ADIT, New Delhi V. M/s. Geopetrol International Inc., New Delhi

ITA 4775/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61757 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment
• Section: 234B; 115JB; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C: NEW DELHI) BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO.4775 /DEL/ 2011 (ASSESSMENT YEAR :2008-09) ADIT, CIRCLE-1(2), VS GEOPETROL INTERNATIO NAL INC. INTERNATIONAL TAXATION, THE MIRA CORPORATE SUITE S, NEW DELHI. D-1,1&2, ISHWAR NAGAR, MATHUR ROAD, NEW DELHI. PAN:AAACG 2583M (APPELLANT) (RESPONDENT) ASSESSEE BY :SHRI AJAY VOHRA, ADVOCATE REVENUE BY :SHRI MOHNISH VERMA, CIT, DR. ORDER PER J. SUDHAKAR. REDDY, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- XXIX, NEW DEL HI DATED 29.07.2011. 2. THE FACTS OF THE CASE ARE BROUGHT OUT AT PARAS 3 .1 TO 3.3 OF THE CIT (A) ORDER PAGE 2. THESE ARE EXTRACTED FOR READY REFEREN CE: 3.1 THE APPELLANT IS A NON-RESIDENT COMPANY BASED IS REPUBLIC OF PANAMA. IT FILED A RETURN OF INCOME DEC LARING TOTAL ITA NO.4775/DEL/2011 2 INCOME OF RS.9,24,01,820/- U/S115JB OF THE ACT ON 3 0.09.2009. THE INCOME COMPUTED AS PER THE NORMAL PROVISIONS OF THE ACT WAS RS. 88,10,450/-. THE APPELLANT WAS ENGAGED IN T HE BUSINESS OF EXPLORATION AND DEVELOPMENT OF OIL FIELDS. IT EN TERED INTO A PRODUCTION SHARING CONTRACT ON 16.06.1995 WITH GOVE RNMENT OF INDIA, OIL INDIA LTD. (OIL) AND GEO EMPRO PETROLEUM LTD. WITH RESPECT TO CONTRACT AREA IDENTIFIED AS KHARSANG FIE LD. 3.2 THE APPELLANT HAD CLAIMED A DEDUCTION OF RS. 9,74,01,117/- U/S 80-IB OF THE ACT IN RESPECT OF FI VE NEW WELLS DRILLED IN KHARSANG FILED DURING THE YEAR UNDER ASS ESSMENT ON THE BASIS OF DECISION OF AHMEDABAD BENCH OF TRIBUNA L IN THE CASE OF ACIT VS. NIKO RESOURCES LTD. 123 TTJ 310 DA TED 28.02.2008 WHERE IT WAS HELD THAT EACH NEW WELL DRI LLED BY AN ASSESSEE WOULD CONSTITUTE A NEW UNDERTAKING FOR THE PURPOSE OF DEDUCTION U/S 80 IB. LATER ON THE PROVISIONS OF SEC TION 80-IB WHERE AMENDED BY FINANCES (NO. 2) OF 2009 TO OVERRU LE THE ABOVE MENTIONED DECISION AND IT WAS CLARIFIED THAT ALL THE BLOCKS LICENSED UNDER A SINGLE CONTRACT WHICH HAD BEEN AWA RDED UNDER THE NEW EXPLORATION LICENSING POLICY ANNOUNCED BY T HE GOVERNMENT OF INDIA VIDE RESOLUTION NO. O-9018/22/9 5- ONG- DO-VL DATED 10 TH FEBRUARY 1999 OR HAD BEEN AWARDED IN PURSUANCE OF ANY LAW FOR THE TIME BEING IN FORCE OR HAD BEEN AWARDED BY THE CENTRAL OR STATE GOVERNMENT IN ANY O THER MANNER, WOULD BE TREATED AS SINGLE UNDERTAKING. 3.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS POINTED OUT BY THE ID AO TO THE APPELLANT THAT THE FINANCE (NO. ITA NO.4775/DEL/2011 3 2) ACT,2009, APPROVED BY THE PARLIAMENT ON 19.08.20 09, HAD AMENDED THE PROVISIONS OF SUB-SECTION (9) OF SECTIO N 80-IB OF THE ACT WITH RETROSPECTIVE EFFECT FROM 01.04.2000. THE APPELLANT SUBMITTED A REVISED COMPUTATION OF INCOME VIDE LETTER DATED 10.11.2010 WITHDRAWING ITS CLAIM FRO DEDUCTIO N U/S 80- IB. THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS . 9,91,11,293/- . THE ID. AO ALSO CHARGED INTEREST OF RS. 63,33,588/- U/S 234B OF THE ACT. THE ID. AO HAS NOT GIVEN ANY SPECIFIC REASON IN THE ASSESSMENT ORDER FOR CHARGIN G INTEREST U/S 234 B. 3. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT (A) APPLIED THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF DIRECTOR OF INCOME TAX VS. JACABS CIVIL INCORPORATED 330 ITR 578 (DEL) AND GRANTED RELIEF TO THE ASSESSEE. AGGRIEVED THE REVENUE IS IN APPEAL ON THE FOLLOWING GROUND : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE INTEREST UNDE R SECTION 234 B IS NOT CHARGEABLE IN THE CASE ON THE REVISED COMP UTATION OF INCOME AT A HIGHER FIGURE MADE IN THE LIGHT OF RETR OSPECTIVE AMENDMENT TO SECTION 80 IB BY FINANCE ACT (2) OF 20 09, EVEN THOUGH THE PROVISIONS OF THE SAID SECTION CLEARLY P ROVIDE FOR CHARGING OF SUCH INTEREST. ITA NO.4775/DEL/2011 4 2. THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR AL TER ANY GROUND OF APPEAL AT THE TIME OF BEFORE THE HEARING OF THE APPEAL. 4. LD. DR, MR. MOHNISH VERMA SUBMITTED THAT THE FIR ST APPELLATE AUTHORITY HAS COMMITTED AN ERROR IN APPLYING THE PR OPOSITIONS LAID DOWN IN THE CASE OF MITSUBISHI CORPORATION (SUPRA), FOR THE REASON THAT, THE ASSESSEE HAS IN THIS CASE WITHDRAWN ITS CLAIM FOR DEDUCTION U/S 80 IB ONLY AS A CONSEQUENCE OF SCRUTINY OF ASSESSMENTS. HE ARGUED T HAT IF THE A.O HAD NOT SCRUTINIZED THE RETURN OF INCOME, THE ASSESSEE WOUL D HAVE ESCAPED, NOT ONLY PAYING TAX BUT ALSO INTEREST THEREON. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, MR. AJAY V OHRA, ON THE OTHER HAND, ARGUED THAT THERE IS NO DISPUTE, THAT THE ASS ESSEE WAS LIABLE FOR DEDUCTION U/S 80 IB (9) OF THE ACT AS ON THE DATE O F FILING OF THE RETURN OF INCOME. HE POINTED OUT THAT THE REVENUE HAS ALLOWED DEDUCTION TO THE ASSESSEE IN THE EARLIER YEARS. HE SUBMITTED THAT IT WAS ONLY DUE TO THE RETROSPECTIVE AMENDMENT BY INSERTION OF EXPLANATION TO SECTION 80 IB (9) BY FINANCE ACT (NO.2) 2009, WITH EFFECT FROM 01.04.200 0, THAT THE ASSESSEE HAD BECOME NOT LIABLE FOR THE EXEMPTION U/S 80 IB (9). HE RELIED ON THE FOLLOWING PROPOSITIONS: ITA NO.4775/DEL/2011 5 (A) INTEREST U/S 234 B CANNOT BE LEVIED WHEN THERE IS CHANGE IN LAW WITH RETROSPECTIVE EFFECT. FOR THIS PROPOSIT ION HE RELIED ON THE FOLLOWING CASE LAWS: (I) EMAMI LTD. VS. CIT (2011) 337 ITR 470 (CAL). (II) CIT VS. ANAND PRAKASH 316 ITR 141 (DEL). (B) THAT INTEREST U/S 234B CANNOT BE LEVIED WHEN TH E ENTIRE INCOME OF THE NON-RESIDENT WAS LIABLE FOR DEDUCTION OF TAX U/S 195 OF THE ACT, AND THE ASSESSEE HAD NO OB LIGATION TO PAY ADVANCE TAX. FOR THIS PROPOSITION, HE RELIED ON DIRECTOR OF INCOME TAX VS. JACABS CIVIL INCORPORATE D, 330 ITR 578 (DEL). 6. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT TH E ASSESSEE HAS FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 30. 09.2008. FINANCE ACT (NO.2) OF 2009, INTRODUCED EXPLANATION TO SECTION 8 0IB (9) WITH RETROSPECTIVE EFFECT FROM 01.04.2000. PARLIAMENT PA SSED THE ACT ON 19.08.2009. SUBSEQUENTLY, THE ASSESSEE LOST HIS ENT ITLEMENT FOR EXEMPTION U/S 80IB (9). THE ISSUE IS WHETHER THE ASSESSEE IS LIAB LE FOR PAYMENT OF INTEREST U/S 234B UNDER THESE CIRCUMSTANCES, WHEN AN ADDITIO N TO INCOME HAD AROSE CONSEQUENT TO WITHDRAWAL OF CLAIM FOR EXEMPTION U/S 80IB (9) OF THE ACT. 7. THE HONBLE KOLKATA HIGH COURT IN 337 ITR 470 HE LD AS FOLLOWS: THAT THE LAST DATE OF THE RELEVANT FINANCIAL YEAR WAS MARCH 31, 2001, AND ON THAT DAY, ADMITTEDLY, THE ASSESSEE HAD NO LIABILITY ITA NO.4775/DEL/2011 6 TO PAY ANY AMOUNT OF ADVANCE TAX IN ACCORDANCE WITH THE LAW THEN PREVAILING. THE AMENDED PROVISIONS OF SECTION 115JB HAVING COME INTO FORCE WITH EFFECT FROM APRIL 1,200 1, THE ASSESSEE COULD NOT BE HELD A DEFAULT WITH RESPECT T O PAYMENT OF ADVANCE TAX. ON THE LAST DATE OF THE FINANCIAL YEAR PRECEDING THE RELEVANT ASSESSMENT YEAR, AS THE BOOK PROFITS OF TH E ASSESSEE IN ACCORDANCE WITH THE THEN PROVISION OF LAW WERE NIL, THERE WERE NO ADVANCE TAX PAYABLE WITHIN THE LAST DAY OF THE F INANCIAL YEAR PRECEDING THE RELEVANT ASSESSMENT YEAR AS PROVIDED IN SECTIONS 207 AND 208 OR WITHIN THE DATES INDICATED IN SECTIO N 211. INTEREST COULD NOT BE LEVIED UNDER SECTIONS 234B AN D 234C. 8. THE JURISDICTIONAL HIGH COURT IN THE CASE OF COM MISSIONER OF INCOME TAX VS. ANAND PRAKASH 316 ITR 141 (DEL) HELD AS F OLLOWS :- THAT THE CONCLUSION OF THE TRIBUNAL THAT THE LEVY OF INTEREST UNDER SECTION 234B OF THE ACT WAS PENAL IN NATURE W AS INCORRECT. LEVY OF INTEREST UNDER SECTION 234B WAS COMPENSATORY IN NATURE. THE ULTIMATE CONCLUSION OF THE TRIBUNAL AS REGARDS DELETION OF THE LEVY OF INTERES T UNDER SECTION 234B OF THE ACT COULD NOT BE INTERFERED WITH BECAUS E INTEREST UNDER SECTION 234B WAS CLEARLY BY WAY OF COMPENSATI ON. THE ASSESSEE HAD NOT WITHHELD ANY MONEY BELONGING TO TH E GOVERNMENT AND THE INTEREST PAYABLE ON ACCOUNT OF E NHANCED COMPENSATION WAS UNKNOWN TO THE ASSESSEE ON THE DAT E OF COMPLETION OF ASSESSMENT. THEREFORE, THE ASSESSEE C OULD NOT HAVE INCLUDED THE INTEREST RECEIVED ON ENHANCED COM PENSATION ITA NO.4775/DEL/2011 7 IN THE ASSESSMENT YEAR WHILE ESTIMATING HIS INCOME FOR THE PURPOSES OF CALCULATION OF ADVANCE TAX FOR THE RELE VANT YEARS. THE GOVERNMENT HAD DELAYED THE PAYMENT OF COMPENSAT ION TO THE ASSESSEE AND THERE WAS NO LOSS TO THE REVENUE. THEREFORE, THERE WAS NO QUESTION OF LEVYING INTEREST UNDER SEC TION 234B OF THE ACT. 9. FOLLOWING PROPOSITIONS LAID DOWN IN THESE CASE L AWS, WE HAVE TO NECESSARILY HOLD THAT THE ASSESSEE IS NOT LIABLE FO R INTEREST U/S 234B. 10. WE ALSO UPHOLD THE FINDINGS OF THE CIT (A) THAT THE PROPOSITIONS LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE O F MITUSUBISHI CORPORATION 330 ITR 578 APPLY TO THE FACTS OF THE CASE. 11. IN THE RESULT, WE DISMISS THIS APPEAL OF THE RE VENUE. ORDER PRONOUNCED IN OPEN COURT ON 03/07/ 20 12. SD/- SD/- (CHANDRA MOHAN GARG) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 3 RD DAY OF JULY 2012 S.SINHA COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), NEW DELHI. AR,ITAT NEW DELHI.