HINDUSTAN COMPOSITES LTD, MUMBAI V. DCIT 10(2), MUMBAI

ITA 5283/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48690 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 11-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 15-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R S GORADIA
• Keywords: Opportunity of being heard
• Section: 234B; 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H : MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ITA. NO. 5283/MUM/2009 ASSESSMENT YEAR 2005-2006 M/S. HINDUSTAN COMPOSITES LTD. MUMBAI 400 013 PAN AAACH0973N VS. CIT, CITY-6, MUMBAI 400 020. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI R.S. GORADIA FOR RESPONDENT : SHRI R.K. GUPTA ORDER PER V.DURGA RAO, J.M. 1. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE A SSESSEE- COMPANY AGAINST THE ORDER OF THE CIT(A)-VI, MUMBAI DATED 23-06- 09 FOR THE ASSESSMENT YEAR 2005-2006. 2. THE FIRST GROUND OF APPEAL IS RELATING TO DISALL OWANCE UNDER SECTION 14A OF THE ACT. 3. AT THE TIME OF HEARING, BOTH THE PARTIES HAVE A GREED THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. VS. DCIT AND ANOTHER (2010) 328 ITR 81 (BOM.) WHEREIN THE JU RISDICTIONAL HIGH COURT HELD AS UNDER:- THAT THE PROVISIONS OF RULE 8D OF THE RULES WHICH H AVE BEEN NOTIFIED WITH EFFECT FROM MARCH 24, 2008, WOULD APP LY WITH EFFECT FROM ASSESSMENT YEAR 2008-09. EVEN PRIOR TO ASSESSMENT YEAR 2008-09, WHEN RULE 8D WAS NOT APPLI CABLE, THE AO HAD TO ENFORCE THE PROVISIONS OF SUB-SECTION (1) OF SECTION 14A. FOR THAT PURPOSE, THE AO IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INC OME UNDER THE ACT. THE AO MUST ADOPT A REASONABLE BASIS OR ME THOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMST ANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD. THE PROCEEDINGS FOR ASSESSMENT YEAR 2002-03 WOULD STAND REMANDED TO THE AO. THE AO SHOULD DETERMINE AS TO WHETHER THE ASSESSEE HAD INCURRED ANY EXPENDITURE (DIRECT OR INDIRECT) IN RE LATION TO DIVIDEND INCOME/INCOME FROM MUTUAL FUNDS WHICH DOES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER SECTION 14A. THE AO CAN ADOPT A REASONABLE BASIS FOR EFFECT ING THE APPORTIONMENT. WHILE MAKING THAT DETERMINATION, THE AO ITA NO. 5283/MUM/09 M/S HINDUSTAN COMPOSITES LTD. 2 SHOULD PROVIDE A REASONABLE OPPORTUNITY TO THE ASSE SSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT OR GERMANE MATE RIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. L TD. (SUPRA), WE REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE SAID JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT AFTER PROVIDING REASONABL E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. THE SECOND GROUND OF APPEAL IS RELATING TO CHARG ING OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. 6. THE LEARNED COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, HAS SUBMITTED THAT MAT PROVISIONS ARE APPLICABLE TO ASSESSEES COMPANY AND, THEREFORE, THE ASSESSEE IS NOT LIABLE TO PAY ADVANCE TAX AND INTEREST UNDER SECTION 234B AND 234C OF THE ACT. HE FURTHER SUBMITTED THAT THE ISSUE IS COVERED IN FAVO UR OF THE ASSESSEE BY THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-2004. 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REC ORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE HONBLE SUPREME COURT DECISION IN THE CASE OF JCIT VS. ROLTA INDIA LTD. (2011) 330 ITR 470 (S.C.). THE HEAD NOTE OF THE JUDGMENT IS RE PRODUCED BELOW : IT IS CLEAR FROM READING SECTIONS 115JA AND 115JB OF THE INCOME TAX ACT, 1961, THAT THE QUESTION WHETHER A C OMPANY WHICH IS LIABLE TO PAY TAX UNDER EITHER PROVISION D OES NOT ASSUME IMPORTANCE BECAUSE SPECIFIC PROVISION IS MAD E IN THE SECTION SAYING THAT ALL OTHER PROVISIONS OF THE ACT SHALL APPLY TO A MAT COMPANY (SECTION 115JA(4) AND SECTION 115J B(5). SIMILARLY, AMENDMENTS HAVE BEEN MADE IN HE RELEVANT FINANCE ACTS PROVIDING FOR PAYMENT OF ADVANCE TAX UNDER SEC TIONS 115JA AND 115JB. SECTION 234B IS CLEAR THAT IT APPL IES TO ALL COMPANIES. THE PRE-REQUISITE CONDITION FOR APPLICAB ILITY OF SECTION 234B IS THAT THE ASSESSEE IS LIABLE TO PAY TAX UNDER SECTION 208 AND THE EXPRESSION ASSESSED TAX IS DE FINED TO MEAN THE TAX ON THE TOTAL INCOME DETERMINED UNDER S ECTION 143 (1) OR UNDER SECTION 143 (3) AS REDUCED BY THE AMOUNT OF TAX DEDUCTED OR COLLECTED AT SOURCE. THUS, THERE IS NO EXCLUSION OF SECTION 115J/115JA IN THE LEVY OF INTEREST UNDER SECTION ITA NO. 5283/MUM/09 M/S HINDUSTAN COMPOSITES LTD. 3 234B. THE EXPRESSION ASSESSED TAX IS DEFINED TO M EAN THE TAX ASSESSED ON REGULAR ASSESSMENT WHICH MEANS THE TAX DETERMINED ON THE APPLICATION OF SECTION 115J/115JA IN THE REGULAR ASSESSMENT. INTEREST UNDER SECTION 234B IS PAYABLE ON FAILURE T O PAY ADVANCE TAX IN RESPECT OF TAX PAYABLE UNDER SECTION 115JA. 8. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HONBLE SUPREME COURT, THIS GROUND RAISED BY THE ASSESSEE I S DISMISSED. 9. THE THIRD GROUND OF APPEAL IS RELATING TO CALCUL ATION OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT WHICH WAS RAI SED AS ADDITIONAL GROUND BEFORE THE CIT(A) AND CIT(A) HAS NOT DECIDED THE ISSUE. BOTH THE PARTIES AGREED THAT THIS ISSUE MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJU DICATION. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO DECIDE T HE ISSUE IN ACCORDANCE WITH LAW BY GIVING A REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2011. SD/- SD/- (R.S.SYAL) (V.DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATE 27 TH APRIL, 2011 VBP/- ITA NO. 5283/MUM/09 M/S HINDUSTAN COMPOSITES LTD. 4 COPY TO 1. HINDUSTAN POLYAMIDES & FIBRES LTD. 1004 PENINSUL A TOWERS, 10 TH FLOOR, PENINSULA CORPORATE PARK, GANPATRAO KADAM M ARG, LOWER PAREL, MUMBAI 400 013 PAN AAACH3757J 2. ACIT, CIRCLE 6 (3), 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 020. 3. CIT(A)-12, MUMBAI 4. CIT, CITY-6, MUMBAI 5. DR H BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI