Asst. Commissioner of Income Tax, Circle- 1, Margao., Margao V. M/s Shradha Ispat Pvt. Ltd., Goa

ITA 425/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93442 (ITAT-PANAJI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 16-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEHBOOB ALI KHAN
• Section: 143(3); 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER AND SHRI N.K. BILLAIYA , HONBLE ACCOUNTANT MEMBER ITA NO. 425 /PNJ/2014 (ASST. YEAR : 20 1 0 - 1 1 ) ACIT, CIRCLE - 1, MARGAO, GOA. VS. M/S. SHRADDHA ISPAT PVT. LTD., SURVEY NO. 53/1, SANTONA VILLAGE, CHOWGULE MINES ROAD, SANGUEM, SOUTH GOA. PAN NO. AAHCS 4567 J (APPELLANT) (RESPONDENT) C.O. NO. 12 /PNJ/2015 (ASST. YEAR : 20 1 0 - 11 ) M/S. SHRADDHA ISPAT PVT. LTD., SURVEY NO. 53/1, SANTONA VILLAGE, CHOWGULE MINES ROAD, SANGUEM, SOUTH GOA. VS. ACIT, CIRCLE - 1, MARGAO, GOA. PAN NO. AAHCS 4567 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI N AGRAJ KALE - CA DEPARTMENT BY : SHRI MEHBOOB ALI KHAN - DR DATE OF HEARING : 1 6 / 0 6 /2015 . DATE OF PRONOUNCEMENT : 16 / 0 6 /201 5 . O R D E R PER N.K. BILLAIYA THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE VERY SAME ORDER OF L D. CIT (A), PANAJI, DATED 23 /0 9 /201 4 PERTAINING TO A.Y. 20 1 0 - 1 1 . 2 ITA NO. 425 /PNJ/2014 & C.O.12/PNJ/2015 2. AT THE VERY OUTSET, COUNSEL FOR THE ASSESSEE STATED TH A T HE HAS WITHDRAWN THE CROSS OBJECTION THEREFORE , THE SAME IS DISMISSED AS WITHDRAWN. 3. COMING TO THE REVENUES APPEAL , THE ONLY GRIEVANCE BY THE REVENUE IS THAT THE LD. CIT(A) ERRED IN ALLOWING MAT CREDIT U/S. 115JAA AS AGAINST MAT CREDIT CLAIM IN THE RETURN OF INCOME FILED BY THE ASSESSEE. 4 . BRIEFLY STATED THE FACTS OF THE CASE ARE THAT IN THIS CASE, ASSESSMENT WAS COMPLETED ON 08/03/2013 MADE U/S. 143(3) OF THE ACT, WHEREIN THE INCOME WAS ASSESSED BY ACCEPTING RETURNED INCOME OF RS. 6,32,60,132/ - . ON RECEIPT OF THE ORDER OF SEC. 143(3), THE ASSESSEE FILED AN APPLICATION FOR RECTIFICATION POINTED OUT THAT THERE IS A MISTAKE IN THE COMPUTATION OF MAT U/S. 115 JB OF THE ACT AND CREDIT ALLOWED OF MAT U/S. 115JAA. THE ASSESSING OFFICER RECTIFIED THE MISTAKE AND RECOMPUTED THE MAT CREDIT. 5. AGGRIEVED BY WHICH , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) , IT WAS POINTED OUT THAT THE ASSESSING OFFICER HAS ALLOWED CREDIT OF MAT TO THE EXTENT OF RS. 75,69,377/ - IN 3 ITA NO. 425 /PNJ/2014 & C.O.12/PNJ/2015 PLACE OF ALLOWABLE CREDIT OF RS. 1,00,93,456/ - WHICH HAS RESULTED I N DEMAND . RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. TULSYAN NEC LTD. IN CIVIL A P PEAL NOS. 10677 - 79 OF 2010 . LD. CIT(A) WAS CONVINCED WITH THE CLAIM OF THE ASSESSEE AND RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TULSYAN NEC LTD (SUPRA ) , LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO GRANT MAT CREDIT FOR AN AMOUNT OF RS. 1,00,93,456/ - 6. AGGRIEVED BY THIS, REVENUE IS BEFORE US. 7. LEARNED DR COULD NOT ADD ANYTHING TO WHAT HAS ALREADY BEEN STATED IN THE ASSESSMENT ORDER. COUNSEL FOR THE ASSESSEE HEAVILY RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TULSYAN NEC LTD. (SUPRA) . 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TULSYAN NEC LTD. (SUPRA) , THE MODE OF ALLOWING MAT CREDIT HAS BEEN CONSIDERED BY MANY JUDICI AL PRONOUNCEMENTS, BUT THE ISSUE HAS BEEN FINALLY SET AT REST BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TULSYAN NEC LTD. 4 ITA NO. 425 /PNJ/2014 & C.O.12/PNJ/2015 (SUPRA) . THE RELEVANT PORTION OF THE DECISION OF THE HONBLE SUPREME COURT READS AS UNDER: - HOWEVER, THE QUESTION BEFORE US IS OF PRIORITY OF ADJUSTMENT FOR THE MAT CREDIT. IN THIS CONNECTION, IT IS IMPORTANT TO BEAR IN MIND THAT THE CREDIT ALLOWED IS THE EXCESS OF THE NORMAL TAX LIABILITY OVER MAT LIABILITY IN THE SUBSEQUENT YEARS. IN THIS CONNECTION THE FOLLOWING IL LUSTRATION ON MAT CREDIT BE SEEN: PARTICULARS AMOUNT RS. YEAR 1 115JB LIABILITY 1,600 NORMAL TAX LIABILITY 400 CREDIT WHICH CAN BE CARRIED FORWARD - I 1 , 200 YEAR 2 115JB LIABILITY (A) 600 NORMAL TAX LIABILITY (B) 1 , 400 TAX LIABILITY = (B) [SINCE B IS HIGHER THAN A] 1 , 400 MAT CREDIT AVAILABLE FOR SET OFF IN YEAR 2 [(A) (B) II 800 NET TAX LIABILITY FOR YEAR 2 [B - II] 600 MAT CREDIT TO BE CARRIED FORWARD [I - II] 400 [SEE THE CHARTERED ACCOUNTANT, VOL. 57, NO. 09, MARCH, 2009, PAGE 1584] 10. THE ISSUE WHICH CROPS UP FOR DECISION IS HOW SHOULD THE ADVANCE TAX BE CALCULATED WHEN THE COMPANY HAS MAT CREDIT? 11. TO ANSWER, WE NEED TO LOOK AT SECTION 234B. UNDER THAT SECTION, ASSESSED TAX MEANS THE TAX ON THE TOTAL INCOME DETERMINED UNDER SECTION 143(1) OR ON REGULAR ASSESSMENT UNDER SECTION 143(3) AS REDUCED BY THE AMOUNT OF TAX DEDUCTED OR COLLECTED AT SOURCE IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII ON ANY INCOME WHICH IS SUBJECT TO SUCH DEDUCTION OR COLLECTION AND WHICH IS TAKE N INTO ACCOUNT IN COMPUTING SUCH TOTAL INCOME. THE DEFINITION, THUS, AT THE RELEVANT TIME EXCLUDED MAT CREDIT FOR ARRIVING AT ASSESSED TAX. THIS LED TO IMMENSE HARDSHIP. THE POSITION WHICH EMERGED WAS THAT DUE TO OMISSION ON ONE HAND MAT CREDIT WAS AVAILAB LE FOR SET OFF FOR FIVE YEARS UNDER SECTION 115JAA BUT THE SAME WAS NOT AVAILABLE FOR SET OFF WHILE CALCULATING 5 ITA NO. 425 /PNJ/2014 & C.O.12/PNJ/2015 ADVANCE TAX. THIS 19 DICHOTOMY WAS MORE SPELT OUT BECAUSE SECTION 115JAA DID NOT PROVIDE FOR PAYMENT OF INTEREST ON THE MAT CREDIT. TO AVOID THI S SITUATION, PARLIAMENT AMENDED EXPLANATION 1 TO SECTION 234B BY FINANCE ACT, 2006 W.E.F. 1.4.2007 TO PROVIDE ALONG WITH TAX DEDUCTED OR COLLECTED AT SOURCE, MAT CREDIT UNDER SECTION 115JAA ALSO TO BE EXCLUDED WHILE CALCULATING ASSESSED TAX. 12. FROM THE ABOVE, IT IS EVIDENT THAT ANY TAX PAID IN ADVANCE/PRE - ASSESSED TAX PAID CAN BE TAKEN INTO ACCOUNT IN COMPUTING THE TAX PAYABLE SUBJECT TO ONE CAVEAT, VIZ, THAT WHERE THE ASSESSEE ON THE BASIS OF SELF COMPUTATION UNILATERALLY CLAIMS SET OFF OR MAT CREDIT, THE ASSESSEE DOES SO AT ITS RISK AS IN CASE IT IS ULTIMATELY FOUND THAT THE AMOUNT OF TAX CREDIT AVAILED WAS NOT LAWFULLY AVAILABLE, THE ASSESSEE WOULD BE EXPOSED TO LEVY OF INTEREST UNDER SECTION 234B ON THE SHORTFALL IN THE PAYMENT OF ADVANCE TAX. WE REI TERATE THAT WE CANNOT ACCEPT THE CASE OF THE DEPARTMENT BECAUSE IT WOULD MEAN THAT EVEN IF THE ASSESSEE DOES NOT HAVE TO PAY ADVANCE TAX IN THE CURRENT YEAR, BECAUSE OF HIS BROUGHT FORWARD MAT CREDIT BALANCE, HE WOULD NEVERTHELESS BE REQUIRED TO PAY ADVANC E TAX, AND IF HE FAILS, INTEREST UNDER SECTION 234B WOULD BE CHARGEABLE. THE CONSEQUENCE OF ADOPTING THE CASE OF THE DEPARTMENT WOULD MEAN THAT MAT CREDIT WOULD LAPSE AFTER FIVE 20 SUCCEEDING ASSESSMENT YEARS UNDER SECTION 115JAA(3); THAT NO INTEREST WOULD BE PAYABLE ON SUCH CREDIT BY THE GOVERNMENT UNDER THE PROVISO TO SECTION 115JAA(2) AND THAT THE ASSESSEE WOULD BE LIABLE TO PAY INTEREST UNDER SECTIONS 234B AND C ON THE SHORTFALL IN THE PAYMENT OF ADVANCE TAX DESPITE EXISTENCE OF MAT CREDIT STANDING TO T HE ACCOUNT OF THE ASSESSEE. THUS, DESPITE MAT CREDIT STANDING TO THE ACCOUNT OF THE ASSESSEE, THE LIABILITY OF THE ASSESSEE GETS INCREASED INSTEAD OF IT GETTING REDUCED. AS THE LD. CIT(A) HAS FOLLOWED THE DECISION OF THE HONBLE SUPREME COURT , WE DECLINE TO INTERFERE. 6 ITA NO. 425 /PNJ/2014 & C.O.12/PNJ/2015 9. IN THE RESULT, A PPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMISSED AS WITHDRAWN. ( ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 TH JUNE , 201 5 ). S D / - S D / - ( GEORGE MATHAN ) ( N.K. BILLA I YA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 1 7 T H JUNE , 201 5 . VR/ - COPY TO: 1 . THE APPELLANT A ) ACIT , C I R L C E - 1 , M A R G A O , G O A . B ) M/S. S H R A D D H A I S P A T P . LTD. 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 7 ITA NO. 425 /PNJ/2014 & C.O.12/PNJ/2015 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 6 .06.2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 1 6 .06.2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 7 /06/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 1 7 /06/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 7 /06/2015 SR.PS 6. DATE OF PRONOUNCEMENT 1 6 /06/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 17 /06/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER