M/s Namtech Electronic Devices Pvt. Ltd., Bangalore V. ACIT, Bangalore

ITA 664/BANG/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68366 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-11-2013
• Assessment Year: 1992-1993
• Appeal Filed On: 14-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BIJOY KUMAR
• Keywords: Capital asset; Depreciation; Business expenditure; Cost of acquisition
• Section: 143(3); 234B; 147; 263; 154

Judgement Text

ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 1 OF 21 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE ABENCH, BANGALORE BEFORE SHRI N. BARTHVAJASANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K. JUDICIAL MEMBER ITA NO.664/BANG/2012 (ASSESSMENT YEAR: 1992-93) M/S. NAMTECH ELECTRONIC DEVICES PRIVATE LIMITED, NO.314, RAHEJA ARCADE, KORAMANGALA, BANGALORE 95. PAN: AAACN 9249 B VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 12(2) BANGALORE (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI SHEETAL, ADVOCATE DEPARTMENT BY: SHRI BIJOY KUMAR PANDA, DR DATE OF HEARING: 28/11/2013 DATE OF PRONOUNCEMENT: 20/12/2013 O R D E R PER GEORGE GEORGE K. J.M. THIS APPEAL OF THE ASSESSEE COMPANY IS DIRECTED AGAINST THE ORDER OF THE CIT (A)-III, BANGALORE, DA TED 2.2.2012. THE RELEVANT ASSESSMENT YEAR IS 1992-93. 2. THE MAIN GROUNDS RAISED BY THE ASSESSEE, I N ITS MEMORANDUM OF APPEAL, ARE REFORMULATED AS UNDER: (1) THAT THE CIT (A) FAILED TO APPRECIATE THAT THE TRIB UNAL HAD SET-ASIDE THE ORIGINAL ASSESSMENT ORDER FOR FRE SH ADJUDICATION AND, CONSEQUENTLY, HAD NOT GIVEN SPECIFIC FINDING WITH REGARD TO COMMENCEMENT OF BUSINESS SINCE THE TRIBUNAL HAD SET-ASIDE THE MATTE R TO THE FILE OF THE AO TO CONSIDER FOR FRESH CONSIDERATION; ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 2 OF 21 (2) THAT THE CIT (A) OUGHT TO HAVE DIRECTED THE AO TO CAPITALIZE THE PRE-COMMENCEMENT OF BUSINESS EXPENDITURE AND TO APPLY THE PROVISIONS OF SECTIONS 35AB AND 35D OF THE ACT; & (3) THAT THE CIT (A) ERRED IN UPHOLDING THE LEVY OF INT EREST U/S 234B OF THE ACT UNTIL THE DATE OF PRESENT ASSESSMENT WITHOUT APPRECIATING THAT THE INTEREST LEVY WAS TO BE PEGGED TO THE DATE OF FIRST REGULAR ASSESSMENT. 3. BEFORE TAKING UP THE ISSUES RAISED BY THE ASSESSEE FOR ADJUDICATION, WE WOULD LIKE TO PLACE ON RECORD THE BACK-GROUND OF THE CASE. 3.1. THE ASSESSEE IS IN THE BUSINESS OF ELECTRON IC EQUIPMENT AND COMPONENTS. FOR THE ASSESSMENT YEAR UNDER CONS IDERATION, THE ASSESSEE HAD FURNISHED ITS RETURN OF INCOME, AD MITTING A TAXABLE INCOME OF RS.1,61,710/- WAY BACK ON 29.12.1 992 WHICH WAS SUBSEQUENTLY REVISED, ADMITTING A LOSS OF RS.49 ,20,860/-. WHILE CONCLUDING THE ORIGINAL ASSESSMENT ON 31.3.19 95 U/S 143 (3) OF THE ACT, THE AO, BASED ON THE DIRECTORS REP ORT, CAME TO THE CONCLUSION THAT THE MANUFACTURE OF GAS DISCHARGE TU BES WERE STILL UNDER IMPLEMENTATION STAGE TILL THE END OF THE YEAR UNDER CONSIDERATION AND THAT THE ASSESSEE HAD NOT STARTED COMMERCIAL PRODUCTION DURING THE YEAR UNDER DISPUTE. ACCORDIN GLY, THE MAIN INCOME OF THE ASSESSEE WAS FROM INTEREST ON DEPOSIT S WITH THE BANKS AGAINST WHICH THE ASSESSEES CLAIMS OF ALL MA NAGERIAL ADMINISTRATIVE EXPENSES CANNOT BE ALLOWED AS DEDUCT ION. THUS, THE INTEREST INCOME WAS TREATED AS INCOME FROM OTH ER SOURCES AND, ACCORDINGLY, CONCLUDED THE ASSESSMENT. AGGRIE VED, THE ASSESSEE TOOK UP THE ISSUES WITH THE THEN CIT (A)- II WHO IN HIS ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 3 OF 21 ORDER DATED 29.3.1996 SET-ASIDE THE ASSESSMENT WITH A DIRECTION TO THE AO TO REDO THE ASSESSMENT AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE. THE AO VIDE HIS ORDER U/S 143(3) R.W. S. 250 OF THE ACT DATED 25.3.1999 CONCLUDED THE ASSESSMENT, D ETERMINING THE INCOME OF THE ASSESSEE AT R.65,76,980/-. AGGRI EVED, THE ASSESSEE YET AGAIN TOOK UP THE CASE WITH THE CIT (A )-II. THE CIT (A)-II IN HIS ORDER DATED 17.8.1999 GRANTED PARTIAL RELIEF. SIMULTANEOUSLY, THE AO [JCIT, S.R.4, BANGALORE] VID E HIS ORDER U/S 143(3) R.W.S. 250 DATED 30.11.2000 AGAIN CONCLUDED THE ASSESSMENT ON THE BASIS OF THE DIRECTIONS OF THE CI T (A)-II, DATED 29.3.1996 AND DATED 17.8.1999, DETERMINING THE ASSE SSEES INCOME AT RS.64,79,980/-. THE ASSESSEE HAD AGAIN A PPROACHED THE CIT (A)-III VIDE ITS APPEAL MEMO DATED 8.2.2001 . AFTER TAKING INTO ACCOUNT THE ASSESSEES SUBMISSION, THE CIT (A) -III HAD, VIDE HER ORDER DATED 13.9.2002, ORDERED THAT 3.4ACCORDING TO ME, THERE IS CONSIDERABLE FORCE