DCIT (LTU-2), MUMBAI V. RELIANCE INDUSTRIES LTD., MUMBAI

ITA 7499/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6688 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 28-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT PATANKARDR
• Keywords: Retrospective amendment
• Section: 80HHC; 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUM BAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.7499/MUM/2018 ( ASSESSMENT YEAR: 2005-06 ) DCIT(LTU-2) 29 TH FLOOR, CENTER-1 WORLD TRADE CENTER CUFFE PARADE MUMBAI-400 005 VS. RELIANCE INDUSTRIES LTD. 3 RD FLOOR, MAKER CHAMBERS IV, NARIMAN POINT MUMBAI-400 021 PAN/GIR NO.AAACR5055K (APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI ABHIJIT PATANKAR,DR ASSESSEE BY SHRI NIMESH VORA, AR DATE OF HEARING 21/01/2020 DATE OF PRONOUNCEMENT 05/02/2020 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)1, MUMBAI, DATED 12/09/2018 AND IT PERTAINS TO ASSESSMENT YEAR 2005- 06. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS RIGHT IN DIRECTING THE ASSESSING OFFICER TO NOT TO LEVY INTEREST U/S 234B OF THE ACT, ON THE ADDITION MADE IN BOOK PROFIT UNDER MAT WITH RESPECT TO DEDUCTION ON EXPORT PROFIT U/S 80HHC(3), IGNORING THE AMENDMENT MADE BY THE FINANCE ACT 2011 TO SECTION 1 15JB WITH RETROSPECTIVE EFFECT FROM 01.04.2005 ITA NO.7499/MUM/2018 RELIANCE INDUSTRIES LTD. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF OIL EXPL ORATION, MANUFACTURING OF PETROCHEMICALS, POLYESTER, FIBER INTERMEDIATES, TEXTILES, GENERATION AND DISTRIBUTION OF POWER AND OPERATION OF JETTIES, AND RELATED INFRASTRUCTURE AND INVESTMENTS. THE ASS ESSEE COMPANY HAS FILED ITS RETURN OF INCOME FOR AY 2005-06 ON 2 8/10/2005, DECLARING TOTAL INCOME AT RS. 1323,20,78,513/- UNDE R THE NORMAL PROVISIONS OF THE I.T.ACT, 1961 AND RS. 5751,71,93, 729/- U/S 115JB OF THE I.T.ACT, 1961. THE ASSESSE HAS CLAIMED DEDUC TIONS TOWARDS ELIGIBLE PROFIT U/S 80HHC OF THE I.T.ACT, 1961. THE LD. AO HAD DISALLOWED DEDUCTIONS CLAIMED U/S 80HHC IN VIEW OF SUN-SET CLAUSE U/S 80HHC(1B) OF THE I.T.ACT, 1961. THERE WA S NO RETROSPECTIVE AMENDMENT IN SECTION 115JB, EITHER AT THE TIME OF PASSING THE ORDER BY THE LD. AO OR CIT(A) WITH REFE RENCE TO DELETION OF CLAUSE (IV) TO CLAUSE (VI) IN EXPLANATION (1) T O SECTION 115JB OF THE ACT. THE AMENDMENT IN SECTION 115JB WAS MADE BY TH E FINANCE ACT, 2011 WITH RETROSPECTIVE EFFECT FROM 01/04/2005 BY DELETING SUB CLAUSE (IV), (V) AND (VI) OF EXPLANATION (1) TO SEC TION 115JB OF THE ACT. THE ASSESSEE CHALLENGED THE ADDITIONS MADE TOWARDS DISALLOWANCES OF DEDUCTIONS CLAIMED U/S 80HHC BEFORE THE TRIBUNAL . THE TRIBUNAL VIDE ITS ORDER, DATED 30/09/2013 DECIDED THE ISSUE AGAINST THE ASSESSEE FOR AY 2005-06 BY STATING THAT IN VIEW OF THE AMENDMENT MADE IN SECTION 115JB BY THE FINANCE ACT,2011 WITH RETROSPECTIVE EFFECT FROM 01/042005 BY OMITTING CLAUSE (IV) TO ( VI) OF EXPLANATION TO SECTION 115JB , THE PROVISIONS OF SECTION 115JB HAV E BEEN BROUGHT AT PAR WITH THE PROVISIONS OF SECTION 80HHC(1B) OF THE ACT. HENCE, THE DISALLOWANCES OF DEDUCTIONS WITH RESPECT TO PRO FIT ELIGIBLE FOR DEDUCTIONS U/S 80HHC OF THE ACT, MADE BY THE LD. AO FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S 115JB OF THE A CT, WAS ITA NO.7499/MUM/2018 RELIANCE INDUSTRIES LTD. 3 CONFIRMED BY THE ITAT. THE LD. AO, WHILE GIVING EF FECT TO ORDER OF THE ITAT HAS LEVIED INTEREST U/S 234B OF THE I.T.AC T, 1961, ON BOOK PROFIT COMPUTED U/S 115JB OF THE I.T.ACT, 1961, FOR SHORTFALL IN PAYMENT OF ADVANCE TAX VIS--VIS, THE TAX ASSESSED FOR THE YEAR. 4. AGGRIEVED BY THE ORDER THE OF LD. AO, THE ASSES SEE HAD FILED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A ), THE ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS ON THE ISS UE, WHICH HAS BEEN REPRODUCED AT PARA 4.1 ON PAGES 4 TO 9 OF LD.C IT(A) ORDER. THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFO RE THE LD.CIT(A) ARE THAT INTEREST U/S 234B OF THE ACT, CA NNOT BE CHARGED AS A CONSEQUENCE FOR AN ADDITION MADE TO THE BOOK PROF IT U/S 115JB OF THE I.T.ACT, 1961, IN VIEW OF RETROSPECTIVE AMENDME NT BY THE FINANCE ACT, 2011 WITH RETROSPECTIVE EFFECT FROM 01/04/2005 . THE LD.CIT(A) AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASS ESSEE AND ALSO, BY FOLLOWING CERTAIN JUDICIAL PRECEDENTS, INCLUDING THE DECISION OF ITAT, IN ASSESSE OWN CASE FOR THE VERY SAME AY 2005 -06 IN ITA NO. 5247/MUM/2014, VIDE ORDER DATED 03/06/2016 HELD THA T INTEREST U/S 234B OUGHT NOT TO HAVE BEEN CHARGED BY THE LD. AO IN A SITUATION, WHERE SUCH LIABILITY IS INCREASED ON ACCOUNT OF TH E RETROSPECTIVE AMENDMENT IN THE LAW, AFTER THE END OF THE RELEVANT ASSESSMENT YEAR, SINCE, THE ASSESSEE COULD NOT HAVE ENVISAGED, THE ADDITIONS ON ACCOUNT OF RETROSPECTIVE AMENDMENT AND PAID ADVA NCE TAX THEREON AND HENCE,DELETED ADDITIONS MADE BY THE LD. AO TOWARDS COMPUTATION OF INTEREST U/S 234B OF THE I.T.ACT, 19 61. AGGRIEVED BY THE LD.CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFOR E US. 5. THE LD. DR SUBMITTED THAT THE LD.CIT(A) WAS ERRE D IN DELETING THE ADDITIONS MADE BY THE LD. AO TOWARDS INTEREST U /S 234B OF THE ITA NO.7499/MUM/2018 RELIANCE INDUSTRIES LTD. 4 ACT, ON THE ADDITIONS MADE IN BOOK PROFIT UNDER MAT PROVISIONS WITH RESPECT TO DEDUCTIONS ON EXPORT PROFIT U/S 80HHC(1 B), IGNORING THE AMENDMENT MADE BY THE FINANCE ACT, 2011 TO SECTION 115JB WITH RETROSPECTIVE EFFECT FROM 01/04/2005. 6. THE LD. AR, ON THE OTHER HAND, STRONGLY SUPPORTI NG ORDER OF THE LD.CIT(A) SUBMITTED THAT THIS ISSUE IS SQUARELY COV ERED IN FAVOUR OF THE ASSESSE BY THE DECISION OF ITAT, MUMBAI IN ASSE SSEE OWN CASE FOR VERY SAME AY 2005-06, VIDE ORDER DATED 03/06/20 16, WHERE IT WAS CATEGORICALLY HELD THAT 234B INTEREST SHALL NO T BE LEVIED ON THE ADDITION MADE ON ACCOUNT OF RETROSPECTIVE AMENDMENT TO THE ACT. HE, FURTHER SUBMITTED THAT THIS ISSUE IS ALSO COVER ED BY THE DECISION OF HONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT VS JSW ENERGY LIMITED (2015) 379 ITR 36, WHERE IT WAS HELD THAT W HERE, THE ASSESSEE COMPUTED BOOK PROFIT, AS PER PREVAILING LA W, NO INTEREST U/S 234B COULD BE LEVIED, CONSEQUENT TO INCLUSION OF V ARIOUS ITEMS, WHILE COMPUTING BOOKS PROFIT, AS PER EXPLANATION T O SECTION 115JB, WHICH HAS BEEN BROUGHT ON STATUTE BY THE FINANCE AC T, 2008 WITH RETROSPECTIVE EFFECT FROM 01/04/2001. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE ISSUE INVOLVED IN THE PRESENT APPEAL, I. E, WHETHER INTEREST U/S 234B OF THE ACT, COULD BE LEVIED FOR SHORTFALL IN PAYMENT OF ADVANCE TAX OR NOT, WHEN SUCH SHORTFALL IN PAYMENT OF TAXES WAS ON ACCOUNT OF ADDITIONS MADE TO TOTAL INCOME, CONSEQUE NT TO RETROSPECTIVE AMENDMENT MADE TO THE ACT, IS NO LONG ER A RES-INTEGRA . THE CO-ORDINATE BENCH OF ITAT, IN ASSESSEE OWN CASE FOR AY 2005- 06 IN ITA NO. 5247/MUM/2014, VIDE ORDER DATED 03/06 /2016 HAD ITA NO.7499/MUM/2018 RELIANCE INDUSTRIES LTD. 5 CONSIDERED AN IDENTICAL ISSUE, IN LIGHT OF ADDITION S MADE BY THE LD. AO TOWARDS LEVY OF INTEREST U/S 234B OF THE ACT, ON THE ADDITIONS MADE TOWARDS BOOK PROFIT COMPUTED U/S 115JB OF THE I.T.ACT, 1961, ON THE BASIS OF RETROSPECTIVE AMENDMENT TO THE ACT, AND HELD THAT THE ASSESSEE SHOULD NOT BE FASTENED WITH INTEREST LIABILITY ON ADDITIONS MADE ON THE BASIS OF SUBSEQUENT AMENDMENT , SINCE, THE ASSESSEE COULD NOT HAVE FORESEEN THE LIABILITY, AT THE TIME OF ESTIMATING HIS INCOME FOR THE PURPOSE OF PAYMENT OF ADVANCE TAX. WE FURTHER NOTED THAT THE HONBLE BOMBAY HIGH COURT , IN THE CASE OF CIT VS JSW ENERGY LIMITED (SUPRA) HAD CONSIDERED AN IDENTICAL ISSUE, IN LIGHT OF ADDITIONS MADE TO BOOK PROFIT C OMPUTED U/S 115JB, ON THE BASIS OF RETROSPECTIVE AMENDMENT BROUGHT IN BY FINANCE ACT, 2008 WITH EFFECT FROM 01/04/2001 AND HELD THAT WHER E, ASSESSE COMPUTED BOOK PROFIT AS PER PREVAILING LAW, NO INTE REST U/S 234B COULD BE LEVIED, CONSEQUENT TO INCLUSION OF VARIOUS ITEMS, WHILE COMPUTING BOOK PROFIT, AS PER EXPLANATION TO SECTIO N 115JB, WHICH HAS BEEN BROUGHT ON STATUTE BY FINANCE ACT, 2008 WI TH RETROSPECTIVE EFFECT FROM 01/04/2001. WE FURTHER NOTED THAT THE H ONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT VS KPMG IN ITA NO. 6 90/2017, DATED 24/09/2009, HAS OBSERVED THAT A PARTY CANNOT BE CAL LED UPON TO PERFORM AN IMPOSSIBLE ACT, I.E TO COMPLY WITH THE P ROVISION, WHICH WAS NOT IN FORCE AT THE RELEVANT TIME. THE SUM AND SUBSTANCE OF THE RATIOS LAID DOWN BY THE HONBLE HIGH COURT OF BOMBA Y IS THAT LIABILITY ARISING ON ACCOUNT OF RETROSPECTIVE AMENDMENT COULD NOT BE FASTENED ON THE ASSESSEE, WHERE THE ASSESSEE COULD NOT HAVE FORESEEN THE LIABILITY, AT THE TIME OF ESTIMATING H IS INCOME FOR THE PURPOSE OF PAYMENT OF ADVANCE TAX. IN THIS CASE, AD DITIONS WAS MADE TO BOOK PROFITS COMPUTED U/S 115JB, TOWARDS DE DUCTION CLAIMED ON ELIGIBLE PROFIT U/S 80HHC OF THE ACT, ON THE BASIS OF ITA NO.7499/MUM/2018 RELIANCE INDUSTRIES LTD. 6 RETROSPECTIVE AMENDMENT TO SECTION 115JB OF THE ACT , BY OMITTING CLAUSE (IV) TO (VII) TO EXPLANATION 1 BY THE FINANC E ACT, 2011 WITH EFFECT FROM 01/04/2005. FURTHER, AT THE TIME OF PAY MENT OF ADVANCE TAX, SAID PROVISIONS WERE VERY MUCH WAS ON STATUTE , AND ASSESSEE WAS ENTITLED TO DEDUCT AMOUNT CLAIMED AS DEDUCTION U/S 80HHC FROM BOOK PROFIT U/S 115JB OF THE ACT. THEREFORE, THE ASSESSEE HAS TAKEN THE ADVANTAGE OF PROVISIONS AS WAS THERE IN S TATUE AT THE TIME OF PAYMENT OF ADVANCE TAX AND HENCE, THE ASSESEE CA NNOT BE EXPECTED TO PAY ADVANCE TAX ON THE PART OF DISPUTE D AMOUNT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT NO IN TEREST CAN BE LEVIED U/S 234B OF THE ACT, FOR SHORTFALL IN PAYMEN T OF ADVANCE TAX ON THE BASIS OF RETROSPECTIVE AMENDMENT TO LAW. THE L D.CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AN D ALSO, BY FOLLOWING THE ORDER OF THE ITAT IN ASSESSEE OWN CAS E FOR VERY SAME AY 2005-06 HAS RIGHTLY DELETED ADDITIONS MADE BY THE LD. AO TOWARDS LEVY OF INTEREST U/S 234B OF THE I.T.ACT, 1 961. HENCE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD.CIT(A) AND D ISMISS, APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED.. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05 / 02/2020 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO.7499/MUM/2018 RELIANCE INDUSTRIES LTD. 7 MUMBAI ; DATED 05/01/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// ITA NO.7499/MUM/2018 RELIANCE INDUSTRIES LTD. 8 DATE INITIAL WHETHER DICTATION PAD ENCLOSED WITH THE FILE : YES/ NO (AS THE ORDER HAS BEEN TYPED WITH THE HELP OF MANUSCRIPT) 1. DRAFT DICTATED ON 28/01/2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER