OVIRA LOGISTICS P.LTD ( NOW MERGED WITH IL & FS MARITIME INFRASTRUCTURE CO. LTD), MUMBAI V. DCIT RG 8(2), MUMBAI

ITA 6970/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83507 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 20-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: D V LAKHANI
• Keywords: Business income; Retrospective amendment
• Section: 54; 154; 15; 234B; 14A; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDI CIAL MEMBER . / ITA NO. 6970/MUM./ 2012 ( / ASSESSMENT YEAR : 2006 07 ) OVIRA LOGISTICS PVT. LTD. (NOW MERGED WITH IL&FS MARITIME INFRASTRUCTURE COMPANY LIMITED) PLOT NO.C 22, G BLOCK BANDRA KURLA COMPLEX MUMBAI 400 051 .. / APPELLANT V/S DY. COMMISSIONER OF INCOME TAX RANGE 8(2), ROOM NO.209 2 ND FLOOR, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAACO1882F / ASSESSEE BY : SHRI D.V. LAKHANI / REVENUE BY : SHRI A.K. KARDAM / DATE OF HEARING 06 .08.2014 / DATE OF ORDE R 14.08.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 13 TH SEPTEMBER 2012, PASSED UNDER SECTION 1 5 4 , OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ), OVIRA LOGISTICS PVT. LTD. 2 BY THE LEARNED COMMISS IONER (APPEALS) XVII, MUMBAI, FOR THE ASSESSMENT YEAR 2006 07 . 2 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS SECOND ORDER PASSED UNDER SECTION 154 AND EARLIER ALSO, AN ORDER WAS PASSED BY THE LEARNED COMMISSIONER (APPEALS) UNDER S ECTION 154, VIDE ORDER DATED 20 TH JUNE 2012. THIS ORDER OF THE LEARNED COMMISSIONER (APPEALS) HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL, WHEREIN THE TRIBUNAL , VIDE ORDER DATED 17 TH JANUARY 2014, HELD THAT THE ISSUES RAISED DURING THE RECTIFICATION PROCEEDINGS UNDER SECTION 154, ARE DEBATABLE IN NATURE AND, THEREFORE, OUTSIDE THE SCOPE OF SECTION 154. ACCORDINGLY, THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) WAS SET ASIDE. NOW, AGAIN THE LEARNED COMMISSIONER (APPEALS) HAS SOUGHT TO REVISE HIS ORDE R UNDER SECTION 154, ON THE MATTER OF ADJUDICATION OF LEVY OF INTEREST UNDER SECTION 234B AND 234C, ON TAX PAYABLE UNDER SECTION 115JB. THEREFORE, THE IMPUGNED ORDER IS NOT MAINTAINABLE AS EARLIER ORDER OF THE LEARNED COMMISSIONER (APPEALS) PASSED UNDER SE CTION 154, HAS BEEN HELD TO BE NOT TENABLE BY THE TRIBUNAL. 3 . FACTS IN BRIEF : IN CASE OF THE ASSESSEE, ASSESSMENT ORDER UNDER SECTION 143(3), WAS PASSED VIDE ORDER DATED 26 TH DECEMBER 2008, WHEREIN THE ASSESSING OFFICER HAS COMPUTED THE INCOME AT NIL UND ER THE HEAD PROFITS AND GAINS OF BUSINESS UNDER SECTION 28, AND ALSO OVIRA LOGISTICS PVT. LTD. 3 COMPUTED THE BOOK PROFIT AT ` 6,86,58,197, UNDER SECTION 115JB . AGAINST THE SAID ORDER, THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS), WHO, VIDE ORDER D ATED 11 TH JANUARY 2010, HAS DISMISSED THE ASSESSEES APPEAL. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 154(3) ON 17 TH FEBRUARY 2011, TO RECTIFY THE COMPUTATION OF INCOME UNDER SECTION 115JB, BY ADDING THE DISALLOWANCE MADE BY THE ASSESS ING OFFICER UNDER SECTION 14A, WHICH WAS MADE WHILE COMPUTING THE BUSINESS INCOME UNDER SECTION 28. THE ASSESSEE FILED ITS OBJECTION VIDE LETTER DATED 7 TH MAY 2011, TO THE PROPOSED RECTIFICATION. HOWEVER, THE ASSESSING OFFICER REJECTED THE SAID OBJECTION A ND, VIDE ORDER DATED 21 ST JULY 2011, PASSED UNDER SECTION 154, AND MADE THE ADDITION IN THE BOOK PROFIT BY SUM OF ` 1,05,47,495, BEING DISALLOWANCE UNDER SECTION 14A. THUS, THE COMPUTATION OF BOOK PROFIT WAS ASSESSED TO ` 7,92,05,692. THIS ORDER OF THE ASS ESSING OFFICER UNDER SECTION 154, WAS SUBJECT MATTER OF FIRST APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS), WHEREIN THE LEARNED COMMISSIONER (APPEALS) HAD GIVEN PART RELIEF TO THE ASSESSEE, VIDE ORDER DATED 20 TH JUNE 2012 THAT IS QUANTUM OF DISALLOWANC E UNDER SECTION 14A WAS REDUCED . AGAINST THE SAID ORDER DATED 20 TH JUNE 2012, THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE TRIBUNAL BEING ITA NO.5353/MUM./2012, WHEREIN THE TRIBUNAL, VIDE ORDER DATED 17 TH JANUARY 2014, HELD THAT INSOFAR AS THE ISSUE OF DISALLOWANCE UNDER SECTION 14A, FOR THE PURPOSE OF COMPUTING BOOK PROFIT UNDER SECTION 115J IS CONCERNED , THERE HAS OVIRA LOGISTICS PVT. LTD. 4 BEEN DIVERGENT VIEWS OF VARIOUS COURTS AND THIS ISSUE BEING HIGHLY DEBATABLE IN NATURE, THEREFORE, THE SAME IS OUTSIDE THE SCOPE OF SECTION 154. IN THE MEAN TIME, THE LEARNED COMMISSIONER (APPEALS), VIDE NOTICE DATED 31 ST AUGUST 2012, PASSED BY THE LEARNED COMMISSIONER (APPEALS) ISSUED UNDER SECTION 154, SOUGHT TO RECTIFY ORDER DATED 20 TH JUNE 2012, TO WITHDRAW THE RELIEF GRANTED BY THE LEARNE D COMMISSIONER (APPEALS). THE ASSESSEE HA D ALSO FILED APPLICATION UNDER SECTION 154, STATING THAT THE GROUND NO.6 TO 9, CHALLENGING THE LEVY OF INTEREST UNDER SECTION 234B AND 234C AND 220(2), WHICH WAS RAISED EARLIER IN THE COURSE OF RECTIFICATION PROCEED INGS HAS NOT BEEN ADJUDICATED UPON. THE LEARNED COMMISSIONER (APPEALS) INSOFAR AS THE ISSUE OF PART RELIEF ON DISALLOWANCE UNDER SECTION 14A, HELD THAT NO RECTIFICATION IS REQUIRED. HOWEVER, HE PROCEEDED TO ADJUDICATE THE ISSUE OF CHARGEABILITY OF INTEREST UNDER SECTION 234B AND 234C AND 220(2), AS RAISED BY THE ASSESSEE DURING THE COURSE OF ORIGINAL RECTIFICATION PROCEEDINGS UNDER SECTION 154, VIDE GROUND NO.6 TO 9. 4 . BEFORE THE LEARNED COMMISSIONER (APPEALS), IN THE IMPUGNED PROCEEDINGS, IT WAS CONTENDED THAT THE ASSESSEE COULD NOT HAVE VISUALISED THE ADDITION MADE IN THE BOOK PROFIT AND, HENCE, NO ADVANCE TAX WAS PAID ON SUCH ADDITIONS / DISALLOWANCES. REGARDING SECTION 234C ALSO, IT WAS SUBMITTED THAT THERE WAS NO DEFAULT IN PAYMENT OF ADVANCE TAX AND TH E SAME WAS DONE IN ACCORDANCE WITH THE INCOME SHOWN IN OVIRA LOGISTICS PVT. LTD. 5 THE RETURN OF INCOME. THE LEARNED COMMISSIONER (APPEALS) HELD THAT BY FINANCE ACT, 2008 , RETROSPECTIVE AMENDMENT HAS BEEN BROUGHT W.E.F. 1 ST APRIL 2001 AND, THEREFORE, THE ASSESSEE WAS LIABLE FOR CHARG ING OF INTEREST UNDER SECTION 234B AND 234C ON THE DISALLOWANCE MADE AND FURTHER THE HON'BLE SUPREME COURT IN JCIT V/S ROLTA INDIA LTD.[ 2011 ] 330 ITR 470 (SC), HAS HELD THAT INTEREST UNDER SECTION 234B AND 234C, ARE PAYABLE ON FAILURE TO PAY ADVANCE TAX IN RESPECT OF TAX PAYABLE UNDER SECTION 115JA AND 115JB. 5 . AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT, FIRST OF ALL, ONCE, ON THE ISSUE OF DISALLOWANCE UNDER SECTION 14A, IN THE COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB, WHICH WAS TH E SUBJECT MATTER OF RECTIFICATION OF PROCEEDINGS UNDER SECTION 154 EARLIER, THE TRIBUNAL HAS ALREADY DECIDED THAT SUCH A DISALLOWANCE IS OUTSIDE THE SCOPE OF 154 PROCEEDINGS AS IT WAS HIGHLY DEBATABLE IN NATURE THEN THE ENTIRE PROCEEDINGS UNDER SECTION 154 , COME TO AN END. ONCE THE ORIGINAL PROCEEDINGS UNDER SECTION 154, HAS BEEN DECIDED IN SUCH A MANNER, THEN THERE WAS NO OCCASION TO RECTIFY THE EARLIER ORDER OF THE LEARNED COMMISSIONER (APPEALS) AGAIN UNDER SECTION 154, FOR THE SECOND TIME. THAT APART ON MERITS ALSO, WHETHER THE INTEREST UNDER SECTION 234B AND 234C ARE TO BE LEVIED ON ACCOUNT OF RETROSPECTIVE AMENDMENT BROUGHT IN TH E STATUTE IN A SUBSEQUENT DATE IS AGAIN A MATTER OF GREAT DEBATE BECAUSE IT CANNOT BE HELD THAT THE ASSESSEE AT OVIRA LOGISTICS PVT. LTD. 6 THE TIME OF FI LING OF RETURN OF INCOME COULD HAVE FORESEEN SUCH AN AMENDMENT AND WAS OBLIGED TO PAY ANY KIND OF ADVANCE TAX ESPECIALLY ON A DISALLOWANCE UNDER SECTION 14A, WHEN THE EXPLANATION TO SECTION 115JB WAS BROUGHT IN THE STATUTE BY FINANCE ACT, 2008, WITH RETROS PECTIVE EFFECT FROM 1 ST APRIL 2001. IN SUCH A SITUATION, IT CANNOT BE SAID THAT THE ASSESSEE WAS LIABLE TO PAY ADVANCE TAX AT THE TIME OF FILING OF RETURN OF INCOME WHEN SUCH A PROVISION DID NOT EXIST IN THE STATUTE. THIS ISSUE IS SQUARELY COVERED BY THE D ECISION OF THE HONBLE CALCUTTA HIGH COURT IN EMAMI LTD. V/S CIT, [2011] 337 ITR 470 (CAL.). THUS, WE DO NOT FIND ANY MERIT IN THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) UNDER SECTION 154, VIDE ORDER DATED 13 TH SEPTEMBER 2012, RECTIFYI NG THE EARLIER ORDER UNDER SECTION 154, PASSED ON 20 TH JUNE 2012. THUS, THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS REVERSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 6 . 6. IN THE RESULT, ASSESSEES APPEA L IS ALLOWED. 14 TH AUGUST 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 14 TH AUGUST 2014 SD/ - . D. KARUNAKARA RAO ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 14 TH AUGUST 2014 OVIRA LOGISTICS PVT. LTD. 7 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI