KUMARI KUMAR ADVANI, MUMBAI V. ASST CIT (CPC) BANGALORE, MUMBAI

ITA 7661/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2599 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 31-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: AJAY R SINGH
• Keywords: Gift; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER. ITA NO. 7661 /MUM/2013 (ASSESSMENT YEAR : 2012-13) KUMARI KUMAR ADVANI, 101, MANASAROVER, MOUNT PLEASANT ROAD, MALABAR HILL, MUMBAI- 400 006 PAN: AAHPA 0248D ... APP ELLANT VS. ASSTT. CIT (CPC), BANGALORE. .... RESPONDENT APPELLANT BY : SHRI AJAY R. SINGH RESPONDENT BY : SHRI A.K.KARDAM DATE OF HEARING : 29/09/2015 DATE OF PRONOUNCEMENT : /07/2016 ORDER PER G.S.PANNU, A.M: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINI NG TO ASSESSMENT YEAR 2012-13 IS DIRECTED AGAINST AN ORDE R PASSED BY CIT(A)- 27, MUMBAI DATED 25/10/2013, WHICH IN TURN ARISES O UT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(1 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 23/11/201 2. 2 ITA NO. 7641 /MUM/2013 (ASSESSMENT YEAR : 2010-11) 2. IN THIS APPEAL, ALTHOUGH ASSESSEE HAS RAISED MU LTIPLE GROUNDS OF APPEAL, BUT THE SOLITARY DISPUTE RELATES TO CHARGIN G OF INTEREST UNDER SECTION 234C OF THE ACT AMOUNTING TO RS.7,66,070/-. 3. BRIEFLY PUT, THE RELEVANT FACTS CAN BE SUMMARIZE D AS FOLLOWS. THE APPELLANT IS AN INDIVIDUAL, WHO IS DERIVING INCOME MAJORLY FROM DEPOSITS MAINTAINED WITH THE BANK AND CAPITAL GAINS. THE RET URN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 WAS FILED ON 20/07/2012 , DECLARING A TOTAL INCOME OF RS.13,91,54,702/-. THE SAID RETURN WAS S UBJECT TO PROCESSING UNDER SECTION 143(1) OF THE ACT DATED 23/11/2012. THE ONLY POINT OF DISPUTE BY THE ASSESSEE IS THAT WHILE PROCESSING SU CH RETURN UNDER SECTION 143(1) OF THE ACT, INTEREST UNDER SECTION 2 34C OF THE ACT WAS LEVIED ON ACCOUNT OF SHORTFALL IN PAYMENT OF ADVANC E TAX ON FIRST AND SECOND INSTALLMENTS, DUE ON 15/09/2011 AND 15/12/20 11, IN RESPECT OF GIFT OF RS.10.00 CRORES CLAIMED TO HAVE BEEN RECEIV ED ON 17/12/2011. ON SUCH DEFERMENT IN PAYMENT OF INSTALMENTS, INTERE ST OF RS.7,66,070/- WAS CHARGED UNDER SECTION 234C OF THE ACT. SUCH LE VY HAS ALSO BEEN AFFIRMED BY CIT(A) AND, HENCE, ASSESSEE IS IN FURTH ER APPEAL BEFORE US. 4. BEFORE CIT(A) AS WELL AS BEFORE US, ASSESSEE HAS RAISED VARIED SUBMISSIONS IN ORDER TO ASSAIL THE CHARGING OF INTE REST UNDER SECTION 234C OF THE ACT. THE FIRST AND FOREMOST PLEA OF TH E ASSESSEE IS THAT THE INCOME IN QUESTION, NAMELY GIFT OF RS.10.00 CRORES RECEIVED ON 17/12/2011 WAS IN THE NATURE OF A WINDFALL GAIN AND , THEREFORE, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO ESTIMATE ACCRUAL O R RECEIPT OF SUCH INCOME AT ANY TIME WHEN THE PAYMENT FOR FIRST AND S ECOND INSTALLMENTS WERE DUE ON 15/9/2011 AND 15/12/2011. IT WAS, THER EFORE, CONTENDED THAT ASSESSEE WAS NOT LIABLE TO PAY ADVANCE TAX ON 15/9/2011 AND 3 ITA NO. 7641 /MUM/2013 (ASSESSMENT YEAR : 2010-11) 15/12/2011 AS THE RECEIPT OF GIFT WAS NOT ESTIMABLE AT THE RELEVANT POINT OF TIME. APART THEREFROM, AN ADDITIONAL PLEA HAS ALSO BEEN RAISED, WHICH IS TO THE EFFECT THAT THE INTEREST UNDER SECT ION 234C OF THE ACT COULD NOT BE CHARGED WHILE PROCESSING THE RETURN UN DER SECTION 143(1) OF THE ACT. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE POINTED OUT THAT THE CIT(A) MADE NO MISTAKE IN UPHOLDING THE LE VY OF INTEREST UNDER SECTION 234C OF THE ACT BECAUSE CHARGING OF INTERES T UNDER SECTION 234C OF THE ACT WAS MANDATORY IN NATURE AND THAT THE JUD GMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF BILL AND P EGGY MARKETING INDIA PVT. LTD. VS. ACIT, 350 ITR 465 (DEL) SUPPORTS THE STAND OF THE REVENUE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE LIABILITY TO PAY ADVANCE TAX ENSHRINED UNDER THE ACT IS BASED ON THE PRINCIPLE OF PAY AS YOU EARN, AS HAS BEEN APTLY NOTED BY THE DELHI HIGH COURT IN THE CASE OF BILL AND PEGGY MARKETING INDIA PVT. LTD .(SUPRA). SECTION 234C OF THE ACT PRESCRIBES THAT THE ADVANCE TAX IS PAYAB LE IN INSTALLMENTS ON THE DATES FALLING WITHIN FINANCIAL YEAR ITSELF. AN Y FAILURE OR SHORTFALL IN PAYMENT OF SUCH INSTALLMENTS ATTRACTS INTEREST UNDE R SECTION 234C OF THE ACT. IN THE PRESENT CASE, THE ASSESSEE HAS BEE N CHARGED INTEREST UNDER SECTION 234C OF THE ACT PRIMARILY ON THE GROU ND THAT THE REQUISITE INSTALLMENTS WERE NOT PAID ON THE SPECIFIED DATES O F 15/9/2011 AND 15/12/2011. THE ASSESSEE RESISTS THE LEVY ON THE G ROUND THAT THE INCOME WHICH HAS PROMPTED THE REVENUE TO LEVY INTER EST WAS NOT RECEIVED BY THE ASSESSEE ON SUCH SPECIFIED DATES, B UT IT WAS RECEIVED ON 17/12/2011. OSTENSIBLY, THE INCOME IN QUESTION IS BY WAY OF GIFTS 4 ITA NO. 7641 /MUM/2013 (ASSESSMENT YEAR : 2010-11) RECEIVED, WHICH HAS BEEN RECEIVED BY THE ASSESSEE A FTER THE DATE OF INSTALMENTS DUE ON 15/9/2011 AND 15/12/2011. QUITE CLEARLY, ASSESSEE COULD NOT HAVE ANTICIPATED THE RECEIPT OR ACCRUAL O F SUCH INCOME BEFORE THE EVENT, AND SUCH EVENT HAS TAKEN PLACE AFTER THE DUE DATES OF INSTALMENTS. AT THIS STAGE, ONE MAY GAINFULLY REFE R TO SECTION 207 OF THE ACT, WHICH CREATES LIABILITY FOR PAYMENT OF ADVANCE TAX WHEREBY, EVERY PERSON IS OBLIGED TO PAY ADVANCE TAX IN THE FINANCI AL YEAR ON TOTAL INCOME CHARGEABLE TO TAX FOR ASSESSMENT YEAR IMMEDI ATELY FOLLOWING THAT FINANCIAL YEAR. SECTION 209 OF THE ACT PROVID ES THE COMPUTATIONAL MECHANISM OF CALCULATING ADVANCE TAX TO BE PAID. N OTABLY, SECTION 209 ENVISAGES CALCULATION OF ADVANCE TAX BASED ON THE ESTIMATE OF CURRENT INCOME . A READING OF SECTION 209 WOULD REVEAL TH AT IN ORDER TO CALCULATE THE AMOUNT OF ADVANCE TAX PAYABLE, AN ASS ESSEE IS LIABLE TO ESTIMATE HIS INCOME. CONSIDERED IN THIS LIGHT, THE FACTS OF THE PRESENT CASE CLEARLY SHOW THAT THE GIFT OF RS.10.00 CRORES, WHICH HAS BEEN RECEIVED BY THE ASSESSEE ON 17/12/2011 COULD NOT H AVE BEEN FORESEEN BY THE ASSESSEE SO AS TO ENABLE HIM TO ESTIMATE SUC H INCOME FOR THE PURPOSE OF PAYMENT OF ADVANCE TAX ON AN ANTERIOR DATE, MAY IT BE 15/09/2011 OR 15/12/2011. IN SUCH A SITUATION, TH E DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V. JINDAL IRRIGATION SYSTEMS LTD. ( 56 ITD 164 )(HYD.), RELIED UPON BY THE APPELLANT, CLEARLY MILITATES AGAINST CHARGING OF INTEREST UNDER SECTIO N 234C OF THE ACT. AS PER THE HYDERABAD BENCH OF THE TRIBUNAL, AN ASSESSE E COULD NOT BE DEFAULTED FOR A DUTY, WHICH WAS IMPOSSIBLE TO BE PE RFORMED. THE HYDERABAD BENCH OF THE TRIBUNAL WAS ALSO CONSIDERIN G LEVY OF INTEREST UNDER SECTION 234C OF THE ACT IN A SITUATION WHERE ON THE RELEVANT DATES ASSESSEE WAS NOT IN A POSITION TO ESTIMATE RE CEIPT OF SUCH 5 ITA NO. 7641 /MUM/2013 (ASSESSMENT YEAR : 2010-11) INCOME. TO THE SIMILAR EFFECT IS THE DECISION OF T HE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF EXPRESS NEWSPAPER LTD ( 103 TTJ 122 )(CHENNAI). THEREFORE, IN THIS BACKGROUND, THE LEV Y OF INTEREST UNDER SECTION 234C OF THE ACT IN THE PRESENT CASE IS UNTE NABLE. 6.1 IN SO FAR AS PLEA OF THE REVENUE THAT CHARGING OF INTEREST UNDER SECTION 234C OF THE ACT IS MANDATORY IN NATURES IS CONCERNED, THE SAME IN OUR VIEW, CANNOT LEAD TO A SITUATION WHERE LEVY OF INTEREST CAN BE FASTENED EVEN IN SITUATIONS, WHERE THERE IS IMPOSSI BILITY OF PERFORMANCE BY THE ASSESSEE. CHARGING OF INTEREST WOULD BE MAN DATORY, ONLY IF, THE LIABILITY TO PAY ADVANCE TAX ARISES UPON FULFILMENT OF THE PARAMETERS, WHICH IN THE PRESENT CASE IS NOT FULFILLED ON ACCOU NT OF THE PECULIAR FACT- SITUATION. THUS, SUCH PLEA OF THE REVENUE IS UNTEN ABLE. 6.2 FURTHERMORE, THE RELIANCE PLACED BY THE REVENUE IN THE CASE OF PEGGY MARKETING INDIA PVT. LTD.(SUPRA) IS ALSO NOT APPROPRIATE CONSIDERING THE PECULIAR FACTS OF THE PRESENT CASE. NO DOUBT, HONBLE DELHI HIGH COURT UPHOLDS THE PROPOSITION THAT THE C AUSE AND DELAY AND JUSTIFICATION FOR DEFERMENT OF ADVANCE TAX LOSES SI GNIFICANCE FOR THE PURPOSES OF LEVY OF INTEREST UNDER SECTION 234C OF THE ACT. THE HONBLE HIGH COURT NOTED THAT THE PROVISO TO SECTION 234C( 1) OF THE ACT PRESCRIBES CASES FOR CONDONING LEVY OF INTEREST IF THE UNDER ESTIMATE OR FAILURE TO ESTIMATE IS ON ACCOUNT OF CAPITAL GAINS OR INCOME BY WAY OF WINNINGS FROM LOTTERY, CROSS WORD, PUZZLES, ETC. THE HONBLE HIGH COURT DID NOT FIND THE FACT-SITUATION, BEFORE IT, TO BE FALLING WITHIN THE SCOPE OF THE PROVISO TO SECTION 234C OF THE ACT. N OTABLY, THE INCOME WHICH WAS CONSIDERED BY THE HIGH COURT RELATED TO T HE BUSINESS RECEIPTS 6 ITA NO. 7641 /MUM/2013 (ASSESSMENT YEAR : 2010-11) OF THE ASSESSEE, WHEREAS IN THE INSTANT CASE, THE I NCOME IS BY WAY OF A WINDFALL GAIN, BEING RECEIPT OF GIFTS. IN OUR CONS IDERED OPINION, THE TWO SITUATIONS ARE INCOMPARABLE. THEREFORE, THE JUDGMEN T OF THE HONBLE DELHI HIGH COURT IN THE CASE PEGGY MARKETING INDIA PVT. LTD.(SUPRA) STANDS ON ITS OWN FACTS AND IS NOT ATTRACTED TO TH E FACTS OF THE PRESENT CASE. 6.3 IN VIEW OF THE ABOVE, WE SET-ASIDE THE ORDER O F THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE INTEREST LEVIED OF RS. 7,66,070/- UNDER SECTION 234C OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 13/07/2016 SD/- SD/- (RAM LAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOU NTANT MEMBER MUMBAI, DATED 13/07/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI