ACIT 1(3), MUMBAI V. M/s. VIDESH SANCHAR NIGAM LTD., MUMBAI

ITA 7205/MUM/2004

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3560 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 29-11-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 07-10-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 234B

Judgement Text

ITA NO. 7205/MUM/2004 M/S VIDESH SANCHAR NIGAM LTD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 7205/MUM/2004 (ASSESSMENT YEAR 1998-99 ) DATE OF HEARING: 17/6/2013 DATE OF PRONOUNCEMENT: 21 /6/2013 O R D E R PER RAJENDRA SINGH THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 21- 07-2004 OF CIT (A) FOR THE ASSESSMENT YEAR 1998-99. THE REVENUE IN THIS APPEAL HAS RAISED DISPUTES ON TWO DIFFERENT GROUNDS WHICH RELATE TO THE COMPUTATION OF INTEREST U/S 234 B OF THE IT ACT AND LEVY OF INTEREST U/S 234 D OF THE ACT. 2. WE FIRST TAKE UP THE ISSUE RELATING TO COMPUTATI ON OF INTEREST UNDER SECTION 234 B OF THE IT ACT. UNDER THE PROVISIONS O F SAID SECTION, IN CASE THE ADVANCE TAX PAID BY ASSESSEE DURING THE YEAR IS LESS THAN 90% OF THE ASSESSEED TAX THE ASSESSEE IS LIABLE TO SIMPLE INTE REST AT THE SPECIFIED RATE FROM THE 1 ST DAY OF THE NEXT FINANCIAL YEAR TO THE DATE OF DETE RMINATION OF ASSISTANT COMMISSIONER OF INCOME TAX-1(3), ROOM NO. 540, 5 TH FLOOR, AAYKAR BHAVAN, M.K. ROAD, NEW MARINE LINES, MUMBAI-400 020. M/S VIDESH SANCHAR NIGAM LTD. LOKMANYA VIDESH SANCHAR BHAVAN, KASHINATH DHURU MARG, OPP. KIRTI COLLEGE, PRABHADEVI, MUMBAI 400 028. APPELLANT RESPONDENT DEPARTMENT BY. SHRI O.P. MEENA ASSESSEE BY: SHRI NIRANJAN GOVINDEKAR & SHRI MADHAV KHANDELWAL. ITA NO. 7205/MUM/2004 M/S VIDESH SANCHAR NIGAM LTD. PAGE 2 OF 6 TOTAL INCOME UNDER SECTION 143 (1) OR TILL THE DATE OF REGULAR ASSESSMENT IN CASE REGULAR ASSESSMENT HAS BEEN MADE. FURTHER, IN CASE THE ASSESSEE HAS PAID SELF ASSESSMENT TAX AT THE TIME OF FILING OF RETURN OF INCOME, THE INTEREST UNDER THE PROVISIONS OF SECTION 234 B (2) (I) IS REQUIRED TO BE COMPUTED FOR THE PERIOD TILL THE DATE OF PAYMENT OF SELF ASSESSMENT TAX AS REDUCED BY THE INTEREST CHARGED U/S 234 B AND INCL UDED IN THE PAYMENT U/S 140 A. THE INTEREST PAYABLE ON FURTHER PERIOD FROM THE DATE OF SELF ASSESSMENT TAX PAYMENT IS TO BE COMPUTED ON THE AMO UNT BY WHICH THE SELF ASSESSMENT ALONG WITH THE ADVANCE TAX PAID FAL LS SHORT OF THE ASSESSED TAX. IN THIS CASE, THE SHORTFALL IN PAYMEN T OF ADVANCE TAX WITH RESPECT TO THE ASSESSED TAX WAS ` . 81.30 CRORE ON WHICH THERE IS NO DISPUTE BETWEEN THE PARTIES. THE ASSESSEE HAD PAID SELF ASSESSMENT TAX OF ` . 28.55 CRORE ON 30.11.1998 I.E. THE DATE OF FILING OF RETURN OF INCOME. THEREFORE, INTEREST CHARGEABLE U/S 234B WAS COMPUTE D FOR THE PERIOD FROM 1.4.1998 TO 30.11.1998 AT ` . 13,00,00,000/-. THE SELF ASSESSMENT TAX PAID OF ` . 28.55 CRORE INCLUDED INTEREST U/S 234 C OF ` . 