M/s Laxmi Hospital, Ernakulam V. ACIT, Cochin

ITA 559/COCH/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4544 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-06-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 04-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHAJR
• Assessee Lawyers: C B M WARRIER
• Keywords: Block assessment
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NOS.559 TO 564/COCH/2009 ASST. YEARS:1999-2000 TO 2004-05 M/S. LAXMI HOSAPITAL, DIWANS ROAD, ERNAKULAM. PA NO.AAAFL 4194N VS. THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, KOCHI. (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI CBM WARRIER, C.A. RESPONDENT BY MS. VIJAYAPRABHA,JR.D.R O R D E R PER N.VIJAYAKUMARAN,J.M: ALL THESE APPEALS ARE FILED BY THE ASSESSEE. THE ONLY COMMON ISSUE IS IN RESPECT OF PERIOD FOR WHICH INTE REST U/S.234B IS TO BE CHARGED. THE COMMON ORDER OF TH E LD. CIT(APPEALS) FOR THE ASSESSMENT YEARS 1999-2000 TO 2003- 04 AND SEPARATE ORDER FOR THE ASSESSMENT YEAR 2004- 05 ARE DATED 18-9-2009 OF CIT(APPEALS)-I,KOCHI. 2. AS THE ISSUE BEING COMMON IN ALL THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS. 559 TO 604/COCH/2009 2 3. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND OF APPEAL CHALLENGING THE FINDING OF THE LD. CIT(APPEALS) THA T 154 IS NOT MAINTAINABLE ALONG WITH PERIOD FOR WHICH 234B I NTEREST IS TO BE CHARGED, WHICH ACCORDING TO THE ASSESSEE IS N OT A DEBATABLE ISSUE AS HAS BEEN DECIDED BY THE TRIBUNA L AS WELL AS THE JURISDICTIONAL HIGH COURT. 4. FOR THE PURPOSE OF DISCUSSION, WE WILL TAKE UP T HE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 1999-2000. IN THIS YEAR AN APPLICATION U/S.154 AT THE INSTANCE OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER STAT ING AS UNDER, AS MENTIONED IN PARA.3 OF THE APPELLATE ORDE R: THE SECOND ISSUE IS REGARDING CALCULATION OF INTER EST U/S.234B. THE ASSESSEES CLAIM THAT FOR THE A.YS. 1999- 2000 TO 2003-04, SINCE TOTAL INCOME HAS BEEN DETERM INED U/S.143(1), THE PROVISIONS OF SECTION 234B(3) IS APPLICABLE. THE ASSESSEE ALSO CLAIM THAT IN THE C ASE WHERE DETERMINATION OF TOTAL INCOME U/S.143(1) OR REGULAR ASSESSMENT UNDER 143(3) ARE COMPLETED, THE INTEREST IS TO BE CALCULATED FROM THE DATE OF THE A BOVE PROCEEDINGS TO THE DATE OF THE RE-ASSESSMENTS OR RE - COMPUTATION U/S.153A. THE ASSESSEES CLAIM IS NOT CORRECT FOR THE FOLLOWING REASONS. AS PER SECTION 234B(1) OF IT ACT, WHERE THE ADVANC E TAX PAID BY THE ASSESSEE UNDER THE PROVISIONS OF SECTIO N 210 IS LESS THAN NINETY PER CENT OF THE ASSESSED TAX, T HE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE ITA NOS. 559 TO 604/COCH/2009 3 OF ONE PERCENT (W.E.F.8-9-2003) FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1 ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR TO THE DAT E OF DETERMINATION OF TOTAL INCOME UNDER SUB SECTION (1) OF SECTION 143 AND WHERE A REGULAR ASSESSMENT IS MADE, TO THE DATE OF SUCH REGULAR ASSESSMENT, ON AN AMOUNT E QUAL TO THE ASSESSED TAX OR AS THE CASE MAY BE, ON THE AMOUNT BY WHICH THE ADVANCE TAX AS AFORESAID FALLS SHORT OF ASSESSED TAX. AS PER EXPLANATION 2, THERE UNDE R, WHERE, IN RELATION TO AN ASSESSMENT YEAR, AN ASSESS MENT IS MADE FOR THE FIRST TIME UNDER SECTION 147(OR SEC TION 153A), THE ASSESSMENT SO MADE SHALL BE REGARDED AS A REGULAR ASSESSMENT FOR THE PURPOSE OF THIS SECTION. SINCE PROCESSING OF RETURNS U/S.143(1) IS NOT CONSI DERED AS A REGULAR ASSESSMENT, INTEREST IS CHARGEABLE U/S.234B(1) R.W. EXPLANATION (2) OF THAT SECTION, F OR THE ASSESSMENT YEARS 1999-2000 TO 2003-04, AS SUCH THE ASSESSEE FIRMS REQUEST FOR RECTIFICATION ON THIS P OINT IS REJECTED. IT WAS SUBMITTED BEFORE THE LD. CIT(APPEALS) THAT EXPLANATION (2) TO SECTION 234B WAS NOT APPLICABLE AS THE ASSESSEE HAD FILED RETURN OF INCOME AND THE SAME WA S PROCESSED U/S.143(1). IT IS THE CLAIM OF THE ASSE SSEE THROUGHOUT THE PROCEEDINGS THAT UNDER THE GIVEN SET OF CIRCUMSTANCES SECTION 234B(3) IS APPLICABLE FOR THE REASON THAT THE ASSESSMENT FRAMED U/S.153A WAS A RE-ASSESS MENT OR RE-COMPUTATION OF INCOME DETERMINED EARLIER U/S. 143(1). TO THAT EXTENT, THE LD. COUNSEL RELIED ON THE ORDER OF THE TRIBUNAL IN ITA NOS.960 & 961/COCH/2007 FOR THE ASS ESSMENT ITA NOS. 559 TO 604/COCH/2009 4 YEARS 2001-02 AND 2002-03 DATED 29-6-2009 IN THE CA SE OF B. LAKSHMIKANTAHAN VS. ACIT. THE SAID ORDER OF TH E TRIBUNAL WAS CONFIRMED BY THE JURISDICTIONAL HIGH C OURT ON APPEAL BY THE DEPARTMENT VIDE ORDER DATED 20-01-201 1. THE ASSESSING OFFICER PROCESSED THE RETURN AND DETERMIN ED THE TAX PAYABLE THEREON U/S.143(1) AND BASED ON THE SHO RT PAYMENT OF ADVANCE TAX WITH REFERENCE TO THE REVISE D INCOME ASSESSED, THE ASSESSING AUTHORITY COMPUTED INTEREST PAYABLE U/S.234B(1) FOR THE PERIODS PROVIDED THEREIN. T HE ASSESSEE FILED RECTIFICATION APPLICATION BEFORE THE ASSESSING OFFICER INTER ALIA CONTENDING THAT INTEREST IN REAS SESSMENT COULD BE CHARGED ONLY U/S.234B(3). 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PRECEDE NTS. THE SCOPE OF SECTION 234B IS THAT SECTION 234B, WHICH STANDS IN SUBSTITUTION OF SECTION 215 W.E.F.1-4-19898, PROVID ES FOR INTEREST IN SHORT-PAYMENT OF ADVANCE TAX, WHILE SECTION 215 WOULD TAKE INTO CONSIDERATION, TAX DEDUCTIBLE, EXPLANATION1,WH ICH DEFINES ASSESSED TAX BEFORE AND AFTER AMENDMENT BY THE FI NANCE ACT,2006, WITH EFFECT FROM 1-4-2007 WOULD TAKE INTO CONSIDERATION TAX DEDUCTED AND NOT TAX DEDUCTIBL E. THE PROVISION COMPREHENDS WITH EFFECT FROM 1-4-2007 TAX COLLECTED AT SOURCE IN CONFORMITY WITH SIMILAR AMENDMENTS MADE F OR SECTIONS 234A AND 234C. THERE IS A TOLERANCE LIMIT OF 10% IN RESPECT OF ITA NOS. 559 TO 604/COCH/2009 5 INTEREST UNDER SECTION 234B, SINCE SUCH INTEREST IS LEVIABLE ONLY OF THE SHORTFALL EXCEEDS 90% OF ASSESSED TAX. THE RE IS NO SUCH TOLERANCE LIMIT EITHER FOR SECTION 234A OR 234C. THE CONTROVERSY AS TO WHETHER INTEREST UNDER SECTION 234B IS LEVIAB LE IN PURSUANCE OF AN ORDER UNDER SECTION 143(3), WHERE I NTEREST HAS ALREADY BECOME SUBJECT MATTER IN AN ORDER UNDER SEC TION 143(1), HAS NOW BEEN SET AT REST BY A RETROSPECTIVE AMENDME NT BY THE FINANCE ACT,1995 BY AN AMENDMENT TO SUB-SECTION(1). BLOCK ASSESSMENT HAS ALSO BEEN MADE THE SUBJECT MATTER OF THE PROVISION WITH EFFECT FROM 1-6-2003, WHILE BLOCK AS SESSMENT ITSELF HAS BEEN DISCONTINUED FOR SEARCHES OR REQUISITION M ADE ON OR AFTER 1 ST JUNE,2003. FURTHER, THE FACTS OF THE CASE ON HAND ARE IDENTICAL WITH THAT OF THE HONBLE JURISDICTION AL HIGH COURT REFERRED TO ABOVE. THEREFORE, CONSIDERING T HE SCOPE OF SECTION 234B AND FOLLOWING THE DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND ALLOW ALL THESE APPEALS OF TH E ASSESSEE. ACCORDINGLY, THEY ARE ALLOWED. 6. IN THE RESULT, ALL THESE APPEALS OF THE ASSESSEE ARE ALLOWED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 20 TH JUNE,2011. PM. ITA NOS. 559 TO 604/COCH/2009 6 COPY FORWARDED TO: 1. M/S. LAXMI HOSAPITAL, DIWANS ROAD, ERNAKULAM. 2. THE ACIT., CENTRAL CIRCLE-1, KOCHI. 3. CIT(A)-I, KOCHI. 4. CIT(CENTRAL) KOCHI. 5. D.R.