CAYLX CHEMICALS & PHARMACEUTICALS LTD, MUMBAI V. JCIT (OSD)8(1), MUMBAI

ITA 6350/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79526 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 17-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Rectification of order; Reason to believe
• Section: 234B; 115JB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.6350/MUM/2012 (ASSESSMENT YEAR:2007-08) CAYLX CHEMICALS & PHARMACEUTICALS LTD. UNIT 110, MARWAH COMPLEX MARWAH ESTATE, SAKI VIHAR RD. SAKI NAKA, ANDHERI (E) MUMBAI-400 067. VS. DY. CIT, RANGE 8(1) AAYAKAR BHAVAN MUMBAI. (APPELLANT) (RESPONDENT) P ERMANENT ACCOUNT N O. : AABCC 1457 B ASSESSEE BY : SHRI M. SUBRAMANIAN REVENUE BY : SHRI SHRIKANT NAMDEO DATE OF HEARING : 10/07/2014 DATE OF PRONOUNCEMENT : 23/07/2014 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18/07/2012 OF CIT(A) ARISING FROM THE ORDER PASSED U/S. 154 BY THE AO FOR ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS :- 1. THE LD. CIT(A)-16 ERRED IN CONFIRMING THE AO S ORDER U/S. 154 OF THE INCOME TAX ACT, 1961. 2. THE LD. CIT(A) OUGHT TO HAVE HELD THAT SUBSEQUE NT DECISION OF HIGHER COURTS CAN NOT BE THE SUBJECT MATTER OF RECTIFICATION U/S.154 OF THE ACT. ITA NO.6350/M/12 AY:07-08 2 3. THE APPELLANT CRAVES THE ORDER OF CIT(A) BE SET ASIDE AS VOID AB INITIO. 2. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3 ). SUBSEQUENTLY THE ORDER GIVING EFFECT TO ORDER OF CI T(A) WAS PASSED ON 08/12/2010 WHEREBY THE AO ASSESSED THE BOOK PROFIT UNDER SECTION 115JB TO TAX. THE ASSESSEE VIDE ITS LETTER DATED 24 /2/2011 POINTED OUT THAT THE CREDIT OF TAX PAID OF RS.52,50,000/- HAS N OT BEEN GIVEN WHILE CALCULATING TAX LIABILITY. THE AO FOUND THAT THE CO NTENTION OF THE ASSESSEE WAS GENUINE AND ACCORDINGLY RECTIFIED THE ORDER. WH ILE PASSING THE ORDER DATED 02/03/2011 UNDER SECTION 154 APART FROM THE S AID RECTIFICATION FOR CREDIT OF TAX PAID, THE AO ALSO CHARGED INTEREST UN DER SECTION 234B AND 234C IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ROLTA INDIA LTD. (330 ITR 470). THE ASSESSEE CHALLE NGED BEFORE THE CIT(A) THE ACTION OF AO CHARGING INTEREST UNDER SECTION 23 4B AND 234C WHILE PASSING RECTIFICATION ORDER UNDER SECTION 154 OF TH E ACT BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD.AR OF THE ASSESSEE HAS SUBMITT ED THAT FOR THE YEAR UNDER CONSIDERATION THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KWALITY BISCUITS LTD. (284 ITR 434) WAS THE LAW OF THE LAND ON THE POINT AND, THEREFORE, THE ASSESSEE COULD NOT BE EXP ECTED TO PAY ADVANCE TAX IN RESPECT OF BOOK PROFIT FOR THE PURPOSE OF MI NIMUM ALTERNATE TAX UNDER SECTION 115JB. HE HAS FURTHER SUBMITTED THAT AT THE RELEVANT POINT OF TIME THERE WAS NO REQUIREMENT FOR PAYMENT OF ADV ANCE TAX IN RESPECT OF BOOK PROFIT AND THIS PROPOSITION HAS BEEN LAID D OWN BY THE DECISION OF HON'BLE SUPREME COURT IN CASE OF KWALITY BISCUIT LT D. HE HAS FURTHER POINTED OUT THAT EVEN IN THE SUBSEQUENT DECISIONS I N THE CASE OF BINANI INDUSTRIES LTD. VS. CIT (329 ITR 323) THE HON'BLE CALCUTTA HIGH COURT HAVING HELD THAT THE PROVISIONS OF SECTION 207 ONWA RDS CANNOT BE INVOKED FOR THE PURPOSE OF COMPUTING THE INCOME UND ER SECTION 115JB FOR THE REASON THAT INCOME WOULD BE COMPUTED ONLY A FTER FINALIZING OF THE ITA NO.6350/M/12 AY:07-08 3 BOOKS OF ACCOUNT AFTER THE END OF FINANCIAL YEAR. T HE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF JCIT VS. ROLTA INDIA LTD. (330 ITR 470) HAS BEEN DELIVERED SUBSEQUENTLY AND MUCH AFTER THE END OF THE FINANCIAL YEAR AND THEREFORE, THE ASSESSEE CANNOT B E ASKED TO DO AN IMPOSSIBLE AND NON-EXISTING REQUIREMENT UNDER LAW. THE LD. AR HAS FURTHER SUBMITTED THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THIS TRIBUNAL IN THE CASE OF CHARBHUJA INDUSTRIES P. LTD. VS. ACIT (31 ITR (TRIB.) 89)(MUM.) . HE HAS POINTED THAT IN THE SAID CASE THE TRIBUNAL AFTER CONSIDERING ALL THE DECISIONS OF THE HON'BLE SUPREM E COURT AS WELL AS THE DECISIONS OF HON'BLE HIGH COURTS HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. 4. ON THE OTHER HAND LD. DR HAS RELIED UPON THE ORD ERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE LEGAL PROPOSITION AS ON THE DATE IS THE DECISION OF HON'BLE SUPREME COURT IN CASE OF JCIT VS. ROLTA INDIA LTD. (SUPRA, THEREFORE, THE AO IS JUSTIFIED IN CHARGING INTEREST UNDER SECTION 234B AND 234C OF THE INCOME TAX ACT. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD WE NOTE THAT FOR THE RELEVANT AS SESSMENT YEAR AND UP- TILL THE END OF THE FINANCIAL YEAR AS ON 31/03/2007 THE ASSESSEE WAS NOT REQUIRED TO PAY ADVANCE TAX IN RESPECT OF BOOK PRO FIT UNDER SECTION 115JB IN VIEW OF THE DECISION OF HON'BLE SUPREME CO URT IN CASE OF KWALITY BISCUITS LTD. (SUPRA). WE FURTHER NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THIS TRIBUNAL IN THE CASE OF CHARBHUJA INDUSTRIES P. LTD. VS. ACIT (SUPRA), IN PARA-5 AS UNDER :- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL A S RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE REGARDING THE FACT THAT DURING THE ASSESSMENT YEARS UNDER CONSIDERATION TH E SETTLED LAW ON THE POINT WAS THE DECISION OF THE HON'BLE SUPRE ME COURT IN THE CASE OF CIT V. KWALITY BISCUITS LTD. [2006] 284 ITR 434 (SC) AS WELL AS A NUMBER OF OTHER DECISIONS INCLUDING THE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF S NOWCEM INDIA ITA NO.6350/M/12 AY:07-08 4 LTD. V. DEPUTY CIT [2009] 313 ITR 170 (BOM) AND IN THE CASE OF CIT V. NATURAL GEMS LTD. [2010] 327 ITR 269 (BOM) WHEREIN IT HAS BEEN HELD THAT NO ADVANCE MINIMUM ALTERNATE TAX WAS PAYABLE BY THE COMPANY. THEREFORE, THE ASSESSEE HAD NO REASON TO BELIEVE OR FORESEE A SUBSEQUENT DECISION FASTENING THE LIABIL ITY OF PAYMENT OF ADVANCE TAX. EVEN OTHERWISE THE DECISION IN THE CA SE OF JOINT CIT V. ROLTA INDIA LTD. [2011] 330 ITR 470 (SC) IS A SUBSEQUENT DECISION AND THEREFORE, THE IMPOSSIBILITIES AT THE RELEVANT POINT OF TIME CANNOT BE THRUST UPON THE ASSESSEE. IN THE FAC TS AND CIRCUMSTANCES AS DISCUSSED ABOVE NO FAULT CAN BE FO UND WITH THE ASSESSEE IN NOT DEPOSITING THE ADVANCE TAX OF MINIM UM ALTERNATE TAX IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT AS WELL AS VARIOUS DECISIONS OF THE HON'BLE HIGH COURT. THE AS SESSEE HAD THE BONA FIDE REASON TO BELIEVE THAT ADVANCE TAX WAS N OT PAYABLE IN RESPECT OF MINIMUM ALTERNATE TAX UNDER SECTION 115 JB AS IT WAS A SETTLED LAW LAID DOWN BY THE HON'BLE SUPREME COURT AND THE HON'BLE HIGH COURT WHICH HOLD GOOD TILL THE SUBSEQU ENT DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF JOINT CIT V. ROLTA INDIA LTD. [2011] 330 ITR 470 (SC). THEREFORE, PRIOR TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF JOINT CIT V. ROLTA INDIA LTD. [2011] 330 ITR 470 (SC) SETTLED PROPOSITION OF THE LAW ON THE POINT WAS THAT NO ADVANCE TAX WAS PAYABLE ON MINIM UM ALTERNATE TAX COMPUTED UNDER SECTION 115JB AND ACCORDINGLY, THE INTEREST UNDER SECTIONS 234B AND 234C CANNOT BE LEVIED FOR N ON-DEPOSIT OF ADVANCE TAX ON MINIMUM ALTERNATE TAX FOR THE YEAR UNDER CONSIDERATION. HENCE, WE DELETE THE LEVY OF INTERES T UNDER SECTIONS 234B AND 234C IN THIS CASE. 6. IT IS CLEAR THAT PRIOR TO THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF JCIT VS. ROLTA INDIA LTD. (SUPRA), THE SETTLED PROPOSITION OF LAW ON THE POINT WAS THAT NO ADVANCE TAX WAS PAYABL E ON MINIMUM ALTERNATE TAX COMPUTED UNDER SECTION 115JB AND ACCO RDINGLY INTEREST U/S. 234B AND 234C CANNOT BE LEVIED FOR NON-DEPOSIT OF ADVANCE TAX ON MINIMUM ALTERNATE TAX FOR THE YEAR. WE DO CONCUR WI TH THE VIEW AS TAKEN BY THIS TRIBUNAL IN THE CASE OF CHARBHUJA INDUSTRIES P. LTD. (SUPRA), THAT THE IMPOSSIBILITIES CANNOT BE THRUST UPON THE ASSES SEE WHEN THERE WAS NO REQUIREMENT UNDER THE EXISTING LAW AT THAT POINT OF TIME FOR PAYMENT OF ADVANCE TAX IN RESPECT OF MINIMUM ALTERNATE TAX UNDER SECTION 115 JB. IN VIEW OF THE ABOVE DISCUSSION AND FOLLOWING T HE EARLIER ORDER OF THIS TRIBUNAL IN CASE OF CHARBHUJA INDUSTRIES P. LTD. (SUPRA), WE DELETE THE ITA NO.6350/M/12 AY:07-08 5 LEVY OF INTEREST UNDER SECTION 234B AND 234C IN RES PECT OF TAX LIABILITY ON BOOK PROFIT UNDER SECTION 115JB. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JULY, 2014. SD/- SD/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER (VIJAY PAL RAO ) JUDICIAL MEMBER MUMBAI, DATED: 23/07/2014. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.6350/M/12 AY:07-08 6 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 10/07/14 JM/AM 2 DRAFT PLACED BEFORE AUTHOR 11/7/14 JM/AM 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER 10. DRAFT /SHORTHAND SCRIPT ENCLOSED IN FILE YES