ESSAR INVESTMENTS LTD ( IN RESPECT OF MERGED COMPANY DWARKA HOLDINGS P.LTD), MUMBAI V. ITO 5(1)(3), MUMBAI

ITA 6444/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9509 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 29-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 21-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Keywords: Retrospective amendment
• Section: 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 6444/MUM/2011 (ASSESSMENT YEAR: 2005-06) M/S ESSAR INVESTMENT LTD. INCOME TAX OFFICER - 5(1) (3) (IN RESPECT OF MERGED COMPANY DWARKA AAYAKAR BHAVAN, M.K. RAOD HOLDINGS PVT. LTD), ESSAR HOUSE, VS. MUMBAI 400020 11 KESHAVRAO KHADYE MARG, MALAKSHMI, MUMBAI 400034 PAN - AABCE 0686 Q APPELLANT RESPONDENT APPELLANT BY: SHRI VIJAY MEHTA RESPONDENT BY: SHRI V. KRISHNAMOORTHY DATE OF HEARING: 29.11.2012 DATE OF PRONOUNCEMENT: 29.11.2012 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGA INST THE ORDER DATED 29.06.2011 PASSED BY THE CIT(A)-9, MUMBAI AND IT PE RTAINS TO A.Y. 2005-06. 2. THE FOLLOWING GROUNDS WERE URGED BY THE ASSESSEE IN THIS APPEAL: - 1. THE COMMISSIONER OF INCOME TAX (APPEALS)-9, MU MBAI, HEREINAFTER REFERRED TO AS CIT(A), ERRED IN CONFIRM ING THE CHARGING OF INTEREST BY THE ASSESSING OFFICER U/S. 234B AMOU NTING TO RS.2,95,718/- ON THE TAX PAYABLE DUE TO RETROSPECTI VE AMENDMENT. 2. THE CIT(A) ERRED IN NOT CONSIDERING THE CASE LAW S QUOTED WITH REFERENCE TO NON-CHARGEABILITY OF INTEREST FOR NON- PAYMENT OF ADVANCE TAX DUE TO RETROSPECTIVE AMENDMENT IN LAW. 3. THE CASE OF THE ASSESSEE IS THAT FOR A.Y. 2005-06 I T WAS EXPECTED TO PAY ADVANCE TAX FOR FINANCIAL YEAR ENDED ON 31 ST MARCH, 2005, BASED ON THE ESTIMATED INCOME FOR THE YEAR. AS PER THE PROCEDURE PRESCRIBED AT THE RELEVANT POINT OF TIME THERE WAS NO TAX PAYABLE AS PER THE ESTIMATED INCOME AND HENCE ASSESSEE COMPANY DID NOT PAY ANY ADVANCE TAX AND EVEN AS PER ITA NO. 6444/MUM/2011 M/S ESSAR INVESTMENT LTD. 2 THE RETURN OF INCOME AS WELL AS INTIMATION UNDER SE CTION 143(1) THERE WAS NO TAX PAYABLE. HOWEVER, BY FINANCE (2) ACT, 2009 A RE TROSPECTIVE AMENDMENT W.E.F. 1 ST APRIL, 2001 WAS MADE TO THE PROVISIONS OF SECTION 115JB OF THE ACT, WHEREBY AN AMOUNT SET ASIDE AS PROVISION FOR DIMINU TION IN THE VALUE OF ANY ASSET WAS TO BE ADDED TO THE NET PROFIT FOR THE PUR POSE OF COMPUTING TAX PAYABLE UNDER THAT SECTION. THE CASE OF THE ASSESSE E IS THAT THE AMENDED PROVISION WAS NOT AVAILABLE IN THE STATUTE AT THE T IME WHEN THE ASSESSEE COMPANY WAS REQUIRED TO PAY ADVANCE TAX. EVEN AT TH E TIME OF FILING OF THE RETURN OR PROCESSING OF THE RETURN THERE WAS NO OBL IGATION ON THE PART OF THE ASSESSEE TO ADD THE SAME TO THE NET PROFIT. HOWEVER , PURSUANT TO THE AMENDMENT THERE WAS A LIABILITY TO PAY ADVANCE TAX ON WHICH THE AO LEVIED INTEREST OF ` 2,95,718/- UNDER SECTION 234B OF THE ACT ON THE GRO UND THAT THE PROVISION HAS TO BE ASSUMED TO BE IN EXISTENCE AT T HE POINT OF TIME WHEN ASSESSEE FILED THE RETURN AND IF THERE IS SHORT FAL L, PAYMENT OF INTEREST UNDER SECTION 234B IS MANDATORY. THE LEARNED CIT(A) UPHEL D THE ORDER OF THE AO AND THUS THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE MAIN PLEA OF THE ASSESSEE IS THAT A RETROSPECTI VE LEGISLATION CANNOT COMPEL HIM TO DO AN IMPOSSIBILITY AND IN THIS REGAR D RELIANCE WAS PLACED UPON THE LEGAL DICTUM LEX NON COGIT AD IMPOSSIBILI A WHICH IN TURN WAS REFERRED BY THE DELHI BENCH OF THE ITAT [75 ITD 15 5 (TM]. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF EMAMI LTD. VS. CIT 337 ITR 470 WHEREIN THE HON'BLE CALCUTTA HIGH C OURT OBSERVED THAT INTEREST CANNOT BE LEVIED UNDER SECTION 234B AND 23 4C MERELY BECAUSE THERE IS A TAX LIABILITY BASED UPON A RETROSPECTIVE AMENDMENT. THE CASE OF THE ASSESSEE IS THAT THERE IS NO CONTRADICTORY DECI SION OF ANY OTHER HIGH COURT OR SUPREME COURT AND HENCE THE DECISION OF TH E HON'BLE CALCUTTA HIGH COURT DESERVES TO BE FOLLOWED. 5. ON THE OTHER HAND, THE LEARNED D.R. RELIED UPON THE ORDERS PASSED BY THE TAX AUTHORITIES. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE FACTS ARE NOT IN DISPUTE AND IN IDENTIC AL CIRCUMSTANCES THE ITA NO. 6444/MUM/2011 M/S ESSAR INVESTMENT LTD. 3 HON'BLE CALCUTTA HIGH COURT OBSERVED THAT AMENDED P ROVISIONS TO SECTION 115JB CANNOT BE INVOKED TO HOLD AN ASSESSEE AS DEFA ULTER WITH RESPECT TO PAYMENT OF ADVANCE TAX MERELY BECAUSE THE AMENDMENT WAS BROUGHT WITH RETROSPECTIVE EFFECT. IN OTHER WORDS, WHAT HAS TO B E SEEN IS THE LAW THAT WAS EXISTING ON THE DATE WHEN THE ASSESSEE WAS TO PAY A DVANCE TAX AND HE CANNOT BE BRANDED AS DEFAULTER IN PAYMENT OF ADVANC E TAX ON ACCOUNT OF LAW, WHICH WAS BROUGHT IN RETROSPECTIVELY. SINCE TH ERE IS NO OTHER CONTRADICTORY DECISION ON THIS, BY FOLLOWING THE AF ORESAID DECISION WE HOLD THAT THIS IS NOT A FIT CASE FOR LEVY OF INTEREST UN DER SECTION 234B OF THE ACT. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER, 2012. SD/- SD/- (D. KARUNAKARA RAO) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 29 TH NOVEMBER, 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 9, MUMBAI 4. THE CIT 5, MUMBAI CITY 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.