M/S GROWMORE EXPORTS LTD., MUMBAI V. DCIT, CC-31, MUMBAI

ITA 4358/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4135 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 16-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 31-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Principle of natural justice; Reasonable cause
• Section: 234B; 115JB

Judgement Text

G BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 4358 /MUM/2013 ( / ASSESSMENT YEAR : 2010-11) GROWMORE EXPORTS LIMITED, 32, MADHULI,3 RD FLOOR, DR.ANNIE BESANT ROAD, WORLI, MUMBAI- 400 018 / V. THE DEPUTY COMMISSIONER OF INCOME TAX,CC-31 R.NO.409,AAYKAR BHAWAN, M .K .ROAD, MUMBAI-400 020 ./ PAN : AAACG4939P ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI ASHWIN KASHINATH REVENUE BY : DR. P.DANIEL / DATE OF HEARING : 16-11-2015 / DATE OF PRONOUNCEMENT : 08-02-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING ITA NO. 4358/MUM/2013, IS DIRECTED AGAINST THE ORDER DATED 17/01/2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 4 0, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010- 11. 2. THE GROUNDS RAISED BY THE ASSESSEE COMPANY IN TH E MEMO OF APPEAL FILED WITH THE TRIBUNAL READ AS UNDER:- 1 THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S. 250 OF THE A CT. ITA 4358/MUM/2013 2 2. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER IN GROSS VIOLATIO N OF PRINCIPLES OF NATURAL JUSTICE. 3.THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) H AS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM AT TACHED ASSETS CAN BE ASSESSED IN THE HANDS OF THE APPELLANT. 4. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT GRANTING RELIEF OF LIABILITY AM OUNTING TO RS.1,57,85,366/-, TOWARDS INTEREST EXPENDITURE CLAI MED BY THE APPELLANT. 5. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) HAS ERRED IN LAW AND IN FACTS IN CALCULATING BOOK PROFIT U/S 115JB A MOUNTING TO RS.1,77,97,551/- . 6. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN LAW AND IN FACTS IN CHARGING INTEREST U/S 234A, 234B AN D 234C OF THE ACT. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE COMPANY MENTIONED THAT THERE IS A DELAY OF 47 DAYS IN FILING THE APPEAL BE FORE THE TRIBUNAL FOR THE ASSESSMENT YEAR 2010-11. THE LD. COUNSEL SUBMITTED THAT AFFIDAVIT IS FILED BY THE ASSESSEE COMPANY DATED 16-09-2014 EXPLAINING TH E REASONS FOR NOT FILING THE SAID APPEALS IN TIME BEFORE THE TRIBUNAL AND PR AYING FOR CONDONATION OF THE DELAY. IN THIS REGARD, THE SAID AFFIDAVIT ALON G WITH APPLICATION FOR CONDONATION FILED BY THE ASSESSEE COMPANY IS BROUGH T TO OUR ATTENTION BY THE LD. COUNSEL AND THE RELEVANT EXTRACT OF THE AFF IDAVIT READ AS UNDER: ITA 4358/MUM/2013 3 2. THE APPELLANT IS A NOTIFIED PERSON U/S. 3 OF TH E SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) AC T ,1992 , HEREINAFTER REFERRED TO AS SAID ACT . THE APPELLANT COME TO B E NOTIFIED BY CUSTODIAN ON 8.6.1992 ON AND FROM WHICH DATE ALL THE ASSET OF THE APPELLANT GOT ATTACHED IN TERMS OF SECTION 3(4) OF THE SAID ACT, THEY CAN BE DEALT WITH BY THE CUSTODIAN ONLY UNDER THE DIRECTIONS OF HONB LE SPECIAL COURT. THAT THE HONBLE COURT HAS EARLIER PERMITTED CUSTODIAN T O RELEASE THE REQUISITE FEES OUT OF THE ATTACHED ACCOUNT OF APPELLANT AND T HE APPELLANT APPLIED FOR RELEASE OF THE SAME TO CUSTODIAN WITHIN ONE DAY FROM RECEIPT OF ORDER. 3. I SAY THAT THE APPEAL FEES SO RELEASED BY THE CU STODIAN WAS RECEIVED ON 24.05.2013 . YOUR HONOURS WOULD OBSERVED THAT TH E APPELLANT HAS TAKEN ALL THE INITIATIVES TO ADDRESS LETTERS AND RE MINDERS TO THE CUSTODIAN FOR THE RELEASE OF THE APPEAL FEE FOR FILING THE AP PEAL; AND THAT UPON RECEIPT OF COUNTERFOIL OF THE PAID CHALLAN , THE AP PEAL WAS SUBMITTED BEFORE YOUR HONOURS . THUS, SO FAR AS THE APPLICANT WAS CONCERNED , WE WERE VERY MUCH DILIGENT AND ANXIOUS ABOUT OUR OBLIG ATION . THE DELAY WAS CAUSED FOR REASONS WHICH WERE BEYOND THE CONTRO L OF THE APPLICANT. AS A RESULT OF THE ABOVE, THE APPEAL WAS FILED ON 3 1.05.2013 I.E. LATE BY 47 DAYS. 4. I STATE THAT APPELLANT WAS PREVENTED BY A REASON ABLE CAUSE IN FILING THE APPEAL FOR A.Y. 2010-11 IN TIME AND THERE WAS N O DELIBERATE DELAY OR ANY MALAFIDE INTENTION ON APPELLANT PART AS PER FAC TS DISCLOSED IN THE ACCOMPANYING APPLICATION SEEKING CONDONATION OF DEL AY 4. CONSIDERING THE ABOVE, WE ARE OF CONSIDERED VIEW THAT THERE IS A REASONABLE CAUSE THAT PREVENTED THE ASSESSEE COMPANY TO FILE T HE AFOREMENTIONED APPEAL BEFORE THE TRIBUNAL WITHIN PRESCRIBED TIME AND WITH A DELAY OF 47 DAYS FOR THE ITA 4358/MUM/2013 4 ASSESSMENT YEAR 2010-11. CONSIDERING THE SAME , WE CONDONE THE DELAY UNDER CONSIDERATION AND PROCEED TO ADJUDICATE THE A PPEAL ON MERITS. 5. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE COMPA NY MENTIONED THAT GROUND NOS. 1,2 AND 3 ARE NOT PRESSED . AFTER HEARING THE LD. SPECIAL COUNSEL FOR THE REVENUE, THE SAID GROUNDS ARE DISMISSED AS NOT PRES SED. 6. GROUND NO. 4 RELATES TO THE DISALLOWANCE OF INTE REST EXPENDITURE OF RS.1,57,85,366/-. IN THIS REGARD THE LD. COUNSEL OF THE ASSESSEE COMPANY SUBMITTED THAT THE TRIBUNAL IN THE ASSESSEE COMPANY S OWN CASE FOR THE ASSESSMENT YEAR 1995-96 TO 1999-2000 , 2003-04 , 20 04-05 , 2005-06 AND 2007-08 IN ITA NO. 4015-4019/MUM/2011 VIDE ORDERS D ATED 20.11.2013, ITA NO. 5203/MUM/ 2013 VIDE ORDERS DATED 18.12.2004 , I TA NO. 4629/MUM/2011 DATED 06.11.2013 , ITA NO. 4020/MUM/2 011 DATED 20.11.2013 AND ITA NO. 8478/MUM/2010 DATED 20.11.20 13 ON IDENTICAL ISSUE HAS SET ASIDE THE MATTER TO THE FILE OF THE C IT(A) FOR FRESH ADJUDICATION OF THE ISSUE. THE SAID ORDERS OF THE TRIBUNAL ARE PLAC ED IN THE PAPER BOOK FILED BY THE ASSESSEE COMPANY WITH THE TRIBUNAL. 7. THE LD. SPECIAL COUNSEL OF THE REVENUE ADMITTED THAT THE ISSUE INVOLVED IN THE AFORESTATED ORDERS OF THE TRIBUNAL IS IDENTICAL AND THE TRIBUNAL FOR THE SAID ASSESSMENT YEARS HAS SET ASIDE THE ISSUE FOR F RESH ADJUDICATION TO THE FILE OF THE CIT(A). 8. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE A ND AFTER HEARING BOTH THE PARTIES, WE SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) , WHO IS DIRECTED TO ADJUDICATE THE MATTER AFRESH IN ACCORDANCE WITH LAW AND IN THE LINES INDICATED IN THE AFOREMENTIONED ORDERS OF THE TRIBUNAL. NEEDL ESS TO SAY THAT THE ASSESSEE COMPANY SHALL BE GRANTED A REASONABLE OPPO RTUNITY OF BEING HEARD BY THE CIT(A). WE ORDER ACCORDINGLY. ITA 4358/MUM/2013 5 9. GROUND NO. 5 RELATES TO THE CALCULATING OF BOOK PROFIT U/S 115JB AMOUNTING TO RS.1,77,97,551/- . THE LD. COUNSEL FOR THE ASSESSEE COMPANY SUBMITTED THAT THIS GROUND IS CONSEQUENTIAL TO GROU ND NO 4, ARISING DUE TO DISALLOWANCE OF INTEREST EXPENDITURE OF RS. RS.1,57 ,85,366/- BY THE REVENUE AND AS CONFIRMED BY THE CIT(A), WHICH IS AGITATED B Y THE ASSESSEE COMPANY VIDE GROUND NO.4 . LD. SENIOR COUNSEL FOR THE REVEN UE AGREED THAT THIS GROUND IS CONSEQUENTIAL. 10. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED TH E MATERIAL ON RECORD. WE HAVE OBSERVED THAT THIS GROUND RELATING TO THE CALC ULATING OF BOOK PROFIT U/S 115JB AMOUNTING TO RS.1,77,97,551/ IS CONSEQUENTIAL TO OUR DECISION IN THE GROUND NO 4 RAISED BY THE ASSESSEE COMPANY, WHICH W E HAVE ADJUDICATED IN PRECEDING PARAS OF THIS ORDER . WE ORDER ACCORDING LY. 11. GROUND NO 6 RELATES TO LEVY OF INTEREST U/S 234 A, 234B AND 234C OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE COMPANY SUBM ITTED THAT INTEREST U/S 234A , 234B AND 234C IS MANDATORY BUT THE INTEREST LIABILITY TO BE CALCULATED AFTER TAKING INTO ACCOUNT TAX DEDUCTED AT SOURCE . THE LD. COUNSEL FOR THE ASSESSEE COMPANY RELIED UPON DECISIONS OF THE TRIBU NAL IN THE CASE OF DCIT V. SMT RASILA S. MEHTA IN ITA NO. 5870/MUM/2011 VIDE O RDERS DATED 21.10.2015, DIVINE HOLDING PVT. LTD. V. ACIT IN ITA NO. 560/MUM/2013 DATED 21.10.2015 AND AATUR HOLDINGS PRIVATE LIMITED V. DC IT IN ITA NO. 846 , 1032 , 2147/MUM/2010 DATED 23-09-2015 , WHEREBY TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE LEARNED ASSESSING OFFICER WHO WOULD LEVY THE INTEREST AS PER PROVISIONS OF SECTION 234 AFTER REDUCING THE AM OUNT OF TAX DEDUCTIBLE AT SOURCE AND DECIDE AS PER THE PROVISION OF LAW. THE TRIBUNAL DECISION IN ITA NO. 846,1032,2147/ MUM/ 2010 DATED 23-09-2015 IS RE PRODUCED BELOW : ITA 4358/MUM/2013 6 6. LAST GROUND OF APPEAL FOR ALL THE THREE ASSESSM ENT YEARS PERTAIN TO LEVY OF INTEREST U/S 234A, 234B AND 234C OF THE ACT . BEFORE US, THE REPRESENTATIVES OF BOTH THE SIDES AGREED THAT IDENT ICAL ISSUE WAS DECIDED IN THE CASES OF TOPAZ HOLDINGS PVT. LIMITED ( ITA/2 146/MUM/2013, A.Y. 2001-02 DTD.18.06.2014) AND EMINENT HOLDINGS PVT. LTD. (ITA/2139/MUM/2013, A.Y.2002-03, DATED 18.06.2014), THAT THE TRIBUNAL HAD UPHELD THE LEVY OF INTEREST IN PRINCIP AL, THAT IT HAD SET ASIDE THE ISSUE FOR CALCULATING THE INTEREST TO THE FILE OF THE AO WITH DIRECTION THAT THE TAX DEDUCTED AT SOURCE SHOULD BE REDUCED W HILE CALCULATING THE INTEREST. WE FIND THAT THE ISSUE WAS DISCUSSED IN T HE CASE OF EMINENT HOLDINGS PVT. LTD.(SUPRA) AS UNDER: 3. NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTEREST U/S. 234 OF THE ACT. BEFORE US , AR STATED THAT THE ASSESSEE WAS A NOTIFIED ENTITY, THAT THE PROVISIONS OF S. 234A,234B AND 234C OF THE ACT WERE DEEMED TO HAVE COMPLIED WITH , THAT THE ASSETS WERE ALREADY IN ATTACHMENT OF THE CUSTODIAN APPOINTED UNDER THE PRO VISIONS OF THE SPECIAL COURTS ACT, THAT THE TRIBUNAL IN THE CASE O F THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD THE VIEW IN FAV OUR OF THE APPELLANT , THAT THE HONBLE BOMBAY HIGH COURT IN T HE CASE OF DIVINE HOLDINGS PVT. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THAT THE PROVISIONS OF SECTIONS 234A, 234B AND 234C OF THE ACT WERE MANDATORY AND WERE APPLICABLE TO THE NOTIFIED ENTITIES ALSO , THAT THE ASSESSEE WAS IN THE PROCESS OF FILING AN A PPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE SUPREME COURT , T HAT THE INCOME EARNED IN THE YEAR UNDER CONSIDERATION WAS SUBJECTE D TO THE PROVISIONS OF TDS, THAT THE CHARGEABILITY OF SECTIO N 234A, 234B AND 234C OF THE ACT SHOULD BE AFTER CONSIDERING THE AMO UNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED . THE A PPELLANT RELIES IN THIS REGARD ON THE FOLLOWING DECISIONS. HE RELIE D UPON THE CASES ITA 4358/MUM/2013 7 OF MOTOROLA INC. V. DCIT (95 ITD 269(DEL.)(SB), SED CO FORES DRILLING CO. LTD. (264 ITR 320) , NGC NETWORK ASIA LLC (313 ITR 187), SUMMIT BHATACHARYA (300 ITR (AT) 347(BOM.)(SB)), VI JAY GOPAL JINDAL (ITA NO. 4333/DEL/2009) & EMILLO RUIZ BERDEJ O (320 ITR 190(BOM.) . DR RELIED UPON THE CASES OF DIVINE HOLD INGS PVT. LTD. . 3.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF DIVINE HOLDINGS PVT . LTD.. HONBLE BOMBAY HIGH COURT HAS HELD THAT PROVISIONS OF SECTION 234A , 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSON ALSO. THEREF ORE, UPHOLDING THE ORDER OF THE FAA TO THAT EXTENT, WE HOLD THAT PROVI SIONS OF SECTION 234 OF THE ACT ARE APPLICABLE . AS FAR AS CALCULATION PART IS CONCERNED , WE FIND MERITS IN THE SUBMISSION MADE BY THE ASSESSEE. THER EFORE, WE ARE RESTORING BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSIDERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO. 5 IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. RESPECTFULLY, FOLLOWING THE ABOVE ORDER WE RESTORE BACK THE ISSUE TO THE FILE OF THE AO WHO WOULD LEVY THE INTEREST AS PER T HE PROVISIONS OF SECTION 234 OF THE ACT AND GIVE CREDIT FOR THE TDS AMOUNTS. GROUND NO. 6 FOR ALL THE THREE A.Y.S STANDS PARTLY ALLOWED. THE LD. COUNSEL FOR THE ASSESSEE COMPANY SUBMITTED THAT THE TRIBUNAL HAS IN THE ASSESSEE COMPANYS OWN CASE HAS ADJUDICATED THE ISSUE IN ITA NO. 5203/MUM/2013 FOR ASSESSMENT YEAR 2003-04, VIDE ORD ERS DATED 18.12.2014 AS UNDER: 9. GROUND NO. 5 RELATES TO CHARGING OF INTEREST U/S 234A AND 234B OF THE ACT. IN CONNECTION WITH THE CHARGE OF INTEREST U/S 234B OF THE ACT, LD. ITA 4358/MUM/2013 8 COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E BEING A NOTIFIED PERSON, THERE IS NO CHARGE OF INTEREST. IT IS HIS FURTHER SUBMISSIONS THAT THE RECEIPTS OF THE ASSESSEE ARE SUBJECTED TO TDS. ON THE CONTRARY, SPECIAL COUNSEL FOR THE REVENUE FILED VARIOUS DECIS IONS OF THE TRIBUNAL IN SUPPORT OF CHARGE OF INTEREST. THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DIVINE HOLDING PVT. LT D. WAS RELIED ON BY THE SPL. COUNSEL FOR THE REVENUE. DURING THE REBUTTAL T IME, LD. COUNSEL SUBMITTED THAT THIS ISSUE SHOULD ALSO REVISIT THE F ILE OF THE AO FOR REMOVAL OF CERTAIN INACCURACIES IN CALCULATING THE INTEREST . WE ORDER ACCORDINGLY. THUS, GROUND NO.6 IS ALLOWED FOR STATISTICAL PURPOS ES. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. LD. SPECIAL COUNSEL OF THE REVENUE SUBMITTED THAT T HE LEVIABILITY OF INTEREST U/S 234A, 234B AND 234C OF THE ACT IS MANDATORY. HE RELIED UPON DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF DIVINE HOLDINGS PRIVATE LIMITED IN ITA NO.3334 OF 2010 , WHEREBY HONBLE BO MBAY HIGH COURT HAS HELD THAT IN CASE OF NOTIFIED PARTIES UNDER THE SPE CIAL COURT ACT , INTEREST U/S 234A , 234B AND 234C OF THE ACT HAS TO BE LEVIED AN D CONTENDED THAT THE INTEREST U/S 234 IS MANDATORY. AFTER HEARING BOTH THE PARTIES AND CAREFULLY CONSID ERING THE MATERIAL ON RECORDS INCLUDING RELIED UPON CASE , RESPECTFULLY , FOLLOWING THE ABOVE ORDERS OF THE TRIBUNAL , WE RESTORE THE ISSUE BACK TO THE FILE OF LEARNED ASSESSING OFFICER WHO WOULD LEVY INTEREST AS PER PROVISIONS O F SECTION 234 OF THE ACT AND GIVE CREDIT FOR THE TDS AMOUNT. WE ORDER ACCORDINGL Y. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE COMPANY IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA 4358/MUM/2013 9 ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH FEBRUARY, 2016. # $% &' 8-02-2016 ( ) SD/- SD/- (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 08-02-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI