ACIT 18(3)(3), MUMBAI V. RAJESH BALAKRISHNAN, MUMBAI

ITA 6551/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8919 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K MEHTA
• Keywords: Deemed to accrue or arise in india; Retrospective amendment
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: MUMBAI BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 6551/MUM/2010 (ASSESSMENT YEAR: 2007-08) ASST. COMMISSIONER OF INCOME-TAX -18(3), ROOM NO.209, 2ND FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI -400 012 ...... APPELLANT VS SHRI RAJESH BALAKRISHNAN, 15, MEERA HOUSE, MOGUL X LANE, MAHIM, MUMBAI -400 016 PAN: AAKPB 1594 J ..... RESPONDENT APPELLANT BY: SHRI N.K. MEHTA RESPONDENT BY: SHRI ANIL SATHE DATE OF HEARING: 09.08.2012 DATE OF PRONOUNCEMENT: 05.09.2012 O R D E R PER VIVEK VARMA , JM: THE APPEAL FILED BY THE DEPARTMENT ARISES FROM THE ORDER OF CIT(A)-29, MUMBAI, DATED 28.06.2010, WHERE THE REVENUE HAS CHA LLENGED THE MAINTAINABILITY OF APPEAL BEFORE THE CIT(A), FILED BY THE ASSESSEE AGAINST THE CHARGING OF INTEREST U/S 234B. ACCORDING TO THE AS RAISED BY THE AO IN THE INSTANT APPEAL, THE ASSESSEE COULD NOT HAVE FILED A PPEAL BEFORE THE CIT(A) AND FURTHERMORE, THE CIT(A), INSTEAD OF HOLDING THE APPEAL BEFORE HIM TO BE NON MAINTAINABLE, ALLOWED THE APPEAL AS FILED BY TH E ASSESSEE, DELETING THE INTEREST CHARGED AT RS. 38,97,501/- U/S 234B. 2. IN THE GROUNDS, AS RAISED, THE REVENUE HAS CITED THE CASE OF CENTRAL PROVINCES MANGANESE ORE CO. LTD. VS CIT, REPORTED I N 27 TAXMAN 275 (SC). SHRI RAJESH BALAKRISHNAN ITA NO.6551/MUM/2010 2 3. THE ISSUE BEFORE US IS WHETHER THE CIT (A) WAS R IGHT IN LAW TO ADJUDICATE ON THE ISSUE OF SECTION 234B. IN THE CO URSE OF HEARING BEFORE CIT (A), THE ASSESSEE RELIED ON A NUMBER OF DECISIONS, WHICH ARE AS UNDER: (A) STAR INDIA PVT. LTD. VS. COMMISSIONER OF CENTRA L EXCISE 280 ITR 321 (SC) (B) COMMISSIONER OF INCOME TAX VS. ANAND PRAKASH 22 4 CTR (DEL) 72 (C) CENTRAL PROVINCES MANGANESE ORE CO. LTD V. CIT: [1986] 160 ITR 961 (SC), (D) KWALITY BISCUITS LTD. V. COMMISSIONER OF INCOME -TAX [2000] 243 ITR 0519 (KAR) (E) SNOWCEM INDIA LTD. V. DEPUTY COMMISSIONER OF IN COME-TAX 313 JTR 170 (F) IN THE CASE OF CIT VS. ANAND PRAKASH 224 CTR (DEL) 72 THE COURT HAS EXAMINED CHARGEABILITY OF INTEREST UNDER SECTION 23 4B ON ENHANCED COMPENSATION ON ACQUISITION OF LAND. THE COMPENSATI ON ON LAND WAS GRANTED AND ENHANCED IN A LATER YEAR. THE COURT HEL D THAT APPELLANT COULD NOT HAVE INCLUDED THE INCOME RECEIVED ON ENHA NCED COMPENSATION AWARDED WHILE ESTIMATING .HIS INCOME F OR THE PURPOSE OF CALCULATING ADVANCE TAX FOR THE RELEVANT YEARS. IT WAS NOT EVEN IN HIS CONTEMPLATION AT THE RELEVANT TIME. IN THIS CONTEXT THE COURT HAS ALSO EXAMINED THE ISSUE THAT CHARGING OF INTEREST UNDER SECTION 234 B IS NOT PENAL IN NATURE. IT IS A COMPENSATORY PAYMENT. THE COURT HELD THAT NO MONEY BELONGING TO THE GOVERNMENT WAS WITHHELD BY T HE ASSESSEE IN THE YEARS N QUESTION. IN FACT THE INTEREST PAYABLE ON ACCOUNT OF ENHANCED COMPENSATION WAS NOT EVEN KNOWN TO THE ASS ESSEE TILL MUCH LATER. IN THIS SCENARIO THE ASSESSEE CANNOT BE EXPE CTED TO PAY ADVANCE TAX ON SOMETHING WHICH WAS NOT RECEIVED AND WHICH W OULD NOT HAVE BEEN IN THEIR CONTEMPLATION. THE APPELLANT HAS ALSO RELIED UPON THE DECISION OF SUPREME COURT IN THE CASE OF STAR INDIA PVT LTD 201 CTR SC 63/280 IT R 321. IN THIS CASE SUPREME COURT EXAMINED CHARGEABILITY OF INTEREST FO R PAYMENT OF SERVICE TAX ON BROADCASTING BECAUSE OF RETROSPECTIV E AMENDMENT IN FINANCE ACT 2002. THE COURT HELD THAT WHILE IT IS P ERMISSIBLE FOR THE LEGISLATURE TO RETROSPECTIVELY LEGISLATE, SUCH RETR OSPECTIVITY IS NORMALLY NOT PERMISSIBLE TO CREATE AN OFFENCE RETROSPECTIVEL Y. LIABILITY TO PAY INTEREST WOULD ARISE ONLY ON DEFAULT. SUCH LIABILIT Y ALTHOUGH CREATED RETROSPECTIVELY WOULD NOT ENTAIL PUNISHMENT OF PAYM ENT OF INTEREST WITH RETROSPECTIVE EFFECT. THE HONBLE BOMBAY HIGH COURT HAS ALSO FOLLOWED TH IS IN THE CASE OF SNOWCEM INDIA LTD. 313 ITR 170. HENCE, THE LEVY OF INTEREST U/S.234B ON DEEMED INCOME WHICH HAS BEEN INCLUDED IN THE CAS E OF THE APPELLANT IN AY 2007-08 CANNOT BE SUSTAINED. THE L EVY OF INTEREST UNDER SECTION 234B AMOUNTING TO RS. 38,97,501/- IS THEREFORE DELETED. 4. THE AR ALSO PLACED A COPY OF DECISION OF THE CO- ORDINATE BENCH AT MUMBAI, IN THE CASE OF ASSESSEES RELATIVE, MR. SUR ESH BALAKRISHNAN, ITA NO. 6552/MUM/2010, WHERE IN THE COORDINATE BENCH, A FTER CONSIDERING THE SHRI RAJESH BALAKRISHNAN ITA NO.6551/MUM/2010 3 CASES CITED IN THE INSTANT GROUNDS OF APPEAL, HAD D ISMISSED THE APPEAL FILED BY THE REVENUE ON SIMILAR FACTS. 5. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISI ON OF THE COORDINATE BENCH, WHEREIN, THE REVENUE APPEAL HAD BEEN DISMISS ED ON THE SAME FACTS & CIRCUMSTANCES AND ALSO PERTAINING TO THE ASSESSEES RELATIVE, WE DISMISS THE APPEAL. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 05/09/2012. SD/- (G.E. VEERABHADRAPPA) PRESIDENT SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 05/09/2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-29, MUMBAI. 4) THE CIT-18, MUMBAI. 5) THE D.R. D BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN