RISHTI STOCK AND SHARE P. LD, MUMBAI V. ASST CIT 4(2), MUMBAI

ITA 5971/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9321 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 23-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-10-2013
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: HIRAL D SEJPAL

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . , . , BEFORE SHRI D. MANMOHAN , VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, AM ./I.T.A. NO. 5971/M/2013 (AY:2008 - 2009 ) RISHTI STOCK AND SHARE PRIVATE LTD., MASKATI MAHAL, 119 LOHAR CHAWL, GROUND FLOOR, MUMBAI 400 002. VS. ACIT - 4(2), AAYAKAR BHAVAN, M.K. MARG, MUMBAI 40 020. ./ PAN : AABCR5439G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MS. HIRAL D. SEJPAL, AR / RESPONDENT BY : SHRI LOVE KUMAR, DR / DATE OF HEARING : 23.2 .2015 / DATE OF PRONOUNCEMENT : 11 .3 .2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 8.10.2013 IS AGAINST THE ORDER OF THE CIT (A) - 8, MUMBAI DATED 30.7.2013 FOR THE ASSESSMENT YEAR 2008 - 2009. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN COMPUTING INTEREST U/S 234C OF THE ACT WITHOUT TAKING INTO ACCOUNT PROVISIONS OF SECTION 234C(1)(B) OF THE ACT. 2. BASED ON THE F ACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 234C WERE AMENDED VIDE FINANCE ACT (NO.2) OF 1996 ONLY TO REMOVE THE HARDSHIP CAUSED TO THE ASSESSEE AND ALLOWING THE ADVANCE TAX ON CAPITAL G AINS TO BE PAID AS PART OF THE REMAINING INSTALLMENTS. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARE BROKING AND EARNED CAPITAL GAINS. ASSESSEE OFFERED LONG TERM CAPITAL GAINS ON TRANSFER OF BSE LI MITED SHARES. THE SALE CONSIDERATION SO RECEIVED WAS CREDITED TO THE ASSESSEES ACCOUNT ON 17.5.2007. RELEVANT RELATABLE ADVANCE TAXES WERE PAID AS PER THE DUE DATES FOR THE ADVANCE TAX AS PROVIDED IN SECTION 211 OF THE ACT. PER CONTRA, IN THE ASSESSMEN T PROCEEDINGS, ASSESSING OFFICER IS OF THE 2 OPINION THAT THE WHOLE OF THE RELATED ADVANCE TAX IS REQUIRED TO BE PAID ON THE DUE DATE OF FIST INSTALLMENT OF ADVANCE TAX DUE ON 15.6.2007. ASSESSEE RELIED ON THE AMENDED PROVISIONS TO THE FIRST PROVISO TO SECT ION 234C(1) OF THE ACT. THESE AMENDED PROVISIONS WERE BROUGHT IN BY THE FINANCE ACT (NO.2) OF 1996. ASSESSING OFFICER RELIED ON THE AMENDED PROVISIONS AND HELD THEY ARE NOT RETROSPECTIVE IN OPERATION. 3. DURING THE FIRST APPELLATE AUTHORITY, ASSESSEE SUBMITTED THAT NO INTEREST WOULD BE CHARGED IN RESPECT OF THE SHORT FALL OF ADVANCE TAX SINCE THE ADVANCE TAX ON CAPITAL GAINS IS REQUIRED TO BE PAID AS A PART OF THE REMAINING INSTALLMENTS AND RELIED ON THE AMENDED FIRST PROVISO TO SECTION 234C(1) OF THE ACTG. CIT (A) CONSIDERED THE SAME AND REJECTED THE SUBMISSIONS OF THE ASSESSEE. EVENTUALLY, CIT (A) CONSIDERED THE VIEWS OF THE ASSESSING OFFICER IN LEVYING INTEREST U/S 234C OF THE ACT. AGGRIEVED WITH THE SAME, ASSESSEE IS IN APPEAL BEFORE US. 4. DURIN G THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO INTEREST U/S 234C IS LEVYABLE WHEN THE CAPITAL GAINS ACCRUED IN THE MONTH OF MAY 2007 IS PAID IN THE REST OF THE INSTALLMENTS. BRINGING OUR ATTENTION TO THE AMENDED PROVISIONS OF T HE FIRST PROVISO TO SECTION 234C(1) OF THE ACT. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID AMENDMENT WAS INTERPRETED BY THE COORDINATE BENCH OF THE ITAT, MUMBAI IN THE CASE OF TORRENTIAL INVESTMENTS (P) LTD VS. ITO [2010] 127 ITD 257 (MUM.) AND R EAD OUT THE RELEVANT EXTRACTS FROM THE HELD PORTION OF THE SAID ORDER (SUPRA). IT IS THE VIEW OF THE COORDINATE BENCH OF THE TRIBUNAL THAT THE AMENDMENT TO THE PROVISO TO SECTION 234C IS AIMED AT EXPLAINING THE EARLIER ACT ON PAYMENT OF ADVANCE TAX IN INS TALLMENTS AND IT HAS TO BE APPLIED RETROSPECTIVELY. 5. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE . THERE IS NO DISPUTE ON THE FACTS RELEVANT TO THE ISSUE UNDER CONSIDERATION. THE DISPUTE IS ONLY WITH REGARD TO THE LEVY OF INTEREST U/S 234C OF THE ACT WHEN THE ASSESSEE PAID ADVANCE TAX RELATABLE TO THE LONG TERM CAPITAL GAINS AGAINST ALL THE ADVANCE TAX INSTALLMENTS SUBSEQUENT TO 17.5.2007. IF THE AM ENDMENT IS HELD RETROSPECTIVE, IT IS NOT TO BE CONSIDERED IN DEFAULT IN MATTERS OF LEVY OF INTEREST U/S 234C OF THE ACT. RELEVANT EXTRACTS FROM THE SAID DECISION OF THE COORDINATE BENCH READ AS UNDER: 3 P ROVISO TO SECTION 234C STIPULATES PAYMENT OF ADVANCE T AX IN INSTALLMENTS ON INCOME ARISING TO THE ASSESSEE ON ACCOUNT OF CAPITAL GAINS OR INCOME REFERRED TO UNDER SECTION 2(24)(IX). THE PROVISION TO PAY ADVANCE TAX AS PART OF INSTALLMENTS DUE AFTER THE DA TE OF ARISING OF THE SAID INCOME OR GAIN WAS ON STATUTE WITH EFFECT FROM 1.4.1989, WHEN THE SAME WAS INSERTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1996 WITH EFFECT FROM 1.4.1997. SUCH SUBSTITUTION PROVIDED BY THE FINANCE (NO.2) ACT, 1996 WAS PROPOSED T O REMOVE HARDSHIPS TO THE ASSESSEE AS ENTIRE TAX HAS TO BE PAID AT SHORT NOTICE IN MANY CASES EVEN BEFORE SALE PROCEEDS WERE RECEIVED. THE AMENDMENT WAS PROPOSED WITH REGARD TO THE PAYMENT OF TAX AS PART OF REMAINING INSTALLMENTS OF ADVANCE TAX DUE. IN C ASE NO INSTALLMENT OF ADVANCE TAX WAS DUE, THEN THE TAX TO BE PAID BY 31 ST MARCH REMAINED SAME, BOTH IN PRE - AMENDED AND POST - AMENDED PROVISIONS. THE AMENDMENT TO PROVISO TO SECTION 234C IS TO EXPLAIN THE EARLIER ACT OF PAYMENT OF ADVANCE TAX IN INSTALLMEN TS AND HAS TO BE APPLIED RETROSPECTIVELY. THE ASSESSEE PAID TAXES AS PART OF INSTALLMENTS DUE AFTER THE DATE OF SALE OF ASSET AND, AS SUCH, WAS NOT IN DEFAULT AS STIPULATED UNDER SECTION 234C, THUS, NO INTEREST WAS CHARGEABLE FROM IT UNDER SECTION 234C. 7. NOTHING IS BROUGHT TO OUR NOTICE THAT THE SAID DECISION OF THE TRIBUNAL IS SUBSEQUENTLY AMENDED OR REVERSED. IN SUCH CIRCUMSTANCES, THE SAID AMENDMENT TO THE PROVISO TO SECTION 234C APPLIES RETROSPECTIVELY. CONSEQUENTLY, THE ASSESSEE IS PAID THE TAXES AS PART OF THE INSTALLMENTS DUE AFTER 17.5.2007 IS NOT IN DEFAULT AS STIPULATED U/S 234C OF THE ACT AND THUS, NO INTEREST WAS CHARGEABLE U/S 234C OF THE ACT. PARA 8 OF THE JUDGMENT IS RELEVANT IN THIS REGARD. THE SAID JUDGMENT WAS DELIVERED DRAWING THE STRENGTH FROM THE RATIO LAID DOWN BY THE HONBLE SUPREME COU RT IN THE CASE OF ZILE SINGH VS. STATE OF HARYANA [2004] 8 (SC) AND JUDGMENT IN THE CASE OF CIT VS. PODAR CEMENT (P) LTD [1997] 5 SCC 482. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRON OUNCED IN THE OPEN COURT ON 1 1 T H MARCH, 2015. S D / - S D / - (D. MANMOHAN) (D. KARUNAKARA RAO) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; 11/3/2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI