED BEFORE 1 ST MARCH, 2003 AND WAS COMPLETED ON 30.03.2004. THERE FORE, BY VIRTUE OF THIS EXPLANATION, THE PROVISIONS OF SECTION 234D OF THE ACT WILL APPLY TO THE PRESENT CASE. IN THE LIGHT OF THIS PROVISION, THE LD. COUNSEL FOR THE ASSESSEE HAS AGREED THAT THE FINDINGS OF THE CIT(APPEALS) TH AT THIS PROVISION WOULD NOT APPLY TO THE ASSESSEES CASE IS INCORRECT AND W RONG. HENCE, IT DESERVES TO BE REVERSED. 6. BUT SO FAR AS THE FINDING IN THE CONSEQUENTIAL O RDER PASSED BY THE AO VIDE HIS ORDER DATED 24.05.2011 IS CONCERNED, TH E LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE CALCULATION OF INTE REST U/S. 234D OF THE ACT IS NOT PROPER AS THE INTEREST IS TO BE CALCULATED A S PER SUB-SECTION (1) OF SECTION 234D OF THE ACT, ACCORDING TO WHICH, THE IN TEREST IS TO BE CALCULATED ITA NO.383/BANG/2013 PAGE 4 OF 5 FROM THE DATE OF GRANT OF REFUND TO THE DATE OF SUC H REGULAR ASSESSMENT. BUT THE AO IN THE CONSEQUENTIAL ASSESSMENT ORDER, H AS WRONGLY CALCULATED THE INTEREST; WHEREAS THE CALCULATION MADE BY THE A O IN THE ORIGINAL ASSESSMENT IS IN ACCORDANCE WITH SUB-SECTION (1) OF SECTION 234D OF THE ACT. 7. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CON TENDED THAT IN THE LIGHT OF THE AFORESAID SUBMISSIONS, THE ORDER OF CI T(APPEALS) DESERVES TO BE REVERSED AND THE CALCULATION MADE BY THE AO IN T HE ORIGINAL ASSESSMENT DESERVES TO BE UPHELD. 8. THE LD. DR, ON THE OTHER HAND, DID NOT DISPUTE T HE FACTUAL ASPECT AS DEMONSTRATED BY THE LD. COUNSEL FOR THE ASSESSEE. 9. HAVING CAREFULLY EXAMINED THE ORDER OF LOWER AUT HORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE CIT(APPEALS) HAS WRONGLY HELD THAT THE PROVISIONS OF SECTION 234D OF THE ACT WOULD NOT BE APPLICABLE TO THE ASSESSEES CASE AS THE ASSESSMENT YEAR INVOLVED IS 2001-02, AS THE ASSESSMENT WAS COMPLETED ON 30.3.2004. THEREFORE, WE SET ASIDE THE ORDER OF CIT(APPEALS) IN THIS REGARD. SO FAR AS TH E QUANTUM MADE BY THE AO IN THE ORIGINAL ASSESSMENT VIDE HIS ORDER DATED 30.03.2004 IS CONCERNED, WE FIND THAT THE CALCULATION OF AO IS AS PER THE PROVISIONS OF SECTION 234D OF THE ACT. THEREFORE, WE UPHOLD THE CALCULATION OF INTEREST MADE BY THE AO IN THE ASSESSMENT ORDER DATED 30.03. 2004. ACCORDINGLY, THE REVENUES APPEAL STANDS ALLOWED. ITA NO.383/BANG/2013 PAGE 5 OF 5 10. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF FEBRUARY, 2017. SD/- SD/- ( A.K. GARODIA ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 22 ND FEBRUARY, 2017. / D S / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.