M/s ITC Limited, Kolkata V. CIT, KOLKATA-III, Kolkata

ITA 684/KOL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3173 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P KHAITAN; BIKASH CHANDRA
• Keywords: Opportunity of being heard
• Section: 43B; 143(3); 244A; 142(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 301 / KOL / 2015 ASSESSMENT YEAR :2009-10 ITA NO.684/KOL/2014 ASSESSMENT YEAR: 2008-09 ITA NO.1027/KOL/2013 ASSESSMENT YEAR: 2007-08 ITC LIMITED 37, J L.NEHRU ROAD, KOLKATA-700 071 [ PAN NO.AAACI 5950 L ] V/S . COMMISSIONER OF INCOME TAX, KOLKATA-3, P-7 CHOWRINGHEE SQUARE, KOLKATA 700 069 /APPELLANT .. / RESPONDENT / /BY ASSESSEE SHRI J.P.KHAITAN, SR. ADVOCATE & SHRI BIKASH CHANDRA, ADVOCATE /BY RESPONDENT NONE /DATE OF HEARING 15-12-2015 ! /DATE OF PRONOUNCEMENT 03-02-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE THREE APPEALS ARE FILED BY THE SAME ASSESSEE AGAINST ORDERS OF COMMISSIONER OF INCOME TAX-3, KOLKATA IN APPEALS NO .CIT-3/KOL/263/2014- 15/6030-32, CIT-III/DC(HQ)-3/KOL/243/U/S263/2013-14 /7183-85-2012-13/ 8984 DATED 18/19/03/2015, 26.03.2014 & 30.03.2013. ASSES SMENTS WERE FRAMED BY ACIT,RANGE-8,/JCIT(OSD) CIRCLE-8/DCIT, CIRCLE-8, KO LKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE THEIR ORDERS DATED 31.03.2013, 28.12.2011 AND 31.12.2010 FOR ASS ESSMENT YEARS 2009-10, 2008-09 & 2007-08 RESPECTIVELY. ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 2 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F REVENUE AND DR FILED THE ADJOURNMENT APPLICATION FOR 16 CASES. THE BULK ADJOURNMENT IN 16 CASES IS NOT ACCEPTED. SO WE DECIDED TO HEAR THESE CASES WITHOUT THE APPEARANCE OF LD. DR FROM REVENUE. HOWEVER, IN THE PRESENT CASES, WE FIND THAT THESE ARE OLD APPEALS AND HAVE BEEN FIXED FOR HEARING AS MANY AS EIGHT TIMES (INCLUDING TODAYS HEARING). HENCE, WE REJECT ED THE ADJOURNMENT APPLICATION AND PROCEEDED FOR HEARING LD. SENIOR AU THORIZED REPRESENTATIVE, SHRI J.P.KHAITAN AND BIKASH CHANDA APPEARING ON BEH ALF OF ASSESSEE. 3. SINCE THE ISSUES RAISED BY ASSESSEE IN THESE APP EALS RELATE TO COMMON ISSUE, THEREFORE, WE ARE HEARING THEM TOGETHER FOR THE SAKE OF CONVENIENCE AND DISPOSING THEM BY PASSING A CONSOLIDATED ORDER. WE TAKE A LEAD CASE IN ASSESSEES APPEAL IN ITA NO.301/KOL/2015 FOR THE AY 2009-10 WHICH IS REPRODUCED BELOW:- 1. FOR THAT THE ORDER MADE BY THE LEARNED COMMISSI ONER OF INCOME TAX UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 I S ILLEGAL, INVALID AND NOT SUSTAINABLE IN LAW. 2. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX, ERRED IN LAW AS WELL AS IN FACTS IN HOLDING THAT THE ASSESSING OFFI CER WAS NOT JUSTIFIED IN ALLOWING DOUBLE DEDUCTION FOR EXCISE DUTY ON CLOSIN G STOCK SINCE THE EXCISE DUTY INCLUDED IN THE VALUE OF CLOSING STOCK HAD BEEN OFFSET BY WAY OF DEBIT IN THE PROFIT & LOSS ACCOUNT. 3. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN TREATING THE SAID DEDUCTION FOR EXCISE DUTY ON CLOS ING STOCK AS A DOUBLE CLAIM SINCE THE SAME WAS NOT CHARGED TO THE PROFIT & LOSS ACCOUNT. 4. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISALLOWING THE SAID CLAIM ALTHOUGH IT REPRESENTED EXCISE DUTY PAID ON CLOSING STOCK FULLY ALLOWABLE UNDER THE PROVISIONS OF SECTION 43B AND IN ACCORDANCE WITH THE RATIO OF THE HON'BLE SUPREME CO URTS DECISION IN BERGER PAINTS INDIA LTD. VS. CIT [266 ITR 99 (2004) ] (SC)]. 5. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN TREATING THE SAME AS PREJUDICIAL TO THE INTERESTS O F REVENUE SINCE THE APPELLANT COMPANY HAD REVERSED AND OFFERED THE EXCI SE DUTY CLAIMED ON CLOSING STOCK IN THE FOLLOWING YEAR I.E. ASSESSMENT YEAR 2010-11, WHEN THE INCOME TAX RATE HAD REMAINED UNCHANGED AT 33.99 %. ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 3 6. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN DISALLOWING INTEREST INCOME ON EXCESS DIVIDEND DIST RIBUTION TAX PAID. ANY SUCH EXCESS TAX PAID HAS TO BE REFUNDED TOGETHER WI TH INTEREST UNDER SECTION 244A, AS RIGHTLY GRANTED BY THE ASSESSING O FFICER. 7. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE COMMISSIONER OF INCOME TAX ERRED IN ASSUMING JURISD ICTION U/S. 263 OF THE ACT WHEN THE ASSESSMENT ORDER PASSED UNDER SECT ION 143(3) OF THE ACT WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE IN TEREST OF THE REVENUE. 8. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) DATED 31.3.2013 IS SET ASIDE F OR FRESH ASSESSMENT AND VERIFICATION. 4. THE FACTS IN BRIEF ARE THAT ASSESSEE IS A LIMITE D COMPANY AND ENGAGED IN VARIOUS BUSINESSES SUCH AS MANUFACTURE AND SALE OF TOBACCO PRODUCTS, CONSUMER GOODS, HOTEL BUSINESS ETC. DURING THE ASSE SSMENT PROCEEDING, AO PASSED ORDER U/S 143(3) OF THE ACT AFTER MAKING CER TAIN ADDITIONS TO THE TOTAL INCOME OF ASSESSEE. HOWEVER, LD. CIT FOUND THAT THE ORDER OF AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE ON ACCOUNT OF THE FOLLOWING REASONS : 1) THE ASSESSEE HAS CLAIMED THE DOUBLE DEDUCTION OF EXCISE DUTY FOR AN AMOUNT OF RS.868,67,87,534/- ON THE CLOSING STOCK O F FINISHED GOODS BY VIRTUE OF SEC. 43B OF THE ACT AND BY DEBITING THE P ROFIT & LOSS ACCOUNT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2009-1 0. 2) THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HA S PAID MORE DIVIDEND DISTRIBUTION TAX (DDT FOR SHORT) THAN THE ACTUAL LI ABILITY. THE AO HAS GRANTED THE REFUND OF THE EXCESS DDT ALONG WITH INT EREST FOR AN AMOUNT OF RS. 58,10,576.00 UNDER SECTION 244A OF THE ACT. THE LD. CIT FOUND THAT THERE IS NO PROVISION UNDER THE ACT FOR THE GR ANT OF INTEREST ON REFUND OF EXCESS DDT PAID. ACCORDINGLY, LD. CIT ISSUED NOTICE FOR THE CLARIFIC ATION ON THE ABOVE SUBJECT- MATTER FOR WHICH ASSESSEE SUBMITTED THAT A DEDUCTIO N OF RS.868,67,534/- IN RESPECT OF EXCISE DUTY ON CLOSING TOCK WAS CLAIMED IN THE AY 2009-10 AND ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 4 SAME WAS ADDED BACK IN THE COMPUTATION OF INCOME FO R THE SUBSEQUENT AY 2010-11. SIMILARLY A DEDUCTION OF RS.372,89,01,394/ - WAS CLAIMED IN THE EARLIER AY I.E. 2008-09 AND ADDED BACK IN THE COMPU TATION OF INCOME FOR AY 2009-10.THE TAX RATE FOR BOTH THE AYS WAS 33.99%. B ESIDES ABOVE, AO HAS ALLOWED THE RELIEF OF THE EXCISE DUTY ELEMENT IN TH E FINISHED GOODS BY VIRTUE OF THE PROVISIONS OF SEC. 43B OF THE ACT AFTER EXHAUST IVE EXAMINATION. 4.1 THE ASSESSEE IN CONNECTION WITH THE INTEREST GR ANTED UNDER SECTION 244A OF THE ACT SUBMITTED THAT THE ASSESSEE IS VERY MUCH ENTITLED FOR INTEREST ON THE EXCESS DDT PAID BY THE ASSESSEE IN TERMS OF PROVISIONS OF SEC. 244A OF THE ACT AND RELIED ON THE CBDT CIRCULAR NO. 549 DATED 31.10.1989. HOWEVER, THE LD. CIT HAS DISREGARDED THE CLAIM OF A SSESSEE BY OBSERVING THAT THE ELEMENT OF EXCISE DUTY IN THE CLOSING STOCK WAS NEUTRALIZED BY DEDUCTING THE ELEMENT OF EXCISE DUTY IN THE OPENING STOCK FOR THE RELEVANT YEAR. THEREFORE, FURTHER DEDUCTION OF EXCISE DUTY ELEMENT IN THE CLOSING STOCK WILL AMOUNT TO DOUBLE DEDUCTION. REGARDING THE INTEREST ON EXCESS DDT THE LD. CIT HELD THAT THERE IS NO PROVISION UNDER THE ACT T O ALLOW THE INTEREST ON THE REFUND OF THE EXCESS DDT PAID. THEREFORE THE INTERE ST GRANTED ON THE REFUND OF EXCESS DDT AND DOUBLE DEDUCTION OF EXCISE DUTY BY T HE ORDER OF AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE REV ENUE. HENCE, FILE WAS RESTORED TO THE FILE OF AO FOR FRESH ADJUDICATION AFTER NECE SSARY VERIFICATION OF THE FACTS AND REASONABLE OPPORTUNITY TO THE ASSESSEE. 5. AGGRIEVED, ASSESSEE HAS PREFERRED THE PRESENT AP PEAL BEFORE US. 6. WE HAVE HEARD LD. AR AND PERUSED THE MATERIALS A VAILABLE ON RECORD. LD. AR SUBMITTED PAPER BOOK WHICH CONTAINING PAGES 1 TO 208 AND SUBMITTED THAT DEDUCTION OF RS.868,67,87,534/- IN RESPECT OF EXCISE DUTY ON CLOSING STOCK WAS CLAIMED IN AY 2009-10 AND THE SAME WAS ADDED BA CK IN THE COMPUTATION OF INCOME FOR THE FOLLOWING ASSESSMENT YEAR I.E. AY 2010-11. SIMILARLY, A DEDUCTION OF RS.372,89,01,394/- WAS CLAIMED IN THE PRECEDING ASSESSMENT ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 5 YEAR I.E. AY 2008-09 AND ADDED BACK IN THE COMPUTAT ION IN AY 2009-10 THE COMPUTATION OF INCOME STATEMENTS FOR ASSESSMENT YEA RS 2008-09, 2009-10 & 2010-11 ARE PLACED ON PAGES 1 TO 6 OF THE PAPER BOO K. THE TAX RATE FOR BOTH THE YEARS WAS 33.99%. THE LD. AR DREW OUR ATTENTION ON PAGE 28 OF THE PAPER BOOK WHERE AUDITOR CERTIFICATE IS PLACED CERTIFYING THAT THE OPENING AND CLOSING STOCK DOES NOT INCLUDE THE EXCISE DUTY. OUR ATTENTI ON WAS ALSO DRAWN ON PAGE 7 & 8 OF THE PAPER BOOK WHERE THE NOTICE WAS ISSUED BY THE ASSESSING OFFICER REGARDING SEEKING THE CLARIFICATION ABOUT THE EXCIS E ELEMENT IN THE CLOSING STOCK OF THE COMPANY. THE REPLY FOR THE SAME IS PLA CED ON PAGE 15 OF THE PAPER BOOK. THE CERTIFIED TRUE COPY OF THE NOTE SHE ET EXPLAINING THE SUBMISSION AND DISCUSSION OF THE EXCISE DUTY MATTER WAS PLACED ON PAGE 46 OF THE PAPER BOOK WITH THE RELEVANT DATE 22/3/2013. THE DEDUCTION WA S CLAIMED AND ALLOWED IN THE ASSESSMENT IN LINE WITH THE JUDGMENT OF HONBLE SUPREME COURT DECISION IN THE CASE OF BERGER PAINTS INDIA LIMITED VS. CIT (2004) [266 ITR 99 (SC)]. THEREFORE, THE CLAIMING O F THE DEDUCTION FOR EXCISE DUTY ON CLOSING STOCK IN AY 2009-10 OF RS.868,67,87 ,534/- AND OFFERING IT FOR TAX IN THE NEXT ASSESSMENT YEAR I.E. AY 2010-11 WAS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE IN AY 2009-10. THE ASSESSIN G OFFICER HAD EXHAUSTIVELY EXAMINED THE ABOVE CLAIM DURING THE AS SESSMENT FOR AY 2009- 10 AND ALLOWED THE DEDUCTION IN ACCORDANCE WITH THE ABOVEMENTIONED JUDGMENTS OF HONBLE APEX COURT. 6.1 REGARDING THE PAYMENT OF INTEREST UNDER SECTION 244A IT WAS SUBMITTED THAT THE INTEREST OF RS.58,10,576/- ON REFUND OF EX CESS DDT PAID BY THE COMPANY HAS BEEN CORRECTLY GRANTED AS PER THE PROVI SIONS OF THE ACT. NONE APPEARED ON BEHALF OF REVENUE. 6.2 FROM THE AFORESAID DISCUSSION, WE FIND THAT THE LD. CIT FOUND FROM THE IMPUGNED ORDER OF THE AO THAT THE ASSESSMENT HAS BE EN FRAMED WITHOUT CONSIDERING AND EXAMINING THE ISSUE OF EXCISE DUTY ON CLOSING STOCK WHICH RESULTED THE DOUBLE DEDUCTION TO THE ASSESSEE IN PR OFIT & LOSS ACCOUNT AND IN ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 6 THE COMPUTATION OF INCOME. AT THE SAME TIME THE AO ALSO GRANTED REFUND OF EXCESS DDT PAID ALONG WITH THE INTEREST FOR WHICH T HERE IS NO PROVISION UNDER THE ACT. THEREFORE THE LD. CIT HELD THE ORDER OF TH E AO ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE REVENUE. HOWEVER, NOW TO ARRIVE AT THE CORRECT CONCLUSION OF THE CASE, WE DEEM IT NECESSARY TO REPRODUCE THE RELEVANT PROVISIONS OF S ECTION 263 OF THE ACT. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE R ECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE, MY , AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MA KING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SU CH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSE SSMENT AND DIRECTING A FRESH ASSESSMENT. THE SUM AND SUBSTANCE OF THE ABOVE REPRODUCED SECTI ON 263(1) CAN BE SUMMARIZED IN THE FOLLOWING POINTS:-: 1) THE COMMISSIONER MAY CALL FOR AN EXAMINE THE REC ORD OF ANY PROCEEDING UNDER THE ACT; 2) IF HE CONSIDERS THAT THE ORDER PASSED BY THE AO IS (I) ERRONEOUS; AND (II) IS PREJUDICIAL TO THE INTEREST OF REVENUE; 3) HE HAS TO GIVE AN OPPORTUNITY OF HEARING IN THIS RESPECT TO THE ASSESSEE; AND 4) HE HAS TO MAKE OR CAUSE TO MAKE SUCH ENQUIRY AS HE DEEMS NECESSARY; 5) HE MAY PASS SUCH ORDER THEREON AS THE CIRCUMSTAN CES OF THE CASE JUSTIFY INCLUDING, (I) AN ORDER ENHANCING OR, (II) MODIFYING THE ASSESSMENT OR (III) CANCELLING THE ASSESSMENT AND DIRECTING A FRE SH ASSESSMENT. ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 7 6.3 NOW IN THE LIGHT OF ABOVE WORDS, WE HAVE TO EXA MINE AS TO WHETHER THE ORDER OF THE LD. CIT IS A VALID ORDER IN THE LIGHT OF THE ABOVE STATED POINTS/ PROVISIONS OF SECTION 263 OF THE ACT. 6.4 REGARDING THE ISSUE OF EXCISE DUTY WE FIND FROM THE CASE IN HAND, THAT THE ISSUE WAS DULY EXAMINED BY THE AO EVIDENT AS UN DER:- (A) QUESTIONNAIRE ISSUED U/S 142(1) DT. 10.01.2013, THE RELEVANT PORTION IS EXTRACTED BELOW:- 6. AS PER THE COMPUTATION OF INCOME (REVISED) (STA TEMENT NO. 14), THE AMOUNT OF EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS AS AT 3.03.2009 IS CLAIMED U/S. 43B IN THIS ASSESSMENT YE AR AT RS.868,67,87,534/-. ON THE OTHER HAND THE AMOUNT OF EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS AS ON 31.03.2008 CL AIMED U/S. 43B IN THE AY 2008-09 AND WRITTEN BACK AS PER COLUMN NO. 2 6 OF THE COMPUTATION OF INCOME (REVISED) IS RS.372,89,01,394 /-. THEREFORE, THERE IS A NET DEDUCTION CLAIM OF RS.495,78,86,140/ -. DEDUCTION TOWARDS EXCISE DUTY PAYABLE ON CLOSING STOCK AS CLAIMED BY THE ASSESSEE BY WAY OF DEBITING IT IN THE PROFIT & LOSS ACCOUNT IS ALLOWABLE U/S. 43B OF THE INCOME TAX ACT. 1961 SUBJECT TO ITS ACTUAL PAYMENT WITHIN DUE DATE OF FILING OF THE RETURN. IF THE DEDUCTION IS ALLOWED O NCE THERE IS NO QUESTION OF FURTHER ALLOWANCE OF DEDUCTION UNDER THE SAME HE AD. IN CONNECTION WITH THE ABOVE OBSERVATIONS YOU ARE H EREBY REQUIRED TO FURNISH AN EXPLANATION IN RESPECT OF THE METHOD OF ACCOUNTING FOLLOWED FOR ACCOUNTING OF EXCISE DUTY ON CLOSING STOCK AND CLAIM OF THE SAME IN THE PROFIT AND LOSS ACCOUNT AND IN THE COMPUTATION OF INCOME U/S. 43B OF THE ACT. 8. FURNISH THE DETAILS OF DIVIDEND DISTRIBUTION TAX PAID BY THE COMPANY U/S 115) AND STATE WHETHER IT HAS BEEN PAID WITHIN THE STIPULATED TIME LIMITS AS PER THE INCOME TAX ACT, 1961. IN RESPONSE TO THE NOTICE ISSUED U/S 142(1) OF THE ACT, THE REPLY OF THE ASSESSEE STAND AS UNDER:- 1. CLAIM FOR EXCISE DUTY ON CLOSING STOCK IN THE R ETURN FOR AY 2009-10 (ITEM NO. 6 OF YOUR REQUISITION DT. 10.01.2013) I. OUT OF THE TOTAL EXCISE DUTY ON CLOSING STOCK OF RS.871.20 CRORES (WHICH HAS NOT BEEN CHARGED TO THE P&L ACCOUNT OF F Y 2008-09) WE HAVE CLAIMED IN THE RETURN FOR AY 2009-1, AS PER SECTION 43B, ONLY RS.686.68 CRORES WHICH HAS BEEN PAID WITH IN THE DUE DATE OF FILING RETURN FOR AY 2009-10. ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 8 II. THERE IS NO CHARGE OF EXCISE DUTY ON CLOSING ST OCK AS ON 31.03.2009 IN THE PROFIT AND LOSS ACCOUNT OF FY 200 8-09 I.E THE DEDUCTION FOR EXCISE DUTY ON CLOSING STOCK AS ON 31 .03.2009 OF RS.868.68 CRORES HAS NOT BEEN CLAIMED BY / ALLOWED THROUGH THE PROFIT & LOSS ACCOUNT TO THE COMPANY IN AY 2009-10. (B) ORDER SHEET ENTRY ON DATED 06.03.2013 AND 22.03 .2013 WHICH ARE PLACED AT PAGES 45 & 46 OF THE PAPER BOOK, THE RELE VANT PORTIONS ARE EXTRACTED BELOW:- 06/3/13 ARS, SHRI K. MUKHERJEE S. SEKSARIA,& SHRI G .GOEL APPEARED AND IN COURSE OF HEARING OF THE CASE, FILED THE DET AILS AS PER THE LETTER OF THE CO. DATED 06/3/2013 AND THE SAME WAS PLACED ON RECORD. THE CASE WAS PARTLY HEARD AND DISCUSSED AND ADJOURNED TO 12. 03.2013 AT 4.30 P.M. SD/- KM SD-ILLEGIBLE SD/- ILLEGIBLE SD/- ILLEGIBLE 6/3/13 6/3/13 22/3/13 ARS, SHRI S. SEKSARIA, SHRI G.GOEL AND MS K. MUKHERJEE, APPEARED AND IN COURSE OF HEARING, THE DETAILS FILE D IN RESPECT OF CLAIM EXCISE DUTY ON CLOSING STOCK U/S 43B WAS DISCUSSED AND EXPLAINED BY THEM FOR FURTHER HEARING AND DISCUSSION, THE CASE I S ADJOURNED TO 25/3/2013 AT 4.30 P.M. SD/- KM SD-ILLEGIBLE SD/- ILLEGIBLE SD/- ILLEGIBLE 22/3/13 22/3/13 FROM A PERUSAL OF THE ORDER U/S. 263 OF THE ACT, WE FIND THAT THE LD. CIT HAS EXERCISED JURISDICTION U/S. 263 OF THE ACT ON THE G ROUND THAT THE AO DID NOT CONDUCT ANY ENQUIRY WITH REGARD TO EXCISE DUTY IN C LOSING STOCK VIS--VIS SEC. 43B OF THE ACT AND GRANT OF REFUND WITH INTERE ST U/S. 244A OF THE ACT ON REFUND OF DIVIDEND DISTRIBUTION TAX. THIS IS CLEAR IF WE READ PARA-5 OF THE LD. CITS ORDER. THE FACTS ARE SET OUT IN THE EARLIER PARA-6 OF THIS ORDER, HOWEVER SHOWS THAT THE AO MADE THE NECESSARY ENQUIRIES WITH REGARD TO THE EXCISE DUTY AS WELL AS DIVIDEND DISTRIBUTION TAX. IN THE CONTEXT OF ABOVE WE FIND THE SUPPORT FROM TH E JUDGMENTS OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD . (2011) 332 ITR ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 9 167 (DEL) AND IN THE CASE OF CIT V. ANIL KUMAR SHARMA (2011) 335 ITR 83 (DEL), HELD THAT THE FACT AS TO WHETHER THE AO HAS APPLIED HIS MIND OR NOT NEED NOT NECESSARILY BE DETERMINED FROM WHAT HAS BEEN ST ATED IN THE ASSESSMENT ORDER ALONE, IT HAS TO BE EXAMINED AS TO WHETHER AN Y INQUIRY WAS AT ALL CONDUCTED BY THE AO. THERE EXISTS A DIFFERENCE BETW EEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WERE ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT GIVE AN OCCASION TO EXERCISE JURISDICTION U/S 263 O F THE ACT. BESIDES THE ABOVE, WE ALSO FIND THE VARIOUS ORDERS OF THE COURT ON THE ABOVE ISSUE AND ON THAT BASIS IT CAN BE CONCLUDED THAT TH E ORDER OF AO IS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. SOME OF THOSE CASES ARE LISTED BELOW:- AS PER THE ABOVE SAID SUPREME COURT DECISION IN THE CASE OF BERGER PAINTS INDIA LTD. VS. CIT [266 ITR 99] DEDUCTION U/S. 43B IS TO BE FULLY ALLOWED FOR EXCISE DUTY AND OTHER DUTIES ON PAYMENT BASIS INCLU SIVE OF THE AMOUNT INCLUDED IN CLOSING STOCK. AN EXTRACT OF THE SAID D ECISION IS GIVEN BELOW: THE ENTIRE AMOUNT OF EXCISE DUTY / CUSTOMS DUTY PA ID THE ASSESSEE IN A PARTICULAR ACCOUNTING YEAR IS ALLOWAB LE U/S. 43B OF THE INCOME TAX ACT, 1961, AS A DEDUCTION IN RESPECT OF THAT YEAR, IRRESPECTIVE OF THE AMOUNT OF EXCISE DUTY / CUSTOMS DUTY INCLUDED IN THE VIOLATION OF THE ASSESSEES CLOSING STOCK AT THE END OF THE ACCOUNTING YEAR AS RELATING THERETO THE SUPREME COURT ALSO NOTED THE OBSERVATIONS MADE IN INDIAN COMMUNICATION NETWORK PVT. LTD. V. IAC OF IT [206 I TR (AT) 96 (1994) (DELHI SPECIAL BENCH OF THE IT] WHICH IS GIVEN BELOW: WE WOULD LIKE TO MAKE IT ABSOLUTELY CLEAR THAT THE REMOVAL OF THE AMOUNT IN QUESTION FROM THE FIGURE OF CLOSING STOCK IS NOT TANTAMOUNT TO A TINKERING OF THE CLOSING STOCK BU T ALLOWING TO THE ASSESSEE THE EFFECTIVE DEDUCTION TO WHICH IT IS ENT ITLED UNDER SECTION 43B. WE WOULD ALSO LIKE TO EMPHASIZE THAT I N THE SUBSEQUENT ASSESSMENT YEAR, THE ASSESSEES OPENING STOCK WOULD STAND REDUCED BY A CORRESPONDING FIGURE SINCE IT CAN AVAIL OF A DOUBLE DEDUCTION ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 10 ALSO, ON EXACTLY THE SAME FACTS, THE KOLKATA TRIBUN AL IN EXIDE INDUSTRIES LTD. VS. DCIT [134 ITD 351 (2012) HAS HELD THAT THERE IS NO CASE OF DOUBLE DEDUCTION AND THE CLAIM FOR DEDUCTION IS VALID IN L AW. IN THE PRESENT CASE THE FACTS ARE THAT A DEDUCTION OF RS.868,67,87,534/- IN RESPECT OF EXCISE DUTY ON CLOSING STOCK WAS CLAIMED IN AY 2009-10 AND THE SAM E WAS ADDED BACK IN THE COMPUTATION OF INCOME FOR THE FOLLOWING ASSESSMENT YEAR I.E. AY 2010-11. THE TAX RATE FOR BOTH THE YEARS WAS 33.99%. SIMILARLY, A DEDUCTION OF RS.372,89,01,394/- WAS CLAIMED IN THE EARLIER ASSES SMENT YEAR I.E. AY 2008- 09 AND ADDED BACK IN THE COMPUTATION IN AY 2009-10. THE DEDUCTION WAS CLAIMED AND ALLOWED IN THE ASSESSMENT IN LINE WITH THE HONBLE SUPREME COURTS DECISION IN THE CASE OF BERGER PAINTS INDIA LTD. (SUPRA) AND AS PER THE SAID DECISION OF HONBLE SUPREME COURT, DEDUCTION U /S. 43B IS TO BE FULLY ALLOWED FOR EXCISE DUTY AND OTHER DUTIES ON PAYMENT BASIS INCLUSIVE OF THE AMOUNT INCLUDED IN CLOSING STOCK. HERE, WE GIVE BEL OW AN EXTRACT OF THE SAID DECISION:- THE ENTIRE AMOUNT OF EXCISE DUTY / CUSTOMS DUTY PA ID BY THE ASSESSEE IN A PARTICULAR ACCOUNTING YEAR IS ALLOWABLE U/S. 4 3B OF THE INCOME TAX ACT, 1961, AS A DEDUCTION IN RESPECT OF THAT YEAR, IRRESPECTIVE OF THE AMOUNT OF EXCISE DUTY / CUSTOMS DUTY INCLUDED IN TH E VALUATION OF THE ASSESSEES CLOSING STOCK AT THE END OF THE ACCOUNTI NG YEAR AS RELATING THERETO. 6.5 IN VIEW OF ABOVE DISCUSSION, WE FIND THAT THE O RDER PASSED BY THE LD. CIT U/S 263 OF THE ACT IS NOT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE REVENUE. REGARDING THE INTEREST ON THE REFUND GRANTED BY THE AO UNDER SECTION 244A OF THE ACT, LET US UNDERSTAND THE PROVISIONS OF SECTION 24 4A WHICH IS REPRODUCED BELOW : (1) WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE UNDER THIS ACT HE SHALL, SUBJECT TO THE PROVISIONS OF THIS SECTIO N, BE ENTITLED TO RECEIVE , IN ADDITION TO THE SAID AMOUNT, SIMPLE INTEREST THEREON CALCULATED IN THE FOLLOWING MANNER, NAMELY:- (A) WHERE THE REFUND IS OUT OF ANY TAX PAID UNDER S ECTION 115WJ OR COLLECTED AT SOURCE UNDER SECTION 206C OR PAID BY WAY OF ADVA NCE TAX OR TREATED AS PAID UNDER SECTION 199, DURING THE FINANCIAL YEAR I MMEDIATELY PRECEDING THE ASSESSMENT YEAR, SUCH INTEREST SHALL BE CALCULA TED AT THE RATE OF ONE- ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 11 HALF PERCENT FOR EVERY MONTH OR PART OF A MONTH COM PRISED IN THE PERIOD FROM THE 1STD DAY OF APRIL OF THE ASSESSMENT YEAR T O THE DATE N WHICH THE REFUND IS GRANTED: PROVIDED THAT NO INTEREST SHALL BE PAYABLE IF THE A MOUNT OF REFUND IS LESS THAN TEN PER CENT OF THE TAX AS DETERMINED UNDER SU B-SECTION (1) OF SECTION 115WE OR SUB-SECTION (1) OF SECTION 143 OR ON REGUL AR ASSESSMENT; (B) IN A NY OTHER CASE , SUCH INTEREST SHALL BE CALCULATED AT THE RATE OF ONE HALF PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRIS ED IN THE PERIOD OR PERIODS FROM THE DATE OR, AS THE CASE MAY BE, DATES OF PAYMENT OF THE TAX OR PENALTY TO THE DATE ON WHICH THE REFUND IS GRANT ED. FROM THE AFORESAID PROVISIONS OF SECTION 244A WE FI ND THAT IT APPLIES TO ALL REFUNDS THAT ARISE UNDER THE INCOME TAX ACT . THE SECTION BEGINS WITH WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE UNDER THIS ACT. DDT IS NOTHING BUT AN ADDITIONAL INCOME TAX FOR WHICH THE CHARGING SECTION IS SECTION 115-O OF THE INCOME TAX ACT, SECTION 115-O LAYS DOWN THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT AND SUBJECT TO THE PROVISIONS OF THIS SECTION, IN A DDITION TO THE INCOME- TAX CHARGEABLE IN RESPECT OF THE TOTAL INCOME OF A DOMESTIC COMPANY FOR ANY ASSESSMENT YEAR, ANY AMOUNT DECLARED, DISTR IBUTED OR PAID BY SUCH COMPANY BY WAY OF DIVIDENDS (WHETHER INTERIM O R OTHERWISE) ON OR AFTER THE 1 ST DAY OF APRIL, 2003, WHETHER OUT OF CURRENT OR ACCU MULATED PROFITS SHALL BE CHARGED TO ADDITIONAL INCOME-TAX ( HEREINAFTER REFERRED TO AS TAX ON DISTRIBUTED PROFITS). THUS WHERE ANY REFUND ARISES ON ACCOUNT OF EXCESS P AYMENT OF DDT, IT IS A REFUND BECOMING DUE TO THE ASSESSEE UNDER THE ACT A ND INTEREST UNDER SECTION 244A IS APPLICABLE ON THE SAME. CLAUSE (A) OF SECTION 244A(1) DEALS WITH REFUNDS THAT ARISE ON ACCOUNT OF EXCESS PAYMEN T OF ADVANCE TAX, TDS/TCS. CLAUSE (B) OF SECTION 244A(1) APPLIES TO REFUNDS TH AT ARISE IN ANY OTHER CASE. AS SUCH, CLAUSE (B) IS OF WIDE IMPORT AND ANY PAYME NT WHICH DOES NOT FALL IN CLAUSE (A), ARE COVERED UNDER CLAUSE (B) LIKE REF UND OF EXCESS TAX PAYMENT MADE AGAINST DEMAND RAISED, REFUND OF EXCESS SELF A SSESSMENT TAX PAID, REFUND OF EXCESS DDT PAID, REFUND OF TDS DEPOSITED, REFUND OF INTEREST LEVIED U/S. 201(1A), REFUND OF PENALTY, ETC. REFUND OF EXC ESS DDT PAID FALLS CLEARLY UNDER CLAUSE (B) I.E. IN ANY OTHER CASE AND THERE IS NO REASONS TO THINK OTHERWISE. WE ALSO FIND THE SUPPORT FROM CBDT CIRCULAR CLARIFY ING ITS INTENT TO GRANT INTEREST ON ALL REFUNDS DUE TO AN ASSESSEE UNDER TH E INCOME TAX ACT, AS EVIDENT FROM ITS CIRCULAR NO. 549 DATED 31.10.1989. WHILE INSERTION OF A NEW INTEREST SECTION U/S 244 FOR INTEREST ON REFUNDS, T HE CBDT HAD CLARIFIED IN THE SAID CIRCULAR THAT APART FROM BEING COMPLICATED, TH E EARLIER SECTIONS FOR REFUND/INTEREST HAD LEFT CERTAIN GAPS FOR WHICH INT EREST WAS NOT PAID BY THE DEPARTMENT TO THE ASSESSEE FOR MONEY REMAINING WITH THE GOVERNMENT. TO ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 12 REMOVE THIS INEQUITY, AS ALSO TO SIMPLIFY THE PROVI SIONS IN THIS REGARD, THE AMENDING ACT, 1987 HAS INSERTED A NEW SECTION 244A IN THE INCOME-TAX ACT, APPLICABLE FROM THE ASSESSMENT YEAR 1989-90 AND ONW ARDS, WHICH CONTAINS ALL THE PROVISIONS FOR PAYMENT OF INTEREST BY THE D EPARTMENT ON DELAY IN THE GRANT OF REFUNDS. WE ALSO FIND THAT SUPPORT FOR OUR CONCLUSTION IN TH E JUDICIAL PRECEDENTS ON THE ISSUE OF INTEREST ON REFUND DUE U/S. 244A(1)(B) OF THE ACT. IT IS NOT OUT OF PLACE TO POINT OUT THE INCOME TAX DEPARTMENT HAS IN A SIM ILAR WAY CONTENDED AT VARIOUS JUDICIAL FORUMS ACROSS THE COUNTRY THAT THE RE ARE NO PROVISIONS FOR PAYMENT OF INTEREST ON REFUND DUE TO SELF-ASSESSMEN T TAX AND ALL IN THE CASES THE APPELLANT AND JUDICIAL AUTHORITIES HAVE HELD TH AT INTEREST HAS TO BE GRANTED U/S. 244A(1)(B) ON SELF ASSESSMENT TAX. REFERENCE C AN BE MADE TO THE FOLLOWING CASE LAWS WHICH HAVE UPHELD THE GRANT OF INTEREST ON REFUND OF SELF ASSESSMENT TAX: (1) ASST COMM. OF INCOME TAX VS. M/S KERALA TRANSPO RT CO. -2013 (10) TMI 1232 9KERALA HIGH COURT) (2) COMM. OF INCOME TAX, COIMBATORE VS ABT INDUSTRI ES LTD. 2013 TIOL - 332-HIGH COURT-MAD-IT (MADRAS HIGH COURT) (3) ADDL. CIT VS ROYAL BANK OF SCOTLAND N.V. [2011] 15 TAXMANN. COM 333 (KOLKATA TRIBUNAL) (4) CIT VS VIJAYA BANK [TS-481-HIGH COURT-2011 ( KAR)] (KARNATAKA HIGH COURT) (5) CIT VS SIV INDUSTRIES LTD. (2007-2 TMI 30 (HC) 9MADRAS HIGH COURT) IN FACT, RECENTLY THE SUPREME COURT IN THE CASE OF UNION OF INDIA V. TATA CHEMICALS LTD. (2014) 43 TAXMANN.COM 240 (SC)HAS UP HELD THE RIGHT OF A DEDUCTOR TO CLAIM INTEREST ON EXCESS TDS DEPOSITED TO AND REFUNDED BY REVENUE SUBSEQUENTLY. THE SUPREME COURT HAS CLEARLY HELD THAT: INTEREST PAYMENT IS A STATUTORY OBLIGATION AND N ON-DISCRETIONARY IN NATURE TO THE ASSESSEE. IN TUNE WITH THE AFORESAID GENERAL PRINCIPLE, SECTION 244A IS DRAFTED AND ENACTED. THE LANGUAGE E MPLOYED IN SECTION 244A OF THE ACT IS CLEAR AND PLAIN. IT GRAN TS SUBSTANTIVE RIGHT OF INTEREST AND IS NOT PROCEDURAL. THE PRINCIPLES FOR GRANT OF INTEREST ARE THE SAME AS UNDER THE PROVISIONS OF SECTION 244 APP LICABLE TO ASSESSMENTS BEFORE 01.04.1989, ALBEIT WITH CLEARLY OF APPLICATION AS CONTAINED IN SECTION 244A; IN VIEW OF ABOVE PROVISIONS, WE FIND THAT THE ASSES SEE IS VERY MUCH ENTITLED TO HAVE THE REFUND ALONG WITH THE INTEREST. THEREFORE WE DEEM IT THAT THE AOS ORDER IS NOT ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE REVENUE. HENCE PROVISIONS OF SECTION 263 ARE NOT APPLICABLE AND SH OULD BE DROPPED WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE ACCORDINGLY. ITA NO.301/KOL/15, 684/KOL/14 & 1027/KOL/13 A.Y S 09-10, 08-09 & 07-08 ITC LTD. V. CIT KOL-3 PAGE 13 7. SINCE ISSUES ARE COMMON IN REMAINING APPEALS OF ASSESSEE IN ITA NO. 684/KOL/2014 AND 1027/KOL/2013 FOR AYS 2008-09 AND 2007-08 AND TAKING A CONSISTENT VIEW IN ITA NO. 301/KOL/2015 FOR AY 2009 -10 IN TERMS OF PARA-5 TO 6.5 OF THIS ORDER, WE ALLOW THOSE ASSESSEES APPEAL S ALSO. 8. IN THE RESULT, ALL THE THREE APPEALS OF ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 03/ 02/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP '#$- 03 / 02 /201 6 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. #,#-. / / CONCERNED CIT KOLKATA 4. /- / CIT (A) KOLKATA 5. 234 55-., -.!, / DR, ITAT, KOLKATA 6. 489 :; / GUARD FILE. BY ORDER/ , /TRUE COPY/ / # -.!,