IN THE ARGUMENT PUT-FORTH BY THE APPELLANT COMPANY THAT THE LAND HAD BEEN PURCHASED PRIOR TO THE EXPENDITURE BEING INCURRED TOWARDS MANAGERIAL ADMINISTRATIVE EXPENDITURE, FINANCIAL CHARGES TOWAR DS CONSTRUCTION OF THE BUILDINGS, ADVERTISEMENT CHARGE S, ADVERTISEMENT IN SOUVENIRS ETC. THESE EXPENSES HAV E NOT BEEN INCURRED TOWARDS THE COST OF ACQUISITION O F LAND. IT IS ALSO TO BE NOTED THAT THE TOTAL COST O F LAND WAS RS.8,59,040/- AND THE ASSESSING OFFICER HAS ALLOCATED RS.11,82,039/- OF PRIOR OPERATIONAL EXPENDITURE TO LAND. THIS PRORATE ALLOCATION OF AL L PRE- OPERATIONAL EXPENSES BY THE ASSESSING OFFICER WAS N OT JUSTIFIED AND ALLOCATION OF THIS AMOUNT TOWARDS LAN D IS DELETED. THE ASSESSING OFFICER IS DIRECTED TO ALLO CATE THESE EXPENSES TO OTHER CAPITAL ITEMS 3.1.2. ACCORDINGLY, THE AO, WHILE GIVING EFFECT TO THE CIT (A)S ORDER, REVISED THE TOTAL INCOME OF THE ASSESSEE AT RS.64,79,980/- ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 4 OF 21 AND ALLOCATED THE PRIOR-OPERATIONAL EXPENDITURE OF RS.11,82,039/- TOWARDS CAPITAL ITEMS OTHER THAN LAN D. AGAINST THIS ORDER OF THE AO, THE ASSESSEE WENT BEFORE THE CIT (A)-III WHEREIN THE ASSESSEE DISPUTED THE AOS ACTION IN CH ARGING OF INTEREST U/S 234B OF THE ACT UP-TO THE DATE OF ORDE R U/S 143 (3) R.W.S. 250 OF THE ACT DATED 31.11.2000. AFTER HE ARING THE ASSESSEES REPRESENTATIVE, THE CIT (A) HAD, IN HIS ORDER DATED 18.3.2003, RECORDED HIS FINDINGS THUS: 4.3AS PER THE PROVISIONS OF SECTION 234B (1), INTEREST HAS TO BE LEVIED UP-TO THE DATE OF DETERMI NATION OF TOTAL INCOME UNDER SUB-SECTION (1) OF SECTION 14 3 OR TO THE DATE OF REGULAR ASSESSMENT. AS PER SECTION 2(40), REGULAR ASSESSMENT MEANS THE ASSESSMENT MADE UNDER SUB-SECTION (3) OF SECTION 143 OR SECTIO N 144. IN THE PRESENT CASE, THE REGULAR ASSESSMENT U /S 143(3) WAS MADE ON 31.3.1995. IN THE CIRCUMSTANCES AND IN VIEW OF THE DECISION OF KOCHI TRIBUNAL REFER RED SUPRA, I AM INCLINED TO AGREE WITH THE CONTENTION O F THE APPELLANT THAT THE INTEREST U/S 234B SHOULD BE RESTRICTED TO THE DATE OF ORIGINAL ASSESSMENT MADE U/S 143(3) DATED 31.3.1995. IN THE CIRCUMSTANCES, THE ASSESSING OFFICER IS DIRECTED TO LEVY INTEREST U/S 234B FOR THE PERIOD UP-TO 31.3.1995. 3.1.3. WITH REGARD TO THE ASSESSEES OBJECTIO N TO THE MANNER OF ALLOCATION OF RS.11.82 LAKHS, THE CIT (A) HAD OB SERVED THAT 6.2. THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN B EFORE ME AS TO HOW THE WORKING OF THE ASSESSING OFFICER WHILE ALLO WING EXPENSES OF RS.1182039/ WAS NOT CORRECT. IN THE CIRCUMSTANCE S, THIS GROUND IS DISMISSED WHILE GIVING EFFECT TO THE CIT (A)S ORDER DATED 18.3.2003, THE AO CHARGED INTEREST U/S 234B OF THE ACT UP-TO 31.3.1995. ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 5 OF 21 3.1.4. AGAINST THE CIT (A)S ORDER, BOTH THE PARTI ES FILED THEIR APPEALS BEFORE THE TRIBUNAL. THE SOLITARY IS SUE RAISED BY THE REVENUE WAS WITH REGARD TO THE LEVY OF INTEREST U/S 234B OF THE ACT WHEREAS THE CROSS OBJECTIONS OF THE ASSESSE E WAS THAT 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE ASSESSING AUTHORITY TO LOCATE RS.11,82,039/- BEING THE PRE-OPERATIVE EXPENSES TOWARDS THE CAPITAL ASSET AS CLAIMED BY THE RESPONDENT; & II. THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE ASSESSING AUTHORITY O FOLLOW THE ORDER OF THE CIT ( A) IN ITA 167/DCIT 8(1)/00-01 DATED 13.9.2002 IN THE RESPONDENTS OWN CASE FOR THE PURPOSE OF ALLOCATION OF THE ABOVE EXPENDITURE TOWARDS CAPITAL ASSET. 3.1.5. THE ASSESSEE HAD ALSO SOUGHT THE PERMIS SION OF THE TRIBUNAL TO RAISE AN ADDITIONAL GROUND WHICH READS AS UNDER: THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THAT THE BUSINESS OF THE RESPONDENT HAD STARTED DURING THE RELEVANT ASSESSMENT YEAR AND CONSEQUENTLY OUGHT TO HAVE DIRECTED THE ASSESSING AUTHORITY TO SET OFF TH E BUSINESS LOSS AS RETURNED. 3.1.6. AFTER HEARING THE RIVAL PARTIES, THE E ARLIER BENCH OF THE TRIBUNAL HAD RECORDED ITS FINDINGS WHICH ARE EXTRAC TED VERBATIM, FOR APPRECIATION OF FACTS, AS UNDER: 3. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED A PAPER BOOK CONSISTING OF PAGES 1 82. HIS SUBMISSION IS THAT THE ISSUE SHOULD BE S ET- ASIDE TO THE FILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED WITH THIS PROPOSITION THAT TH E ISSUE SHOULD BE SET ASIDE TO ASSESSING OFFICER FOR FRESH ADJUDICATION. ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 6 OF 21 3.1.7. THUS, AS AGREED UPON BY THE RIVAL PARTIES DURING THE COURSE OF HEARING, THE EARLIER BENCH SET ASIDE THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION. HOWEVER, THE AO, IN THE RE- ASSESSMENT PROCEEDINGS U/S 143(3) R. W. S. 254 (1) OF THE ACT DATED 19.7.2007 TOOK A STAND THAT 3THE CAPITALIZATION AND AMORTIZATION OF EXPENDITURE HAS BEEN CARRIED OUT FO R ALLOWANCE IN FUTURE YEARS. THE ALLOCATION OF RS.11,82,039/- HAS BEEN MADE AMONGST BUILDING, PLANT AND MACHINERY, VEHICLES AND FURNITURE BUT DEPRECIATION WOULD BE ALLOWABLE IN FUTURE YEARS AND NOT IN AY 1992-93. THIS MATTER HAS BECOME FINAL IN THE FIRST APPEAL ITSELF (PARA 2.3 AND 2.4) . REGARDING THE SET OFF OF BUSI NESS LOSS, THE MATTER DOES NOT EMERGE OUT OF CIT (A)S ORDER DT. 1 8.3.2003. THE MATTER OF SETTING OFF OF BUSINESS LOSS AGAINST THE INCOME FROM OTHER SOURCES HAS ALREADY BEEN CONSIDERED AND REJ ECTED IN THE ORDERS U/S 143(3) R.W.S. 250 DATED 25.3.1999 AND 30 .11.2000. IN THE SAID ORDERS, A CLEAR CUT FINDING WAS RECORDED T O THE EFFECT THAT THE COMMERCIAL PRODUCTION HAD NOT COMMENCED DURING THE PREVIOUS YEAR RELEVANT TO AY 1992-03. IN THE CIRCUMSTANCES, THE POINTS RAISED IN THE CROSS OBJECTION DOES NOT EXIST AT ALL FOR CONSIDERATION NOW. WITH REGARD TO CHARGING OF INTEREST U/S 234B OF THE ACT, THE AO TOOK A STAND THAT 4THE ASSESSMENT MADE ON 31.3.1995 WAS SET ASIDE BY CIT (A) IN TOTO AT THE R EQUEST OF THE ASSESSEE AND THERE WERE NO SUBSISTING ORDERS EVEN U P-TO 31.3.1995 UPON SETTING ASIDE OF THE SAID ORDER IN A PPEAL AND THE ENTIRE ORIGINAL DEMAND GOT CANCELLED. AS SUCH, THE DETERMINATION OF THE TOTAL INCOME WAS CONCLUDED BY THE REGULAR AS SESSMENT ON 25.3.1999 AND THE INTEREST U/S 234B WAS CHARGEABLE ON THE DEMAND SO RAISED. THE ITAT DECISION IN TRAVANCORE TITANIUM ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 7 OF 21 PRODUCTS PVT LTD V. DCIT 52 TTJ 601 (KOCHI) RELIED ON BY THE ASSESSEE WAS IN THE CONTEXT OF INTIMATION U/S 143 ( 1)(A) AND ORDER U/S 143(3) AND IS NOT RELEVANT TO THE ASSESSEES CA SE. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE INTEREST U/S 234B IS CHARGED UP-TO 25.3.1999. 3.1.8. AGGRIEVED, THE ASSESSEE AGAIN TOOK U P THE ISSUE BEFORE THE CIT (A)-III. AFTER DUE CONSIDERATION OF THE ASSESSEES SUBMISSION, THE CIT (A) HAD RECORDED HIS FINDINGS A S UNDER: 4.1.1IT IS CRITICAL TO NOTE THAT THE LD. ITA T DID NOT EXAMINE THE ISSUE ON MERITS AT ALL, BUT, ON LY ADVISED A RE-LOOK BY THE AO. IN REFERRING TO AND AGREEING WITH THE EARLIER FINDINGS ON THE SUBSTANTI VE ISSUES, THE AO, IN MY VIEW, HAS EXERCISED HIS MIND SUFFICIENTLY ON THE ISSUES BEFORE HIM. IN CASE, TH E APPELLANT FELT THAT THE ITATS DIRECTIONS WERE NOT BEING ACCEDED TO, THE CORRECT COURSE FOR HIM WOULD HAVE B EEN TO FILE A MISCELLANEOUS PETITION BEFORE THE LD. ITA T SEEKING SPECIFIC REDRESSAL. THIS WAS OBVIOUSLY NOT DONE SINCE IT IS ABUNDANTLY CLEAR THAT THE ITAT ONL Y SOUGHT THE AO TO HAVE A RE-LOOK AT THE ISSUES, AND DID NOT HAND DOWN ANY SPECIFIC DIRECTIONS OR ADVICE ON MERITS. AS SUCH, I DO NOT FIND ANY INFIRMITY WITH THE ORDER OF THE AO BEFORE ME IN APPEAL AND THE SAME IS UPHELD. WITH REGARD TO THE CLAIM OF INTEREST U/S 234B OF THE ACT, THE CIT (A) HAD REASONED AS UNDER: 4.2 ..I HAVE TO NOTE THAT SEC. 234B LEVIES INTEREST FROM THE 1 ST DAY OF APRIL FOLLOWING THE RELEVANT FINANCIAL YEAR UP-TO THE DATE OF REGULAR ASSESSMEN T. IN THIS CASE, THE DATE OF COMPLETION OF THE REGULAR ASSESSMENT IS 19 TH JULY, 2007 U/S 143(3). THE FINAL DETERMINATION OF INCOME BEING THE RESULT OF THIS R EGULAR ASSESSMENT,, AS PER THE CLEAR AND UNAMBIGUOUS ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 8 OF 21 DEFINITION OF THE TERM IN SEC. 2(40), THE INTEREST ALSO IS LEVIABLE UP-TO THIS DATE, AS SPECIFIED IN SEC. 234B (3) ITSELF. IT MAY BE MENTIONED THAT IN A REVERSE SITU ATION, WHERE INTEREST BECOMES DUE TO THE APPELLANT AS A RESULT OF A REGULAR ASSESSMENT (INCLUDING AN ASSESSMENT PASSED IN COMPLIANCE WITH DIRECTIONS OF A HIGHER APPELLATE AUTHORITY), SEC. 244 A(3) CLEARLY SPECIFIES THAT THE EXTENT OF THE ELIGIBILITY OF THE APPELLANT TO RECEIVE THE SAME IS DETERMINABLE AS ON THE DATE OF THE ORDER GRANTING THE REFUND, WHICH TRANSL ATES TO A REGULAR ASSESSMENT ORDER. THUS, THE CONFLUENC E OF THE PRINCIPLE IS EVIDENT BOTH IN CASES OF INTEREST DUE TO THE APPELLANT AND THAT DUE FROM HIM IN BOTH THESE SECTIONS OF LAW. 4.2.1. I FIND THAT THE ABOVE PRINCIPLES ARE JUDICIA LLY RECOGNIZED IN SOUTH INDIAN BANK LTD V. CIT (2010) 3 25 ITR 517 (KER) WHERE THE LD. HIGH COURT ALSO REFERRE D TO THE MANDATORY NATURE OF THE LEVY AS BROUGHT OUT IN THE APEX COURT JUDGMENT IN CIT V. ANJUM MH GHASWALA (2001) 252 ITR 1 (SC). THE LD. SUPREME COURT ALSO HELD IN ITO V. KL SRIHARI (HUF) (2001) 250 ITR 193, ALSO IN THE GENERAL CONTEXT OF SEC. 234B(3), THAT REASSESSMENT AMOUNTS TO A FRESH ASSESSMENT OF THE ENTIRE INCOME EFFACING THE ORIGINAL ORDER. 3.2. AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE US WITH THE PRESENT APPEAL. DURING THE COURSE OF HEARING, THE LEARNED AR SUBMITTED THAT THE LEARNED CIT (A) ERRED IN DECLINI NG TO CONSIDER THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO CO MMENCEMENT OF BUSINESS, ASSUMING THAT THE ISSUE STOOD SETTLED BY THE EARLIER ORDERS AND NO FRESH FINDING WAS GIVEN BY THE TRIBUN AL; THAT THE CIT (A) FAILED TO APPRECIATE THAT THE TRIBUNAL HAD SET-ASIDE THE ASSESSMENT FOR FRESH ADJUDICATION AND, CONSEQUENTLY , HAD NOT GIVEN A SPECIFIC FINDING WITH REGARD TO COMMENCEMEN T OF BUSINESS THOUGH THE ISSUE WAS BEFORE IT WHICH WOULD NOT MEAN A ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 9 OF 21 FINDING IN THIS REGARD WAS NOT GIVEN BY THE TRIBUNA L WHEN IT DIRECTED THE AO TO CONSIDER THE ISSUES AFRESH TO AD JUDICATE IN THE SET ASIDE PROCEEDINGS. IT WAS, FURTHER, SUBMITTED THAT THE CIT (A) FAILED TO APPRECIATE THE COMMENCEMENT OF BUSINESS W AS NOT THE COMMENCEMENT OF COMMERCIAL PRODUCTION WHEN THE ASSE SSEE WAS CARRYING ON VARIOUS ACTIVITIES AND THAT THE ASSESSE E HAVING COMMENCED THE CONSULTANCY BUSINESS W. E. F 1.10.199 1, HE OUGHT TO HAVE HELD THAT THE BUSINESS HAS BEEN COMMENCED I N THE RELEVANT YEAR W. E. F 1.10.1991 AND OUGHT TO HAVE D IRECTED THE AO TO ALLOW THE EXPENDITURE POST-COMMENCEMENT OF BUSIN ESS UNDER THE HEAD BUSINESS AND TO ARRIVE AT THE BUSINESS L OSS, IF ANY, TO BE SET OFF AGAINST THE INCOME FROM OTHER SOURCES. IT WAS ALSO CONTENDED THAT THE CIT (A) ERRED IN UPHOLDING THE L EVY OF INTEREST U/S 234B OF THE ACT UNTIL THE DATE OF PRESENT ASSES SMENT WITHOUT APPRECIATING THAT THE INTEREST LEVY WAS TO BE PEGGE D TO THE DATE OF FIRST REGULAR ASSESSMENT I.E., 31.3.1995 OR IN THE ALTERNATIVE UP- TO 25.3.1999. IT WAS, FURTHER, ARGUED THAT THE CIT (A) OUGHT TO HAVE APPRECIATED THAT THE AO HIMSELF HAD CATEGORICA LLY ACCEPTED THAT THE LEVY OF INTEREST CAN BE ONLY UP-TO 25.3.19 99 THOUGH IT WAS ACTUALLY LEVIED UP-TO 19.7.2007 AND IN THE CIRC UMSTANCES, THE CIT (A), IT WAS CONTENDED, OUGHT TO HAVE ACCEPT ED THE ASSESSEES CONTENTION AND RESTRICTED THE LEVY ONLY UP-TO THE FIRST REGULAR ASSESSMENT. 3.2.1. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE STAND OF THE AUTHORITIES BELOW. ILLUSTRATING FURTH ER, THE LEARNED DR ARGUED THAT THE ASSESSEES CLAIM OF COMMERCIAL P RODUCTION HAVING BEEN STARTED ON 1/10/1991 WAS REJECTED BY TH E AO; THE ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 10 OF 21 ENTIRE INCOME WAS BROUGHT TO TAX UNDER OTHER SOURC ES. FINALLY, WHEN THE ISSUE OF ALLOCATION OF SUM OF RS.11,82,039 /- AND CHARGING OF INTEREST U/S 234B OF THE ACT CAME UP FO R ADJUDICATION, IT WAS SUBMITTED THAT THE THEN CIT ( A) DIRECTED THE AO TO ALLOCATE THE SUM OF RS.11.82 LAKHS TOWARDS OT HER CAPITAL ASSETS INSTEAD AND ALSO CHARGE INTEREST U/S 234B OF THE ACT ONLY FROM 1.4.92 TO 31.3.1995. SUBSEQUENTLY, WHEN THE I SSUES WERE RAISED BY BOTH THE PARTIES BEFORE THE EARLIER BENCH OF THIS TRIBUNAL, THE LEARNED DR SUBMITTED, THE TRIBUNAL RE MANDED BOTH THE ISSUES TO THE AO WITHOUT EVEN CONSIDERING THE I SSUES ON MERITS. IT WAS, THEREFORE, CONTENDED THAT SINCE TH E TRIBUNAL ONLY SOUGHT THE AO TO HAVE A RE-LOOK AT THE ISSUES AND D ID NOT GIVE ANY SPECIFIC DIRECTIONS/ADVICE ON MERITS; THERE WAS NO ANY INFIRMITY EITHER IN THE ORDER OF THE AO OR THE FIND INGS OF THE CIT (A) WARRANTING THIS BENCHS INTERFERENCE. 3.3. WE HAVE CAREFULLY CONSIDERED THE RIVA L SUBMISSIONS, PERUSED THE RELEVANT MATERIALS ON RECORD, THE FINDI NGS OF THE CIT (A) AND ALSO THE EARLIER BENCH OF THIS TRIBUNAL. 3.3.1. AT THE OUTSET, WE WOULD LIKE TO REIT ERATE THAT THE CIT (A) ERRED IN COMING TO A CONCLUSION THAT THE EARLIE R BENCH HAD SET-ASIDE THE MATTER RAISED BY THE REVENUE FOR FRES H CONSIDERATION WITHOUT GOING INTO MERITS. HE HAD, F URTHER, COME TO THE CONCLUSION THAT THE APPELLANT HAD FILED CERTAIN CROSS OBJECTIONS RAISING CERTAIN OTHER ISSUES WHICH WERE NOT ADJUDICATED IN THE TRIBUNALS ORDER OF REMAND, AND EVEN NEITHER CONSIDERED ON ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 11 OF 21 MERITS [REFER: PARA 4 OF CIT (A)S ORDER]. AS A MATTER O F FACT, THE LEARNED AR SUBMITTED DURING THE COURSE OF HEARING B EFORE THE EARLIER BENCH THAT THE ISSUE SHOULD BE SET-ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION. ON HIS PART, THE LEARNE D DR AGREED WITH THE PROPOSITION OF THE LEARNED AR THAT THE ISS UE SHOULD BE SET-ASIDE TO AO FOR FRESH ADJUDICATION. AFTER TAKI NG COGNIZANCE OF THE UNANIMOUS SUBMISSIONS OF BOTH THE PARTIES, THE BENCH SET ASIDE THE MATTER TO THE FILE OF THE AO FOR FRESH AD JUDICATION. WHEN BOTH THE PARTIES PLEADED FOR RESTORATION OF THE ENT IRE MATTER (ISSUES) FOR FRESH ADJUDICATION AT THE LEVEL OF THE AO, IN OUR VIEW, THE CIT (A) WAS NOT JUSTIFIED IN TAKING A STAND THA T (AT THE COST OF REPETITION) 4.1.FROM THE SEQUENCE OF EVENTS RELATING TO THE CASE, IT BECOMES CLEAR THAT THE ONLY ISSUE SURV IVING FOR ADJUDICATION AS PER THE ORDER OF THE ITAT SETTING A SIDE THE SAME, CONCERNS THE CHARGING OF INTEREST UNDER SECTION 234 B. I HAVE TO AGREE WITH THE AO THAT WITH RESPECT TO THE AMORTIZA TION OF EXPENDITURE VIS--VIS THE CLAIM OF COMMERCIAL PRODU CTION HAVING BEGUN ON 1 OCTOBER 1991, THE ISSUE HAD ALREADY REAC HED FINALITY IN THE ASSESSMENT ORDER OF 30 NOVEMBER 2000, AND NO LONGER SURVIVE FOR CONSIDERATION. IN FACT, THIS MATTER AP PEARS TO HAVE BECOME FINAL AT THE FIRST APPELLATE STAGE ITSELF. HENCE, I FIND NO REASON TO ADJUDICATE ON THESE GROUNDS WHICH ARE NOT FOUND TO BE AVAILABLE FOR ADJUDICATION SINCE DUE EFFECT HAS BEE N GIVEN TO THE DIRECTIONS OF THE ITAT, BANGALORE ALREADY BY THE AO SETTLING THE ORIGINAL GRIEVANCE OF THE APPELLANT.. 3.3.2. IN THIS CONNECTION, WE WOULD LIKE TO REFER TO THE OBSERVATION OF THE EARLIER BENCH OF THE TRIBUNAL AS UNDER: (ON PAGE 1)..THE SOLE ISSUE AGITATED BY THE REVEN UE IS THE DIRECTION OF THE CIT (A) TO THE ASSESSING OF FICER ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 12 OF 21 WHEREIN HE DIRECTED THE ASSESSING OFFICER TO LEVY I NTEREST UNDER SECTION 234B UP-TO THE PERIOD 31.3.95 I.E., T HE DATE OF ORIGINAL ASSESSMENT UNDER SECTION 143(3). THE CROSS OBJECTION IS FILED BY THE ASSESSEE ON THE FOL LOWING GROUNDS: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE ASSESSING AUTHORITY TO LOCATE (SIC) ALLOCATE RS.11,82,039/- BEING THE PRE-OPERATIVE EXPENSES TOWARDS THE CAPITAL ASSET AS CLAIMED BY THE RESPONDENT. II. THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE ASSESSING AUTHORITY TO FOLLOW THE ORDER OF THE CIT (APPEALS) IN ITA 167/DCIT 8(1)/00-01 DATED 13.9.2002 IN THE RESPONDENTS OWN CASE FOR THE PURPOSE OF ALLOCATION OF THE ABOVE EXPENDITURE TOWARDS CAPITAL ASSET. 2. THE ASSESSEE HAS FILED ADDITIONAL GROUNDS OF CRO SS OBJECTION WHICH READS AS UNDER: THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THAT THE BUSINESS OF THE RESPONDENT HAD STARTED DURING THE RELEVANT ASSESSMENT YEAR AND CONSEQUENTLY OUGHT TO HAVE DIRECTED THE ASSESSING AUTHORITY TO SET OFF TH E BUSINESS LOSS AS RETURNED 3. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED A PAPER BOOK CONSISTING OF PAGES 1 82. HIS SUBMISSION IS THAT THE ISSUE SHOULD BE S ET ASIDE TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION. THE LEARNED DEPARTMENTAL REPRESENTAT IVE AGREED WITH THIS PROPOSITION THAT THE ISSUE SHOULD BE SET ASIDE TO ASSESSING OFFICER FOR FRESH ADJUDICATION. 4. AS BOTH THE PARTIES HAVE REQUESTED THAT THE ISS UE TO BE SET ASIDE TO THE FILE OF ASSESSING OFFICER, WE D O NOT GO INTO THE MERITS OF THE GROUNDS OF APPEAL OR CROSS OBJECTION IN THIS CASE. WE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 13 OF 21 3.3.3. WHEN THE ISSUES RAISED BY BOTH THE PARTIES AND ALSO THE ADDITIONAL GROUNDS OF CROSS OBJECTION OF THE ASSESS EE WERE FORMED AS PART OF THE ORDER OF THE TRIBUNAL AND THAT BOTH THE REPRESENTATIVES HAVE UNANIMOUSLY PLEADED TO SET-ASI DE THE ISSUES TO THE FILE OF THE AO FOR FRESH ADJUDICATION , THE CIT (A) HAD GROSSLY ERRED IN COMING TO A CONCLUSION THAT THE ON LY ISSUE OF CHARGING OF INTEREST U/S 234B OF THE ACT SURVIVES F OR ADJUDICATION. IF THAT WERE TO BE SO, THE EARLIER B ENCH WOULD HAVE GIVEN A SPECIFIC DIRECTION TO THE AO TO ADDRESS ONLY ISSUE OF CHARGING OF INTEREST U/S 234B OF THE ACT AS ASCRIBE D BY THE CIT (A). MOREOVER, WHEN THE ASSESSEE HAD SOUGHT TO RAI SE AN ADDITIONAL GROUND IN ITS CROSS OBJECTION, THERE WAS NO TRACE OF ANY OBJECTION FROM THE THEN LEARNED DR FOR ADMITTIN G SUCH AN ADDITIONAL GROUND BY THE BENCH. THIS CLEARLY VINDI CATES THAT THE LEARNED DR WAS IN AGREEMENT FOR SETTING ASIDE THE I SSUES RAISED BY THE REVENUE AND THE ASSESSEE IN TOTO AND RESTORE THE SAME TO THE FILE OF THE AO FOR FRESH ADJUDICATION. THUS, I T IS EXPLICIT THAT AFTER HAVING DULY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO THE FACTS OF THE ISSUE, THE EARLIER BENCH THOUGHT IT FI T TO ACCEDE TO THE REQUEST OF BOTH THE PARTIES. ANOTHER GLARING CONTR ADICTORY STAND OF THE AO AND THE CIT (A) WERE OBSERVED IN RESPECT OF COMMERCIAL PRODUCTION, NAMELY, THE AO HAD STATED IN HIS RE-ASS ESSMENT PROCEEDINGS [ASSESSMENT ORDER DATED 19.7.2007] U/S 143(3) R.W. S. 254(1) OF THE ACT THAT 3.IN THE SAID ORDERS A CLEAR CUT FINDING WAS RECORDED TO THE EFFECT THAT THE COMMERCIAL PROD UCTION HAD NOT COMMENCED DURING THE PREVIOUS YEAR RELEVANT TO AY 1 992-93. IN THE CIRCUMSTANCES, THE POINTS RAISED IN THE CROSS O BJECTION DOES NOT EXIST AT ALL FOR CONSIDERATION NOW. WHEREAS THE CIT (A), IN HIS REASONING, HAS AVERRED THAT 4.1.1.I HAVE TO AGREE WITH THE AO ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 14 OF 21 THAT WITH RESPECT TO THE AMORTIZATION OF EXPENDITUR E VIS-A-VIS THE CLAIM OF COMMERCIAL PRODUCTION HAVING BEGUN ON 1 OC TOBER, 1991, THE ISSUE HAD ALREADY REACHED FINALITY IN THE ASSES SMENT ORDER OF 30 NOVEMBER 2000, AND NO LONGER SURVIVES FOR CONSID ERATION. THUS, THERE WAS CONFLICTING OBSERVATION OF THE AO A S WELL AS CIT (A) ON THE ISSUE. FURTHER, THE CIT (A) WAS ALSO IN CORRECT IN OBSERVING THAT THE ITAT DID NOT EXAMINE THE ISSUE O N MERITS AT ALL, BUT, ONLY ADVISED TO RE-LOOK BY THE AO. WHEN BOTH THE PARTIES HAVE PLEADED FOR RESTORATION OF THE ISSUE(S ) TO THE AO FOR FRESH ADJUDICATION, NATURALLY, THE EARLIER BENCH WA S LEFT WITH NO OTHER ALTERNATIVE, BUT, TO ACCEDE TO THEIR REQUESTS . LIKEWISE, AFTER HAVING DULY CONSIDERED OF ITS ADMISSIBILITY, THE EA RLIER BENCH RESTORED THE ADDITIONAL GROUND OF THE CROSS OBJECTI ON OF THE ASSESSEE ALSO ALONG WITH THE ISSUES RAISED BY BOTH THE PARTIES TO THE FILE OF THE AO FOR FRESH ADJUDICATION . 3.3.4. WE HAVE ALSO NOTICED THAT THE CIT (A) HAD OBSERVED IN HIS FINDING THAT - 4.1.1......IN CASE, THE APPELLANT FELT THAT THE IT ATS DIRECTIONS WERE NOT BEING ACCEDED TO, THE CORRECT COURSE FOR HIM [THE ASSESSEE] WOULD HAVE BEEN TO FI LE A MISCELLANEOUS PETITION BEFORE THE LD. ITAT SEEKING SPECIFIC REDRESSAL. IN THIS CONNECTION, WE WOULD LIKE TO POINT OUT THAT THE EARLIER BENCH HAD, AFTER HAVING CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND, PARTICULARLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAVING AGREED WITH THE PROPOSITION THAT THE ISSUE SHOULD BE SET ASIDE TO ASSESSING OFFICER FOR FRESH ADJUDICATION , RECORDED ITS FINDINGS THAT 4. AS BOTH THE PARTIES HAVE REQUESTED THAT THE ISSUE TO BE SET ASIDE TO FI LE OF ASSESSING ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 15 OF 21 OFFICER, WE DO NOT GO INTO THE MERITS OF THE GROUND S OF APPEAL OR CROSS OBJECTION IN THIS CASE. WE SET ASIDE THE MAT TER TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION. THIS OBSERVATION OF THE EARLIER BENCH CLEARLY VINDICATES THAT THE LEARN ED DR HAD; IN FACT, UNRESERVEDLY CONCEDED WITH THE ARS REQUEST. HAD THE REVENUE FELT THAT ISSUES RAISED BY THE ASSESSEE BEF ORE THE TRIBUNAL DOES NOT ARISE OUT OF CIT (A)S ORDER, IT WAS FOR THE REVENUE TO HAVE COME UP BEFORE THE TRIBUNAL WITH A MISCELLANEOUS PETITION. IN OTHER WORDS, WHEN THE DR AGREED THAT THE ISSUES RAISED BY BOTH THE ASSESSEE AND THE REVE NUE BE RESTORED TO THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION AND THE TRIBUNAL ORDER HAVING ATTAINED FINALITY, THE TRIBUN ALS DIRECTION CANNOT BE CIRCUMVENTED. THEREFORE, THE OBSERVATION OF THE CIT (A) ON THE ISSUE, IN OUR OPINION, WAS, , OUT OF CONTEXT . 3.3.5 TAKING INTO ACCOUNT ALL THE FACTS AND CIRC UMSTANCES OF THE ISSUE AS DISCUSSED EXHAUSTIVELY IN THE FORE- GOING PARAGRAPHS, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE NOT PROPERLY UNDERSTOOD THE DIRECTIONS OF THE EARLI ER BENCH IN A BETTER PERCEPTION FOR WHICH IT WAS INTENDED TO. 3.3.6. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE REQUIRES FRESH ADJUDICATION AT THE LEVEL OF THE AO, FOR WHICH, THE MATTER IS YET AGAIN RESTORED ON THE FILE OF THE AO WITH A SPECIFIC DIRECTION TO ADDRESS TO THE ISSUES RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION AS WELL AS THE ADDITIONAL ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 16 OF 21 GROUND WHICH WAS DULY ADMITTED BY THE EARLIER BENCH AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE PROV ISIONS OF THE ACT AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY. 4. THE SECOND GROUND IN RESPECT OF CAPITALI ZATION OF PRE- COMMENCEMENT BUSINESS EXPENSES RAISED BY THE ASSESS EE IN ITS MEMORANDUM OF APPEAL IS NOT ADJUDICATED AS NO ARGUM ENT WAS PUT-FORTH BY THE LEARNED AR DURING THE COURSE OF HE ARING BEFORE THIS BENCH. 5. WITH REGARD TO THE LEVY OF INTEREST U/S 234B OF THE ACT, THE SUBMISSION OF THE ASSESSEE WAS THAT WHEN THE AS SESSMENT WAS ORIGINALLY CONCLUDED, THE INCOME OF THE ASSESSE E WAS DETERMINED AT RS.65,76,980/- AND THE INTEREST U/S 2 34B OF THE ACT WAS CHARGED AT RS.14,55,913/-. HOWEVER, IN THE ASSESSMENT ORDER UNDER DISPUTE, IT WAS SUBMITTED, THOUGH THE I NCOME DETERMINED WAS RS.61,79,980/-, THE INTEREST CHARGED WAS RS.33,12,792/- ON A TAX DEMAND OF RS.19,71,949/- WH ICH WAS ARBITRARY AND INCORRECT. THE LEARNED AR FURTHER SU BMITTED THAT THE AO APPEARED TO HAVE CALCULATED THE INTEREST UP- TO THE DATE OF THE ASSESSMENT ORDER [19.7.2007] EVEN THOUGH, IN TH E BODY OF THE ORDER, HE HAD AVERRED THAT INTEREST U/S 234B WAS CHARGED UP-TO 25.3.1999. IT WAS, THEREFORE, PLEADED THAT THE INTEREST CHARGEABLE, AS CONCEDED BY THE AO IN HIS ORDER UNDE R DISPUTE, BE RESTRICTED UP-TO 25.3.1999 [RS.14.55 LAKHS] AND, TH US, THE EXCESS INTEREST CHARGED REQUIRES TO BE DELETED. ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 17 OF 21 5.1. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION O F THE LEARNED AR AND ALSO PERUSED THE RELEVANT ASSESSMENT ORDER UNDER CONSIDERATION. AS COULD BE SEEN FROM THE ASS ESSMENT ORDER MADE U/S 143(3) R.W.S. 250 OF THE ACT DATED 2 5.3.1999, THE INTEREST CHARGED U/S 234B OF THE ACT WAS ONLY RS.1 4,55,913/- [SOURCE: PAGES 19 TO 27 OF PB AR]. IN THE ASSESSME NT ORDER U/S 143(3) R.W.S. 254(1) OF THE ACT DATED 19.7.2007 UND ER CONSIDERATION, EVEN THOUGH, THE AO HAD STATED AT PA RA 4 OF THE ORDER THAT .. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE INTEREST U/S 234B IS CHARGED UP-TO 25.3.1999 , HOWEVER, IN THE COMPUTATION OF TAXES, INTEREST CHARGED WAS AT R S.33,12,792/- [REFER PAGE 5 OF THE ASST. ORDER] OBVIOUSLY BY OVER SIGHT. 5.1.1. AT THIS POINT OF TIME, LET US ANALYZE THE PROVISIONS OF S. 234B OF THE ACT ON THE ISSUE. 234B. INTEREST FOR DEFAULTS IN PAYMENT OF ADVANCE- TAX: (1) SUBJECT TO THE OTHER PROVISIONS OF THIS SE CTION, WHERE, IN ANY FINANCIAL YEAR, AN ASSESSEE WHO IS LIABLE TO PAY ADVANCE TAX UNDER SECTION 208 HAS FAILED TO PAY SUCH TAX OR, WHERE THE ADVANCE TAX PA ID BY SUCH ASSESSEE UNDER THE PROVISIONS OF SECTION 21 0 IS LESS THAN NINETY PER CENT OF THE ASSESSED TAX, T HE ASSESSEE 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 1 ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR TO THE DAT E OF DETERMINATION OF TOTAL INCOME UNDER SUB-SECTION (1) OF SECTION 143 AND WHERE A REGULAR ASSESSMENT IS MADE, TO THE DATE OF SUCH REGULAR ASSESSMENT, ON AN AMOUNT EQUAL TO THE ASSESSED TAX OR, AS THE CASE MAY BE, ON THE AMOUNT BY WHICH THE ADVANCE TAX PAID AS AFORESAID FALLS SHORT OF THE ASSESSED TAX. ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 18 OF 21 EXPLANATION 1- IN THIS SECTION, ASSESSED TAX MEAN S THE TAX ON THE TOTAL INCOME DETERMINED UNDER SUB-SECTIO N (1) OF SECTION 143 AND WHERE A REGULAR ASSESSMENT IS MA DE, THE TAX ON THE TOTAL INCOME DETERMINED UNDER SUCH REGULAR ASSESSMENT AS REDUCED BY THE AMOUNT - (I). 5.1.2. IN THE INSTANT CASE, EVEN THOUGH THE REGULAR ASSESSMENT MADE U/S 143(3) OF THE ACT MADE ON 31.3. 1995 WAS SET-ASIDE BY THE THEN CIT (A)-III VIDE HIS APPELLAT E ORDER DATED 29.3.1996 TO REDO THE ASSESSMENT AFRESH, THE ASSESS MENT ORDER PASSED U/S 143(3) R.W.S. 250 OF THE ACT DATED 25.3. 1999 BASED ON THE APPELLATE ORDER (SUPRA) WOULD NOT BECOME THE REGULAR ASSESSMENT. THE ASSESSMENT MADE U/S 143(3) DATED 31.03.1995 WOULD REMAIN THE REGULAR ASSESSMENT. THE AMOUNT DUE TO THE GOVT. WOULD BE COMPENSATED BY THE AUTOMA TIC LEVY OF INTEREST U/S 220(2), IF THE DEMAND IS NOT MET BY TH E ASSESSEE PURSUANT TO ASSESSMENT ORDER DATED 31.03.1995. 5.1.3. AT THIS JUNCTURE, WE REFER TO THE SPECIFIC P ROVISIONS OF S. 234 B(4) OF THE ACT WHICH PRESCRIBE THAT 234B (4) WHERE, AS A RESULT OF AN ORDER UNDER SECTION 154 OR SECTION 155 OR SECTION 250 OR SECTIO N 254 OR SECTION 260 OR SECTION 262 OR SECTION 263 OR SECTION 264 OR AN ORDER OF THE SETTLEMENT COMMISSIO N UNDER SUB-SECTION (4) OF SECTION 245D, THE AMOUNT O N WHICH INTEREST WAS PAYABLE UNDER SUB-SECTION (1) OR SUB-SECTION (3) HAS BEEN INCREASED OR REDUCED, AS T HE CASE MAY BE, THE INTEREST SHALL BE INCREASED OR REDUCED ACCORDINGLY, AND- (I) IN A CASE WHERE THE INTEREST IS INCREASED, THE ASSESSING OFFICER SHALL SERVE ON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM SPECIFYING THE SUM PAYABLE AND SUCH NOTICE OF DEMAND SHALL BE DEEMED TO BE A NOTICE UNDER ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 19 OF 21 SECTION 156 AND THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY; (II) IN A CASE WHERE THE INTEREST IS REDUCED, THE EXCESS INTEREST PAID, IF ANY, SHALL BE REFUNDED. 5.1.4. IN THE PRESENT CASE, THE ASSESSMENT WAS U/S 143(3) OF THE ACT ON 31.3.1995 WITH A TAXABLE INCOME OF RS.65 ,76,980/- AND INTEREST U/S 234B OF THE ACT WAS CHARGED AT RS. 17,28,233/-. SUBSEQUENTLY, WHEN AN ASSESSMENT WAS MADE IN COMPLI ANCE WITH THE ORDER CIT (A) DATED 29.3.1996 U/S 143(3) R .W.S. 250 OF THE ACT ON 25.3.1999 ON A TOTAL INCOME OF RS.65,76, 980/- INTEREST U/S 234B OF THE ACT WAS CHARGED AT RS.14,5 5,913/- [REFER PAGE 27 OF PB]. THE ASSESSMENT WAS AGAIN MA DE ON 31.11.2000 IN CONSONANCE WITH THE CIT (A)S ORDER D T. 17.8.1999 U/S 143(3) R.W. S. 250 ON A REDUCED TOTAL INCOME OF RS.64,79,980 AND THE INTEREST U/S 234B WAS CHARGED AT RS.14,19,7 68 [REFER: PAGE 38 OF PB]. WHILE GIVING EFFECT TO THE ORDER O F THE CIT (A)-III DATED 18.3.2003, THE AO, VIDE HIS ORDER DATED 13.6. 2003 ON A TAXABLE INCOME OF RS.64,79,980/- HAD LEVIED INTERES T U/S 234B OF RS.14,19,768/-. HOWEVER, IN THE ASSESSMENT ORDER U /S 143(3) R.W.S. 254(1) OF THE ACT DATED 19.7.2007 UNDER DISP UTE, THE AO HAD DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 61,79,980/- WHICH WAS OBVIOUSLY LESS THAN THE INCOME DETERMINED EARLIER AT RS,65,76,980/-, INTEREST U/S 234B OF THE ACT WAS CALCULATED AT RS. 33,12,790/- ON A TAX DEMAND OF RS.19,71,949/-. WHEN THE INCOME OF THE ASSESSEE HAS, OF LATE, BEEN DETERMINED AT A LESSER AMOUNT U/S 143(3) R.W.S . 254(1) OF THE ACT DATED 19.7.2007 THAN WHAT HAS BEEN DETERMIN ED EARLIER AT RS.64,79,980/-, OBVIOUSLY, THE INTEREST CHARGED U/S 234B OF ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 20 OF 21 THE ACT SHOULD HAVE BEEN LESSER IN VIEW OF S. 234B( 4) OF THE ACT. THE AO IS, THEREFORE, DIRECTED TO CHARGE INTEREST U /S 234B OF THE ACT ON THE TAXABLE INCOME ARRIVED AT IN THE ORIGINA L ORDER PASSED ON 31.3.1995. IT IS ORDERED ACCORDINGLY. 5.1.5. BEFORE PARTING WITH, WE WOULD LIKE TO POINT OUT THAT THE CASE LAW [SOUTH INDIAN BANK LTD V. CIT (2010) 325 ITR 517 (KER)] CITED BY THE CIT (A) HAS NO RELEVANCE TO THE ISSUE UNDER CONSIDERATION, IN THE SENSE THAT IN THAT CASE THE L OSS SHOWN IN THE ORIGINAL RETURN WAS ACCEPTED U/S 143(1)(A) OF T HE ACT AND AS SUCH NO INTEREST U/S 234B OF THE ACT WAS PAYABLE. SUBSEQUENTLY, THE ASSESSMENT WAS RE-OPENED U/S 147 OF THE ACT AND, ACCORDINGLY, ASSESSED ON A NET INCOME OF OVER RS.16 CRORES FOR WHICH ALSO NO INTEREST U/S 234B OF THE ACT WAS RAISED. HOWEVER, PURSUANT TO THE REVISED REASSESSMENT U/S 1 47 OF THE ACT, THE AO LEVIED INTEREST U/S 234B OF THE ACT. WH EN THE ISSUE HAD FINALLY REACHED THE HONBLE COURT FOR ADJUDICAT ION, THE HONBLE KERALA HIGH COURT UPHELD THE STAND OF THE A O ON THE PREMISE THAT WHEN THE REVISED LOSS RETURN WAS ACCEPTED IN THE ORIGINAL ASSESSMENT, THERE WAS NO LIABILITY FOR ANY ADVANCE TAX AND SO NO INTEREST WAS FOUND PAYABLE U/S 234 B(1). THE OMISSION OF THE OFFICER TO LEVY INTEREST U/S 234 B(3) IN THE REASSESSMENT COMPLETED U/S 147 WHICH COULD HAVE BEEN RECTIFIED U /S 154 DID NOT DESIST THE OFFICER FROM LEVYING INTEREST UNDER THE VERY SAME PROVISION, WHEN THE REASSESSMENT WAS REVISED A SECO ND TIME U/S 147. THE LEVY OF INTEREST U/S 234B WAS VALID. HOWEVER, IN THE PRESENT CASE WHEN THE ORIGINAL ASSESSMENT WAS CONCL UDED ON A ITA NO.664 OF 2012 NAMTECH ELECTRONIC DEVUCES PVT L TD BANGALORE PAGE 21 OF 21 TOTAL INCOME OF RS.65.76 LAKHS, INTEREST U/S 234B O F THE ACT WAS CHARGED AT RS.17.28 LAKHS AND FINALLY WHEN THE RE-A SSESSMENT WAS CONCLUDED U/S 143(3) R.W.S. 254(1) OF THE ACT O N A REDUCED INCOME OF RS.61.79 LAKHS, THE INTEREST CHARGEABLE U /S 234B OF THE ACT CANNOT BE HIGHER THAN WHAT HAS BEEN LEVIED IN THE ORIGINAL ASSESSMENT. 6. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2013. SD/- SD/- (N. BARTHVAJASANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER BANGALORE DATED 20 TH DECEMBER, 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE