DCIT, Chandigarh V. M/s SAB Industries Ltd., Chandigarh

ITA 542/CHANDI/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5397 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH GARG
• Keywords: Bonafide belief; Retrospective amendment
• Section: 143(3); 234B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL: A BENCH: CH ANDIGARH BEFORE SHRI D K SRIVASTAVA, AM AND MS. SUSHMA CHOWL A, JM ITA NO. 542/CHANDI/2010 ASSESSMENT YEAR: 2006-07 D.C.I.T. C-5(1) V M/S SAB INDUSTRIES LTD CHANDIGARH SCO 49-50, SECTOR 26, CHANDIGARH PAN: AACCS 5078 H ITA NO. 536/CHANDI/2010 ASSESSMENT YEAR: 2006-07 M/S SAB INDUSTRIES LTD V D.C.I.T. C-5(1), CHANDIG ARH APPELLANT BY: SHRI BINOD KUMAR RESPONDENT BY: SHRI RAJESH GARG ORDER D K SRIVASTAVA : THESE ARE CROSS-APPEALS FILED BY THE DEPARTMENT A ND THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) DATED 16.2 .2010 AND HENCE THEY ARE BEING DISPOSED OFF BY A CONSOLIDATED ORDER. 2. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.11 .2006 FOR THE YEAR UNDER APPEAL RETURNING TOTAL INCOME AT RS.75,13,050/-. AF TER PROCESSING, THE RETURN WAS TAKEN UP FOR SCRUTINY. THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF EXECUTION OF CIVIL CONTRACTS AND PROVIDING INTERNET SERVICES IN PUNJAB TELECOM CIRCLE INCLUDING PUNJAB, CHANDIGARH, PANCHKULA AND PARTS OF HARYANA AND H.P. THE AO COMPLETED THE ASSESSMENT U/S 143(3) ON 16.12.2008 IN WHICH HE DENIED RELIEF AMOUNTING RS. 1,99,80,074/- CLAIMED BY THE ASSESSEE U/S 80IA. HE ALSO ADDED A SUM OF RS. 9,71,360/- BEING RETENTION MONEY. HE FURTHER CHARGE D INTEREST U/S 234A, 234B AND 234C OF THE INCOME-TAX ACT. 3. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A), THE LD. CIT(A) CONFIRMED THE DENIAL OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IA OF THE INCOME-TAX ACT FOLLOWING THE ORDER OF THIS TRIBUNAL. SHE HOWEVER D ELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF RETENTION MONEY AS ALSO LEVY O F INTEREST U/S 234B AS A RESULT OF DENIAL OF RELIEF U/S 80IA. BOTH THE PARTIES ARE NOW IN APPEAL BEFORE THIS TRIBUNAL. ITA NO. 542/CHANDI/2010: DEPARTMENTS APPEAL 4. GROUND NO. 1 TAKEN BY THE DEPARTMENT READS AS UN DER: 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOU T APPRECIATING THE FACTS OF THE CASE. 5. BOTH THE PARTIES SUBMITTED THAT THE AFORESAID GR OUND IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. GROUND NO. 1 IS THEREFORE DISMISSED. 2 6. GROUND NO. 2 TAKEN BY THE DEPARTMENT READS AS UN DER: 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON MADE ON ACCOUNT OF RETENTION MONEY. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. THE IMPUGNED ADDITION HAS BEEN DELETED BY THE LD. C IT(A) FOLLOWING THE ORDERS OF THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE ASSE SSEES OWN CASE FOR AYS 2001- 02, 2002-03 AND 2004-05. ON BEING ASKED AS TO WHAT HAS HAPPENED IN AY 2003- 04 AND 2005-06, THE LD. AUTHORIZED REPRESENTATIVE F OR THE ASSESSEE SUBMITTED THAT THIS ISSUE WAS NOT INVOLVED IN BOTH THE AFORESAID A SSESSMENT YEARS AND THEREFORE WAS NOT SUBJECT MATTER OF APPEAL BEFORE THE LD. CIT (A) OR BEFORE THIS TRIBUNAL IN THOSE YEARS. TURNING TO THE ASSESSMENT YEAR UNDER A PPEAL, WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE ORDER OF THIS TRIBUNAL FOR DELETING THE IMPUGNED ADDITION. FOLLOWING THE AFORESAID ORDERS OF THIS TRIBUNAL, WE CONFIRM THE ORDER OF LD. CIT(A). THE LD. CIT(A) HAS ALREADY EXTRACTED THE RELEVANT O BSERVATIONS OF THIS TRIBUNAL AND REPRODUCED THEM IN PARA 15 OF HER APPELLATE ORDER A ND THEREFORE THE SAME IS NOT BEING REPRODUCED HERE. GROUND NO.2 TAKEN BY THE DEP ARTMENT IS DISMISSED. 6. GROUND NO. 3 TAKEN BY THE DEPARTMENT READS AS UN DER: 3 WHETHER THE LD. CIT(A) HAS NOT ERRED IN ALLOWING CHARGING OF INTEREST U/S 234B ON THE AMOUNT OF DEDUCTION U/S 80IA WHEREA S DISALLOWANCE OF DEDUCTION U/S 80IA HAS BEEN CONFIRMED IN THE SAID A PPEAL. THE ASSESSEE HAS DELIBERATELY CLAIMED DEDUCTION JUST TO REDUCE I TS TAX LIABILITY. 6 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) HA S CANCELLED THE LEVY OF INTEREST U/S 234B WITH THE FOLLOWING OBSERVATIONS: 19. REGARDING THIS ISSUE, THE JUDGMENT OF THE HON' BLE JURISDICTIONAL HIGH COURT IN THE HARYANA WAREHOUSING CORPORATION (SUPRA ) IS VERY RELEVANT. THE HIGH COURT HELD THAT THE ASSESSEE ACTED BONAFI DE IN CONFORMITY WITH THE DECISION OF THE HIGH COURT, JUST BECAUSE THE DE CISION WAS REVERSED BY THE APEX COURT LIABILITY TO PAY ADVANCE TAX CANNOT FASTENED ON THE ASSESSEE. AT THE RELEVANT POINT OF TIME, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO FORESEE THE DECISION OF THE HON'BLE SUPREME COUR T ON THE POINT. LEX NON GO CO GIT AD IMPOSSIBLE (LAW CANNOT COMPEL YOU TO DO THE IMPOSSIBLE). BEFORE INVOKING SECTION 234B OF THE ACT, IT IS ESSE NTIAL TO SEE WHETHER THE ASSESSEE COMES WITHIN THE SWEEP OF THIS SECTION. TH E PRE-CONDITION FOR INVOKING SEC 234B OF ACT IS THAT THE ASSESSEE MUST BE FASTENED WITH THE LIABILITY TO PAY ADVANCE TAX. AS THE ASSESSEE WAS N OT LIABLE TO MAKE THE 3 PAYMENT OF ADVANCE TAX, THE CASE OF THE ASSESSEE WO ULD NOT COME WITHIN THE AMBIT OF SEC 234B OF THE ACT. 20 SINCE THIS AMENDMENT/CLARIFICATION WAS GIVEN IN THE FINANCE BILL, 2007 IT IS QUITE CLEAR THAT BEFORE THIS DATE, THERE WAS SOME AMBIGUITY WHICH WAS SOUGHT TO BE CLARIFIED. THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THIS CLAIM FOR DEDUCTION U/S 80IA IS VALID. IN J.K. SYNTHETICS V. CTO (1994) 4 SUPREME COURT 276, IT WAS HELD THAT WHERE CLAIM FOR EXEMPTION WAS BONAFIDE BUT DISALLOWED, TAX CAN BE LEVIED BUT NO I NTEREST CAN BE CHARGED. 21. IN MY CONSIDERED OPINION, THE INTEREST WAS NOT LEVIABLE, ALLOWING ASSESSEES GROUND ON THIS ISSUE. 7. THE LD. CIT(A) HAS FOLLOWED THE ORDER OF THE HON 'BLE JURISDICTIONAL HIGH COURT WHILE DELETING THE IMPUGNED LEVY OF INTEREST U/S 234B OF INCOME-TAX ACT. THE DEPARTMENT COULD NOT ESTABLISH THAT THE AFORESA ID JUDGMENT WAS NOT APPLICABLE ON THE FACTS OF THE CASE OF THE ASSESSEE . IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE LD. CIT(A) IN THIS BEHALF IS CO NFIRMED. GROUND NO.3 TAKEN BY THE DEPARTMENT IS DISMISSED. 8. GROUNDS NO. 4 AND 5 (WRONGLY NUMBERED BY THE DEP ARTMENT AS 3 AND 4) TAKEN BY THE DEPARTMENT READS AS UNDER: 4 IT IS PRAYED THAT EH ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO MAY BE RESTORED. 5 THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OFF. 8. AT THE TIME OF HEARING, BOTH THE PARTIES SUBMITT ED THAT THE AFORESAID GROUNDS WERE GENERAL IN NATURE AND DO NOT REQUIRE A NY ADJUDICATION. IN THIS VIEW OF THE MATTER, GROUNDS NOS. 4 AND 5 TAKEN BY THE DE PARTMENT ARE DISMISSED. 9. APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ITA NO. 536/CHANDI/10: ASSESSEES APPEAL 10. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1 THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE DISALLOWANCE OF DEDUCTION OF RS. 1,9 9,80,074/- U/S 80IA(4) IN RESPECT OF THE INCOME DERIVED BY THE ASSESSEE FR OM THE DEVELOPMENT OF ELIGIBLE INFRASTRUCTURE FACILITIES, HOLDING THAT TH E ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IA(4). HOWEVER THE ASSESSEE IS ELIG IBLE FOR THE DEDUCTION U/S 80IA(4). THEREFORE, THE DISALLOWANCE OF RS. 1,9 9,80,074/- MAY PLEASE BE DELETED. 4 THE ASSESSEE CRAVES LEAVE TO ADD, ALTER AND AMEND T HE ABOVE GROUND OF APPEAL BEFORE THE SAME IS HEARD OR DISPOSED OF. IT IS RESPECTFULLY PRAYED THAT THE RELIEF MAY KINDL Y BE ALLOWED TO THE ASSESSEE KEEPING IN VIEW OF THE AFORESAID GROUND OF APPEAL 11. APROPOS GROUND NO. 1, THE LD. AUTHORIZED REPRES ENTATIVE FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE ASSESSEE WAS NOT ENTITLED TO SUCCEED IN VIEW OF THE INSERTION OF EXPLANATION TO SECTION 80IA BY THE FIN ANCE ACT, 2009 WITH RETROSPECTIVE EFFECT. IN THIS VIEW OF THE MATTER, T HE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 12. RESULTANTLY, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED ON 24 JUNE 2011 SD/- SD/- (SUSHMA CHOWLA) (D K SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER CHANDIGARH: THE 24 JUNE 2011 SURESH COPY TO: 1. THE APPELLANT, D.C.I.T. C-5(1), CHANDIGARH 2. THE RESPONDENT, M/S SAB INDUSTRIES LTD. CHANDIGA RH 3. THE CIT(A), CHANDIGARH 4. THE LD. CIT, CHANDIGARH 5. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH ASSISTANT REGISTRAR, ITAT, CHANDIGARH