The ACIT, 1(1), Bhopal V. M/s. M.P.Rajya Sahakari Bank Maryadit, Bhopal

ITA 525/IND/2010

• Counselvise Citation: 52522714 RSA 2010
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 1994-1995
• Appeal Filed On: 03-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: VINAY BHAMORE
• Section: 153A; 147; 263; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.525/IND/2010 AY :1994-95 ACIT-1(1), BHOPAL APPELLANT VS M/S. M.P. RAJYA SAHAKARI BANK MARYADIT, BHOPAL PAN AAAAM 3348 L RESPONDENT APPELLANT BY : SHRI ARUN DEWAN, SR. DR RESPONDENT BY : SHRI VINAY BHAMORE, ADV. O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-I, BHOPAL, DATED 21.4.2010 ON THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN 1. DIRECTING THE ASSESSING OFFICER NOT TO CHARGE INTEREST U/S 234D FOR THE ASSESSMENT YEAR 1994-95 WHILE UPHOLDING THE ORDER OF THE ASSESSING OFFICER WHEN NO APPEAL HAS BEEN PROVIDED AGAINST THE DECISION U/S 244A(2) OF CIT OR CCIT U/S 246A OF THE I.T. ACT AND THE 2 DECISION OF CIT IS FINAL AS PER SEC. 244A(2) REGARDING THE PERIOD OF DELAY ATTRIBUTED TO THE ASSESSEE. 2. DIRECTING THE ASSESSING OFFICER NOT TO CHARGE INTEREST U/S 234D FOR THE ASSESSMENT YEAR 1994-95 EVEN THOUGH THE ASSESSMENT ORDER U/S 244A(2) R.W.S. 254 OF THE I.T. ACT, 1961 WAS PASSED ON 31.12.2008, AFTER THE INSERTION OF SEC. 234D BY THE FINANCE ACT, 2003 W.E.F. 1.6.2003. 2. DURING HEARING, WE HAVE HEARD SHRI ARUN DEWAN, L D. SR. DR AND SHRI VINAY BHAMORE, LD. COUNSEL FOR THE ASSE SSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE LD. CIT(A) IS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER NOT TO CHARGE INTEREST U/S 234D OF THE ACT. ON THE OTHER H AND, LD. COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDE R. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSES SEE FILED ITS RETURN OF INCOME ON 28.10.99 ALONG WITH TDS CERTIFI CATE AMOUNTING TO RS.1,59,98,611/-. THE CRUX OF THE ISSU E IS THAT THE REVENUE IS AGGRIEVED BY THE DIRECTION OF THE LD. CI T(A) TO THE 3 ASSESSING OFFICER NOT TO CHARGE INTEREST U/S 234D F OR ASSESSMENT YEAR 1994-95, EVEN THOUGH, THE ASSESSMEN T ORDER U/S 244A(2) RWS SEC. 254 OF THE ACT WAS PASSED ON 3 1.12.2008 AFTER INSERTION OF SEC. 234D OF THE ACT. BEFORE COM ING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVA NT PORTION OF SEC. 234D: 3 [ INTEREST ON EXCESS REFUND. 234D. (1) SUBJECT TO THE OTHER PROVISIONS OF THIS ACT, WH ERE ANY REFUND IS GRANTED TO THE ASSESSEE UNDER SUB-SECTION (1) OF SECTION 143 , AND ( A ) NO REFUND IS DUE ON REGULAR ASSESSMENT; OR ( B ) THE AMOUNT REFUNDED UNDER SUB-SECTION (1) OF SECTION 143 EXCEEDS THE AMOUNT REFUNDABLE ON REGULAR ASSESSMENT, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF 4 [ONE-HALF] PER CENT ON THE WHOLE OR THE EXCESS AMOU NT SO REFUNDED, FOR EVERY MONTH OR PART OF A MONTH COMPRI SED IN THE PERIOD FROM THE DATE OF GRANT OF REFUND TO THE DATE OF SUCH REGULAR ASSESSMENT. (2) WHERE, AS A RESULT OF AN ORDER UNDER SECTION 154 OR SECTION 155 OR SECTION 250 OR SECTION 254 OR SECTION 260 OR SECTION 262 OR SECTION 263 OR SECTION 264 OR AN ORDER OF THE SETTLEMENT COMMISSION UNDER SUB-SECTION (4) OF SECTION 245D , THE AMOUNT OF REFUND GRANTED UNDER SUB-SECTION (1) OF SECTION 143 IS HELD TO BE CORRECTLY ALLOWED, EITHER IN WHOLE OR IN PART, AS T HE CASE MAY BE, THEN, THE INTEREST CHARGEABLE, IF ANY, UNDER SU B-SECTION (1) SHALL BE REDUCED ACCORDINGLY. EXPLANATION. WHERE, IN RELATION TO AN ASSESSMENT YEAR, AN ASSESSMENT IS MADE FOR THE FIRST TIME UNDER SECTION 147 OR SECTION 153A , THE ASSESSMENT SO MADE SHALL BE REGARDED AS A REGULAR ASSESSMENT FOR THE PURPOSES OF THIS SECTION .] THE LANGUAGE USED IN AFORESAID SEC. IS PLAIN AND UN AMBIGUOUS. THE LEGISLATURE HAS SPECIFICALLY MENTIONED THE DATE OF 4 APPLICABILITY W.E.F. 1.6.2003, THEREFORE, NOTHING P REVENTED THE LEGISLATURE TO MAKE THE PROVISIONS RETROSPECTIVE, I F IT WAS SO INTENDED. THE MERE FACT THAT EARLIER THERE WAS NO P ROVISION TO CHARGE INTEREST ON THE REFUND ISSUED ON PROCESSING OF RETURN CANNOT BY ITSELF A DEFECT. SEC. 234D WAS INTRODUCED BY THE FINANCE ACT, 2003 W.E.F. 1.6.2003, WAS NOT INTRODUC ED WITH REFERENCE TO ANY ASSESSMENT YEAR, ON THE OTHER HAND , THIS PROVISION WILL APPLY TO ALL CASES OF REFUND GRANTED U/S 143(1) BUT SUCH INTEREST COULD BE LEVIED ONLY W.E.F. 1.6.2003, THEREFORE, SEC. 234D OF THE ACT IS APPLICABLE ONLY FROM ASSESS MENT YEAR 2004-05 ONWARDS AND THEREFORE, NO INTEREST COULD BE CHARGED UNDER THAT PROVISION FOR THE PERIOD TO ASSESSMENT Y EAR 2004-05. OUR VIEW IS SUPPORTED BY THE DECISION FROM HONBLE KERLA HIGH COURT IN CIT VS. KERLA CHEMICALS & PROTEINS LTD. (2 010) 323 ITR 584 (KER) AND DIT VS. JECABS CIVIL INCORPORATED /MITSUBISHI CORPORATION (2010) 194 TAXMAN 495 (DEL). EVEN IF SE C. 234D RELATES TO CHARGE OF INTEREST IT WAS IN THE NATURE OF A SUBSTANTIVE PROVISION AS WAS HELD BY THE HONBLE APEX COURT IN THE CASE OF J.K. SYNTHETICS LTD. VS. CTO (1994) 119 CTR (SC) (2 22), 5 THEREFORE, IT CANNOT HAVE RETROSPECTIVE OPERATION, MORESO, WHEN IT WAS NOT SO PROVIDED BY THE LEGISLATURE WHILE INS ERTING SEC. 234D. IN THE CASE OF J.K. SYNTHETICS LTD. (SUPRA), THE HONBLE APEX COURT HAS CATEGORICALLY HELD THAT CHARGING OF INTEREST WOULD BE CONSTRUED AS A SUBSTANTIVE LAW. THE DISCUS SION MADE THEREIN IS REPRODUCED HEREUNDER: 7. IT IS WELL KNOWN THAT WHEN A STATUTE LEVIES A TAX IT DOES SO BY INSERTING A CHARGING SECTION BY WHICH A LIABILITY IS CREATED OR FIXED AND THEN PROCEEDS TO PROVIDE THE MACHINERY TO MAKE THE LIABILITY EFFECTIVE. IT, THEREFORE, PROVIDES THE MACHINERY FOR THE ASSESSMENT OF THE LIABILITY ALREADY FIXED BY THE CHARGING SECTION, AND THEN PROVIDES THE MODE FOR THE RECOVERY AND COLLECTION OF TAX, INCLUDING PENAL PROVISIONS MEANT TO DEAL WITH DEFAULTERS. PROVISION IS ALSO MADE FOR CHARGING INTEREST ON DELAYED PAYMENTS, ETC. ORDINARILY THE CHARGING SECTION WHICH FIXES THE LIABILITY IS STRICTLY CONSTRUED BUT THAT RULE OF STRICT CONSTRUCTION IS NOT EXTENDED TO THE MACHINERY PROVISIONS WHICH ARE CONSTRUED LIKE ANY OTHER STATUTE. THE MACHINERY PROVISIONS MUST, NO DOUBT, BE SO CONSTRUED AS WOULD EFFECTUATE THE OBJECT AND PURPOSE OF THE STATUTE AND NOT DEFEAT THE SAME. [SEE WHITNEY V. IRC 1926 AC 37, CIT V. MAHALIRAM RAMJIDAS [1940] 8 ITR 442 (PC), INDIA UNITED MILLS LTD. V. CEPT [1955] 1 SCR 810 AND GURSAHAI SAIGAI V. CIT [1963] 3 SCR 893]. BUT IT MUST ALSO BE REALIZED THAT PROVISION BY WHICH THE AUTHORITY IS EMPOWERED TO LEVY AND COLLECT INTEREST, EVEN IF CONSTRUED AS FORMING PART OF THE MACHINERY PROVISIONS, IS SUBSTANTIVE LAW FOR THE SIMPLE REASON THAT IN THE ABSENCE OF 6 CONTRACT OR USAGE INTEREST CAN BE LEVIED UNDER LAW AND IT CANNOT BE RECOVERED BY WAY OF DAMAGES FOR WRONGFUL DETENTION OF THE AMOUNT. [SEE BENGAL NAGPUR RAILWAY CO. LTD. V. RUTTANJI RAMJI AIR 1938 PC 67 AND UNION OF INDIA V. A.L. RALLIA RAM [1964] 3 SCR 164 AT 185-190]. OUR ATTENTION WAS, HOWEVER, DRAWN BY MR. SEN TO TWO CASES. EVEN IN THOSE CASES, CIT VS. M. CHANDRA SEKHAR [1985] 44 CTR (SC) 110:[1985] 151 ITR 433 (SC) AND CENTRAL PROVINCES MANGANESE ORE CO. LTD. V. CIT [1986] 58 CTR (SC) 112: [1986] 160 ITR 961 (SC), ALL THAT THE COURT POINTED OUT WAS THAT PROVISION FOR CHARGING INTEREST WAS, IT SEEMS, INTRODUCED IN ORDER TO COMPENSATE FOR THE LOSS OCCASIONED TO THE REVENUE DUE TO DELAY. BUT THEN INTEREST WAS CHARGED ON THE STRENGTH OF A STATUTORY PROVISION, MAY BE ITS OBJECTIVE WAS TO COMPENSATE THE REVENUE FOR DELAY ION PAYMENT OF TAX. BUT REGARDLESS OF THE REASON WHICH IMPELLED THE LEGISLATURE TO PROVIDE FOR CHARGING INTEREST, THE COURT MUST GIVE THAT MEANING TO IT AS IS CONVEYED BY THE LANGUAGE USED AND THE PURPOSE TO BE ACHIEVED. THEREFORE, ANY PROVISION MADE IN A STATUTE FOR CHARGING OR LEVYING INTEREST ON DELAYED PAYMENT OF TAX MUST BE CONSTRUED AS A SUBSTANTIVE LAW AND NOT ADJECTIVAL LAW. SO CONSTRUED AND APPLYING THE NORMAL RULE OF INTERPRETATION OF STATUTES, WE FIND, AS POINTED OUT BY US EARLIER AND BY BHAGWATI, J. IN THE ASSOCIATED CEMENT COS CASE, THAT IF THE REVENUES CONTENTION IS ACCEPTED IT LEADS TO CONFLICTS AND CREATES CERTAIN ANOMALIES WHICH COULD NEVER HAVE BEEN INTENDED BY THE LEGISLATURE. IN THE PRESENT APPEAL, SINCE THE ASSESSMENT YEAR IN VOLVED IS 1994-95, THEREFORE, IN VIEW OF THE ABOVE, NO INTERE ST IS 7 CHARGEABLE PRIOR TO THE ASSESSMENT YEAR 2004-05, CONSEQUENTLY, WE FIND NO INFIRMITY IN THE CONCLUSIO N DRAWN IN THE IMPUGNED ORDER, THEREFORE, THIS APPEAL OF THE REVEN UE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CO NCLUSION OF THE HEARING ON 30 TH JUNE, 2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.6.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE