ACIT, New Delhi V. Shri Vijay Kumar Jindal, New Delhi

ITA 4236/DEL/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0115 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 26-11-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 30-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANGEETA GUPTA
• Keywords: Cost of acquisition; Fair market value; Right to appeal
• Section: 143(3); 243B; 234B; 260A; 246; 144; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 4033/DEL/09 ASSTT. YR: 2000-01 MR. VIJAY GOPAL JINDAL VS. ACIT CIR. 23(1), W-22, GREATER KAILASH, PART-I, NEW DELHI. NEW DELHI. PAN/ GIR NO. AALPJ1491R ITA NO. 4236/DEL/09 ASSTT. YR: 2000-01 ACIT CIR. 23(1), VS. MR. VIJAY GOPAL JINDAL NEW DELHI. W-22, GREATER KAILASH, PART-I, NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI AJAY VOHRA ADV. REVENUE BY : SMT. SANGEETA GUPTA CIT DR O R D E R PER R.P. TOLANI, J.M: : THESE ARE CROSS APPEALS, ONE BY THE ASSESSEE AND TH E OTHER BY THE REVENUE AGAINST THE ORDER OF CIT(A)-XXIII, NEW DELH I DATED 4-8-2009 RELATING TO A.Y. 2000-01. 2. IN ASSESSEES APPEAL (ITA NO. 4033/DEL/01), FOLL OWING GROUNDS ARE RAISED: 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT HOLDING THAT THE PROPORTIONATE AMOUNT OF TWO-THIRD OF TOTAL VALUE OF ESOP AS ASSESSED BY LD. AO WAS NOT LIABLE FOR ASSES SMENT IN THE YEAR UNDER CONSIDERATION AS THE SAME WAS UNDER LOCK-IN- 2 PERIOD AND DID NOT CARRY ANY MARKET VALUE AS HELD B Y HONBLE SUPREME COURT IN THE CASE OF INFOSYS TECHNOLOGIES L TD. 297 ITR 167. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN NOT DEALING TWO-THIRD OF THE TOTAL PE RQUISITE VALUE OF ESOP ASSESSED BY LD. AO IN VIEW OF ABOVE MENTION ED JUDGMENT OF SUPREME COURT AND IN VIEW OF SETTLED LA W IS UNLAWFUL AND UNFOUNDED. 3. THAT THE ASSESSMENT ORDER AND APPEAL EFFECT ORDE R WERE CONTRARY TO LAW AND FACTS AND THEREFORE, LD. CIT(A) HAS ERRED IN NOT BRINGING THE SAME IN ACCORDANCE WITH LAW AND FA CTS AND THE ACTION OF LD. CIT(A) IN NOT DOING SO IS CONTRARY TO LAW AND FACTS. 4. THAT THE VALUE OF PERQUISITE OF ESOP AS ASSESSED BY LD. AO WAS CONTRARY TO LAW AND FACTS INASMUCH AS PER LA W AS CONTAINED IN SECTION 17(2)(IIIA) READ WITH MEMORAND UM EXPLAINING FINANCE BILL OF 1999 AND THEREFORE, LD. CIT(A) OUGHT TO HAVE MODIFIED THE IMPUGNED ORDER SO AS TO BRING IT IN ACCORDANCE WITH LAW. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) WHILE DELETING INTEREST U/S 234B, HAS OTHERWISE ERRED IN LAW AND ON FACTS IN NOT HOLDING THAT THE I MPUGNED AMOUNT OF PERQUISITES VALUE OF ESOPS ASSESSABLE AS INCOME IN THE HANDS OF THE ASSESSEE BEING LIABLE FOR TAX DEDU CTION BY THE EMPLOYER WAS ALSO IN ANY CASE OUTSIDE THE SCOPE OF LEVY OF INTEREST U/S 234B. 6. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODI FY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3. IN REVENUES APPEAL (ITA NO. 4236/DEL/09), FOLLO WING GROUNDS ARE RAISED: 3 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN ALLOWIN G RELIEF TO THE ASSESSEE FOR THE AY 1999-2000, 2001-02 AND 2002 -03, DESPITE THE FACT THAT THE ASSESSMENT ORDERS FOR THE SE YEARS ARE NOT UNDER APPEAL BEFORE HIM. 2. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO TREAT THE T AXES PAID BY THE ASSESSEE TO THE EXTENT OF PERQUISITE IN AY 1999 -2000 AS ADVANCE TAX IN AY 2000-01, WHICH IS CONTRARY TO THE PROVISIONS OF INCOME TAX ACT. 3. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ADJUST THE EXCESSIVE TAX PAID BY THE ASSESSEE ON TRANSACTIONS IN ISSUE IN AY 2001-02 AND 2002-03 AGAINST THE DEMAND OF ASSESSMENT YEAR 2000- 01. 4. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO TREAT THE E XCESSIVE PAYMENT OF TAX MADE BY THE ASSESSEE IN AY 1999-2000 AS ADVANCE TAX FOR AY 2000-01 AND THEREBY NOT CHARGING INTEREST U/S 234B OF THE ACT, FOR WHICH NO PROVISION IS EXIS TING UNDER THE INCOME TAX ACT. 5. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN ALLOWING THE CREDIT FOR EXCESS PAYMENT OF TAX IN EARLIER YEAR AS ADVANCE TAX IN CURRENT YEAR AND THEREBY NOT CHARGING INTEREST U/S 234B OF THE ACT, WHICH IS CON TRARY TO THE PROVISIONS OF THE ACT. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. 4. BRIEF FACTS ARE: THE ASSESSEE, WHO WAS, AT THE R ELEVANT TIME, THE MANAGING DIRECTOR OF ZEE TELEFILMS LTD. ( ZEE TELEFILMS ) WAS OFFERED OPTIONS TO PURCHASE 2,00,000 EQUITY SHARES OF ZEE T ELEFILMS AT THE RATE OF RS.212/- PER SHARE UNDER AN ESOP SCHEME OF ZEE TELE FILMS ON 01.02.1999. 4 THE SAID OFFER FOR PURCHASE OF OPTIONS WAS EXERCISE D BY COUNTERSIGNING THE OFFER LETTER ON THE SAME DATE BY THE ASSESSEE. THE MARKET VALUE OF THE SHARE AS ON THAT DATE, I.E., 01.02.1999, WAS RS. 598. UND ER THE TERMS OF THE OFFER, ONE THIRD OF THE SHARES WERE SUBJECT TO A LOCK-IN P ERIOD OF 1 YEAR, ANOTHER ONE-THIRDS TO A LOCK-IN PERIOD OF 2 YEARS. THE BALA NCE ONE-THIRDS OF THE SHARES WAS FREELY TRANSFERRABLE. 4.1. FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT Y EAR 1999-2000, THE ASSESSEE FILED RETURN OF INCOME DECLARING PERQUISI TE UNDER SECTION 17(2)(III) OF THE INCOME-TAX ACT, 1961 (THE ACT) TO THE TUNE OF RS.7.72 CRORES, BEING THE DIFFERENCE BETWEEN THE MARKET VAL UE OF THE EQUITY SHARES AS ON 01.02.1999 (RS.598 PER SHARE) AND THE RATE AT WH ICH THE OPTION TO PURCHASE THE EQUITY SHARES WAS OFFERED TO THE ASSES SEE (RS.212 PER SHARE). PERQUISITE WAS THEREFORE DECLARED AT RS.386 PER SHA RE. THE RETURN OF INCOME FOR THE SAID ASSESSMENT YEAR, DECLARING PERQUISITE VALUE OF RS7,72,00,000/- , WAS ACCEPTED VIDE INTIMATION DATED 03.07.2001 ISSUE D UNDER SECTION 143(1)(A) OF THE ACT. 4.2. SUBSEQUENTLY, VIDE LETTER DATED 15.04.1999, RE LEVANT TO THE ASSESSMENT YEAR UNDER 2000-01, THE ASSESSEE EXERCISED THE OPTI ON TO CONVERT THE ENTIRE 2,00,000 WARRANTS INTO EQUITY SHARES. THE BOARD OF DIRECTORS OF ZEE TELEFILMS ON 30.04.1999 APPROVED ALLOTMENT OF EQUITY SHARES A S PER TERMS OF OFFER. 4.3. IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 20 00-2001, THE ASSESSEE DECLARED TOTAL INCOME OF RS.14,41,77,150/-, INCLUDI NG SHORT TERM CAPITAL GAIN OF RS.13,28,54,864/- ON SALE OF 1/3 RD PORTION OF FREELY TRADABLE SHARES I.E. 66,668 SHARES, TAKING RS.598 AS THE COST OF ACQUISI TION. 5 4.4. ASSESSING OFFICER HOWEVER FRAMED THE CORRECT A SSESSMENT YEAR U/S 143(3) ADOPTING TAXABILITY OF PERQUISITE IN A.Y. 2000-2001 AGAINST AY 1999-2000, CLAIMED BY THE ASSESSEE. THE ASSESSING O FFICER FURTHER COMPUTED PERQUISITE VALUE BY TAKING THE MARKET VALUE OF THE SHARES OF ZEE TELEFILMS ON 30.04.1999 FOR ENTIRE 2 LAKHS SHARES INCLUDING 2/3 RD WHICH WAS UNDER LOCK IN AND BROUGHT TO TAX ESOP PERQUISITE FROM EMPLOYMENT AT RS.18,32,50,000/-. 4.5. IN APPEAL, HOWEVER, THE CIT(A) SET ASIDE THE A CTION OF THE ASSESSING OFFICER, HOLDING THAT THE CRUCIAL DATE FOR TAXABILI TY OF PERQUISITE WAS THE DATE OF ACCEPTANCE OF THE OFFER. THE CIT(A) ACCORDINGLY CONCLUDED THAT PERQUISITE FELL FOR ASSESSMENT IN AY 1999-2000 4.6. THE APPEAL PREFERRED BY THE REVENUE THERE AGAI NST WAS ALLOWED BY THE TRIBUNAL VIDE ORDER DATED 29.08.2008, WHEREBY THE T RIBUNAL HELD THAT PERQUISITE HAD RIGHTLY BEEN BROUGHT TO TAX IN AY 20 00-01. THE TRIBUNAL FURTHER HELD THAT FOR COMPUTING SUCH PERQUISITE VAL UE, THE RELEVANT DATE WAS 30.04.1999, BEING THE DATE OF BOARD APPROVAL, BY FO LLOWING OBSERVATIONS: WHEN SPECIFIC PROVISION IS MADE IN THE ACT TO BRIN G TO CHARGE THE PERQUISITE IN THE FORM OF VALUE OF SPECIFIED SE CURITY ALLOWED AT A CONCESSIONAL RATE, THE SAME SHALL APPLY WITH F ULL FORCE AND NOT AT THE DISCRETION OF THE ASSESSEE TO BE TAXED I N EARLIER YEAR. IT IS WELL SETTLED THAT UNDER THE ACT, THE ASSESSING O FFICER MUST TAX THE RIGHT PERSON AND RIGHT PERSON ALONE. BY RI GHT PERSON IS MEANT THE PERSON WHO IS LIABLE TO BE TAXED, ACCORDI NG TO LAW, WITH RESPECT TO A PARTICULAR INCOME. THE EXPRESSION WRONG PERSON IS OBVIOUSLY USED AS THE OPPOSITE OF EXPRES SION RIGHT PERSON. MERELY BECAUSE A WRONG PERSON IS TAXED WIT H RESPECT TO A PARTICULAR INCOME, THE ASSESSING OFFICER IS NOT P RECLUDED FROM TAXING THE RIGHT PERSON WITH RESPECT TO THAT INCOME . EXTENDING THIS ANALOGY IT CAN BE SAID THAT WHEN RIGHT PERSON IS TO BE TAXED, THE ASSESSMENT SHOULD ALSO BE IN THE RIGHT YEAR AND NOT FOR ANY OTHER YEAR AT THE OPTION OF THE ASSESSEE. THUS, EVE N IF THE 6 ASSESSEE VOLUNTARILY OFFERED THE PERQUISITE VALUE O F SHARE WARRANTS FOR THE ASSESSMENT YEAR 1999-2000, THE ASS ESSING OFFICER WAS NOT PRECLUDED FROM TAXING THE INCOME IN VIEW OF SPECIFIC PROVISION OF SECTION 17(2)(IIIA). SINCE TH E CORRECT ASSESSMENT YEAR TO BE TAXED WAS 2000-01, IT MIGHT B E A GROUND TO REDUCE THE INCOME FROM ASSESSMENT OF THE ASSESSM ENT YEAR 1999-2000, BUT REVERSE WAS NOT TRUE IN VIEW OF SPEC IFIC PROVISION OF SECTION 17(2)(IIIA) APPLICABLE TO THE YEAR UNDER APPEAL. SINE THE ASSESSEE EXERCISED OPTION IN RESPE CT OF ALLOTMENT OF SHARES BY LETTER DATED 15-4-1999, THOU GH WITHOUT PAYMENT OF REQUISITE SUM BUT WHICH WAS ACCEPTED BY THE EMPLOYER ON 30-4-1999 WAIVING THE AMOUNT PAYABLE FO R ALLOTMENT OF SHARES, THE PERQUISITE AROSE IN TERMS OF SECTION 17(2)(IIIA) ON 30-4-1999. SINCE THERE WAS NO DISPUT E AS REGARDS FAIR MARKET VALUE OF SHARES AS ON 30-4-1999, THE AS SESSING OFFICER WAS JUSTIFIED IN BRINGING TO TAX THE SUM IN THE FINANCIAL YEAR 1999-2000 RELEVANT TO THE ASSESSMENT YEAR 2000 -01. THEREFORE, THE ORDER OF THE COMMISSIONER (APPEALS) WAS TO BE REVERSED AND THAT OF THE ASSESSING OFFICER WAS TO B E RESTORED. 4.7. THE ASSESSEE HAS NOW PREFERRED AN APPEAL UNDER SECTION 260A OF THE ACT TO THE HONBLE HIGH COURT OF DELHI AGAINST THIS ITAT ORDER DATED 29.08.2008, WHICH APPEAL HAS BEEN ADMITTED VIDE ORD ER DATED 23.09.2009 BY THE HONBLE HIGH COURT. 4.8. THEREAFTER ASSESSING OFFICER PASSED APPEAL EF FECT ORDER 05.05.2009 UNDER SECTION 254/143(3) OF THE ACT FOR AY 2000-01 IN ITNS 150 PROFORMA GIVING EFFECT TO ORDER DATED 29.08.2008 PASSED BY T HE HONBLE TRIBUNAL IN ITA 1668/DEL/2003. HOWEVER, THE ASSESSING OFFICER, INTER ALIA, (A) DID NOT ALLOW ADJUSTMENT OF TAX ON PERQUISITE PAID FOR AY 1 999-2000, (B) DID NOT ALLOW ADJUSTMENT OF EXCESS CAPITAL GAINS TAX PAID F OR AY 2001-02 AND AY 2002-03 ON THE BASIS OF LOWER ACQUISITION COST, AND (C) LEVIED INTEREST UNDER SECTION 234B OF THE ACT. 7 4.9. THE ASSESSEE WAS AGGRIEVED BY A.OS ORDER INA SMUCH AS, ACCORDING TO HIM, PROPER CONSEQUENTIAL ADJUSTMENT OF TAXES AL READY PAID, ALBEIT IN AY 1999-2000, 2001-02 & 2002-03 TOWARDS PERQUISITE VAL UE, WAS NOT GIVEN; 243B INTEREST WAS WITHOUT PROPER JUSTIFICATION; AND 2/3 RD SHARES WERE UNDER LOCK IN PERIOD WHICH HAD NO PERQUISITE VALUE IN THI S YEAR. IN FIRST APPEAL, ASSESSEE RAISED FOLLOWING GROUNDS BEFORE CIT(A): 1. THAT THE LEARNED ASSESSING OFFICER, ASST. COMMI SSIONER OF INCOME TAX (ACIT), CIRCLE 23(1), NEW DELHI HAS E RRED, BOTH ON FACTS AND IN LAW IN PASSING THE ORDER U/S 254/14 3(3)/154, DATED 05-05-09. 2. THAT THE LEARNED ACIT HAS NOT GIVEN ADJUSTMENT O F TAXES ALREADY PAID ON THE SAME INCOME IN THE AY 199 9-2000 WHILE CALCULATING THE TAX DEMAND FOR THE AY 2000-01 . 3. THAT THE LEARNED ACIT OUGHT TO HAVE ADJUSTED EXC ESS TAXES PAID IN THE AY 2001-02 AND AY 2002-03. 4. THAT THE LEARNED ASSESSING OFFICER HAS GROSSLY E RRED IN LEVYING INTEREST U/S 234B OF THE INCOME TAX ACT. TH E AO FAILED TO APPRECIATE THAT PERQUISITE FOR ESOPS WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE (TAX DEDUCTIBLE) AND A LSO THE FACT THAT THE EXCESS TAXES PAID NEEDS TO BE ADJUSTE D WHILE CALCULATING INTEREST U/S 234B OF THE INCOME TAX ACT AS HAS BEEN HELD IN THE CASE OF THE APPELLANT FOR THE AY 1 999-00 BY THE HONBLE ITAT. 5. THAT THE LD. AO FAILED TO APPRECIATE THAT INTERE ST U/S 234B OF THE INCOME TAX ACT CAN BE LEVIED ONLY IF TH ERE IS A LOSS TO THE REVENUE WHEREAS IN THE INSTANT CASE TH ERE IS NO SUCH LOSS TO THE GOVERNMENT IN VIEW OF THE TAXES AL READY PAID IN THE AY 1999-00 AND SUBSEQUENT YEARS. 6. THAT THE LEARNED ASSESSING OFFICER AHS COMPLETEL Y IGNORED THE FACT THAT 2/3 RD SHARES WERE UNDER LOCK IN PERIOD AND WHICH DO NOT HAVE ANY PERQUISITE VALUE AS PER THE J UDGMENT OF 8 THE APEX COURT IN INFOSYS TECHNOLOGIES LIMITED REPO RTED AT 297 ITR 147. 7. THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN LEVYING INTEREST U/S 220 OF THE INCOME TAX ACT. 8. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR A MEND THE ABOVE GROUNDS OF APPEAL. 4.10. AGAINST THE SAID ORDER DATED 26.05.2009, THE REVENUE HAS PREFERRED APPEAL TO THE TRIBUNAL. 4.11. CONSEQUENT TO ITAT ORDER, THE AO PROCEEDED TO GIVE EFFECT OF THE TRIBUNALS ORDER DATED 29-08-2008. VIDE ORDER DATED 5-5-2009 U/S 254 READ WITH SEC. 143(3)/154, HE RECOMPUTED THE INCOME BY W AY OF ITNS 150 AND NOT IN REGULAR PROFORMA. 4.12. CIT(A) HELD GROUND NOS. 1 & 8 TO BE GENERAL I N NATURE. GROUND NOS. 2 & 3 PERTAINED TO GIVING ADJUSTMENT OF TAXES PAID BY THE ASSESSEE IN A.Y. 1999-2000, 2000-01 AND 2002-03. THESE GROUNDS AROSE BECAUSE OF THE FACT THAT THE ITAT HELD THE ESOP TO BE TAXABLE IN THE YE AR 2000-01 WHEREAS THE ASSESSEE WAS UNDER IMPRESSION THAT ESOP WERE PARTLY TAXABLE IN EACH OF THE YEARS I.E. 2000-01, 2001-02 & 2002-03 AND UNDER THI S BELIEF THE TAXES WERE PAID IN THESE THREE YEARS. AO DID NOT GIVE CREDIT FOR THE TAXES WHICH WERE ALREADY PAID BY THE ASSESSEE TOWARDS ESOPS IN A.Y. 1999-2000. ASSESSEE RAISED FOLLOWING CONTENTIONS, WHICH ARE NOTED BY CI T(A) AS UNDER: (A) ADJUSTMENT IN RESPECT OF AY: 1999-2000: IN THE SECOND GROUND OF APPEAL, THE APPELLANT HAS CHALLENGED THE NON ADJUSTMENT OF TAXES ALREADY PAID IN AY 1999 -2000 WHILE CALCULATING THE TAX DEMAND FOR AY 2000-01. SI NCE THE PERQUISITE OF RS. 7.72 CRORES WAS OFFERED BY HIM AS INCOME IN 9 THE IMMEDIATELY PRECEDING ASSESSMENT YEAR BUT WHICH HAS BEEN ASSESSED IN THIS YEAR, THE AMOUNT OF INCOME TAX DEP OSITED ON THE SAID AMOUNT MUST BE ADJUSTED AGAINST THE TAX LIABIL ITY OF THE APPELLANT RAISED FOR THIS YEAR AS THE SAME AMOUNT C ANNOT BE TAXED IN BOTH THE ASSESSMENT YEAR. THE DATES OF PAY MENT OF THE INCOME-TAX AS SELF ASSESSMENT TAX FOR THE SAID ASSE SSMENT YEAR MUST BE TAKEN AS THE DATES OF PAYMENT OF ADVANCE TA X FOR THIS ASSESSMENT YEAR. THE REVENUE CANNOT TAKE THE BENEFI T OF UNJUST ENRICHMENT ON THE PLEA THAT IT WAS ASSESSEES DEFAU LT TO PAY THE TAX IN THE WRONG ASSESSMENT YEAR. WITHOUT PREJUDICE TO THE RIGHT OF THE APPELLANT TO CHALLENGE THE ASSESSMENT OF PER QUISITE IN THE IMPUGNED ASSESSMENT YEAR, THE APPELLANT SUBMITS THA T WHEN THE REVENUE WISHES TO CORRECT ONE WRONG ACTION OF THE A SSESSEE, THEN IT IS DUTY BOUND TO CORRECT THE OTHER CONSEQUE NTIAL WRONG ACTIONS ARISING MERELY BECAUSE OF THE FIRST WRONG A CTION. AS PER THE REVENUE, THE APPELLANT DECLARED THE INCOME BY W AY OF PERQUISITE IN THE WRONG ASSESSMENT YEAR AND CONSEQU ENTLY PAID THE INCOME TAX THERE ON IN THE SAID YEAR ONLY. NOW IF THE REVENUE WISHES TO CORRECT THE SAME THEN IT HAS TO B E CORRECTED FOR BOTH THE ACTIONS I.E. FOR THE INCOME AS WELL AS FOR TAXES PAID ON THE AID INCOME. IT IS ADMITTEDLY NOT THE CASE EV EN IN ANY MANNER OF THE REVENUE THAT THE INCOME DECLARED BY T HE APPELLANT IN ONE YEAR AND THE INCOME ASSESSED BY THE REVENUE IN THE OTHER YEAR IS NOT ON THE SAME SET OF FACTS OR IS NOT ARIS ING FROM THE SAME 2 LACS SHARES RECEIVED AS ESOP OR THE TREATMEN T IS PARTIAL IN ONE YEAR OR THE REMAINDER IN THE OTHER. THUS IT IS AN UNDISPUTED FACT THAT THE ASSESSEE DECLARED THE PERQ UISITE VALUE OF 2 LAC SHARES OF ZEE TELEFILMS LTD. IN AY 1999- 2000 AND THE ASSESSING OFFICER TAXED THE SAME IN AY 2000-01. THU S THE SAME INCOME HAS BEEN TAXED IN TWO YEARS WHICH IS N NOT P ERMISSIBLE BY LAW. THUS THE SAID AMOUNT CAN BE TAXED IN ANY ON E OF THE TWO YEARS. IF THE REVENUE IS TAXING THE PERQUISITE VALUE IN AY 2000-01, THEN THE SAID INCOME DECLARED BY THE ASSES SEE IN AY 1999-2000 ON ACCOUNT OF PERQUISITE HAS TO BE EXCLUD ED THEREFROM AND THE TAXES PAID TOWARDS THE SAID INCOM E SHOULD BE ADJUSTED TOWARDS THE TAX DUE FOR THE YEAR UNDER CON SIDERATION. SUITABLE DIRECTIONS IN THIS REGARD SHOULD BE ISSUED TO THE ASSESSING OFFICER TO EXCLUDE THE SAID INCOME FROM A Y 99-2000 AND TO ADJUST THE TAXES PAID IN THAT YEAR AGAINST D EMAND DUE FOR AY 2000-01. 10 (B) ADJUSTMENTS IN RESPECT OF AY 2001-02 & 2002-03 THE THIRD GROUND OF APPEAL IS TO CHALLENGE THE NON -ADJUSTMENT OF EXCESS TAXES PAID IN THE AY 2001-02 AND 2002-03. THE ASSESSEE DECLARED CAPITAL GAIN ON THE SAID SHARES I N AY 2001-02 AND 2002-03 AT SALE PRICE MINUS THE COST OF SHARE I .E. 598/- BEING THE VALUE ON WHICH PERQUISITE WAS CALCULATED BY HIM. IF THE ASSESSING OFFICER CONSIDERED THE VALUE OF RS. 1128.25 FOR CALCULATION OF PERQUISITE THEN WHILE COMPUTING CAPI TAL GAIN, THE SAID VALUE SHOULD BE CONSIDERED AS COST OF THE SAID SHARES. HOWEVER, IN THE SUBSEQUENT TWO ASSESSMENT YEARS THE REVENUE COLLECTED TAX ON CAPITAL GAIN COMPUTED ON THE SALE OF THE SAID SHARES BY TAKING THEIR COST AT RS. 598/- PER SHARE AS DECLARED BY THE APPELLANT IN HIS RETURNS OF INCOME ON THE BASIS OF HIS COMPUTATION OF PERQUISITE IN THE AY 1999-2000 AND N O ADJUSTMENT WAS MADE BY THE REVENUE IN THE VALUE OF COST AS PER THE HIGHER VALUE OF SHARES ASSESSED BY IT AS PERQUI SITE. THUS THIS HAS AMOUNTED TO DOUBLE TAXATION OF THE INCOME OF RS . 530.25 PER SHARE (1128.25 598) AGGREGATING TO RS. 10,60, 50,000/- BEING FIRST AS PERQUISITE ASSESSED BY AO IN AY 2000 -01 AND SECOND AS CAPITAL GAIN OFFERED BY THE ASSESSEE IN T HE YEAR OF SALE. THIS MUST BE RECTIFIED. THE LEARNED ASSESSING OFFICER DID NOT CARRY OUT THE SAID ADJUSTMENTS IN THE SUCCEEDIN G YEARS THOUGH HE WAS DUTY BOUND TO DO THE SAME WHILE GIVIN G EFFECT TO THE ITAT ORDER FOR AY 2000-01, THE CAPITAL GAIN AS WELL AS TAXES DUE FOR AY 2001-02 AND 2002-03 WILL BE REDUCE D AND THE AMOUNTS PAID AS TAXES ON THE SAID EXCESSIVE AMOUNT OF CAPITAL GAIN FOR THE SAID YEARS MUST BE ADJUSTED AGAINST TH E TAX LIABILITY FOR THE IMPUGNED ASSESSMENT YEAR FROM THE DATE IT W AS PAID BY THE ASSESSEE IN THOSE YEARS BY FOLLOWING SANDVIK AS IA LTD VS. CIT (2006) 280 ITR 643 (SC). A PHOTOCOPY OF THE SAI D JUDGMENT IS ENCLOSED. SUITABLE DIRECTIONS SHOULD BE GIVEN TO THE ASSESSING OFFICER TO CONSIDER THE COST OF ACQUISITI ON OF THE SAID SHARES AT 1128.25 PER SHARE AND THUS REDUCE THE AMO UNT OF CAPITAL GAIN ARISING ON SAID SHARES IN AY 2001-02 A ND 2002-03 AND ADJUST THE EXCESS TAX PAID IN THOSE YEARS AGAIN ST THE DEMAND DUE FOR THE YEAR UNDER CONSIDERATION. 11 4.13. CIT(A) AFTER CONSIDERING THE CONTENTIONS AND MATERIAL AVAILABLE ON RECORD ALLOWED ASSESSEES GROUNDS AS UNDER: I) CREDIT OF TAXES FOR 1999-2000 & A.Y. 2000-01: 5. I AM INCLINED TO ACCEPT THE SUBMISSIONS OF THE ASSESSEE. AS PER THE PROVISIONS OF SECTION 4, WHICH IS THE CH ARGING SECTION R.W.S. 5 AND SECTIONS 15 & 17 OF THE ACT, THERE IS NO MANDATE THAT THE SAME TRANSACTION AND THE SAME INCOME CAN B E TAXED TWICE. IN LAXMIPAT SINGHANIA VS. CIT (1969) 72 ITR 291 (SC), IT HAS BEEN OBSERVED BY THE APEX COURT THAT IT IS T HE FUNDAMENTAL RULE OF LAW OF TAXATION THAT UNLESS OTH ERWISE EXPRESSLY PROVIDED, INCOME CANNOT BE TAXED TWICE. T HERE IS NO SUCH EXPRESS PROVISION, IN THE CASE IN HAND. SIMIL ARLY, IN CIT VS. R. DALMIA (1982) 135 ITR 346 (DEL), THE JURISDI CTIONAL HIGH COURT HAS CATEGORICALLY HELD THAT T HE TAXING OF TH E SAME ITEM TWICE IS NOT ALLOWED IN LAW. THE HONBLE DELHI HIGH COURT APPLIED THE DECISION IN SUGDEN VS. LEEDS CORPORATIO N (1913) 6 TAX CASES 211 (HL), TO CONCLUDE THAT TAXING TWICE F OR THE SAME PURPOSE CANNOT BE PERMITTED. IF THE SAME TRANSACTIO N AND THE RESULTANT INCOME CANNOT BE TAXED TWICE, IT NATURALL Y FOLLOWS THAT THE PAYMENT OF TAX ON THE SAID TRANSACTION/ INCOME CANNOT BE MADE TWICE. SAME HAS BEEN THE POSITION TAKEN BY THE APEX COURT IN JAIN BROS. & OTHERS V. UNION OF INDIA AND OTHERS (1970) 77 ITR 107 (SC). ONCE THIS PRINCIPLE IS SETT LED, WE MAY NATURALLY CONCLUDE THAT TO THE EXTENT TAX WAS PAID BY THE ASSESSEE FOR AY 1999-2000, THE LEARNED ASSESSING OF FICER WOULD HAVE TO ADJUST THE SAME, IN ACCORDANCE WITH T HE DECISION OF THE APEX COURT IN ITO VS. BACHU LAL KAPOOR (1966 ) 60 ITR 74 (SC). THE REVENUE CANNOT BLOW HOT AND COLD AT TH E SAME TIME. AS SUCH, THE ASSESSEE SUCCEEDS IN GROUND OF A PPEAL NO. 2. 6. THERE IS ANOTHER ANGLE, WHY THE ASSESSEE DESERVE S TO SUCCEED IN GROUND OF APPEAL NO. 2. WHEN THE ISSUE, WAS ORIGINALLY BEING CONSIDERED A THE LEVEL OF CIT(A), A REMAND REPORT WAS FILED BY THE LEARNED ASSESSING OFFICER, WHO IN HIS REPLY TO POINT 1.1 (PAGE 179 OF THE PAPER BOOK) HAS STATED THAT T HE ASSESSEE HAD RETURNED THE INCOME AS TAXABLE IN T HE ASSESSMENT YEAR 1999-2000, VOLUNTARILY. AS IT WAS A MATTER OF PROCEDURE, NECESSARY ADJUSTMENT WOULD BE CARRIED AS PER LAW FOR 12 ASSESSMENT YEAR 2000-01. IN OTHER WORDS, AT THE REM AND STAGE, THE LEARNED ASSESSING OFFICER HAD COMMITTED FOR ADJ USTMENT OF THE TAX PAID IN ASSESSMENT YEAR 1999-2000. FURTHER, AT PAGE NO. 208 OF THE PAPER BOOK, WHICH IS AN INTEGRAL PART OF THE REMAND REPORT, IT HAS BEEN SUBMITTED BY THE LEARNED ASSESS ING OFFICER, BEFORE MY LEARNED PREDECESSOR AS UNDER:- AO, REPLY (VIII) IT IS THE ASSESSEE WHO HAD RETURNED THE INCOME AS TAXABLE IN THE ASSESSMENT YEAR 99-2000. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(1)(A). IT IS A MATTER OF PROCEDURE AND THE NECESSARY ADJUSTMENT WILL BE CARRIED OUT AS PER LAW. THE DEPARTMENT IS SURE OF TAXABILITY OF THE SUBJECT INCOME IN ASSESSMENT YEAR 2000-01, THE SAME HAVING BEEN ASSESSED UNDER SECTION 143(3) AFTER SCRUTINY. IN OTHER WORDS, IT HAS ALWAYS BEEN THE STAND OF THE LEARNED ASSESSING OFFICER, EARLIER, THAT THE PAYMENT OF TAX AS MADE FOR THE ASSESSMENT YEAR 1999-2000 WOULD BE ADJUSTED IN ASSESSMENT YEAR 2000-01. 7. THERE IS, YET, ANOTHER ANGLE TO GROUND OF APPEAL NO. 2. IT MAY BE PERTINENT TO REITERATE THAT THE ORDER GIVING APPEAL EFFECT TO THE ORDER DATED 29.8.08 OF THE HONBLE ITAT, IS ON A COMPUTATION FORM. IT IS A NON-SPEAKING ORDER. SINE IT IS A NON- SPEAKING ORDER, IT CANNOT BE APPRECIATED, THAT HOW AND WHY THE LEARNED ASSESSING OFFICER AHS NOT ADJUSTED THE TAX FOR ASSESSMENT YEAR 1999-2000. IN MOHINDER SINGH GILL V S. CHIEF ELECTION COMMISSIONER AIR 1978 SC 851, IT HAS BEEN HELD THAT WHERE A STATUTORY FUNCTIONARY MAKES AN ORDER BASED ON CERTAIN GROUNDS, ITS VALIDITY MUST BE JUDGED BY THE REASON SO MENTIONED. IN OTHER WORDS, THE HONBLE APEX COURT H AS EMPHASIZED ON THE NEED FOR PASSING A SPEAKING ORDER . SIMILARLY, IN MANGALORE GANESH BIDI BOX VS. CIT (2005) 273 ITR 56 (SC), THE APEX COURT HAS INTERALIA STATED AS UNDER :- 13 RECORDING OF REASONS IS A PART OF FAIR PROCEDURE. REASONS ARE THE HARBINGER BETWEEN THE MIND OF THE MAKER OF THE DECISION IN THE CONTROVERSY AND THE DECISION OR CONCLUSION ARRIVED AT. THEY SUBSTITUTE SUBJECTIVITY WITH OBJECTIVITY. AS OBSERVED IN ALEXANDER MACHINERY (DUDELY) LTD. V. CRABTREE (1974) ICR 120 FAILURE TO GIVE REASONS AMOUNTS TO DENIAL OF JUSTICE. THUS, ON THIS GROUND ALSO, THE ASSESSEE DESERVES TO SUCCEED IN GROUND OF APPEAL NO. 2. II) CREDIT OF TAXES IN RESPECT OF A.Y. 2001-02: 9. TO REITERATE, THE SUM AND SUBSTANCE OF THE POIN T IN CONTROVERSY IS THAT THE ASSESSEE HAD DECLARED CAPIT AL GAIN ON THE ALE OF SHARES IN ASSESSMENT YEAR 2001-02 AND 2002-0 3 @ RS. 598 PER SHARE. THIS WAS IN ACCORDANCE WITH HIS VOLU NTARY DECLARATION OF INCOME IN AY 1999-2000. THE LEARNED ASSESSING OFFICER HAS TAKEN THE VALUE AT RS. 916.25 PR SHARE, HOLDING THE MARKED VALUE AS RS. 1128.25 PER SHARE AS ON 30.4.19 99. THE STAND OF THE LEARNED ASSESSING OFFICER AHS BEEN UPH ELD BY THE HONBLE ITAT. HOWEVER, WHILE GIVING APPEAL EFFECT, THE LEARNED ASSESSING OFFICER HAS NOT ADJUSTED THE TAXE S PAID IN ASSESSMENT YEAR 2001-02 AND 2002-03, EVEN WHILE TAK ING THE COST PRICE AT RS. 598 PER SHARE, AS DECLARED BY THE APPELLANT. THIS WAS THE COST OF THE SHARE AS ON 1.2.1999 AND D ECLARED BY THE ASSESSEE. ONE THE LEARNED ASSESSING OFFICER (AN D ALSO UPHELD BY THE HONBLE ITAT) HAS TAKEN THE MARKET VA LUE AT 1128.25 PER SHARE AS ON 30.4.1999, THE SAME PRICE W OULD HAVE TO BE CALCULATED EVEN FOR THE ASSESSMENT YEAR 2001- 02 AND 2002-03, WHILE COMPUTING THE CAPITAL GAIN. I WOULD LIKE TO CLARIFY HERE THAT WHILE DECIDING THIS GROUND OF APP EAL, I AM HOLDING THAT THE COST OF ACQUISITION OF THE SAME AT RS. 1128.25 PER SHARE WOULD HAVE TO BE CONSIDERED, AS HA ALSO B EEN DONE BY THE HONBLE ITAT. BY HOLDING THE COST OF ACQUISITIO N OF THE SHARE, BEING THE MARKET VALUE ON 30.4.1999, IT MAY HAVE A BEARING IN THE SUBSEQUENT ASSESSMENT YEARS, NATURAL LY. ADJUSTMENT OF TAX AS PAID IN A.Y. 2001-02, WOULD AL SO HAVE TO BE MADE ACCORDINGLY. (THE APPEALS FOR ASSESSMENT YE AR 2001-02 14 AND 2002-03 IS NOT BEFORE ME). THUS, FOR THIS LIMIT ED PURPOSE, WITH REGARD TO THE DETERMINATION OF THE COST OF ACQ UISITION AND ADJUSTMENT OF TAX, THE ASSESSEE SUCCEEDS IN GROUND OF APPEAL NO. 3. WHILE ARRIVING AT THIS CONCLUSION, I HAVE RELIED ON THE DECISIONS OF THE APEX COURT AND THE JURISDICTIONAL HIGH COURT IN PARA 5 ABOVE. FOR THE SAKE OF CLARIFICATION, IT IS ALSO MENTIONED THAT WHILE CALCULATING THE TAX PAID, THE INTEREST THAT WOULD HAVE ACCRUED (AS NO REFUND WAS ISSUED) WOULD ALSO HAVE TO BE CALCULATED FROM THE DATE OF PAYMENT OF TAX IN ACCORDANCE WITH THE DECISION AND PRINCIPLES LAID DOWN IN SANDV IK ASIA LTD. VS. CIT (2000) 280 ITR 643(SC). 4.14. APROPOS GROUND NOS. 4 & 5 TAKEN BEFORE CIT(A) BY ASSESSEE IN RESPECT OF DELETION OF INTEREST U/S 234B, ASSESSEE CONTENDED AS UNDER: I. THE FOURTH AND FIFTH GROUNDS OF APPEAL ARE TO CHALL ENGE THE ACTION OF THE LEARNED ASSESSING OFFICER IN CHARGING INTERE ST U/S 234B. THE ASSESSING OFFICER AHS CHARGED INTEREST OF RS. 1,10, 68,519/- U/S 234B OF THE ACT ON THE TAX AMOUNT COMPUTED ON THE ADDIT ION MADE ON ACCOUNT OF PERQUISITE IN RESPECT OF ESOP SHARES ASS ESSED BY HIM. THE APPELLANT DECLARED THE SAID PERQUISITE IN THE P [RECEDING ASSESSMENT YEAR 1999-2000 ON THE BASIS OF THE CIRCU LAR NO. 710 DATED 24/07/95 WHICH WAS VALID AND OPERATIVE AS ON THE DATE OF ACCEPTANCE OF THE OFFER FOR THE SAID SHARES. THE RE VENUE ACCEPTED THE SAID RETURN OF INCOME U/S 143(1) OF THE CT BUT SINCE NEITHER NECESSARY ADVANCE TAX THEREON WAS PAID NOR THE EMPL OYER MADE REQUISITE TDS, THE REVENUE LEVIED INTEREST U/S 234B OF THE ACT ON THE SELF ASSESSMENT TAX DEPOSITED. THE APPELLANT FI LED AN APPEAL CHALLENGING THE SAID LEVY ON THE PLEA THAT THE SAID PERQUISITE U/S 17(2) WAS SUBJECT TO DEDUCTION OF TDS AND WHETHER T HE EMPLOYER MADE THE SAME OR NOT IS NOT MATERIAL AS THE APPELLA NT WAS NOT LIABLE TO DEPOSIT ANY ADVANCE TAX THEREON IN TERMS OF THE SECTIONS 208 TO 210 OF THE ACT. THE LEARNED CIT(A) AS WELL AS THE I TAT ACCEPTED THE SAID PLEA OF THE APPELLANT AND DELETED THE SAID LEVY. PHOTOCOPIES OF THE SAID TWO APPELLATE ORDERS ARE ENCLOSED. II. WHAT AO HAD DONE IS ONLY TO SHIFT THE YEAR OF ASSES SMENT OF THE PERQUISITE VALUE TO SUCCEEDING YEAR FOR IMMEDIATELY PRECEDING YEAR LEVY OF SIMILAR INTEREST WAS DELETED, THEREFORE, SH IFTING OF TAXABILITY 15 WILL NOT AUTOMATICALLY LEAD TO IMPOSITION OF INTERE ST U/S 234 AS A HOLISTIC VIEW WAS TO BE TAKEN AS ALL THESE YEARS W ERE UNDER CHALLENGE. III. THE APPELLANT ALSO SUBMITS THAT INTEREST U/S 234B C OULD NOT BE CHARGED ON THE ADDITIONS MADE IN THE ASSESSMENT PRO CEEDINGS, AS HE HAD NO LIABILITY TO PAY ADVANCE TAX IN VIEW OF T HE FACT THAT HIS ENTIRE INCOME WAS SUBJECT TO TAX OF TAX AT SOURCE. IV. THE USE OF WORDS SUCH ASSESSEE IN THE SECOND LIMB INDICATES THAT THE LIABILITY TO PAY 90% OF THE ADVANCE TAX APPLIES ONLY TO AN ASSESSEE WHO IS LIABLE TO PAY ADVANCE TAX UNDER SEC TION 208. THEREFORE, THE CHARGE OF INTEREST U/S 234B OF THE A CT PRESUPPOSES A LIABILITY TO PAY ADVANCE TAX U/S 208, AND AN ASSESS EE WHO IS NOT SO LIABLE CANNOT BE CALLED UPON TO PAY INTEREST U/S 23 4B OF THE ACT. V. THE APPLICABILITY OF SECTION 208 ON CURRENT INCOME AS COMPUTED U/S 209(1)(A) WAS NOT APPLICABLE TO ASSESSEES CASE BEC AUSE OF THE FOLLOWING REASONS: (A) ADVANCE TAX UNDER SECTION 209 NEED NOT BE COMPUTED IN CASE OF A PERSON DERIVING INCOME CHARGEABLE UNDER THE HE AD SALARIES AS TAX IS DEDUCTIBLE ON SUCH INCOME AS A WHOLE UNDER SECTION 192 OF THE ACT; (B) CONSEQUENTLY, THE ADVANCE TAX PAYABLE COMPUTED UNDE R CHAPTER XVII OF THE ACT DOES NOT EXCEED RUPEES FIVE THOUSAND AND HENCE SECTION 208 IS NOT APPLICABLE TO SUCH ASS ESSEE; AND (C) ONCE THE PROVISIONS OF SECTION 208 ARE NOT APPLICAB LE TO AN ASSESSEE, SECTION 234B OF THE ACT WOULD ALSO NOT BE APPLICABLE TO THE ASSESSEE AS PER THE PROVISIONS OF SECTION 23 4B(1). VI. BASED ON THE ABOVE POSITION OF LAW, IT IS CONTENDED THAT THE PROVISIONS OF SECTION 234B OF THE ACT ARE NOT APPLI CABLE IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. THE TAXA BLE INCOME OF THE APPELLANT FOR THE ASSESSMENT YEAR IN CONSIDERAT ION CONSISTS OF ONLY INCOME CHARGEABLE UNDER SECTION 192 OF THE ACT . HENCE, AS PER THE PROVISIONS OF SECTION 209(10(D), THERE IS N O RESIDUAL AMOUNT OF TAX, WHICH COULD BE CONSIDERED AS ADVANCE TAX PA YABLE. CONSEQUENTLY, THE ADVANCE TAX PAYABLE BY THE APPELL ANT DID NOT EXCEED RUPEES FIVE THOUSAND AND HENCE, SECTION 208 WAS NOT 16 APPLICABLE. SINCE SECTION 208 WAS NOT APPLICABLE, I NTEREST UNDER SECTION 234B OF THE ACT CANNOT BE LEVIED, A HE WAS NOT AN ASSESSEE LIABLE TO PAY ADVANCE TAX UNDER SECTION 208 OF THE ACT. RELIANCE WAS PLACED ON : - DCIT VS. VIJAY V. MEGHANI (2005) 106 ITD 362 (MUM.); - ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. VS. DCIT (2003) 85 ITD 478 (DEL.); - SEDCO FOREX INTERNATIONAL DRILLING INC. VS. DCIT (2000) 72 ITD 415 (DEL.); - MITSUI ENGG. & SHIKPBUILDING CO. LTD. VS. ACIT (2001) 79 ITD 481 (DEL.); - CIT VS. DAMANI BROTHERS (2003) 259 ITR 475 (SC); AND - CIT V. JINDAL EXPORTS LTD. & OTHERS (2009) 222 CTR (DEL) 8. 4.15. CIT(A) PARTLY UPHELD THE CONTENTION OF THE AS SESSEE FOR DELETION OF INTEREST U/S 234B BY FOLLOWING OBSERVATIONS: 11. I HAVE CONSIDERED THE IMPUGNED ORDER AS WELL A S THE SUBMISSIONS MADE BY THE ASSESSEE. THE SCOPE AND AMB IT OF SS. 234A, 234B AND 234C HAS RECENTLY BEEN SPELT OUT IN CIT V. JINDAL EXPORTS LTD. & OTHERS (2009) 222 CTR (DEL) 8 . AT PAGE 32 AND 33, IT HAS, INTER ALIA, BEEN HELD AS UNDER:- 52. WE ARE ALSO OF THE VIEW THAT SS. 234A, 234B AND 234C ARE OF THE SAME GENRE. ON GOING THROUGH THESE PROVISIONS, IT IS CLEAR THAT INTEREST IS SOUG HT TO BE CHARGED BECAUSE THE GOVERNMENT IS DENIED OF ITS REVENUES AT THE DUE DATES. UNDER S. 234A INTEREST IS CHARGED WHERE TAX WHICH IS PAYABLE UPON SELF ASSESSMENT AT THE TIME OF FILING OF A RETURN IS NOT PAID AT THAT POINT OF TIME. SEC. 234B PROVIDES FOR CHARGING OF INTEREST FOR DEFAULT IN PAYMENT OF ADVANCE TAX AND UNDER S. 234C INTEREST IS CHARGED FOR DEFERMENT IN THE PAYMENT OF ADVANCE TAX FROM THE APPOINTED DATES OF PAYMENT. UNDER THE ACT, INCOME-TAX IS PAYABLE AT DIFFERENT 17 STAGES AND THROUGH DIFFERENT MODES. WHERE SPECIFIC DATES BY WHICH PARTS OF THE TAX ARE TO BE PAID ARE CLEARLY STIPULATED, IF SUCH A SCHEDULE IS NOT ADHERED TO IT CAN BE SAID THAT THE GOVERNMENT IS DEPRIVED OF ITS REVENUE AS ON THOSE DATES. TO COMPENSATE FOR SUCH DEPRIVATION, INTEREST IS CHARGEABLE UNDER PROVISIONS OF THE ACT SUCH AS SS. 234A, 234B AND 234C. THE SCHEME OF THE ACT AND THE NATURE OF THESE PROVISIONS REVEAL THAT THEY ARE COMPENSATORY AND NOT PENAL. UNDER THESE PROVISIONS INTEREST IS CHARGEABLE BY WAY OF COMPENSATION AND NOT BY WAY OF PENALTY. THIS IS ALSO CLEAR FROM THE FACT THAT NONE OF THE SAFEGUARD S SUCH A STIPULATION OF OPPORTUNITY OF HEARING AND TH E LIKE AS ARE NECESSARY ACCOMPANIMENTS OF PENAL PROVISIONS ARE TO BE FOUND IN THESE SECTIONS. IN AN Y EVENT, THIS ISSUE IS NOW BEYOND THE PALE OF CONTROVERSY IN VIEW OF THE SUPREME COURT DECISION IN DR. PRANNOY ROY (SUPRA), WHEREIN IT ACCEPTED THIS COURTS CONCLUSION THAT INTEREST CHARGED UNDER SECTION 234A OF THE ACT IS NOT A PENALTY AND THAT THE INTEREST IS LEVIED BY WAY OF COMPENSATION TON COMPENSATE THE REVENUE IN ORDER TO AVOID IT FROM BEING DEPRIVED OF THE PAYMENT OF TAX ON THE DUE DATE. THIS, IN OUR VIEW, WOULD APPLY WITH EQUAL VIGOR TO SS. 234B AND 234C. IN THE SAID SECTION THE SUPREME COURT ALSO OBSERVED THAT SINCE THE TAX DUE HAD ALREADY BEEN PAID WHICH WAS NOT LESS THAN THE TAX PAYABLE ON THE RETURNED INCOME WHICH WAS ACCEPTED, THE QUESTION OF LEVY OF INTEREST DOES NOT ARISE. THE LEARNED COUNSEL FOR THE REVENUE REFERRE D TO THIS SENTENCE AND SUBMITTED THAT IN DR. PRANNOY ROY (SUPRA) THE TAX HAD BEEN PAID BUT THE RETURN WAS NOT FILED AND THEREFORE, THAT CASE STOOD ON A DIFFERENT FOOTING. WE ARE NOT IMPRESSED BY THIS LIN E OF THOUGHT. WHAT THE SUPREME COURT DECIDE WAS THAT THE PROVISIONS OF S. 234A WERE COMPENSATORY IN NATURE AND SINCE THE TAX STOOD PAID THERE WAS NO QUESTION OF LEVY OF INTEREST EVEN THOUGH THE RETURN HAD NOT BEEN FILED WHEN THE TAX WAS PAID. 18 [DECISION OF APEX COURT IN DR. PRANNOY ROY HAS BEEN REPORTED IN (2009) 222 CTGR 6 (SC). 12. IN THE CASE IN HAND, IT IS UNDOUBTED THAT IN T HE ASSESSMENT YEAR 1999-2000, THE ASSESSEE HAS PAID TA X, ON A COMPUTATION, WHEREIN THE VALUE OF THE SHARES HAVE B EEN TAKEN AT RS. 386 PER SHARE. TO THIS EXTENT, THE ASSESSEE HAS PAID THE TAX, EVEN THOUGH THE LEARNED ASSESSING OFFICER HAS TAKEN THE TRANSACTION AS PERTAINING TO ASSESSMENT YEAR 20 00-01. THIS HAS ALSO BEEN UPHELD BY THE HONBLE ITAT. NO REFUND HAS BEEN GRANTED FOR ASSESSMENT YEAR 1999-2000. SINE TAX OR PART OF IT HAS ALREADY BEEN PAID BY THE ASSESSEE, VOLUNTARILY, THE REVENUE HAS NOT BEEN DEPRIVED OF TAX PART OF SUCH AMOUNT. F URTHER, SINCE REFUND HAS NOT BEEN GRANTED, THE ASSESSEE WOULD ALS O BE ELIGIBLE FOR INTEREST IN ACCORDANCE WITH THE DECISION OF THE HONBLE SUPREME COURT IN SANDVIK ASIA LTD. V. CIT (2006) 28 0 ITR 643 (SC). AFTER CONSIDERING THESE TWO ASPECTS I.E. PAYM ENT OF TAX AS MADE IN ASSESSMENT YEAR 1999-2000 AND THE INTEREST ON THE POTENTIAL REFUND WHICH SHOULD HAVE ACCRUED (AS NO R EFUND AHS BEEN ISSUED), THE INTEREST UNDER SECTION 234B WOULD HAVE TO BE COMPUTED. WHILE COMPUTING THE INTEREST, THE DATE OF PAYMENT OF TAX BY THE ASSESSEE WOULD BE THE CRUCIAL FACTOR. 13. THE ASSESSEE SUCCEEDS IN GROUND OF APPEAL NO. 4 . DECISION IN GROUND OF APPEAL NO. 5 WOULD GO AGAINST THE ASSESSEE IN VIEW OF THE JURISDICTIONAL HIGH COURT D ECISION, EXTRACTED ABOVE. 4.16. AGAINST THE ABOVE ORDER OF THE CIT(A), BOTH T HE REVENUE AND THE ASSESSEE HAVE FILED THE PRESENT APPEALS: 5. LEARNED DR AT THE OUT SET CONTENDS THAT THE ASSE SSEES APPEAL IS NOT MAINTAINABLE INASMUCH AS CIT(A) OUGHT NOT HAVE ADMI TTED THE ASSESSEES APPEAL IN THE FIRST PLACE. ITAT VIDE ITS ORDER DATE D 29-8-2008, ALLOWING REVENUES APPEAL, HAS CLEARLY HELD THAT ESOPS WERE TAXABLE PERQUISITES FOR A.Y. 2000-01. THE AO WHILE GIVING EFFECT TO THE ORD ER OF ITAT HAS PASSED IMPUGNED ORDER IN PROFORMA ITNS 150, WHICH IS A NO N-APPEALABLE ORDER AND 19 PASSED TO GIVE EFFECT TO THE DIRECTION OF THE TRIBU NAL. SINE THERE WAS NO DIRECTION IN THE ITAT ORDER ABOUT LEVY OF INTEREST U/S 234B, 234C AND GIVING CREDIT OF TAXES OF EARLIER YEAR AND SUBSEQUENT YEAR , CIT(A) OUGHT NOT HAVE ADMITTED THE APPEAL. THE A.OS ORDER GIVING EFFECT IN FORM ITNS 150 IS NOT APPEALABLE. IT IS PLEADED THAT CIT(A) HAS PASSED AN ORDER ON A NON- APPEALABLE ORDER, ON WHICH HE HAD NO JURISDICTION. THEREFORE, THOUGH THIS GROUND HAS NOT BEEN SPECIFICALLY RAISED IN THE MEMO OF REVENUES APPEAL, THE REVENUE MAY BE ALLOWED TO RAISE THIS ADDITIONAL GR OUND, BEING A LEGAL GROUND. 6. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, CONTENDS THAT IT IS WELL SETTLED THAT AN ORDER GIVING EFFECT OF APPELLA TE ORDER, IS ALSO AN ASSESSMENT ORDER. RELIANCE IS PLACED ON THE RATIO O F DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CALTEX OIL REFININ G (INDIA) LTD. VS. CIT (1993) 202 ITR 375. IN THAT CASE, ON SIMILAR ISSUE OF DELETION OF INTEREST U/S 214, THE HONBLE COURT HAS HELD SUCH ORDER GIVING E FFECT TO APPELLATE ORDER BY FOLLOWING OBSERVATIONS: WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS . THERE IS NO DISPUTE ABOUT THE PROPOSITION THAT THERE IS NO I NHERENT RIGHT OF APPEAL. IT IS TO BE SPECIFICALLY CONFERRED BY TH E STATUTE PROVIDING FOR AN APPEAL. BUT AS STATED BY THE SUPRE ME COURT IN CIT VS. ASHOKA ENGINEERING CO. (1992) 194 ITR 645, IT IS AN EQUALLY WELL SETTLED PROPOSITION OF LAW THAT, IF TH ERE IS A PROVISION CONFERRING A RIGHT OF APPEAL, IT SHOULD B E READ IN A REASONABLE \, PRACTICAL AND LIBERAL MANNER. WE HAVE , THEREFORE, TO CONSTRUE THE PROVISIONS OF SECTION 246 IN THE LI GHT OF THIS WELL SETTLED LEGAL POSITION. SO FAR AS THE FIRST SUBMISS ION, WHICH RELATES TO THE NATURE OF AN ORDER PASSED BY THE INC OME TAX OFFICER IN CONSEQUENCE OF ORDERS OF THE APPELLATE A UTHORITIES WITH A VIEW TO GIVING EFFECT TO THE DIRECTIONS CONT AINED THEREIN, IS CONCERNED, IT IS DIFFICULT TO HOLD THAT SUCH AN ORDER IS AN ADMINISTRATIVE ORDER. THE POWER OF THE INCOME-TAX O FFICER IS TO 20 MAKE ASSESSMENT UNDER SECTION 143 OR 144 OF THE ACT . IT IS THAT ASSESSMENT WHICH IS THE SUBJECT-MATTER OF APPEAL. T HE APPELLATE AUTHORITY, ON AN APPEAL AGAINST AN ORDER OF ASSESSM ENT HAS POWER TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSE SSMENT OR TO SET ASIDE THE ASSESSMENT AND REFER THE CASE BACK TO THE INCOME- TAX OFFICER FOR MAKING A FRESH ASSESSMENT IN ACCORD ANCE WITH THE DIRECTION GIVEN BY SUCH AUTHORITY (SECTION 251) . EVIDENTLY THE EFFECT OF AN APPELLATE ORDER IS THAT THE ORDER EITHER STANDS CONFIRMED, REDUCED OR ENHANCED OR IT STANDS ANNULLE D OR SET ASIDE. IN THE CASE OF CONFIRMATION, REDUCTION OR E NHANCEMENT, THE ORIGINAL ORDER OF ASSESSMENT STANDS MODIFIED TO THE EXTENT OF THE DIRECTIONS GIVEN BY THE APPELLATE AUTHORITY. IN THE CASE OF ANNULMENT THE ORDER BECOMES NON EST. IN CASE AN ORD ER IS SET ASIDE, THE AUTHORITY HAS TO START THE ENTIRE PROCES S AFRESH AND MAKE A FRESH ORDER OF ASSESSMENT COMPLYING WITH THE DIRECTION GIVEN BY THE APPELLATE AUTHORITY. IT IS THUS CLEAR THAT WHAT REMAINS AS A FINAL ORDER AFTER GIVING EFFECT TO THE ORDERS OF THE APPELLATE AUTHORITIES IS AN ORDER OF ASSESSMENT UND ER SECTION 143 OR 144. IT CANNOT BE ANYTHING ELSE. 6.1. IT IS PLEADED THAT THERE IS NO MERIT IN THE AR GUMENT OF LEARNED DR THAT THE APPEAL WAS NEITHER MAINTAINABLE NOR BEFORE ITA T. BESIDES, IN THIS ORDER AO HAS LEVIED FRESH INTEREST ON THE ASSESSEE WHO HA S A RIGHT OF APPEAL INASMUCH AS LEGALITY OF LEVY OF INTEREST ITSELF IS CHALLENGED. 7. WE HAVE HEARD RIVAL CONTENTIONS AND HAVE GONE T HROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. THOUGH REVENUE HAS NO T RAISED THIS GROUND IN MEMO OF APPEAL, HOWEVER, THIS BEING LEGAL GROUND TH E SAME IS ADMITTED. 7.1. WE SEE NO REASON TO DEVIATE FROM THE VIEW TAKE N BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CALTEX OIL REFININ G (INDIA) LTD. (SUPRA), WHICH CLEARLY LAYS DOWN THAT AN ORDER GIVING EFFECT TO THE DIRECTIONS OF THE APPELLATE AUTHORITIES IS AN APPEALABLE ORDER AND IN SUCH APPEAL THE LEVY OF INTEREST CAN BE CHALLENGED. RESPECTFULLY FOLLOWING THE RATIO OF DECISION OF 21 HONBLE BOMBAY HIGH COURT WE REJECT THE PLEA OF THE DEPARTMENT THAT ASSESSEES APPEAL WAS NOT MAINTAINABLE. 8. COMING TO THE ASSESSEES APPEAL, LEARNED COUNSEL FOR THE ASSESSEE AT THE OUT SET CONTENDS THAT PERQUISITE VALUE OF ESOPS HAS BEEN WRONGLY CHARGED IN THIS YEAR AND FURTHER RAISED ISSUE THAT THE 2/3 RD VALUE OF ESOPS TAKEN BY THE AO WAS NOT CORRECT INASMUCH AS THIS 2/ 3 RD PORTION OF SHARES ISSUED UNDER ESOPS WERE UNDER LOCK IN PERIOD. THE V ALUE OF TRADABLE AND LOCK IN SHARES CANNOT BE THE SAME, THEREFORE, AO & CIT(A) OUGHT TO HAVE CONSIDERED THIS ASPECT OF THE MATTER TO DETERMINE T HE VALUE OF PERQUISITE IN RESPECT OF THESE 2/3 RD LOCK IN PERIOD SHARES. LEARNED COUNSEL CONTENDS TH AT THE ITAT VIDE ITS ORDER DATED 29-8-2008 WHILE HOLDI NG THAT THE ESOPS ARE TAXABLE PERQUISITES IN A.Y. 2000-01, BUT HAS NOT GI VEN A CLEAR FINDING ON THE ASPECT OF VALUATION OF SUBSTANTIAL PORTION OF 2/3 RD SHARES UNDER LOCK IN AND ITS PERQUISITE VALUE WAS MUCH LESS THAN THE TRADABL E SHARES. IN THE ABSENCE OF CLEAR ADJUDICATION ON THIS ASPECT, AO INSTEAD ORDER , GIVING EFFECT IN FORM ITNS 150, SHOULD HAVE GIVEN OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. CIT(A) OUGHT TO HAVE DECIDED THIS ISSUE ITSELF OF T AXING THE 2/3 RD LOCK IN SHARE PERQUISITE ON SAME VALUE AS OF FREELY TRADABL E SHARES. 9. APROPOS GROUND NO. 5, LEARNED COUNSEL CONTENDS T HAT THE ESOPS BEING PERQUISITES OF SALARY ARE LIABLE TO BE SUBJECTED TO TDS BY EMPLOYER U/S 192. ASSESSEE DECLARED PERQUISITE VALUE OF ESOPS FOR A.Y . 1999-2000 AND PAID TAXES THEREON. THE TAXES PAID IN RESPECT OF PERQUIS ITES FOR A.Y. 1999-2000 WERE ONLY IN RESPECT OF PERQUISITES. WHEN ITAT HELD THAT THE PERQUISITES WERE TAXABLE IN A.Y. 2000-01, IT TAKES IN ITS STRID E A NATURAL COROLLARY THAT THE TAXES PAID QUA THESE PERQUISITES HAVE INTRINSIC NAT URE OF BEING ADJUSTED 22 TOWARDS PERQUISITES TAXES. IT DOES NOT LIE WITH TH E REVENUE TO TAX ESOPS PERQUISITE IN A.Y. 2000-01 AND NOT TO GIVE CREDIT OF TAXES PAID IN A.Y. 1999-2000 SPECIFICALLY IN THIS BEHALF AND FURTHER LEVY THE INTEREST U/S 234B. 10. LEARNED COUNSEL CONTENDS THAT WHILE RETAINING T HE LEVY OF INTEREST U/S 234B, ORDER OF CIT(A) IS NOT CORRECT ON FOLLOWING C OUNTS: (I) IT HAS BEEN ADMITTED THAT THE ESOPS ARE PERQUISITES OF SALARY AND TAXABLE U/S 17(2) OF THE I.T. ACT AS SALARY INC OME. EMPLOYER IS UNDER AN OBLIGATION U/S 192 TO DEDUCT T DS THEREON. SECTION 209 MANDATES THAT WHILE COMPUTING THE ADVANCE TAX I.E. CURRENT INCOME, THE SAME SHALL BE REDUCED BY THE AMOUNT OF INCOME TAX WHICH IS DEDUCTIBLE OR COLLECTABLE AT SOURCE. (II) LEARNED COUNSEL FURTHER CONTENDS THAT : INTEREST UN DER SECTION 234B OF THE INCOME-TAX ACT, 1961 IS CHARGEA BLE ONLY IN CASES WHERE THERE IS EITHER FAILURE OR SHORTFALL IN THE PAYMENT OF ADVANCE TAX BY AN ASSESSEE. THE RELEVANT PORTION OF THE SAID SECTION, AT THE RELEVANT TIME, READ AS UNDER: 234B. INTEREST FOR DEFAULTS IN PAYMENT OF ADVANCE TAX (1) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION, WH ERE, IN ANY FINANCIAL YEAR, AN ASSESSEE WHO IS LIABLE TO PA Y ADVANCE TAX UNDER SECTION 208 HAS FAILED TO PAY SUC H TAX OR, WHERE THE ADVANCE TAX PAID BY SUCH ASSESSEE UNDER THE PROVISIONS OF SECTION 210 IS LESS THAN NI NETY PER CENT OF THE ASSESSED TAX, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF ONE AND ONE-H ALF PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED I N THE PERIOD FROM THE 1 ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR TO THE DATE OF DETERMINATION OF TOTA L 23 INCOME UNDER SUB-SECTION (1) OF SECTION 143 AND WHE RE A REGULAR ASSESSMENT IS MADE, TO THE DATE OF SUCH REGULAR ASSESSMENT, ON AN AMOUNT EQUAL TO THE ASSES SED TAX OR, AS THE CASE MAY BE, ON THE AMOUNT BY WHICH THE ADVANCE TAX PAID AS AFORESAID FALLS SHORT OF THE AS SESSED TAX. SECTION 209 OF THE ACT PROVIDES FOR THE COMPUTATION OF ADVANCE TAX. THE ASSESSEE IS REQUIRED TO ESTIMATE H IS CURRENT INCOME AND COMPUTE ADVANCE TAX PAYABLE THER EON. CLAUSE (D) OF SUB-SECTION (1) THEREOF PROVIDES THAT IN COMPUTING THE AMOUNT OF ADVANCE TAX PAYABLE BY AN ASSESSEE IN THE FINANCIAL YEAR, THE INCOME TAX PAYA BLE ON CURRENT INCOME, SUBJECT TO ADVANCE TAX, SHALL BE RE DUCED BY THE AMOUNT OF INCOME-TAX WHICH IS DEDUCTIBLE OR COLLECTIBLE AT SOURCE DURING THE SAID FINANCIAL YEA R UNDER ANY PROVISION OF THE ACT AND THE AMOUNT SO REDUCED SHALL BE THE ADVANCE TAX PAYABLE. THE RELEVANT PORTION OF THE SAID SUB-SECTION READS AS UNDER: 209. COMPUTATION OF ADVANCE TAX (1) THE AMOUNT OF ADVANCE TAX PAYABLE BY AN ASSESSEE IN THE FINANCIAL YEAR SHALL, SUBJECT TO THE PROVISIONS OF SUB- SECTIONS (2) AND (3), BE COMPUTED AS FOLLOWS, NAMEL Y:- . (D) THE INCOME-TAX CALCULATED UNDER CLAUSE (A) OR C LAUSE (B) OR CLAUSE (C) SHALL, IN EACH CASE, BE REDUCED B Y THE AMOUNT OF INCOME-TAX WHICH WOULD BE DEDUCTIBLE OR COLLECTIBLE AT SOURCE DURING THE SAID FINANCIAL YEA R UNDER ANY PROVISION OF THIS ACT FROM ANY INCOME (AS COMPU TED BEFORE ALLOWING ANY DEDUCTIONS ADMISSIBLE UNDER THI S ACT) WHICH HAS BEEN TAKEN INTO ACCOUNT IN COMPUTING THE CURRENT INCOME OR, AS THE CASE MAY BE, THE TOTAL IN COME AFORESAID; AND THE AMOUNT OF INCOME-TAX AS SO REDUC ED SHALL BE THE ADVANCE TAX PAYABLE. IN TERMS OF SECTION 192 OF THE ACT, THE EMPLOYER IS UNDER AN OBLIGATION TO DEDUCT INCOME-TAX AT SOURCE ON THE AM OUNT OF INCOME OF 24 HIS EMPLOYEES UNDER THE SAID SALARY. THE SAID SEC TION READS AS UNDER: 192. SALARY (1) ANY PERSON RESPONSIBLE FOR PAYING ANY INCOME CHARGE ABLE UNDER THE HEAD SALARIES SHALL, AT THE TIME OF PAYMENT, DEDUCT INCOME- TAX ON THE AMOUNT PAYABLE AT THE AVERAGE RATE OF IN COME-TAX COMPUTED ON THE BASIS OF THE RATES IN FORCE FOR THE FINANCIAL YEAR IN WHICH THE PAYMENT IS MADE, ON THE ESTIMATED INCOME OF THE ASSESSEE UNDER THIS HEAD FOR THAT FINANCIAL YEAR. FOR THE YEAR UNDER CONSIDERATION I.E. AY 2000-01, B ENEFIT ARISING TO ANY EMPLOYEE IN THE FORM OF ANY SECURITY ALLOTTED T O SUCH EMPLOYEE, EITHER FREE OF COST OR AT A CONCESSIONAL PRICE, UND ER AN EMPLOYEE STOCK OPTIONS SCHEME (ESOP SCHEME) OF THE EMPLOYER CONST ITUTED PERQUISITE U/S 17(2)(IIIA) OF THE ACT, AND CHARGE ABLE TO TAX UNDER THE HEAD SALARIES IN TERMS OF SECTION 17(1)(IV) READ WITH SECTION 15 OF THE ACT. THE RELEVANT PORTION OF THE SAID SECTION I S AS UNDER: 17. FOR THE PURPOSES OF SECTION 15 AND 16 AND OF THIS SECTION, __ (1) SALARY INCLUDES __ . (IV) ANY FEES, COMMISSIONS, PERQUISITES OR PROFITS IN LI EU OF OR IN ADDITION TO ANY SALARY OR WAGES; (2) PERQUISITE INCLUDES__ (IIIA) THE VALUE OF ANY SPECIFIED SECURITY ALLOTTED OR TRANSFERRED. DIRECTLY OR INDIRECTLY, BY ANY PERSON FREE OF COST OR AT CONCESSIONAL RATE, TO AN INDIVIDUAL WHO IS OR HAS BEEN IN EMPLOY MENT OF THAT PERSON: ON A CONJOINT READING OF SECTION 192 AND SECTION 17 OF THE ACT, IT IS SUBMITTED THAT THE EMPLOYER IS UNDER AN OBLIGATION TO DEDUCT INCOME- TAX AT SOURCE IN RESPECT OF THE BENEFIT ARISING TO AN EMPLOYER ON SECURITIES ALLOTTED UNDER AN ESOP SCHEME OF SUCH EM PLOYER. CONSEQUENTLY, SINCE TAX WAS DEDUCTIBLE AT SOURCE ON THE INCOME OF THE ASSESSEE, ASSESSABLE UNDER THE HEAD SALARIES, INC LUSIVE OF PERQUISITE VALUE OF STOCK OPTIONS GRANTED BY THE EMPLOYER, THE RE WAS NO LIABILITY TO PAY ADVANCE TAX ON THE ASSESSEE AND THE PROVISIO NS FOR LEVY OF 25 INTEREST UNDER SECTION 234B OF THE ACT FOR DEFAULT DUE TO NON-PAYMENT OF ADVANCE TAX WOULD NOT GET ATTRACTED. REFERENCE, IN THIS REGARD ARE MADE ON THE DECISIONS IN THE CASES OF: - DIT V. JACABS CIVIL INCORPORATED & ORS 235 CTR 123 (DEL.) - DIT (INTL. TAXATION) V. NGC NETWORK ASIA LLC 313 ITR 187 (BOM.); - CIT V. TIDE WATER MARINE INTERNATIONAL INC 309 ITR 85 (UTTARKHAND); - CIT V. SEDCO FOREX INTERNATIONAL DRILLING INC. 264 ITR 320 (UTTARKHAND); (AFFIRMING SEDCO FOREX INTERNATIO NAL DRILLING V. DCIT 72 ITD 415 (DEL. ITAT).; - CIT V. MADRAS FERTILIZERS LTD. 149 ITR 703 (MAD.); - MOTOROLA INC. V. DIT 95 ITD 269 (DEL. ITAT) (SB); - ADIT V. WESTERN GECO INTERNATIONAL LTD. (2008) 21 SOT 549 (DEL. ITAT )- IN THE CONTEXT OF SEC. 192 OF THE ACT. - DCIT V. PRIDE FORAMER SAS (2008) 24 SOT 59 (DEL. ITAT ) IN THE CONTEXT OF SECTION 192 OF THE ACT. - ACIT V. VIJAY GOPAL JINDAL (2008) 24 SOT 296 (DEL. ITAT ) ASSESSEES OWN CASE IN THE CONTEXT OF SE CTION 192 OF THE ACT. - TURNER BROADCASTING SYSTEM ASIA PACIFIC INC. V. ADI T (2009) 30 SOT 248. - DDIT V. TIDEWATER MARINE INTERNATIONAL INC. ITA NO. 4612/DEL/07. - MITSUBISHI CORPORATION V. ADIT ITA NO. 1492/D/2009; - BHGPE KINHILL JOINT VENTURE V. ADIT (2008) 23 SOT 209 - SNC LKAALIN INTERNATIONAL INC. V. DDIT (2008) 26 SO T 155 (DEL. ITAT) - ASIA SATELLITE TELECOMMUNICATIONS V. DCIT 85 ITD 47 8 (DEL. ITAT). 11. CIT(A) HAS GIVEN A CLEAR FINDING THAT REFUND H AS NOT BEEN GRANTED TO ASSESSEE FOR A.Y. 1999-2000, WHICH CLEARLY IMPLIES THAT NO INTEREST WAS PAID 26 TO ASSESSEE, THEREFORE, THE LEVY OF INTEREST U/S 23 4B HAS BEEN PARTLY CONFIRMED ON ERRONEOUS ASSUMPTIONS. 12. LEARNED DR IS HEARD, WHO SUPPORTS THE ORDER OF CIT(A) ON ABOVE ISSUES AND CONTENDS THAT THE DELHI HIGH COURT JUDGM ENT IN THE CASE OF DIT VS. JACABS CIVIL INCORPORATED (SUPRA), IS IN RESPEC T OF TDS ON NON-RESIDENTS WHERE THE ASSESSEE IS AN INDIAN RESIDENT. 13. IN REPLY, THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT APPLICABILITY OF SECTIONS 209 AND 192 IS SAME IN R ESPECT OF RESIDENT AND NON- RESIDENT ASSESSEES AND THEREFORE THE RATIO OF DECIS ION OF HONBLE DELHI HIGH COURT APPLIES WITH FULL FORCE TO ASSESSEES CASE. 14. WE HAVE HEARD RIVAL CONTENTIONS AND HAVE GONE T HROUGH THE RELEVANT MATERIAL ON RECORD. APROPOS ASSESSEES GROUND NOS. 1 TO 4, ABOUT TAXATION OF PERQUISITES ON 2/3 RD LOCK IN SHARES, WE HAVE NO CHOICE BUT TO FOLLOW TH E ITAT JUDGMENT DATED 29-8-2008 REPRODUCED ABOVE AS IN THE END THERE IS A DIRECTION TO TAX ENTIRE SHARES AT SAME MARKET RATE. FOLLOWING THIS ORDER, GROUND NOS. 1 TO 4 OF ASSESSEES APPEAL ARE DISMISS ED. 14.1. APROPOS GROUND NO. 5, IT HAS NOT BEEN DISPUTE D THAT THE PERQUISITE VALUE CONSTITUTES SALARY U/S 17(2) WHICH IS LIABLE FOR TDS U/SS 192 AND 209, POSTULATES PAYMENT OF ADVANCE TAX ON THE AMOUNT OF TAX PAYABLE BY THE ASSESSEE MINUS INCOME-TAX WHICH IS DEDUCTIBLE OR CO LLECTABLE. HONBLE DELHI HIGH COURT IN THE CASE OF JACABS CIVIL INCORPORATED (SUPRA) HAS CLEARLY HELD: THE LIABILITY TO DEDUCT OR COLLECT THE TAX AT SOUR CE IS THAT OF THE PAYER. THEREFORE, FOR THE PURPOSES OF S. 234B, THE QUESTION WOULD BE AS TO WHETHER THE PAYEE, I.E. THE ASSESSEE IN THIS CASE, HAD ANY ROLE IN DEDUCTING OR COLLECTING THE TAX. ON CE THAT IS IN 27 THE NEGATIVE, AND IT WAS NOT DUTY OF THE PAYEE/ ASS ESSEE, THE QUESTION OF PAYMENT OF ANY INTEREST WOULD NOT ARISE AS IT CANNOT BE SAID, IN SUCH CIRCUMSTANCES, THAT THE ASSESSEE I S IN DEFAULT FOR THE PURPOSES OF S. 234B. NO DOUBT, IF THERE IS A DE FAULT IN MAKING THE PAYMENT OF ADVANCE TAX, THE CONSEQUENCE WHICH IS TO FOLLOW IS THAT THE INTEREST BECOMES PAYABLE UNDE R S. 234B. BUT IN THE INSTANT CASE, THE PROVISIONS OF S. 234B WOULD NOT BE ATTRACTED AT ALL. THE SCHEME OF THE ACT IN RESPECT OF NON- RESIDENTS IS CLEAR. SEC. 195 PUTS AN OBLIGATION ON THE PAYER I.E. ANY PERSON RESPONSIBLE FOR PAYING TO A NON-RESIDENT , TO DEDUCT INCOME-TAX AT SOURCE AT THE RATES IN FORCE FROM SUC H PAYMENTS EXCLUDING THOSE INCOMES WHICH ARE CHARGEABLE UNDER THE HEAD SALARIES. THEREFORE, THE ENTIRE TAX IS TO BE DEDU CTED AT SOURCE WHICH IS PAYABLE ON SUCH PAYMENTS MADE BY THE PAYER TO THE NON-RESIDENT. SEC. 201 LAYS DOWN THE CONSEQUENCES OF FAILURE TO DEDUCT OR PAY. THESE CONSEQUENCES INCLUDE NOT ON LY THE LIABILITY TO PAY THE AMOUNT WHICH SUCH A PERSON WAS REQUIRED TO DEDUCT AT SOURCE FROM THE PAYMENTS MADE TO A NON-RE SIDENT BUT ALSO PENALTIES ETC. ONCE IT IS FOUND THAT T HE LIAB ILITY WAS THAT OF THE PAYER AND THE SAID PAYER HAS DEFAULTED IN DEDUC TING THE TAX AT SOURCE, THE DEPARTMENT IS NOT REMEDY LESS AND T HEREFORE CAN TAKE ACTION AGAINST THE PAYER UNDER THE PROVISIONS OF S. 201 AND COMPUTE THE AMOUNT ACCORDINGLY. NO DOUBT, IF THE PE RSON (PAYER) WHO HAD TO MAKE PAYMENTS TO THE NON-RESIDEN T HAD DEFAULTED IN DEDUCTING THE TAX AT SOURCE FROM SUCH PAYMENTS, THE NON-RESIDENT IS NOT ABSOLVED FROM PAYMENT OF TA XES THEREUPON. HOWEVER, IN SUCH A CASE, THE NON-RESIDEN T IS LIABLE TO PAY TAX AND THE QUESTION OF PAYMENT OF ADVANCE TAX WOULD NOT ARISE. THIS WOULD BE CLEAR FROM THE READING OF S. 1 91 ALONG WITH S. 209(1)(D). FOR THIS REASON, IT WOULD NOT BE PERM ISSIBLE FOR THE REVENUE TO CHARGE ANY INTEREST UNDER S. 234B. THE T RIBUNAL HAS RIGHTLY HELD THAT THE ASSESSEE WAS NOT LIABLE TO PA Y ANY INTEREST UNDER S. 234B. CIT VS. SEDCO FOREX INTERNATIONAL DR ILLING CO. LTD. & ORS. (2004) 186 CTR (UTTARANCHAL) 144: (2003 ) 264 ITR 320 (UTTARANCHAL), CIT VS. MADRAS FERTILIZERS LTD. (1984) 149 ITR 703 (MAD) AND DIRECTOR OF IT (INTERNATIONAL TAX ATION) VS. NGC NETWORK ASIA LLC (2009) 222 CTR (BOM) 86: (2009 ) 18 DTR (BOM) 203 RELIED ON. 28 14.2. WE FIND MERIT IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THERE IS NO DIFFERENCE BETWEEN A RESIDENT AND NON-RESIDENT ASSESSEE ABOUT LEVY OF INTEREST U/S 234B, THEREFORE, WE ARE UNABLE TO ACCEPT THE REVENUES ARGUMENT THAT RATIO OF DECISION IN THE CA SE OF JACABS CIVIL INCORPORATED (SUPRA) IS NOT APPLICABLE TO ASSESSEE S CASE. IN OUR VIEW THE AFORESAID DECISION OF HONBLE DELHI HIGH COURT SQUA RELY COVERS THE ISSUE IN QUESTION. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE INTEREST U/S 234B WAS NOT CHARGEABLE ON ASSESSEE IN THESE FACTS AND CIRCUMSTANCES AND THE SAME SHOULD BE DELETED. CONSEQUENTLY, GROUND NO . 5 OF THE ASSESSEE IS ALLOWED. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. 15. COMING TO REVENUES APPEAL, LEARNED DR MS. SANG EETA GUPTA CONTENDS THAT WHILE DECIDING THE APPEAL CIT(A) HAS DIRECTED THE AO THAT THE TAX PAID BY THE ASSESSEE IN RESPECT OF PERQUISITES IN A.Y. 1999-2000 MAY BE TREATED AS ADVANCE TAX FOR A.Y. 2000-01 AND TO ADJU ST THE EXCESS TAXES PAID BY THE ASSESSEE ON SALE OF ESOPS IN AY 2001-02 AND 2002-03 AGAINST THE DEMAND OF ASSESSMENT YEAR IN QUESTION I.E. 2000-01. LEARNED DR ARGUES THAT WHAT WAS BEFORE CIT(A) IN FIRST APPEAL WAS LIMITED TO YEAR UNDER APPEAL I.E. AY 2000-01. THE APPEALS FOR A.Y. 1999-2000, 2001-0 2 & 2002-03 WERE NOT BEFORE HIM, THEREFORE, THE CIT(A) SHOULD NOT HA VE GIVEN THESE DIRECTIONS TO THE AO. 16. LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER H AND VEHEMENTLY ARGUES THAT ALL THE ISSUES ARE INTER-LINKED INASMUCH AS AO OFFERED THE TAX ON PERQUISITES IN AY 1999-2000, REVENUE CHOSE TO TAX I T IN AY 2000-01. ON SALE OF SHARES ASSESSEE PAID CAPITAL GAIN TAX AS T HE PERQUISITE VALUE/ COST OF ACQUISITION WAS LESS WHEREAS REVENUE INCREASED THE PERQUISITE VALUE 29 CONSEQUENTLY AND THE ASSESSEES TAX LIABILITY QUA C APITAL GAINS WAS REDUCED. AS PER THE ITAT ORDER THE TAXABILITY OF PERQUISITES AND THE COST OF ACQUISITION OF THE SHARES STANDS FINALIZED IN AY 20 00-01. IT WILL BE BUT NATURAL THAT THE TAXES PAID BY THE ASSESSEE QUA PER QUISITES UNDER A BONA FIDE BELIEF IN EARLIER YEAR IS TO BE ADJUSTED IN THE ACT UAL YEARS OF TAXABILITY. IT WILL BE IRONICAL THAT THE REVENUE CHOOSES TO TAX THE PER QUISITES AND HIGHER COST OF ACQUISITION FOR AY 2000-01 AND THE TAXES PAID QUA T HESE TRANSACTIONS AS PER THE BONA FIDE BELIEF OF THE ASSESSEE ARE NOT ADJUST ED WHICH GIVES A DISTORTED PICTURE. THOUGH THE REVENUE HAS BEEN ADEQUATELY COM PENSATED BY THESE TAXES, THE UNJUST COMPENSATORY INTEREST IS BEING CH ARGED ON THE ASSESSEE. CIT(A) WHILE TAKING A HOLISTIC PICTURE BASED ON OBS ERVATIONS OF VARIOUS JUDICIAL AUTHORITIES, HAS GIVEN THESE DIRECTIONS, WHICH CONFORMS TO THE PRINCIPLE OF JUSTICE AND EQUITY. WHEN THE ORDER OF TAXABILITY IS IN QUESTION, IT WILL NOT BE FAIR ON THE PART OF THE REVENUE TO TAX THE ITEM AND DENY THE CREDIT WHICH IS PAID IN SOME OTHER YEAR BY THE ASSESSEE UN DER A BONA FIDE BELIEF. BESIDES, ITAT CAN PASS SUCH ORDER WHICH IT DEEMS FI T TO ENSURE THAT A JUST AND PROPER ASSESSMENT IS FRAMED ON THE ASSESSEE WHI CH INCLUDES CHARGEABILITY OF INTEREST AND CREDIT OF TAXES. 17. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR VIEW WHEN THE ISSUE IS IN RESPECT OF CHARGEABILITY OF PARTICULAR SOURCE OF INCOME AND IF THE REVENUE CHOOSES TO TAX THE SOURCE IN A PARTICULAR YEAR AT VARIANCE WITH ASSESSEES CLAIM, IT IS UNJUS T FOR THE REVENUE TO DENY THE CREDIT OF THE TAXES PAID QUA THE VERY SAME TRANSACT IONS ALBEIT UNDER A BONA FIDE BELIEF IN DIFFERENT YEAR. IN OUR VIEW THE CON TROVERSY IN QUESTION PERTAINS TO YEAR OF TAXABILITY OF PERQUISITES AND VALUATION OF PERQUISITES WHICH LEADS TO THE AMOUNT OF CAPITAL GAINS. WE ARE UNABLE TO FI ND ANY INFIRMITY IN THE 30 ORDER OF CIT(A), WHICH IS BASED ON PROPER APPRECIAT ION OF FACTS, JUST AND PROPER CONSIDERATIONS. IT HAS BEEN OBSERVED THAT RE FUND OF TAXES FOR A.Y. 1`999-2000 WAS NOT GIVEN TO THE ASSESSEE. REVENUE C ANNOT CHOOSE TO DEFER THE REFUND AND NOT TO GIVE CREDIT WHEN THE TAXES AR E RAISED. WE UPHOLD THE ORDER OF CIT(A). IN THE RESULT, REVENUES APPEAL IS DISMISSED. 18. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 18-3-2011. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18-3-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR