DCIT CIR 2(2)(2), MUMBAI V. MAHINDRA AUTOMOBILE DISTRIBUTOR P. LTD, MUMBAI

ITA 5625/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0883 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 14-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MILESH DARUAR
• Keywords: Capital asset; Wholly owned subsidiary
• Section: 143(3); 234B; 6

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5625/MUM/2015 ASSESSMENT YEAR: 2012-13 DCIT, CIRCLE-2(2)(2), ROOM NO.549, AAYAKAR BHAVAN M.K. ROAD, MUMBAI-400020 / VS. M/S MAHINDRA AUTOMOBILE DISTRIBUTOR PVT. LTD. AUTOMOTIVE SECTOR DIV. ADMIN. BLDG. 02 ND FLOOR, AKURLI ROAD, KANDIVALI (E), MUMBAI-400101 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO.AAACD3923C % & $ ' / DATE OF HEARING : 23/01/2018 & $ ' / DATE OF ORDER: 23/01/2018 ! / REVENUE BY SHRI T.A. KHAN-DR !'# $ ! / ASSESSEE BY SHRI MILESH DARU-AR ITA NO. 5625/MUM/2015 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR PRIVATE LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 05/09/2015 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, DELETING THE INTEREST CHARGED U/S 234B AND 234C OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) H OLDING THAT THE ASSESSEE BECAME AWARE THE INSTALLMENTS OF ADVANCE TAX HAD TO BE PAID ONLY ON 25/04/2012 I.E. EFFECTIVE OF DEMERGER, WITHOUT APPRECIATING THE FAC T THAT CHARGING OF INTEREST U/S 234B AND 234C IS MANDATORY . 2. DURING HEARING, THE LD. DR, SHRI T.A. KHAN, ADVANCED ARGUMENTS WHICH IS IDENTICAL TO THE GROUND RAISED BY CONTENDING THAT CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT IS MANDATORY IN NATURE, THEREFO RE, THE LD. ASSESSING OFFICER HAD NO DISCRETION. ON THE OTH ER HAND, SHRI MILESH DARU, LD. COUNSEL FOR THE ASSESSEE, DEF ENDED THE IMPUGNED ORDER BY CONTENDING THAT THE SANCTION OF DEMERGER FROM HON'BLE HIGH COURT CAME ON 30/03/2012 , WHICH WAS RECEIVED BY THE ASSESSEE ON 19/04/2012 FO R WHICH OUR ATTENTION WAS INVITED TO PAGE-28 OF THE P APER BOOK. IT WAS PLEADED THAT THE ASSESSEE WAS NOT AWA RE ITA NO. 5625/MUM/2015 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR PRIVATE LTD. 3 BEFORE THAT DATE AND THERE WAS ENOUGH LOSS TO THE A SSESSEE. RELIANCE WAS PLACED UPON THE DECISION IN THE CASE O F M/S ULTRATECH CEMENT LTD. VS DCIT (ITA NO.7646 AND 7647/MUM/2007) ORDER DATED 20/08/2009 AND HON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S PRIME SECURITI ES LTD. VS ACIT 333 ITR 464 (BOM.), ORDER DATED 20/12/ 2010. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS O F DESIGNING, MANUFACTURING AND MARKETING OF VEHICLES, DECLARED TOTAL INCOME OF RS.21,41,71,730/- IN ITS R ETURN FILED ON 28/09/2012, WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON THE RETURNED INCOME. THE CASE OF THE ASS ESSEE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICE U/S 14 3(2) AND 142(1), ALONG WITH QUESTIONNAIRE WERE ISSUED AND SE RVED UPON THE ASSESSEE. THE ASSESSEE ATTENDED ASSESSMEN T PROCEEDINGS AND FILED DETAILS, AS CALLED FOR, FROM TIME TO TIME AND THE CASE WAS DISCUSSED (AS IS EVIDENT FROM PARA-2 OF THE ASSESSMENT ORDER). THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT. IT WAS DIRECTED THAT TAX LIABIL ITY AND ITA NO. 5625/MUM/2015 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR PRIVATE LTD. 4 INTEREST, WHEREVER APPLICABLE, ARE TO BE COMPUTED A S PER ITNS-150A. THE ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSION ER OF INCOME TAX (APPEAL) CHALLENGING THE CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT, AMOUNTING TO RS.1,58, 150/- , WHEREIN, CONSIDERING THE FACTUAL MATRIX AND FOLLO WING THE DECISION OF THE TRIBUNAL IN THE CASE OF ULTRATECH C EMENT LTD. (SUPRA), IT WAS HELD THAT THERE WAS NO POSSIBI LITY OF PAYING THE ADVANCE TAX AND THUS THE INTEREST CHARGE D U/S 234B AND 234C OF THE ACT WAS ORDERED TO BE DELETED. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS T RIBUNAL. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT THE MATTER OF DEMERGER WAS DECIDED BY HON'BLE BOMBAY HIGH COURT A ND AS PER ORDER-SHEET (PAGE-28 OF THE PAPER BOOK), THE ORDER WAS DELIVERED ON 19/04/2012 AND 23/04/2012, THE CERTIFIED COPY OF THE ORDER WAS SUBMITTED BY THE AS SESSEE TO THE REGISTRAR OF THE COMPANIES ON 23/04/2012 (PAGE- 29 OF ITA NO. 5625/MUM/2015 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR PRIVATE LTD. 5 THE PAPER BOOK). IN VIEW OF THIS UNCONTROVERTED FAC T, THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S ULTRATE CH CEMENT LTD. VS DCIT (SUPRA) (PAGE-31 TO 44 OF THE P APER BOOK) CLEARLY COMES TO THE RESCUE OF THE ASSESSEE. THE HON'BLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 20/12/2010 IN THE CASE OF PRIME SECURITIES LTD. (20 11) 333 ITR 464 (BOM.) HELD AS UNDER:- 1. BY THIS APPEAL THE APPELLANT CHALLENGES THE ORD ER PASSED BY THE INCOME- TAX APPELLATE TRIBUNAL, MUMBAI BENCH 'I' IN I. T. A. NO. 5639/BOM/95 RELATING TO THE ASSESSMENT YEAR 1991-92 . 2. THE FACTS WHICH ARE RELEVANT ARE THAT THE ASSESS EE FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1991-92 DECLARING TOTAL INCOME AT RS.16,62,730 ON DECEMBER 31, 1991. THIS RETURN WAS SIGNED AND VERIFIED BY ONE SHRI BALASUBRAMANIAM IYER, WHO WAS THE SECRETARY OF THE COMPANY. THE ASSESSING OFFICER ADDRESSED A LETT ER TO THE ASSESSEE ON OCTOBER 9, 1992, AS TO WHY THE AFORESAI D RETURN SHOULD NOT BE TREATED AS AN INVALID RETURN BECAUSE THE RET URN OF INCOME WAS REQUIRED TO BE SIGNED AND VERIFIED BY A DIRECTOR OF THE COMPANY OR ITS MANAGING DIRECTOR. THE ASSESSEE THEREUPON FILED ANO THER RETURN ON OCTOBER 15, 1992. THE ASSESSING OFFICER INFORMED TH E ASSESSEE BY HIS LETTER DATED OCTOBER 16, 1992, THAT THE EARLIER RET URN FILED ON DECEMBER 31, 1991, WAS INVALID RETURN AND THE RETUR N FILED ON OCTOBER 15, 1991, ALONE WAS TO BE TREATED AS THE OR IGINAL RETURN OF INCOME. THE ASSESSEE DISPUTED THIS FINDING ON THE G ROUNDS THAT THE PROVISIONS OF SECTION 139(9) AND 292B OF THE ACT SA VED THE RETURN OF INCOME AS ORIGINALLY FILED. THE LEARNED ASSESSING O FFICER HELD THAT THE PROVISIONS OF SECTION 139(9) HAD ENUMERATED THE DEF ECTS FOR WHICH OPPORTUNITY WAS REQUIRED TO BE GIVEN FOR REMOVAL. T HE PROVISIONS OF SECTION 140 WERE INHERENT. IN SHORT THE ASSESSING O FFICER HELD THAT IF THE RETURN WAS NOT SIGNED AND VERIFIED BY THE PROPE R PERSON IT COULD NOT BE CONSIDERED TO BE A RETURN AT ALL. CONSEQUENT LY, THE ASSESSING OFFICER LEVIED INTEREST UNDER SECTION 234A FOR LATE FILING OF HIS RETURN OF INCOME. NEXT THE ASSESSING OFFICER NOTED THAT IN THE RETURN OF INCOME FILED ON OCTOBER 15, 1992, THE ASSESSEE HAD CLAIMED AN EXEMPTION OF RS. 2,04,99,060 UNDER SECTION 47(V) ON SALE OF CAPITAL ASSETS TO THE HOLDING COMPANY-M/S. GREAT EASTERN SH IPPING LTD., WHICH HAD OWNED THE 100 PER CENT. SHARES OF THE ASS ESSEE-COMPANY. IN MARCH 1992, THE ASSESSEE-COMPANY HAD ISSUED 6,50 ,000 SHARES TO VARIOUS PERSONS WHICH RESULTED IN REDUCING THE HOLD ING OF M/S. GREAT EASTERN SHIPPING CO. LTD. FROM 100 PER CENT. TO 43 PER CENT. THEREFORE, THE EXEMPTION OF RS. 2,04,99,060 BEING G AIN ON SALE OF CAPITAL ASSETS WAS REQUIRED TO BE WITHDRAWN IN ACCO RDANCE WITH THE ITA NO. 5625/MUM/2015 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR PRIVATE LTD. 6 PROVISIONS OF SECTION 47A OF THE ACT AND INTEREST U NDER SECTION 234B WAS CHARGED ON THIS AMOUNT. 3. THE CASE OF THE APPELLANT IS THAT THERE WAS NO D ISPUTE BETWEEN THE PARTIES THAT IN VIEW OF THE ISSUANCE OF SHARES BY T HE ASSESSEE- COMPANY IN THE MONTH OF MARCH, 1992, THE ASSESSEE I S ENTITLED TO DEDUCTION UNDER SECTION 47(V) OF THE ACT. THE TRIBU NAL HAS HELD THAT THE APPELLANT IS LIABLE TO PAY INTEREST UNDER SECTI ON 234B OF THE INCOME-TAX ACT MAINLY RELYING ON THE JUDGMENT OF TH E SUPREME COURT IN THE CASE OF CIT V. ANJUM M. H. GHASWALA [2001] 252 ITR 1 . THE TRIBUNAL HAS HELD THAT THE PROVISIONS OF SECTION 23 4B ARE MANDATORY AND THEREFORE INTEREST UNDER SECTION 234B IS LIABLE TO BE CHARGED. 4. THE LEARNED COUNSEL APPEARING FOR THE PETITIONER URGED BEFORE US THE FOLLOWING POINTS : (I) NO INTEREST CAN BE CHARGED UNDER SECTION 234B O N A CONSTRUCTION OF SECTIONS 234B, 210 AND 209 OF THE ACT. (II) INTEREST CANNOT BE LEVIED RETROSPECTIVELY ON T HE BASIS OF A SUBSE QUENT EVENT. (III) INTEREST CANNOT BE LEVIED ON THE PRINCIPLE TH AT THE LAW DOES NOT EXPECT THE PERFORMANCE OF AN IMPOSSIBLE ACT. (IV) AN INTERPRETATION OF SECTION 234B OF THE ACT W HICH RENDERS AN ASSESSEE LIABLE FOR INTEREST THEREUNDER BASED ON A SUBSEQUENT EVENT, WOULD RENDER SECTION 234B UNCONSTITUTIONAL AS IT WO ULD BE VIOLATIVE, INTER ALIA, OF ARTICLE 14 OF THE CONSTITUTION OF IN DIA. 5. THE LEARNED COUNSEL SUBMITTED THAT WHEN THE APPE LLANT/ASSESSEE SUBMITTED THE RETURN AND PAID THE ADVANCE TAX, THE APPELLANT WAS ENTITLED TO EXEMPTION UNDER SECTION 47(V) OF THE AC T, THE APPELLANT CEASED TO BE ENTITLED TO THAT EXEMPTION IN THE NEXT FINANCIAL YEAR AND THEREFORE LIABILITY TO PAY TAX ON THAT TRANSACTION AROSE. THE LEARNED COUNSEL INVITED OUR ATTENTION TO THE JUDGMENT OF TH E DIVISION BENCH OF THIS COURT IN A PETITION FILED BY THE APPELLANT DAT ED APRIL 27, 2009, PRIME SECURITIES LTD. V. VARINDER MEHTA, ASST. CIT [2009] 317 ITR 27 (BOM), SPECIALLY THE FOLLOWING OBSERVATIONS FROM TH AT JUDGMENT (PAGE 35) : 'IN THE INSTANT CASE, WHEN THE PETITIONER FILED ITS RETURN FOR THE PRE VIOUS YEAR 1990-91, THE PETITIONER WAS A FULLY OWNE D SUBSIDIARY OF GREAT EASTERN SHIPPING COMPANY LTD. THE PETITIONER CEASED TO BE A FULLY OWNED SUBSIDIARY ONLY AFTER MARCH, 1992. THE DEFECT IN SIGNATURE WAS REMOVED ON OCTOBER 15, 1992, BUT IN RESPECT OF THE SAME ASSESS MENT YEAR 1991-92. IN OUR OPINION, THE SUBSEQUENT E VENT CANNOT RESULT IN HOLDING THAT THE RETURN AS ORIGINALLY FIL ED WAS NOT IN SUB STANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING T O THE INTENT OR PUR POSE OF THE ACT ON THE DATE THE RETURN WAS FILED. T HE TEST TO BE APPLIED IS WHETHER ON THE DATE THE ORIGINAL RETURN WAS FILED WAS THE RETURN IN CONFORMITY WITH OR ACCORDING TO THE PURPO SE OF THE ACT. ON THE DATE THE RETURN WAS FILED THE PETITIONER WAS AD MITTEDLY A WHOLLY OWNED SUBSIDIARY OF GREAT EASTERN SHIPPING. IT IS T RUE THAT THE RETURN WAS INVALID AS ORIGINALLY FILED BECAUSE OF A DEFECT IN THE PERSON SIGNING THE RETURN. BUT BY VIRTUE OF SECTION 139(9) THAT DEFECT COULD BE CURED AND WAS IN FACT CURED. THOUGH THE DEFECT W AS CURED ON ITA NO. 5625/MUM/2015 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR PRIVATE LTD. 7 OCTOBER 15, 1992 IT WOULD RELATE BACK TO DECEMBER 3 1, 1991, THE DATE OF ORIGINAL FILING OF THE RETURN. ONCE THE RET URN IS VALID AND IN CONFORMITY WITH THE INTENDED PURPOSE OF THE ACT, IN OUR OPINION, THEREFORE, ON THIS COUNT ALSO, THE PETITION WILL HA VE TO BE ALLOWED.' 6. RELYING ON THESE OBSERVATIONS THE LEARNED COUNSE L SUBMITS THAT THIS JUDGMENT HAS BECOME FINAL BETWEEN THE PARTIES. AS A RESULT OF THIS, IT CAN BE SAID THAT THE ORIGINAL RETURN THAT WAS FILED BY THE APPELLANT WAS IN CONSONANCE WITH THE LAW AND ALSO T HE ADVANCE TAX THAT WAS DEPOSITED BY THE APPELLANT WAS IN CONSONAN CE WITH THE LAW AND THEREFORE, THERE WAS NO DEFAULT. THE LEARNED CO UNSEL SUBMITS THAT PROPER READING OF THE JUDGMENT OF THE SUPREME COURT IN GHASWALA'S CASE [2001] 252 ITR 1 REFERRED TO ABOVE SHOWS THAT INTEREST UNDER SECTION 234B BECOMES PAYABLE ON THERE BEING A DEFAU LT. IN THE PRESENT CASE AS THE APPELLANT HAS NOT COMMITTED ANY DEFAULT IN PAYMENT OF ADVANCE TAX, AS ADVANCE TAX WAS PAID IN ACCORDANCE WITH LAW, THERE IS NO QUESTION OF THE APPELLANT BEING LI ABLE TO PAY INTEREST UNDER SECTION 234B. 7. THE LEARNED COUNSEL APPEARING FOR THE RESPONDENT , ON THE OTHER HAND, SUBMITTED THAT EVEN IF IT IS ASSUMED THAT ADV ANCE TAX WAS PAID LESS OR SHORT BY THE APPELLANT, BECAUSE OF ANY BONA FIDE MISTAKE, THEN ALSO THE INTEREST UNDER SECTION 234B HAS TO BE CHAR GED. HE RELIED ON THE JUDGMENT OF THE DIVISION BENCH OF THE DELHI HIG H COURT IN THE CASE OF CIT V. INSILCO LTD. [2010] 321 ITR 105 . 8. NOW, IF IN THE LIGHT OF THESE RIVAL SUBMISSIONS THE PROVISIONS OF LAW ARE PERUSED, IT BECOMES CLEAR THAT THE APPELLANT WO ULD NOT BE LIABLE TO PAY INTEREST UNDER SECTION 234B OF THE ACT. SECT ION 234B, ESPECIALLY SUB-SECTION (1) THEREOF WHICH IS RELEVAN T FOR OUR PURPOSE READS AS UNDER : '234B. (1) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION, WHERE, IN ANY FINANCIAL YEAR, AN ASSESSEE WHO IS LIABLE TO PA Y ADVANCE TAX UNDER SECTION 208 HAS FAILED TO PAY SUCH TAX OR, WH ERE THE ADVANCE TAX PAID BY SUCH ASSESSEE UNDER THE PROVISIONS OF S ECTION 210 IS LESS THAN NINETY PER CENT OF THE ASSESSED TAX, THE ASSES SEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF ONE PER CENT. FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1S T DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR TO THE DATE OF DETERM INATION OF TOTAL INCOME UNDER SUB-SECTION (1) OF SECTION 143 AND WHE RE A REGULAR ASSESSMENT IS MADE, TO THE DATE OF SUCH REGULAR ASS ESSMENT, ON AN AMOUNT EQUAL TO THE ASSESSED TAX OR, AS THE CASE MA Y BE, ON THE AMOUNT BY WHICH THE ADVANCE TAX PAID AS AFORESAID F ALLS SHORT OF THE ASSESSED TAX.' 9. PERUSAL OF THE ABOVE PROVISIONS SHOWS THAT LIABI LITY TO PAY INTEREST ARISES ON FAILURE OF THE ASSESSEE TO PAY ADVANCE TA X UNDER SECTION 208 OR ADVANCE TAX PAYABLE UNDER SECTION 210 IS PAI D LESS THAN 90 PER CENT. PERUSAL OF THE PROVISIONS OF SECTIONS 208 AND 209 SHOWS THAT FOR THE PURPOSE OF PAYMENT OF ADVANCE TAX THE ASSESSEE HAS TO ESTIMATE HIS CURRENT INCOME AND THEN HE HAS TO CALC ULATE INCOME-TAX ON THAT INCOME AT THE RATE IN FORCE IN THE FINANCIA L YEAR. THUS, THE AMOUNT OF ADVANCE TAX IS TO BE DECIDED BY THE ASSES SEE AFTER ESTIMATING HIS CURRENT INCOME AND THEN APPLYING LAW IN FORCE FOR DECIDING THE AMOUNT OF TAX. IT IS AN ADMITTED POSIT ION IN THE PRESENT CASE THAT THE DATE ON WHICH THE APPELLANT PAID THE ADVANCE TAX IT HAD ITA NO. 5625/MUM/2015 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR PRIVATE LTD. 8 ESTIMATED ITS INCOME AND LIABILITY FOR PAYMENT OF A DVANCE TAX IN ACCORDANCE WITH LAW THAT WAS IN FORCE. THEREFORE, I T IS OBVIOUS THAT THERE WAS NO FAILURE ON THE PART OF THE APPELLANT T O PAY ADVANCE TAX IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 208 A ND 209. SO FAR AS THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF GH ASWALA [2001] 252 ITR 1 IS CONCERNED, THE SUPREME COURT WAS CONCERNED WITH THE POWERS OF THE SETTLEMENT COMMISSION IN GRANTING WAI VER OF INTEREST AND FOR THAT PURPOSE THE SUPREME COURT CONSIDERED T HE PROVISIONS OF SECTIONS 234A, 234B AND 234C. THE SUPREME COURT IN NO UNCERTAIN TERMS HELD THAT THE INTEREST IS COMPENSATORY IN NAT URE. THE COURT READ THE PROVISIONS OF SECTIONS 234A, 234B AND 234C AS MANDATORY IN CHARACTER HOLDING THAT AFTER THE AMENDMENT IN THE P ROVISIONS IN THE FINANCE ACT, 1987, THAT WITH THE USE OF THE EXPRESS ION 'SHALL' THEREIN THE LEGISLATURE CLEARLY INDICATED THAT ITS INTENTIO N TO MAKE THE COLLECTION OF STATUTORY INTEREST MANDATORY. IT IS F OR THIS PURPOSE THAT THE COURT PROCEEDED TO DECIDE THAT EVEN THE SETTLEM ENT COMMISSION WHICH WAS VESTED WITH THE VAST POWER HAD NO POWER T O WAIVE THE INTEREST PAYABLE UNDER THESE PROVISIONS. GOING BY T HIS INTERPRETATION OF SECTIONS 234A, 234B AND 234C AS GIVEN BY THE CON STITUTION BENCH OF THE SUPREME COURT, IT IS CLEAR THAT THE INTEREST IS PAYABLE IN CASE THE ADVANCE TAX IS NOT PAID IN CONSONANCE WITH THE LAW IN FORCE AT THE TIME WHEN THE ADVANCE TAX IS PAID AND THERE IS A DE FAULT. THEREFORE, FOR CHARGING INTEREST UNDER SECTION 234B, COMMITTIN G OF DEFAULT IN PAYMENT OF ADVANCE TAX IS CONDITION PRECEDENT. PERU SAL OF THE JUDGMENT OF THE DELHI HIGH COURT, WHICH IS RELIED O N BY THE LEARNED COUNSEL APPEARING FOR THE RESPONDENT, SHOWS THAT IN THAT CASE ALSO THE DELHI HIGH COURT HAS HELD THAT FOR CHARGING OF INTEREST ESTABLISHMENT OF DEFAULT IN PAYMENT OF ADVANCE TAX IS NECESSARY. IN THE PRESENT CASE, IT IS NOBODY'S CASE THAT THE APPE LLANT AT THE TIME OF PAYMENT OF ADVANCE TAX HAS COMMITTED ANY DEFAULT OR THAT PAYMENT OF ADVANCE TAX MADE BY THE APPELLANT WAS NOT IN CON SONANCE WITH LAW. THE DIVISION BENCH OF THIS COURT IN ITS JUDGME NT IN THE CASE OF THE APPELLANT, REFERRED TO ABOVE, HAS HELD THAT THE RETURN FILED BY THE APPELLANT WAS IN CONSONANCE WITH LAW AND THERE WAS ONLY A FORMAL DEFECT AND THE MOMENT THAT DEFECT WAS CURED, THE RE TURN RELATED BACK TO THE ORIGINAL DATE. IN OUR OPINION, WHEN THE SUPR EME COURT IN GHASWALA'S CASE [2001] 252 ITR 1 SAYS THAT CHARGING OF INTEREST UNDER SECTION 234B IS MANDATORY, WHAT IT REALLY MEA NS IS THAT ONCE THE ASSESSEE IS FOUND LIABLE TO PAY INTEREST, THEN RECOVERY OF INTEREST IS MANDATORY AND RECOVERY OF THAT INTEREST CANNOT B E WAIVED FOR ANY REASON. BUT FOR CHARGING INTEREST UNDER THAT SECTIO N, IT HAS TO BE ESTABLISHED THAT THE ASSESSEE HAS COMMITTED DEFAULT IN PAYMENT OF ADVANCE TAX. IN OUR OPINION, AS IN THE PRESENT CASE IT IS NOBODY'S CASE THAT THE APPELLANT HAS COMMITTED A DEFAULT IN PAYME NT OF ADVANCE TAX WHEN IT ACTUALLY PAID IT, THE APPELLANT CANNOT BE H ELD LIABLE TO PAY INTEREST UNDER SECTION 234B. IN SO FAR AS THE OBSER VATIONS IN THE ORDER OF THE TRIBUNAL, THAT THE APPELLANT SHOULD HAVE ANT ICIPATED THE EVENTS THAT TOOK PLACE IN MARCH, 1992 ARE CONCERNED, IN OU R OPINION, THEY HAVE NO SUBSTANCE. IN OUR OPINION, IT IS RIGHTLY SU BMITTED THAT IT WAS NOT POSSIBLE FOR THE APPELLANT TO ANTICIPATE THE EV ENTS THAT WERE TO TAKE PLACE IN THE NEXT FINANCIAL YEAR AND PAY ADVAN CE TAX ON THE BASIS OF THOSE ANTICIPATED EVENTS. 10. IN THE RESULT, THEREFORE, THE PRESENT APPEAL SU CCEEDS AND IS ALLOWED. IT IS HELD THAT IN THE FACTS AND CIRCUMSTA NCES OF THE CASE THE TRIBUNAL WAS NOT JUSTIFIED IN LAW IN HOLDING THAT T HE INTEREST WAS PAYABLE UNDER SECTION 234B. ITA NO. 5625/MUM/2015 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR PRIVATE LTD. 9 11. SO FAR AS WRIT PETITION NO. 1621 OF 1994 IS CON CERNED, THE LEARNED COUNSEL APPEARING FOR THE PETITIONER STATES THAT FU LL AMOUNT OF INTEREST UNDER SECTION 234B, WHICH THE PETITIONER WAS HELD L IABLE TO PAY, HAS BEEN PAID. IN VIEW OF THE FINDING RECORDED BY US AB OVE, THE AMOUNT OF INTEREST RECOVERED FROM THE PETITIONER IS DIRECTED TO BE REFUNDED TO THE PETITIONER WITH INTEREST AS PER LAW. 12. BOTH APPEAL AND WRIT PETITION ARE DISPOSED OF. LIKEWISE, THE MUMBAI BENCH OF THE TRIBUNAL IN TH E CASE OF GREAT OFFSHORE LIMITED VS DCIT (ITA NO.5221/MUM/2010), VIDE ORDER DATED 30/09/2015, ON IDENTICAL ISSUE, CONSIDERING THE DECISION FROM HON' BLE JURISDICTIONAL HIGH COURT IN PRIME SECURITIES LTD. (SUPRA) AND THE DECISION OF THE TRIBUNAL IN ULTRATECH CEMEN T LTD. (SUPRA) HELD THAT FOR CHARGING INTEREST U/S 234B OF THE ACT, THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE IN ESTIMATING THE ADVANCE TAX AND PAYMENT THEREOF AS P ER PROVISIONS OF SECTION 209 R.W.S 210 OF THE ACT. CO NSIDERING THE TOTALITY OF FACTS, WE ARE OF THE VIEW ONCE THE DEFAULT IS ATTRIBUTED TO THE ASSESSEE IN THAT SITUATION, THE C HARGING OF INTEREST BECOME MANDATORY. IN THE PRESENT APPEAL, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO HAVE ANTICIPATED T HE EVENTS AND THUS THERE WAS NO DEFAULT ON THE PART OF THE AS SESSEE AS THE ORDER OF THE JURISDICTIONAL HIGH COURT WAS D ELIVERED ON 19/04/2012 AND ON RECEIPT OF THE SAME, THE ASSES SEE ON 23/04/2012 ITSELF SUBMITTED THE CERTIFIED COPY O F THE ITA NO. 5625/MUM/2015 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR PRIVATE LTD. 10 ORDER BEFORE THE REGISTRAR OF THE COMPANIES, WE, TH EREFORE, CONSIDERING THE FACTUAL MATRIX AND THE JUDICIAL PRONOUNCEMENTS FROM THE TRIBUNAL AND ALSO FROM HON' BLE JURISDICTIONAL HIGH COURT, WE DONT FIND INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (A PPEAL), RESULTANTLY, THE APPEAL OF THE REVENUE FAILS, CONSE QUENTLY, DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 23/01/2018. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % MUMBAI; ( DATED : 23/01/2018 F{X~{T? P.S / /. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE RESPONDENT. 3. 0 0 1$ ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1$ / CIT(A)- , MUMBAI, 5. 34 .$ ! , 0 *+' *! 5 , % / DR, ITAT, MUMBAI 6. 6' 7% / GUARD FILE. ! / BY ORDER, /! (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI