DCIT 6(2), MUMBAI V. CEBON APPAREL P. LTD, MUMBAI

ITA 5133/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100670 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 29-01-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 21-06-2010
• Court: TRIBUNAL
• Department Lawyers: S K JANGRE
• Assessee Lawyers: J D MISTRY; K K VED
• Section: 43B; 143(3); 80HHC; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO. 5133/M/2010 (AY:2001 - 2002 ) ACIT, CIRCLE - 6(2), R.NO. 563, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 400 020. / VS. M/S. CEBON APPAREL P LTD., UNIT NO.1, NIRMAN KENDRA, DR. E. MOSES ROAD, MAHALAXMI, MUMBAI - 400011. ./ PAN : AAACC2088B ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.K. JANGRE, DR / RESPONDENT BY : SHRI J.D. MISTRY & SHRI K.K. VED / DATE OF HEARING : 23.07.2015 / DATE OF PRONOUNCEMENT :05 .0 8 .2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 2.6.2010 IS AGAINST THE ORDER OF THE CIT (A) - 12, MUMBAI DATED 30.3.2010 FOR THE ASSESSMENT YEAR 2001 - 2002. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUND WHICH READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN LAW BY OBSERVING THAT TILL THE DATE OF FILING OF RETURN, INTEREST U/S 234B SHOULD BE COMPUTED ON THE BASIS OF SHORTFALL IN ADVANCE TAX WITH REFERENCE TO TOTAL INCOME DECLARED IN THE RETURN, WHER EAS, AS PER PROVISIONS O FLAW, IT SHOULD BE WITH REFERENCE TO TAL INCOME DETERMINED IN REGULAR ASSESSMENT. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF GARMENTS. ASSESSEE FILE D THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS.1,43,11,554/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 2,60,96,836/ - . IN THE ASSESSMENT, AO MADE CERTAIN ADDITIONS NAMELY; (I) RS. 1,17,49,730/ - ON ACCOUNT OF EXCESS CLAIM OF DEDUCTION U/S 80HHC OF THE ACT AND (II) DISALLOWANCE OF RS. 35,556/ - U/S 43B OF THE ACT. FURTHER, ASSESSING OFFICER ALSO CHARGED THE INTEREST U/S 234B OF THE ACT ON THE BASIS OF SHORT FALL IN ADVANCE TAX WITH REFERENCE TO TOT AL INCOME DECLARED IN THE RETURN OF INCOME INSTEAD OF TOTAL INCOME DETERMINED THE 2 REGULAR ASSESSMENT, WHICH IS THE CORE ISSUE FOR ADJUDICATION BEFORE THE TRIBUNAL. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. D URING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) GRANTED RELIEF TO THE ASSESSEE IN RESPECT OF COMPUTATION OF INTEREST U/S 234B OF THE ACT AS PER THE DISCUSSION GIVEN IN PARA 4.4 OF THE I MPUGNED ORDER AND PARTLY ALLOWED THE APPEAL . AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON TH E ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 5. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 6. WE HAVE HEARD BOTH PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITI ES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE CIT (A)S ORDER IN GENERA L AND PARA 4.4 IN PARTICULAR, WE FIND THE SAME IS RELEVANT. CONSIDERING THE IMPORTANCE OF THE SAID PARA 4.4 OF THE CIT (A)S ORDER AND FOR THE SAKE OF COMPLE TENESS OF THIS ORDER, THE SAME IS EXTRACTED AS FOLLOWS: 4.4. IN VIEW OF THE ABOVE, THE CONTENTION OF THE ASSESSEE THAT THE ASSESSED TAX SHOULD BE COMPUTED ON THE TOTAL INCOME DECLARED IN THE RETURN AND INTEREST U/S 234B SHOULD BE COMPUTED ON THE AMOUNT BY WHICH THE ASSESSED TAX FALLS SHORT OF ADVANCE TAX. THE DIRECTION OF THE TRIBUNAL IS VERY CLEAR THAT THE PROVISIONS OF SECTION 140A(1B) SHOULD READ IN CONSONANCE WITH SECTION 234B. IN SECTION 234B I T I S D E F I N E D T H A T T H E ASSESSED TAX MEANS TAX ON TOTAL INCOME AS DETERMINED IN A REGULAR ASSESSMENT. READING THE PROVISIONS OF SECTION 140A AND 234B, IT SEEMS THAT IN THE FIRST STAGE, 234B SHOULD BE COMPLETED TILL THE DATE OF FILING OF RETURN ON THE BASIS OF SHORT FALL IN ADVANCE TAX WITH REFERENCE TO THE TOTAL INCOME DECLARED IN THE RETURN AND FOR THE REMAINING PERIOD ON THE BASIS OF TOTAL INCOME ASSESSED U/S 143(1) OR 143(3) AS THE CASE MAY BE. 7. THE ABOVE ORDER OF THE CIT (A) R E L I E D O N THE COORDINATE BENCH OF TRIBUNAL IN THE CASE OF D EUTSCHE BANK A.G. VS. DDIT (IT) VIDE ITA NO. 1668/M2010 (AY 2005 - 06), DATED 10.4.2013 AND ALSO DECISION OF THE TRIBUNAL IN THE CASE OF M/S. C.C. CHOKSHI & CO. VS. ACIT IN ITA NOS. 7791, 9213, 7450 & 8267/MUM/2004 AND 523/MUM/2007, DATED 21.5.2010. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE 3 RELEVANT PORTION OF THE TRIBUNALS ORDER IN THE CASE OF DEUTSCHE BANK A.G. (SUPRA) IS EXTRACTED AS FOLLOWS: - 7.4. THIS ISSUE WAS ELABORATELY DISCUSSED IN THE ORDER OF ITAT IN THE CASE OF ACIT VS. M/S. C.C. CHOKSHI & CO (SUPRA) AS UNDER: - '3.6 THE NEXT DISPUTE WHICH IS RELEVANT TO ONLY A . Y 2000 - 01 AND 2001 - 02 IS REGARDING COMPUTATION OF INTEREST CHARGEABLE UNDER SECTION 234B OF THE ACT . IN THIS CASE ) REGULAR ASSESSMENTS HAD BEEN MADE BY THE AO UNDER SECTION 143(3) AND IN SUCH CASES ) IN CASE) THE ADVANCE TAX PAID BY THE ASSESSEE IS LESS THAN 90 % OF THE ASSESSED TAX THE ASSESSEE IS REQUIRED TO PAY INTEREST AT THE PRESCRIBED RATE FROM FIRST DAY OF NEXT FINANCIAL YEAR TILL THE DATE OF REGULAR ASSESSMENT ON THE AMOUNT BY WHICH ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX. THE ASSESSED TAX HAS BEEN DEFINED IN THE EXPLANATION1 TO SECTION 234B AS TAX PAYABLE ON THE TOTAL INCOME DETERMINED IN THE REGULAR ASSESSMENT AS REDUCED BY THE AMOUNT OF ANY TAX DEDUCTED/ COLLECTED A T SOURCE ETC. SECTION 234B (2) FURTHER PROVIDES THAT) IN CASE) BEFORE COMPLETION OF REGULAR ASSESSMENT) ANY TAX HAS BEEN PAID BY THE ASSESSEE AS SELF ASSESSMENT TAX UNDER SECTION 140A OR OTHERWISE) THE INTEREST UPTO THE DATE OF TAX SO PAID HAS TO BE CALCUL ATED AS PRESCRIBED UNDER SECTION 234B(L) AND THEREAFTER INTEREST IF ANY PAID UNDER SECTION 140A WILL BE REDUCED FROM THE TAX PAID AND INTEREST THEREAFTER SHALL BE CALCULATED ON THE AMOUNT BY WHICH TAX PAID UNDER SECTION 140A TOGETHER WITH ADVANCE TAX FALLS SHORT OF THE ASSESSED TAX. IT MAY ALSO BE NOTED THAT UNDER SECTION 140A THE ASSESSEE IS LIABLE TO PAY TAX ON THE RETURNED INCOME TOGETHER WITH INTEREST PAYABLE UNDER THE PROVISIONS OF SECTION 234A) 234B & 234C OF THE ACT . FURTHER THE EXPLANATION TO SECTIO N 140A PROVIDES THAT IN CASE TAX PAID UNDER SECTION 140A FALLS SHORT OF THE TAX PAYABLE INCLUDING THE INTEREST ) THEN THE TAX PAID SHALL BE FIRST ADJUSTED TOWARDS INTEREST PAYABLE UNDER SECTION 234A) 234B & 234C . SECTION 140(1 B) ALSO PROVIDES THAT INTEREST UNDER SECTION 234B FOR THE PURPOSE OF SECTION 140A SHALL BE COMPUTED ON THE AMOUNT BY WHICH ADVANCE TAX PAID FALLS SHORT OF ASSESSED TAX AND FOR THIS PURPOSE THE ASSESSED TAX HAS BEEN DEFINED TO MEAN THE TAX ON TOTAL INCOME AS DECLARED IN THE RETURN AS REDUCED BY TAX DEDUCTED/ COLLECTED AT SOURCE ETC. THUS INCASE THE PAYMENT MADE UNDER SECTION 140A FALLS SHORT OF TAX PAYABLE U / S . 140A INCLUDING INTEREST) THEN TAX PAID IS TO BE FIRST ADJUSTED TOWARDS INTEREST PAY ABLE UNDER SECTION 234B . 3 . 6.1 THE LIMITED ISSUE RAISED IN THIS APPEAL IS WHETHER THE INTEREST PAYABLE UNDER SECTION 234B HAS FOR THE PURPOSE OF SECTION 140A IS TO BE COMPUTED WITH RESPECT TO THE TAX PAYABLE ON THE RETURNED INCOME OR THE INCOME DETERMINED IN THE R E GULAR ASSESSMENT . THE A . G . CALCULATED THE INTEREST UNDER SECTION 234B ON THE BASIS OF TOTAL INCOME DETERMINED IN THE R E GULAR ASSESSMENT AND ADJUSTED THE SAME AGAINST THE TAX PAID UNDER SECTION 140A AND THE BALANCE AMOUNT OF PAYMENT U / S . 140A WAS CONSIDERED AS TAX PAID AND THE INTEREST FROM TH E DATE ON WHICH TAX WAS PAID UNDER SECTION 140A WAS CALCULATED ON THE OUTSTANDING TAX AFTER ADJUSTING THE ADVANCE PAID AND THE TAX PAID UNDER SECTION 140A . THE ASSESSEE ON THE OTHER HAND CONTENDED THAT THE INTEREST UNDER SECTION 234B AGAINST WHICH THE TAX PAID UNDER SECTION 140A HAS TO BE ADJUSTED FIRST IS REQUIRED TO BE COMPUTED WITH RESPECT TO THE RETURNED INCOME AS THE ASSESSED TAX FOR THE PURPOSE OF SECTION 140A HAS B EEN DEFINED TO MEAN TAX ON THE TOTAL INCOME DECLARED IN THE RETURN AS REDUCED BY AN AMOUNT OF TAX DEDUCTED/ COLLECTED AT SOURCE ETC . THE CIT(A) HAS CONFIRMED THE APPROACH ADOPTED BY THE AD AGAINST WHICH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE BEF ORE THE TRIBUNAL. 3.6.2 WE HAVE HEARD BOTH PARTIES PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE FACTUAL AND LEGAL BACKGROUND RELATING TO THE ISSUE HAS ALREADY BEEN DISCUSSED IN THE PRECEDING PARAS. THE SECTION 140A PROVIDES THAT IN CASE PA YMENT MADE UNDER THE SAID SECTION FALLS SHORT OF THE TAX PAYABLE INCLUDING INTEREST UNDER THE SAID SECTION THEN THE TAX SO PAID SHALL BE FIRST ATTRIBUTED TOWARDS THE INTEREST AND THE BALANCE AMOUNT SHALL BE ADJUSTED AGAINST THE TAX PAYABLE. IN THIS CASE, T HE TAX PAYABLE UNDER SECTION 140A ALSO INCLUDED INTEREST PAYABLE UNDER SECTION 234B . THE ISSUE IS WHETHER THE INTEREST PAYABLE UNDER SECTION 234B WHICH HAS TO BE FIRST ADJUSTED AGAINST THE PAYMENT MADE UNDER SECTION 140A HAS TO BE CALCULATED WITH RESPECT T O TOTAL INCOME AS DECLARED IN THE RETURN OR TOTAL INCOME DETERMINED IN THE REGULAR ASSESSMENT . 3.6.2. WE FIND THAT THE SECTION 140(1B) PROVIDES THAT INTEREST PAYABLE UNDER SECTION 234B, HAS TO BE COMPUTED ON THE AMOUNT BY WHICH THE ADVANCE 4 PAID FALLS SHORT OF ASSESSED TAX AND THE ASSESSED TAX FOR THE PURPOSE OF THIS SUB - SECTION HAS BEEN DEFINED IN THE EXPLANATION TO MEAN THE TAX ON TOTAL INCOME AS DECLARED IN THE RETURN AS REDUCED BY TAX DEDUCTED/ COLLECTED AT SOURCE ETC. THEREFORE, WE AGREE WITH THE SUBMISSION MADE BY ID. A . R THAT THE INTEREST PAYABLE UNDER SECTION 234B FOR THE PURPOSE OF ADJUSTMENT AGAINST THE TAX PAID UNDER SECTION 140A HAS TO BE COMPUTED WITH RESPECT TO ASSESSED TAX DETERMINED ON THE BASIS OF TOTAL INCOME DECLARED IN THE RETURN . BUT THIS IS ONLY FOR THE LIMITED PURPOSE OF ADJUSTMENT OF PAYMENT MADE U/ S. 140A AGAINST INTEREST PAYABLE UNDER SECTION 234B WHILE MAKING COMPUTATION OF INTEREST PAYABLE BY THE ASSESSEE UNDER SECTION 234B, WHICH HAS TO BE COMPUTED WITH RESPECT TO THE TOTAL INCOME DETERMINED IN REGULAR ASSESSMENT AS PER THE DEFINITION OF ASSESSED TAX GIVEN IN SECTION 234B . THE ASSESSEE HAS ALSO FOLLOWED THE SAME PROCEDURE WITH WHICH WE AGREE . THE ORDER OF CIT(A) CONFIRMING THE METHOD FOLLOWED BY THE AO IS THEREFORE SET ASIDE AND THE CLAIM OF THE ASSESSEE IS ALLOWED' . 8. CONSIDERING THE ABOVE, WE FIND THE ORDER OF THE CIT (A) HAS RIGHTLY ADJUDICATED THE MATTER AND IN OUR OPINION, THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 T H A U G U S T , 2015. S D / - S D / - (AMIT SHUKLA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 5 . 8 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI