ACIT, Faridabad V. M/s. NHPC Ltd., Faridabad

ITA 4049/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53166 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-11-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 06-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RA J TANDON
• Assessee Lawyers: V MOHAN
• Section: 263; 154; 2; 143(3); 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI A.D. JAIN AND SHRI K.G. BANSAL ITA NO. 4049/DEL/2011 ASSTT. YR: 2003-04 ACIT, CIR. II, VS. M/S N.H.P.C. LTD., FARIDABAD. N.H.P.C. COMPLEX, SECTOR-33, FARIDABAD (HARYANA) GIR/PAN AAACN0149C (APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI RAJ TANDON CIT (DR) RESPONDENT BY: SHRI V. MOHAN CA O R D E R PER A.D. JAIN, J.M : THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 200 3-04 AGAINST THE ORDER DATED 1-7-2011 PASSED BY THE CIT(APPEALS), FA RIDABAD. THE EFFECTIVE GROUNDS TAKEN BY THE DEPARTMENT ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH ON FACTS AND IN LAW, IN DELETING THE INTEREST OF RS. 14,80,2 45/- CHARGED BY AO UNDER SECTION 234D. THE INTEREST WAS CHARGED ON 07-08- 2009 AND FOR THE PERIOD FROM 19-03-2004 TO 28-01-20 05 I.E. AFTER 01-06-2003 AND ALSO FOR THE PERIOD POSTERIOR TO 1 ST JUNE, 2003 WHICH IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 234D OF THE INCOME TAX ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH ON FACTS AND IN LAW, IN DELETING THE INTEREST OF RS. 14,80,2 45/- CHARGED ITA 4047/DEL/11 NHPC LTD. FARIDABAD 2 BY AO UNDER SECTION 234D AS THE SECTION 234D BECOME OPERATIVE FROM 01-06-2003 AND INTEREST U/S 234D IS CHARGEABLE ON ALL ASSESSMENTS MADE ON OR AFTER 1 ST JUNE, 2003 IRRESPECTIVE OF THE ASSESSMENT YEAR OR THE DATE WHEN THE REFUND WAS GRANTED. RELIANCE IS PLACED ON THE JUDGMENTS (I) SIGMA ALDRI CH FOREIGN HOLDING CO. VS. ACIT [2007] 104 ITD 95 (BANG.) (II) JINDAL STEEL AND POWER LIMITED VS. ADDL. CIT [2006] 106 TT J 943 (DELHI) 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 11-2-2004 DECLARING LOSS OF RS. 4,96,85,7 1,016/- BUT PAID TAX ON THE BOOK PROFIT OF RS. 5,51,91,04,808/- U/S 115JB O F THE I.T. ACT. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND A REFUND OF RS. 2,54,80,330/- WAS ISSUED ON 23-03-2004. THE ASSESSMENT U/S 143(3) WAS FINALIZED ON 28-03- 2006 AT A LOSS OF RS. 85,95,00,270/- UNDER THE NORM AL PROVISIONS OF THE ACT, BUT THE BOOK PROFIT WAS DETERMINED AT RS. 8,35,79,1 3,648/-. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ASSESSMENT ORDER AN D CONSEQUENT UPON THE APPEAL ORDER, THE INCOME U/S 115JB OF THE ACT WAS D ETERMINED AT RS. 8,07,39,86,148/-. AS A RESULT, A REFUND OF RS. 14,6 8,56,648/- WAS ISSUED. THE ASSESSEE FILED AN APPLICATION U/S 154 OF THE ACT, C ONTENDING THAT THE INTEREST U/S 234B, 220(2) AND 234D OF THE ACT WAS WRONGLY CH ARGED. THE AO, VIDE ORDER DATED 7-8-2009, ACCEPTED THE CONTENTIONS OF THE ASSESSEE REGARDING CHARGING OF INTEREST U/S 234B AND 220(2) OF THE ACT , BUT HELD THAT INTEREST U/S 234D STOOD CORRECTLY CHARGED. THEREFORE, THE CLAIM OF ASSESSEE REGARDING INTEREST OF RS. 14,80,245/- CHARGED U/S 234D OF THE ACT WAS REJECTED. 2.1. BY VIRTUE OF THE IMPUGNED ORDER, THE LEARNED C IT(A) DELETED THE INTEREST CHARGED U/S 234D BY OBSERVING AS FOLLOWS: 6.1 THE ONLY CONTROVERSY INVOLVED IN THE PRESENT A PPEAL IS CHARGING OF INTEREST U/S 234D OF THE ACT. THE PROVI SIONS OF ITA 4047/DEL/11 NHPC LTD. FARIDABAD 3 SECTION 234D WERE BROUGHT ON THE STATUTE W.E.F. 1-6 -2003 AND PROVIDED FOR CHARGING OF INTEREST WHEREIN THE AMOUN T OF REFUND GRANTED PRIOR TO ASSESSMENT WAS EITHER REDUCED OR N OT REFUNDABLE AS A RESULT OF REGULAR ASSESSMENT. THE F ACT THAT THE PROVISIONS OF SECTION 234D ARE EFFECTIVE FROM 1-6-2 003 SHOWS THAT SUCH PROVISIONS ARE SUBSTANTIVE AND PROSPECTIV E IN NATURE. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF H ONBLE ITAT DELHI BENCH C NEW DELHI DATED 10-10-2008 IN APPEA L ITA NO. 2473/DEL/2007 IN THE APPELLANTS OWN CASE FOR A .Y. 2001- 02 WHEREIN THE HONBLE ITAT, FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF ITO VS. EKTA PROMOTERS PVT. LTD. (117 TTJ 289) HAS HELD THAT THE INTEREST U/S 234D I S CHARGEABLE FROM A.Y. 2004-05 AND IT COULD NOT BE CHARGED FOR E ARLIER YEARS EVEN THOUGH REGULAR ASSESSMENT FOR THOSE YEARS ARE FRAMED AFTER 1 ST JUNE 2003 OR THE REFUND WAS GRANTED FOR EARLIER YE ARS AFTER THE SAID DATE. THE RELIANCE OF THE LEARNED COUNSEL ON THE DECISION IN THE CASE OF GLAXO SMITHKLINE ASIA (P) L TD. VS. ACIT (SUPRA) IS VERY MUCH RELEVANT AND JUSTIFIED. THE HO NBLE DELHI HIGH COURT IN THE CASE OF DIT VS. JACOB CIVIL INCOR PORATED & OTHERS IN APPEAL NO. 491/2008 & OTHERS AS PER ORDER DATED 30- 08-2010, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF J.K. SYNTHETICS VS. COMMERCIAL TAX OFFI CER (119 CTR 222), HAS UPHELD THE ORDER OF ITAT IN DELETING THE INTEREST U/S 234D FOR THE PERIOD PRIOR TO AY 2004-05 BY HOLD ING THAT THE PROVISIONS FOR CHARGING INTEREST WOULD BE CONSTRUED AS A SUBSTANTIVE LAW AND NOT RETROSPECTIVE IN OPERATION. KEEPING IN VIEW THE RATIONALE LAID DOWN IN THE ABOVE JUDICIAL RULINGS, THE INTEREST U/S 234D CANNOT BE CHARGED IN RESPECT OF T HE ASSESSMENT YEARS PRIOR TO COMING INTO FORCE OF THES E PROVISIONS. THEREFORE, THE INTEREST OF RS. 14,80,245/- CHARGED BY THE AO U/S 234D IS UNJUSTIFIED AND CONTRARY TO THE PROVISIONS OF LAW, WHICH IS DIRECTED TO BE DELETED. ALL THE GROUNDS OF APPEA L TAKEN UP BY THE APPELLANT ARE ALLOWED. 2.2. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US. 3. THE LEARNED DR CONTENDED THAT: ADMITTEDLY SECTI ON 234D WAS INTRODUCED BY THE FINANCE ACT, 2003 WITH EFFECT FRO M 1-6-2003. THIS ITA 4047/DEL/11 NHPC LTD. FARIDABAD 4 PROVISION ON INTEREST IS NOT INTRODUCED WITH REFERE NCE TO ANY ASSESSMENT YEAR, WHICH IS OBVIOUS FROM THE FACT THAT IT IS NOT EFFEC TIVE FROM THE BEGINNING OF THE FINANCIAL YEAR. ON THE OTHER HAND, PROVISION ON INTEREST WILL APPLY TO ALL CASES OF REFUND GRANTED UNDER SECTION 143(1), BUT I NTEREST CAN BE LEVIED ONLY WITH EFFECT FROM 1-6-2003. EVEN THOUGH IN THE INSTA NT CASE REFUND WAS GRANTED WHILE SENDING INTIMATION UNDER SECTION 143( 1) ON 28-6-2000 AND REGULAR ASSESSMENT U/S 143(3) WAS COMPLETED CONVERT ING THE REFUND TO DEMAND OF TAX ON 22-1-2004, INTEREST COULD BE DEMAN DED ONLY FOR THE PERIOD FROM 1-6-2003 TO 22-1-2004, WHICH WAS DONE BY THE ASSESSING OFFICER. THUS, THERE WAS NO JUSTIFICATION FOR THE CIT TO GIV E ANY RETROSPECTIVITY TO SECTION 234D AS HE HAD DIRECTED THE ASSESSING OFFIC ER TO REVISE THE ASSESSMENT LEVYING INTEREST FROM THE DATE OF REFUND . IN FACT, THE COMMISSIONER HAD NO AUTHORITY TO GIVE RETROSPECTIVE OPERATION TO A SUBSTANTIVE PROVISION OF LAW PROVIDING FOR INTEREST . THEREFORE, THE COMMISSIONERS ORDER U/S 263 WAS RIGHTLY FOUND TO B E UNTENABLE BY THE ITAT. HOWEVER, THE FINDING OF THE ITAT THAT SECTION 234D IS APPLICABLE ONLY FROM ASSESSMENT YEAR 2004-05 ONWARDS WAS LIAB LE TO BE VACATED. THE VIEW TAKEN BY THE ASSESSING OFFICER THAT THE SECTIO N APPLIED FROM 1-6-2003, WAS THE CORRECT POSITION. RELIANCE IS PLACED ON THE RATIO OF DECISIONS IN THE FOLLOWING CASES: - DCIT V. SUNDARAM FINANCE LTD. 2010-TIOL-722-ITAT-MA D. - TRANSPEK SILOX INDUSTRY LTD. V. DCIT 2011-TIOL-420- ITAT-AHM - CIT V. SOUTH INDIA BANK LTD. (2001) 249 ITR 304 (SC ) - V.R. SONTI V. CIT (1979) 117 ITR 838 (CAL.). 4. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS STRONGLY RELIED ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT AS RIGHTLY OBSERVED ITA 4047/DEL/11 NHPC LTD. FARIDABAD 5 BY THE CIT(A), THE PROVISIONS OF SEC. 234D OF THE A CT WERE INCORPORATED IN THE STATUTE W.E.F. 1-6-2003, PROVIDING FOR CHARGING OF INTEREST WHERE THE AMOUNT OF REFUND GRANTED PRIOR TO ASSESSMENT WAS EI THER REDUCED OR NOT REFUNDABLE AS A RESULT OF REGULAR ASSESSMENT; THAT THE PROVISIONS OF SEC. 234D ARE EFFECTIVE FROM 1-6-2003 AND ARE SUBSTANTIVE IN NATURE, DUE TO WHICH, THEY ARE PROSPECTIVELY APPLICABLE; THAT THE TRIBUNA L, IN THE ASSESSEES CASE FOR A.Y. 2001-02, HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE SPECIAL BENCH DECISION OF THE TRIBUNA L IN THE CASE OF ITO VS. EKTA PROMOTERS (SUPRA), HOLDING THAT THE INTEREST U/S 234D IS CHARGEABLE FROM A.Y. 2004-05 AND NOT FROM EARLIER YEARS, EVEN THOUGH REGULAR ASSESSMENT FOR THOSE YEARS ARE FRAMED AFTER 1-6-200 3 OR THE REFUND WAS GRANTED FOR EARLIER YEARS AFTER 1-6-2003. THE LEARN ED COUNSEL HAS ALSO PLACED RELIANCE ON THE DECISION IN THE CASES OF DIRECTOR OF INCOME-TAX VS. JACOB CIVIL INCORPORATED & OTHERS (2011) 311 ITR 578 (DE L.), WHEREIN IT HAS BEEN HELD, INTER ALIA, THAT SEC. 234D IS APPLICABLE ONLY FROM A.Y. 2004-05 ONWARDS AND NOT IN EARLIER ASSESSMENT YEARS AND THA T, THEREFORE, NO INTEREST UNDER THAT PROVISION CAN BE LEVIED FOR THE PERIOD P RIOR TO A.Y. 2004-05. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE HONBLE JUR ISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF JACOB CIVIL INCORPORATED & OT HERS (SUPRA) HAS EFFECTIVELY DECIDED THE ISSUE IN FAVOUR OF THE ASSE SSEE, HOLDING THAT THE PROVISIONS OF SEC. 234D OF THE ACT ARE APPLICABLE O NLY FROM A.Y. 2004-05 ONWARDS AND NOT IN THE EARLIER YEARS DUE TO WHICH N O INTEREST U/S 234D CAN BE LEVIED FOR THE PERIOD PRIOR TO A.Y. 2004-05. IN VIE W OF THIS EFFECTIVE PRONOUNCEMENT OF THE JURISDICTIONAL HIGH COURT, NO COUNTER TO WHICH HAS ITA 4047/DEL/11 NHPC LTD. FARIDABAD 6 BEEN PUT BEFORE US ON BEHALF OF THE DEPARTMENT, THE DECISIONS RELIED ON BY THE DEPARTMENT ARE NOT APPLICABLE. THEREFORE, THE GRIEV ANCE OF THE DEPARTMENT IS FOUND TO BE WITHOUT FORCE AND IS REJECTED AS SUCH. 6. IN THE RESULT, DEPARTMENTS APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 18-11-2011. SD/- SD/- ( K.G. BANSAL ) ( A.D. JAIN ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18-11-2011. MP COPY TO : (1) ASSESSEE (2) AO (3) CIT (4) CIT(A) (5) DR, ITAT.