4.05 CRORE. THEREFORE, TAX COMPONENTS OF PAYMENT UNDER SECTION 140 A WAS ` . 24.50 CRORE. THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF INTEREST UNDER SECTION 234 B FROM 1.10.1998 ONWARDS TILL THE DATE OF REGULAR ASSESSMENT REDUCED THE SELF ASSESSMENT TAX OF ` . 24.50 CRORE FROM THE SHORTFALL OF ` . 81.30 CRORE AND COMPUTED INTEREST ON THE BALANCE SH ORTFALL OF ` . 56.80 CRORE. THE AO ON THE OTHER HAND EXCLUDED NOT ONLY T HE INTEREST U/S 234 C INCLUDED IN THE SELF ASSESSMENT TAX OF ` . 28.55 CRORE BUT ALSO THE INTEREST OF ` . 13,00,00,000/- CHARGEABLE FROM 1.4.98 TO 30.11.98 FROM THE SUM OF ` . 81.30 CRORE. THE AO THUS COMPUTED THE BALANCE SHO RTFALL AT ` . 71.32 CRORE AGAINST 56.80 CRORE TAKEN BY THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF INTEREST U/S 234 B FOR FURTHER PERI OD FROM 1.10.98 ONWARDS. 2.1. THE ASSESSEE DIPSUTED THE DECISION OF AO BEFOR E CIT (A) WHO HAD DIRECTED THE AO TO NOT REDUCE THE SUM OF ` . 13,00,00,000/- FROM THE SELF ASSESSMENT TAX FOR THE PURPOSE OF COMPUTATION OF SH ORTFALL FOR FURTHER LEVY ITA NO. 7205/MUM/2004 M/S VIDESH SANCHAR NIGAM LTD. PAGE 3 OF 6 OF INTEREST FROM 1.10.98 ONWARDS. AGGRIEVED BY THE DECISION OF CIT (A), THE REVENUE IS IN APEAL BEFORE TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES IN THE MATTER. TH E LEARNED AR FOR ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE CI T (A) THAT THE INTEREST CHARGEABLE UNDER SECTION 234 B (2) (I) ` .13,00,00,000/- IS NOT REQUIRED TO BE REDUCED FROM SELF ASSESSMENT TAX PAID WHILE COMP UTING THE SHORTFALL FOR THE PURPOSE OF COMPUTATION OF INTEREST FOR THE FURTHER PERIOD FROM 1.10.98, AS NO INTEREST U/S 234 B WAS PAYABLE U/S 1 40 A AS THE SAME WAS TO BE COMPUTED BASED ON REASSESSED INCOME. THE INTE REST OF ` . 13,00,00,000/- HAD BEEN FOUND PAYABLE ON THE BASIS OF ASSESSED INCOMEON REGULAR ASSESSMENT. IT WAS ALSO SUBMITTED THAT DECISION OF CIT (A) WAS SUPPORTED BY THE DECISION OF TRIBUNAL IN CA SE OF DCIT VS. ORIENTAL AEROMATICS PVT. LTD. IN ITA NO. 9021/M/95 DATED 29. 7.2002. LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDER OF AO AND PLA CED RELIANCE ON THE FINDINGS GIVEN IN THE ASSESSMENT ORDER. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING THE COMPUTATION OF INTEREST UNDER SECTION 234 B OF THE IT ACT. UNDER THE SAID SECTION , INTEREST U/S 234 B LEVIABLE IN CASE ADVANCE TAX PAID BY ASSESSEE IS LE SS THAN 90% OF ADVANCE TAX PAYABLE DURING THE YEAR AND ON THE SHORTFALL, I NTEREST IS LEVIABLE FROM 1 ST DAY OF NEXT FINANCIAL YEAR TILL THE DATE OF DETERM INATION OF INCOME UNDER SECTION 143 (1) OR TILL THE REGULAR ASSESSMENT. IN CASE THE ASSESSEE HAS PAID SELF ASSESSMENT TAX THEN THE INTEREST U/S 234 B IS REQUIRED TO BE COMPUTED IN THE PRESCRIBED MANNER ON THE SHORFALL W ITH RESPECT TO ASSESSED TAX FROM 1 ST DAY OF NEXT FINANCIAL YEAR TILL THE DATE OF PAYMEN T OF SELF ASSESSMENT TAX U/S 140 A AND, THREREFORE, ON T HE AMOUNT BY WHICH THE SELF ASSESSMENT TAX AND ADVANCE TAX PAID FALLS SHORT OF ASSESSED TAX TILL THE DATE OF REGULAR ASSESSMENT. IN THIS CASE, AS MENTIONED EARLIER, THE SHORTFALL IN PAYMENT OF ADVANCE TAX WAS ` . 81.30 CRORE. THE ASSESSEE HAD PAID SELF ASSESSMENT TAX OF ` . 28.55 CRORE ON 30.11.98. THE INTEREST ITA NO. 7205/MUM/2004 M/S VIDESH SANCHAR NIGAM LTD. PAGE 4 OF 6 PAYABLE U/S 234 B FROM 1.4.98 TO 30.11.98 WAS ` . 13,00,00,000/-. THE ISSUE IS WHETHER FOR FURTHER LEVY OF INTEREST UNDER SECTION 234 B FROM 1.10.98 ONWARDS, THE SUM OF ` . 13,00,00,000/- IS REQUIRED TO BE DEDUCTED FROM SELF ASSESSMENT TAX FOR THE PURPOSE OF COMPUTA TION OF SHORTFALL. THE SELF ASSESSMENT TAX INCLUDED A SUM OF ` . 4.05 CRORE BEING THE INTEREST UNDER SECTION 234 C. THE ASSESSEE, THEREFORE, REDUC ED THE SAID INTEREST FROM THE SELF ASSESSMENT TAX AND THE BALANCE AMOUNT OF ` . 24.50 CRORE WAS REDUCED FROM THE SHORTFALL OF ` . 81.30 CRORE AND THE INTEREST U/S 234 B WAS COMPUTED FROM 1.10.98 ONWARDS ON THE BALANCE SUM OF ` . 56.80 CRORE. THE AO HAS HOWEVER REDUCED THE INTEREST OF ` . 13,00,00,000/- AND ` . 4.05 CRORE FROM THE SELF ASSESSMENT TAX WHICH WAS ` . 24.50 CRORE AND THE BALANCE AMOUNT HAS BEEN REDUCED FROM THE SHORTF ALL OF ` . 81.30 CRORE AND THUS COMUTED FURTHER INTEREST ON THE SUM OF ` . 71.32 CRORE. 4.1 IN OUR VIEW, ACTION OF THE AO IS NOT JUSTIFIED. THE INTEREST TILL THE DATE OF SELF ASSESSMENT TAX PAYMENT HAS TO BE COMPU TED U/S 234 B (2) (I) IN THE PRESCRIBED MANNER AND FROM THE SAID INTEREST , INTEREST U/S 234 B INCLUDED IN THE SELF ASSESSMENT TAX IS REQUIRED TO BE REDUCED. IN THIS CASE THE ASSESSEE HAS POINTED OUT THAT IN THE SELF ASSE SSMENT TAX, ONLY THE INTEREST U/S 234 C WAS INCLUDED AND, THEREFORE, NO REDUCTION OF INTEREST IS REQUIRED UNDER SECTION 234 B (2) (I). THE INTER EST FOR THE PERIOD BEYOND THE DATE OF SELF ASSESSMENT TAX PAYMENT I.E. 30.11. 98 IS REQURIED TO BE COMPUTED UNDER SECTION 234 B (2) (II) ON THE AMOUN T BY WHICH SELF ASSESSMENT AND ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX AT THE SPECIFIED RATES. IN THIS CASE SELF ASSESSMENT TAX A FTER EXCLUDING THE INTEREST U/S 234 C WAS ONLY ` . 24.50 CRORE. THEREFORE, ONLY THIS SUM IS REQUIRED TO BE REDUCED FROM THE SHORTFALL OF ` . 81.30 CRORE FOR FURTHER COMPUTATION OF INTEREST. THE SUM OF ` . 13,00,00,000/- WHICH IS THE INTEREST COMPUTED FOR THE PERIOD FROM 1.4.98 TO 30. 11.98 IS NOT REQUIRED TO BE EXCLUDED FROM SELF ASSESSMENT TAX AS THE SAME WAS NOT PAYABLE UNDER SECTION 140 A BUT BECAME PAYABLE ON REGULAR A SSESSMENT. WE, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF CIT (A) WHICH IS ALSO SUPPORTED ITA NO. 7205/MUM/2004 M/S VIDESH SANCHAR NIGAM LTD. PAGE 5 OF 6 BY THE DECISION OF TRIBUNAL IN CASE OF DCIT VS. ORI ENTAL AEROMATICS PVT. LTD. (SUPRA). THE ORDER OF CIT (A) IS ACCORDINLGY U PHELD. 5. THE SECOND DISPUTE IS REGARDING LEVY OF INTEREST U/S 234 D. UNDER THE SAID PROVISIONS, IN CASE REFUND HAS BEEN GRANTE D TO THE ASSESSEE U/S 143 (1) AND SUBSEQUENTLY ON REGULAR ASSESSMENT IT I S FOUND THAT NO REFUND IS DUE OR REFUND DUE IS LOWER, THEN THE ASSE SSEE IS LIABLE TO PAY INTEREST AT THE SPECIFIED RATE. THE SAID PROVISION WHICH WAS INSERTED BY FINANCE ACT 2003 IS APPLICABLE W.E.F 1.6.2003. SUBS EQUENTLY EXPLANATION II HAS BEEN INSERTED BY THE FINANCE ACT 2012 W.E.F 1.6.2003 AS PER WHICH THE PROVISIONS OF SECTION 234 D WOULD ALSO APPLY TO ASSESSMENT YEARS COMMENCING BEFORE 1.06.2003 IF THE PROCEEDINGS IN R ESPECT OF SUCH ASSESSMENT YEAR IS COMPLETED AFTER THE SAID DATE. T HE ISSUE IS WHETHER INTEREST U/S 234 D CAN BE LEVIED IN THIS CASE. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT ASSESSMENT IN THIS CASE U/S 143 (3) HAD BEEN COMPLETED ON 1.03.2001 WHICH IS PRIOR TO 1.6.2003 A ND, THEREFORE, PROVISIONS OF SECTION 234 D ARE NOT APPLICABLE. IT WAS ALSO SUBMITEED THAT IN THIS CASE NO REFUND HAD BEEN GRANTED U/S 143 (1) AND, THEREFORE, THERE WAS NO QUESTION OF LEVY OF INTEREST U/S 234 D. THE LEARNED DR ON THE OTHER HAND SUBMITTED THAT THE ASSESSMENT ORDER PASS ED U/S 143 (3) HAD BEEN SUBSEQUENTLY RECTIFIED ON 28 TH FEBRUARY 2004 AND, THEREFORE, THE PROCEEDINGS WERE COMPLETED ON THAT DATE WHICH WAS A FTER 1.6.2003 AND, THEREFORE, INTEREST WAS LEVIABLE. IN REPLY LEARNE A R FOR THE ASSESSEE POINTED OUT THAT EVEN IF THE SECTION 234 D WAS APPICABLE, S INCE NO REFUND HAD BEEN GRANTED UNDER SECTION 143(1) TO ASSESSEE, NO I NTEREST CAN BE CHARGED UNDER SECTION 234 D. 6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEVY OF INTERES T U/S 234 D. UNDER THE SAID PROVISIONS, THE INTEREST U/S 234 D IS PAYABLE BY ASSESSEE, IN CASE THE REFUND GRANTED UNDER SECTION 143(1) IS FOUND TO BE EXCESSIVE ON REGULAR ASSESSMENT. THE LEARNED AR HAS, HOWEVER, SU BMITTED THAT THE ITA NO. 7205/MUM/2004 M/S VIDESH SANCHAR NIGAM LTD. PAGE 6 OF 6 ASSESSEE HAS NOT BEEN GRANTED ANY REFUND U/S 143 (1 ). THE PROVISIONS OF SECTION 234 D APPLY ONLY IN CASES WHERE THE REFUND HAS BEEN GRANTED U/S 143(1) WHICH IS LATER FOUND EXCESSIVE ON REGULAR AS SESSMENT. THEREFORE, IF THERE IS NO REFUND GRANTED U/S 1432 (1) THE QUESTIO N OF LEVY OF INTEREST U/S 234 D DOES NOT ARISE. AO, THEREFORE, IS DIRECTED TO VERIFY THE CLAIM OF ASSESSEE AND DELETE THE INETEREST IF NO REFUND HAD BEEN GRANTED TO ASSESSEE UNDER SECTION 143 (1). 5. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED ON 21 ST JUNE 2013 SD/- SD/- (VIVEK VARMA ) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 21 ST JUNE, 2013. SK SR. P.S. COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI