M/s. Super Spinning Mills Ltd., Coimbatore V. JCIT, Coimbatore

ITA 415/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64553 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-11-2012
• Assessment Year: 1994-1995
• Appeal Filed On: 27-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SANKARAN
• Assessee Lawyers: K RAVI
• Keywords: Capital asset; Depreciation; Question of law; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 234B; 147; 148; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NOS.414, 415 & 416/MDS/2012 ASSESSMENT YEARS: 1993-94, 1994-95 & 1998-99 M/S. SUPER SPINNING MILLS LTD., NO. 737-D, PULIAKULAM ROAD, GREEN FIELDS, COIMBATORE-641 045. V. THE JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE-II, COIMBATORE. (PAN :AADCS0672G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAVI, ADVOCATE RESPONDENT BY : SHRI N. SANKARAN, CIT-DR DATE OF HEARING : 21-1 1-2012 DATE OF PRONOUNCEMENT : 27-11-201 2 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEA LS FILED BY THE ASSESSEE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. ITA NOS.414 - 416/MDS /2012 2 THESE APPEALS ARE DIRECTED AGAINST THE CONSOLIDATED ORDER PASSED BY CIT(APPEALS)-I, COIMBATORE DATED 14-12-20 11 FOR THE ASSESSMENT YEARS 1993-94, 1994-95 AND 1998-99. 2. THE FACTS INVOLVED IN ALL THESE APPEALS ARE SIMI LAR. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANU FACTURE CUM SALE OF COTTON YARN AND FABRIC AND GENERATION O F ELECTRICITY. THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEARS 1993-94 AND 1994-95 DECLARING NIL TAXABLE INCOME AND FOR THE ASSESSMENT YEAR 1998-99 THE ASSE SSEE DECLARED THE TOTAL INCOME AT ` 2,85,77,710 UNDER SEC. 115JA OF THE INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT). TH E RETURNS WERE PROCESSED UNDER SECTION 143(1) OF THE ACT. TH EREAFTER THE TAXABLE INCOME WAS DETERMINED AT ` 3,36,836/- FOR THE ASSESSMENT YEAR 1993-94, AT ` 7,92,03,840/- FOR THE ASSESSMENT YEAR 1994-95 AND AT ` 4,26,18,650/- FOR THE ASSESSMENT YEAR 1998-99. SUBSEQUENTLY, THE ASSESSI NG OFFICER BY ISSUING A NOTICE U/S 148 OF THE ACT REASSESSMENT PROCEEDINGS WERE INITIATED U/S 147 READ WITH SECTIO N 143(3) OF THE ACT AND HE DISALLOWED THE EXPENDITURE INCURRED ON REPLACEMENT OF MACHINERY. ITA NOS.414 - 416/MDS /2012 3 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(APPEALS). THE LEARNED CIT(APPEALS) CONFIRMED TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPE CT OF THE EXPENDITURE INCURRED ON REPLACEMENT OF MACHINERY. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE T HE TRIBUNAL. THE TRIBUNAL BY COMMON ORDER DATED 26-07 -2005 IN ITA NO. 186/MDS/2001 ALLOWED THE GROUND RAISED BY T HE ASSESSEE AND HELD THAT THE EXPENDITURE INCURRED ON REPLACEMENT OF MACHINERY IS REVENUE EXPENDITURE. T HE REVENUE CARRIED THE MATTER BEFORE THE HONBLE JURIS DICTIONAL HIGH COURT. THE HONBLE JURISDICTIONAL HIGH COURT IN TAX CASE (APPEALS) NO. 1073 OF 2010 DATED 10-01-2011 REMITTE D THE MATTER TO THE CIT(APPEALS) WITH THE FOLLOWING DIREC TION : 3. THESE VERY QUESTIONS CAME UP FOR CONSIDERATION BEFORE US IN TAX CASE (APPEAL) NO. 261 OF 2010. BY ORDER DATED 22.6.2010, AFTER APPLYING THE DECISION OF THE HON'BLE SUPREME COURT IN S.L.P. NOS. 413 AND 414 OF 2009 AND CIVIL APPEAL NO. 7297 OF 2009 AS WELL AS TWO DIVISION BENCH DECISIONS DATED 14.12.2009 IN TAX CASE (APPEAL) 1290 AND 1291 OF 2009 AND 22.10.2010 IN TAX CASE (APPEAL) 1216 TO 1221 OF 2008 OF 2008, WE PASSED ORDERS AS UNDER: ITA NOS.414 - 416/MDS /2012 4 3. THE LEARNED COUNSEL REPRESENTING THE APPELLANT AS WELL AS THE RESPONDENT HAVE STATED THAT HERE ALSO THERE WAS NO SPECIFIC FINDING AS REGARDS THE ENDURING NATURE OF THE ASSETS OR THE INCREASE IN THE PRODUCTION CAPACITY BY VIRTUE OF THE REPLACEMENT OF MACHINERY PARTS. IN THE SAID CIRCUMSTANCES, WHILE SETTING ASIDE THE ORDER OF THE COMMISSIONER (APPEALS) AS WELL AS THAT OF THE TRIBUNAL, THE MATTER IS REMITTED BACK TO THE COMMISSIONER OF INCOME TAX (APPEALS) TO RE-CONSIDER THE ISSUE IN THE LIGHT OF THE DIRECTIONS GIVEN BY THE SUPREME COURT IN THE ABOVE REFERRED TO SPECIAL LEAVE PETITION AS WELL AS THE CIVIL APPEAL. THE QUESTIONS OF LAW ARE NOT ANSWERED AND ARE REFERRED BACK TO THE COMMISSIONER OF INCOME TAX (APPEALS). THIS TAX CASE APPEAL STANDS DISPOSED OF. 4. FOLLOWING THE SAME, WHILE SETTING ASIDE THE ORDER OF THE COMMISSIONER (APPEALS) AS WELL AS THAT OF THE TRIBUNAL IMPUGNED IN THIS APPEAL, THE MATTER IS REMITTED BACK TO THE COMMISSIONER OF INCOME TAX (APPEALS) TO RE-CONSIDER THE ISSUE, IN THE LIGHT OF THE DIRECTIONS GIVEN BY THE SUPREME COURT IN THE ABOVE REFERRED TO SPECIAL LEAVE PETITION AS WELL AS CIVIL APPEAL. THE QUESTIONS OF LAW ARE NOT ANSWERED AND ARE REFERRED BACK TO THE COMMISSIONER OF INCOME TAX (APPEALS). 5. THIS TAX CASE (APPEAL) STANDS DISPOSED O F. CONSEQUENTLY, THE CONNECTED MP IS CLOSED. NO COSTS. ITA NOS.414 - 416/MDS /2012 5 4. AS PER THE DIRECTIONS OF THE HONBLE JURISDICTIO NAL HIGH COURT, THE LEARNED CIT(APPEALS) DECIDED THE ISSUE A S UNDER : 9. . IT IS CLEAR FROM PERUSAL OF THE FACTS OF THE PRESENT APPEAL THAT THE RATIO OF THE DECISION O F THE HONBLE APEX COURT IN THE CASE OF M/S. MANGAYARKARASI MILLS (P) LTD. (SUPRA) CAN BE SQUARELY APPLIED IN THE INSTANT CASE. THE QUESTION S RAISED BY THE HON'BLE SUPREME COURT IN THE CASE OF RAMARAJU SURGICAL COTTON MILLS & ORS REGARDING THE TESTS FOR DETERMINING THE NATURE OF EXPENDITURE AND THE ALLOWABILITY U/S 37 ARE ALSO ANSWERED BY THE JUDGEMENT IN THE CASE OF SRI MANGYARKARASI MILLS )P . LTD. IN THE CASE OF COMMISSIONER OF INCOME-TAX V. SARVARAYA TEXTILES LTD. (2011) 332 ITR 553 (AP), IT WAS HELD THE ENTIRE TEXTILE MACHINERY CANNOT BE REGARDED AS A SINGLE ASSET, REPLACEMENT OF PARTS WHICH CAN BE CONSIDERED TO BE FOR THE MERE PURPOSE OF PRESERVING OR MAINTAINING THIS ASSET. ALL MACHINES PUT TOGETHER CONSTITUTE THE PRODUCTION PROCESS AND EACH SEPARATE MACHINE IS AN INDEPENDENT ENTITY. REPLACEMENT OF AN OLD MACHINE WITH A NEW ONE WOULD CONSTITUTE THE BRINGING INTO EXISTENCE OF A NEW ASSET IN THE PLACE OF THE OLD ON E, AND NOT REPAIR OF THE OLD AND EXISTING MACHINE. A NEW ASSET IN A TEXTILE MILL GIVES THE PURCHASER AN ENDURING BENEFIT OF BETTER AND MORE EFFICIENT PRODUCTION OVER A PERIOD OF TIME. THE EXPENDITURE ITA NOS.414 - 416/MDS /2012 6 INCURRED WAS TO BRING A NEW ASSET INTO EXISTENCE WITH A VIEW TO OBTAIN A NEW ADVANTAGE AND NOT AN EXPENDITURE INCURRED TO PRESERVE AND MAINTAIN AN ALREADY EXISTING ASSET. THE EXPENDITURE WAS CAPITA L IN NATURE. THE FACTS OF THE APPELLANTS CASE ARE SIMILAR TO THE FACTS IN THE JUDGEMENTS DISCUSSED ABOVE. ACCORDINGLY, THE CLAIM OF THE APPELLANT IS REJECTED AND THE ASSESSING OFFICER IS DIRECTED TO TREAT THE SAID EXPENSES ON REPLACEMENT OF MACHINERY AS CAPITAL EXPENDITURE AND ALLOW DEPRECIATION THEREON AS PER THE PROVISIONS OF THE ACT. 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BE FORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE LEARNED CIT(APPEALS) HAS NOT STRICTLY FOLLOWED THE DIRECTIONS OF THE HONBLE JURISDICTIONAL HIGH COURT , PARTICULARLY REPLACEMENT OF MACHINERY GIVES ENDURING NATURE OF T HE ASSETS OR INCREASE IN THE PRODUCTION CAPACITY. 6. ON THE OTHER HAND, THE LEARNED DR STRONGLY RELIE D ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT V. S. MANGAYARKARASI MILLS P. LTD. (315 ITR 114) (SC) AND ALSO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT V. MADURA COATS (2012) 205 TAXMAN 357 (MAD). T HE ITA NOS.414 - 416/MDS /2012 7 LEARNED DR FURTHER SUBMITTED THAT SIMILAR ISSUE WAS CONSIDERED BY THE VERY SAME BENCH OF THE TRIBUNAL, WHERE BOTH OF US ARE PARTIES IN ITA NO. 754/MDS/2012 DATED 12-09-2012. 7. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE FOR CONSIDERATION BEFORE US IS WHETHER THE EX PENDITURE INCURRED BY THE ASSESSEE FOR THE PURPOSE OF REPLACE MENT OF RING FRAMES IS REVENUE EXPENDITURE OR CAPITAL EXPEN DITURE. THE LEARNED CIT(APPEALS) AS PER THE DIRECTIONS OF T HE HONBLE JURISDICTIONAL HIGH COURT BY FOLLOWING THE DECISION S OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. RAMARAJ U SURGICAL COTTON MILLS LTD. (294 ITR 328) AND IN THE CASE OF CIT V. SRI MANGAYARKARASI MILLS P. LTD. (315 ITR 114) (SC) , H AS HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS CAPITAL EXPENDITURE. THE VERY SAME ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THE CASE OF THE KUMARAN MILLS LTD. V. A CIT IN ITA NO. 754/MDS/2012 DATED 12-09-2012. THE RELEVANT PO RTION IN THE SAID DECISION IS REPRODUCED HEREUNDER : 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE FOR ADJUDICATION BEFORE US IS WHETHER THE ITA NOS.414 - 416/MDS /2012 8 EXPENDITURE INCURRED FOR THE PURPOSE OF REPLACEMENT OF DRAW FRAME IS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE. THE LEARNED CIT(APPEALS) BY CONSIDERING THE ENTIRE FACTS OF THE CASE AND ALSO THE DECISIONS OF VARIOUS HIGH COURTS AND THE HON'BLE SUPREME COURT INCLUDING THE DECISION IN THE CASE OF CIT V. RAMARAJU SURGICAL COTTON MILLS LTD. (SUPRA) AND BY FOLLOWING THE DECISION IN THE CASE OF CIT V. MANGARKARASI MILLS LTD. (SUPRA) HAS HELD THAT REPLACEMENT OF DRAW FRAME IS A CAPITAL EXPENDITURE. FOR THAT PROPOSITION THE HON'BLE SUPREME COURT HAS RELIED ON THE DECISIONS IN THE CASE OF TRAVANCORE COCHIN CHEMICALS LTD. V. CIT (106 ITR 900) (SC) AND LAKSHMIJI SUGAR MILLS P. CO. V. CIT AIR 1972 SC 159 AND OBSERVED THAT IT HAS BEEN HELD BY THIS COURT THAT BRINGING INTO EXISTENCE A NEW ASSET OR AN ENDURING BENEFIT FOR THE ASSESSEE AMOUNTS TO CAPITAL EXPENDITURE. WE HAVE ALREADY EXPLAINED WHY REPLACEMENT, IN THIS CASE, AMOUNTS TO BRINGING INTO EXISTENCE A NEW ASSET AND ALSO AN ENDURING BENEFIT FOR THE ASSESSEE IT IS CLEAR THEN THAT THE EXPENDITURE OF THE ASSESSEE HERE IS NOT OF A REVENUE NATURE AND THUS, CANNOT BE CLAIMED AS A DEDUCTION UNDER SECTION 37 OF THE ACT.. ITA NOS.414 - 416/MDS /2012 9 6. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT, MADURAI V. MADURA COATS (2012) 205 TAXMAN 357 (MADRAS) HAS OBSERVED AS UNDER : 11. WHEN THE TAX CASE APPEALS CAME UP FOR CONSIDERATION IT IS SUBMITTED BY THE LEARNED COUNSEL FOR THE APPELLANT/REVENUE THAT WITH REGARD TO THE SUBSTANTIAL QUESTION OF LAW 1 AND 2 THEY ARE COVERED AS PER THE JUDGMENT OF THIS COURT DATED 25-04-2011 IN TAX CASE (APPEALS) NOS. 71 AND 72 OF 2008. 12. IN VIEW OF THE ABOVE, FOLLOWING TH E SAME, THE SUBSTANTIAL QUESTION OF LAW 1 AND 2 RAISED IN THIS TAX CASE APPEAL ARE ANSWERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 13. WITH REGARD TO THE THIRD SUBSTANTIAL QUESTION OF LAW, IT IS SUBMITTED BY THE LEARNED COUNSEL FOR THE APPELLANT THAT WHEN EACH OF THE MACHINERY IN QUESTION SUCH AS RING FRAMES, DRAW FRAMES AND SPEED FRAME IS PURCHASED FOR THE FIRST TIME, THEN IT IS A CAPITAL ASSET, ON WHIC H DEPRECIATION SHOULD BE GRANTED. WHEREAS, IT IS SUBMITTED THAT THE SALE OF A WORN OUT MACHINERY AND REPLACEMENT THEREOF BY NEW MACHINERY CAN ONLY BE TREATED AS REDUCTION AND ADDITION TO THE BLOCK OF ASSETS, WHICH IS A PART OF REPLACEMENT. IT IS ALSO SUBMITTED THAT WHILE UNDER THE LAW, AS IT STOOD PRIOR TO 1988-89, THE FACT OF TREATING THE ENTIRE MILL AS AN INTEGRATED UNIT MAY HAVE HAD THE EFFECT OF TREATING THE REPLACEMENT OF MACHINERY AS REPLACEMENT OF PARTS OF A LARGER WHOLE AND THUS TREATED AS REVENUE EXPENDITURE AND ONCE THE CONCEPT OF BLOCK OF ASSETS HAS BEEN BROUGHT IN BY THE PARLIAMENT FROM THE ASSESSMENT YEAR 1988-89, WHETHER THE MILL IS AN INTEGRATED WHOLE OR NOT, WHETHER THE REPLACEMENT OF MACHINES RESULTED IN INCREASED ITA NOS.414 - 416/MDS /2012 10 CAPACITY OR NOT, WILL HAVE NO BEARING AND WHEN ANY ITEM BELONGING TO THE BLOCK IS REMOVED, ITS VALUE IS REDUCED AND IF ANY NEW ITEM COMES IN ITS PLACE, ITS VALUE IS ADDED TO THE BLOCK. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE THIRD SUBSTANTIAL QUESTION OF LAW IS ALSO COVERED AS PER THE JUDGMENT OF THIS COURT DATED 25.04.2011 IN TAX CASE (APPEALS) NOS. 71 & 72 OF 2008. IN VIEW OF THE SAID SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE APPELLANT, WE HOLD THAT THE THIRD QUESTION OF LAW IS ALSO ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 7. IN VIEW OF THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. RAMARAJU SURGICAL COTTON MILLS LTD. (SUPRA), CIT V. SRI MANGAYARKARASI MILLS P. LTD. (SUPRA) AND THE DECISION OF THE HONOURABLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT, MADURAI V. MADURA COATS (SUPRA), WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(APPEALS). HIS ORDER IS ACCORDINGLY CONFIRMED AND THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL AND ALSO THE DECISI ONS OF THE HON'BLE SUPREME COURT AS WELL AS THE HONBLE JURISD ICTIONAL HIGH COURT, THIS GROUND OF APPEAL RAISED BY THE ASS ESSEE IS DISMISSED. ITA NOS.414 - 416/MDS /2012 11 9. IN ALL THESE APPEALS TWO ADDITIONAL GROUNDS HAVE ALSO BEEN RAISED WHICH READ AS UNDER : CHARGE OF INTEREST U/S 220(2): 1. THE LEARNED ASSESSING OFFICER HAS ERRED IN LEVYING INTEREST U/S 220(2) WITHOUT CREATING A CHARGE IN RESPECT OF INTEREST US 220(2) IN THE IMPUGNED ASSESSMENT ORDER. 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN LEVYING INTEREST U/S 220(2) FROM THE ELAPSING OF 30 DAYS FROM THE DATE OF ORIGINAL ASSESSMENT ORDER WHEN IN FACT INTEREST U/S 220(2) IS GOVERNED BY CIRCULAR NO.334 (F. NO. 400/3/81-ITCC), DATED 3-4- 1982, WHICH MANDATES THAT INTEREST U/S 220(2) CAN BE LEVIED ONLY FROM THE ELAPSING OF 30 DAYS FROM THE DATE OF THE NOTICE OF DEMAND U/S 156 ISSUED AS A CONSEQUENCE OF THE FRESH ASSESSMENT ORDER BEING PASSED. CHARGE OF INTEREST U/S 234B: 3. THE LEARNED ASSESSING OFFICER HAS ERRED IN LEVYING INTEREST U/S 234B WITHOUT CREATING A CHARGE IN THE IMPUGNED ASSESSMENT ORDER. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT BOTH THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE, I.E. ONE IS AGAINST LEVY OF INTEREST U/S 220(2) OF THE ACT AND THE OTHER IS ITA NOS.414 - 416/MDS /2012 12 AGAINST LEVY OF INTEREST U/S 234B OF THE ACT ARE LE GAL GROUNDS AND THEREFORE HE PRAYED FOR THE ADMISSION OF THE SA ID GROUNDS. 10. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT AFTER LONG DELAY THE ADDITIONAL GROUNDS CANNOT BE E NTERTAINED. THE LEARNED DR STRONGLY SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSING OFFICER HAS CORRECTLY LEVIED THE INTEREST U/S 220(2) OF THE ACT . 11. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. INSOFAR AS THE ADMISSION OF THE ADDITIONAL GROUNDS IS CONCERNE D, IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT (229 ITR 383 ) (SC), WE ARE ADMITTING THE ADDITIONAL GROUNDS RAISED BY T HE ASSESSEE AND PROCEED TO DISPOSE OF THE SAME. 12. INSOFAR AS THE LEVY OF INTEREST U/S 220(2) IS C ONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE CIRCULAR N O. 334 (F. NO. 400/3/81-ITCC) DATED 3-4-1982. THE LEARNED COU NSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. ITO (1993) 70 TAXM AN 423 (KAR). ITA NOS.414 - 416/MDS /2012 13 THE CASE OF THE ASSESSEE IS THAT THE ASSESSING OFFI CER HAS LEVIED INTEREST U/S 220(2) OF THE ACT WITHOUT CONSI DERING THE AFORESAID CIRCULAR. AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT ORDER, WE FIND THAT IT IS NOT CLEAR HOW THE ASSESSING OFFICER HAS LEVIED THE INTEREST U/S 220(2 ) OF THE ACT. WE THEREFORE DIRECT THE ASSESSING OFFICER TO CONSID ER THE AFORESAID CIRCULAR AND DECIDE THE LEVY OF INTEREST U/S 220(2) DE NOVO IN ACCORDANCE WITH LAW. THIS ADDITIONAL GROUND RA ISED BY THE ASSESSEE IS THEREFORE ALLOWED FOR STATISTICAL P URPOSES. 13. INSOFAR AS THE LEVY OF INTEREST U/S 234B OF THE ACT IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT UNLESS THE INTEREST IS CHARGED IN THE ASSESSME NT ORDER, NO INTEREST CAN BE LEVIED U/S. 234B OF THE ACT. FOR TH AT PROPOSITION, HE RELIED ON THE DECISION OF THE HIMAC HAL PRADESH HIGH COURT IN INCOME-TAX APPEAL NO. 76 OF 2006 DATE D 19-09- 2012 IN THE CASE OF CIT V. M/S. RUCHIRA PAPERS LTD. 14. THE LEARNED DR SUPPORTED THE ORDER PASSED BY TH E ASSESSING OFFICER. HE FURTHER SUBMITTED THAT THE A SSESSING OFFICER HAS CHARGED THE SAID INTEREST IN THE ASSESS MENT ORDER ITSELF AND THEREFORE THE CASE LAW RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE HAS NO APPLICATION. ITA NOS.414 - 416/MDS /2012 14 15. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE IN THE ASSESSMENT ORDER ITSELF AT PAGE NO.10 THE AS SESSING OFFICER HAS CHARGED THE INTEREST UNDER SECTION 234B OF THE ACT. THEREFORE WE FIND THAT THE DECISION RELIED ON BY TH E LEARNED COUNSEL FOR THE ASSESSEE HAS NO APPLICATION. AS PE R THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT V. ANUJM M.H. GHASWALA AND OTHERS (252 ITR 1) (SC), C HARGING OF INTEREST UNDER SECTION 234B OF THE ACT IS MANDATO RY. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE AFORESAID CASE, THIS ADDITIONAL GROUND RAISED BY THE ASSESSEE IN RESPECT OF LEVY OF INTEREST UNDER S ECTION 234B OF THE ACT IS DISMISSED. 16. IN THE RESULT, THE ASSESSEES APPEALS ARE PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 27 TH OF NOVEMBER, 2012, AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ( V.DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 27 TH NOVEMBER, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE