WEIZMANN LTD, MUMBAI V. DCIT 1(3), MUMBAI

ITA 769/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71914 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 02-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 03-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Keywords: Business income; Rectification of order; Rule of consistency; Retrospective amendment; Revised return
• Section: 234B; 115JB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ./I.T.A. NO.769/M/2012 (AY: 2006 - 2007) M/S. WEIZMANN LTD., EMPIRE HOUSE, 214, DR. D.N. RD, ENT. A.K. NAYAK MARG, FORT, MUMBAI 400 001. / VS. DCIT, RANGE - 1(3), AAYAKAR BHAVAN, MUMBAI 400 020. ./ PAN : AAACW 1260 H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA / RESPONDENT BY : SHRI R.K. SAHU, DR / DATE OF HEARING : 02.12.2013 / DATE OF PRONOUNCEMENT : 11 .12.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 3.2.2012 IS AGAINST THE ORDER OF THE CIT (A) - 2, MUMBAI DATED 2.11.2011 FOR THE ASSESSMENT YEAR 2006 - 2007. THIS ORDER WAS PASSED BY THE CIT (A) IN CONNECTION WITH THE ORDER OF THE AO PASSED U/S 154 OF THE ACT MAKING CERTAIN ADDITIO NS TO THE BOOK PROFITS U/S 115JB OF THE ACT. 2. AT THE OUTSET, SHRI VIJAY MEHTA, LD COUNSEL FOR THE ASSESSEE DID NOT PRESS THE ORIGINAL GROUNDS RAISED IN THE APPEAL. HOWEVER, HE BROUGHT OUR ATTENTION TO THE ADDITIONAL GROUNDS WHICH ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) OUGHT TO HAVE HELD THAT THE AO ERRED IN LEVYING INTEREST U/S 234B OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) OUGHT TO HA VE HELD THAT NO INTEREST U/S 234B OF THE ACT SHOULD BE LEVIED ON ACCOUNT OF SHORT FALL IN ADVANCE TAX ARISING OUT OF RETROSPECTIVE AMENDMENT U/S 115JB OF THE ACT. 3. IN CONNECTION WITH THE ABOVE GROUNDS, LD COUNSEL MENTIONED THAT THE ISSUE EMA NATING FROM THE GROUND IS THE LEVYABILITY OF INTEREST U/S 234B OF THE ACT, GIVING 2 EFFECT TO THE AMENDED PROVISIONS, RELYING ON THE FACT THAT THE SAID AMENDED PROVISIONS ARE RETROSPECTIVE AND THEREFORE, APPLY TO THE CURRENT AY 2006 - 2007. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTE NTION TO THE FACT OF FILING THE RETURN ON 29.11.2006 AND THEN REVISED RETURN ON 31.3.2008, WHICH ARE EARLIER IN TIME QUA THE AMENDED PROVISIONS BROUGHT IN BY THE FINANCE ACT, 2009 W.E.F., 1.1.2001. FURTHER, HE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. ESSAR INVESTMENT LTD VS. ITO VIDE ITA NO. 6444/M/2011 FOR THE AY 2005 - 2006, ORDER DATED 29.11.2012 AND MENTIONED THAT THESE AMENDED PROVISIONS SHALL NOT APPLY RETROSPECTIVELY. THE COORDINATE BENCH HAS TAKEN A VIEW RELYING ON THE JUDGMENT OF THE CALCUTTA HIGH COURT IN THE CASE OF EMAMI LTD VS. CIT 337 ITR 470 . THE FACT OF NON - AVAILABILITY OF T HE ANY CONTRARY JUDGMENT OF ANY OTHER HIGH COURT OR THE SUPREME COURT WAS ALSO DISCUSSED ON THIS ISSUE. FURTHER, HE ALSO FILED A COPY OF THE ORDER O F THE TRIBUNAL IN THE CASE OF GLENMARK PARMACEUTICALS LTD VS. ADDL.CIT VIDE ITA NO. 5031/M/2012 (AY 2008 - 2009), DATED 13.11.2013 FOR IDENTICAL PROPOSITION. PARA 30 OF THE SAID ORDER OF THE TRIBUNAL IS RELEVANT IN THIS REGARD. IN THESE TWO ORDERS, THE UND ERSIGNED (AM) IS A PARTY. 4. ON THE OTHER HAND, LD DR MENTIONED THAT THE ISSUE OF CHARGEABILITY OF INTEREST U/S 234B RETROSPECTIVELY WAS NOT DISCUSSED WHICH IS EVIDENT FROM THE ORDER OF THE CIT (A) AND THE RECTIFICATION ORDER OF THE AO. HE, HOWEVER, MENTI ONED THAT THE ISSUE STANDS COVERED AGAINST THE REVENUE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDERS OF THE TRIBUNAL. ON PERUSAL OF THE SAID ORDERS OF THE TRIBUNAL FILED BEFORE US, WE FIND THAT THE ISSUE, IN PRINCIPLE, IS COVERED AGAINST THE REVENUE AND THESE AMENDED PROVISIONS CANNOT BE APPLIED RETROSPECTIVELY, CONSIDERING THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EMAMI LTD (SUPRA). FOR THE PURPOSE OF COMPLETENESS OF THIS ORDER, PARA 6 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. ESSAR INVESTMENT LTD (SUPRA) AND PARA 30 FROM THE ORDER OF THE ITAT IN THE CASE OF GLENMARK PARMACEUTICALS LTD (SUPRA) ARE REPRODUCED AS UNDER: 3 PARA 6 FROM M/S. ESSAR INVESTMENTS LTD: - 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE FACTS ARE NOT IN DISPUTE AND IN IDENTICAL CIRCUMSTANCES THE HONBLE CALCUTTA HIGH COURT OBSERVED THAT AMENDED PROVISIONS TO SECTION 115JB CANNOT BE INVOKED TO HOLD AN ASSESS EE AS DEFAULTER WITH RESPECT TO PAYMENT OF ADVANCE TAX MERELY BECAUSE THE AMENDMENT WAS BROUGHT WITH RETROSPECTIVE EFFECT. IN OTHER WORDS, WHAT HAS TO BE SEEN IS THE LAW THAT WAS EXISTING ON THE DATE WHEN THE ASSESSEE WAS TO PAY ADVANCE TAX AND HE CANNOT BE BRANDED AS DEFAULTER IN PAYMENT OF ADVANCE TAX ON ACCOUNT OF LAW, WHICH WAS BROUGHT IN RETROSPECTIVELY. SINCE, THERE IS NO OTHER CONTRADICTORY DECISION ON THIS, BY FOLLOWING THE AFORESAID DECISION WE HOLD THAT THIS IS NOT A FIT CASE FOR LEVY OF INTERES T UNDER SECTION 234B OF THE ACT. PARA 30 AND 31 FROM M/S. GLENMARK PHARMACEUTICALS LTD: - 30. GROUND NO.8 RELATES TO CHARGING OF INTEREST U/S 234B OF THE ACT ON THE ENHANCED BOOK PROFITS U/S 115JB OF THE ACT. IN THIS REGARD, IT IS THE ARGUMENT OF THE LD C OUNSEL THAT THE SAID INTEREST CANNOT BE CHARGED ON THE ASSESSEE IN VIEW OF THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2001. IN THIS CONNECTION, ASSESSEE RELIED ON THE FACTUAL MATRIX OF THE CASE THAT THE RETURN OF INCOME WAS FILED BEFORE THE SAID RETROSPECTIVE AMENDMENT AND THE ASSESSEE IS NOT EXPECTED TO DO THE IMPOSSIBLE. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EMAMI LTD VS. CIT [2011] 337 ITR 470 (CAL) FOR THE PROPOSITION THAT THE INTEREST U/S 234 NEED NOT BE CHARGED WHEN THE RETURNS ARE FILED PRIOR TO THE AMENDMENT AND THE ASSESSEE CANNOT BE EXPECTED TO DO THE IMPOSSIBLE BY EXPECTING SUCH AMENDMENTS. PARA 15 & 16 OF THE SAID JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT (SUPRA) IS RELEVANT IN THIS REGARD. WE HAVE PERUSED THE RATIO OF THE SAID JUDGMENT AND THE HELD PORTION OF THE SAID JUDGMENT OF THE HIGH COURT READS AS UNDER: HELD , THAT THE LAST DATE OF THE RELEVANT FINANCIAL YEAR WAS 31 - 3 - 2001 AND ON THAT DAY, ADMITTEDLY, THE ASSESSEE HAD NO LIABILITY TO PAY ANY AMOUNT OF ADVANCE TAX IN ACCORDANCE WITH THE LAW THEN PREVAILING IN THE COUNTRY. CONSEQUENTLY, THE ASSESSEE PAID NO ADVANCE TAX AND SUBMITTED ITS REGULAR RETURN ON 31 - 10 - 2001 W ITHIN THE TIME FIXED BY LAW WHEREIN IT DECLARED ITS TOTAL INCOME AND THE BOOK PROFIT BOTH AS NIL. HOWEVER, CONSEQUENT TO THE AMENDMENT OF THE PROVISIONS CONTAINED IN SECTION 115JB BY VIRTUE OF THE FINANCE ACT, 2002 WHICH WAS PUBLISHED IN THE OFFICIAL GAZET TE ON 11 - 5 - 2002 GIVING RETROSPECTIVE EFFECT TO THE AMENDMENT FROM 1 - 4 - 2001, THE ASSESSEE FIRST VOLUNTARILY PAID A SUM OF RS. 1,55,62,511 ON ACCOUNT OF THE TAX PAYABLE ON BOOK PROFIT AS PROVIDED IN AMENDED PROVISION OF SECTION 115JB AND THEN FILED ITS REVIS ED RETURN 31 - 3 - 2003 DECLARING ITS BUSINESS INCOME AS NIL BUT THE BOOK PROFIT UNDER SECTION 115JB AS RS. 20,63,65,711. THE ASSESSING OFFICER ACCEPTED SUCH RETURN OF INCOME BUT IMPOSED INTEREST UNDER SECTIONS 234B AND 234C. 30.1. FURTHER, IN SUPPORT, LD AR FILED THE DECISION OF THE ITAT, MUMBAI IN THE CASE OF ESSAR STEEL INDIA LTD . VS. ADDL. CIT VIDE ITA NO.7013 FOR THE AY 2007 - 2008 DATED 27.9.2013, WHEREIN, BY RELYING ON THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EMAMI LTD (SUPRA), THE TRIBUNAL DECIDED THE CASE IN FAVOUR OF THE ASSESSEE AND AGAINST THE LEVY OF INTEREST U/S 234B OF THE ACT IN RESPECT OF SUCH ENHANCED AMOUNTS TO THE BOOK PROFITS U/S 115JB OF THE ACT. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 31. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DECISIONS AND THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES, WE ARE OF THE OPINION THAT IT IS A SETTLED LEGAL PROPOSITION THAT THE INTEREST COULD NOT BE LEVIED U/S 234B OF THE ACT IN RESPECT OF SUCH ENHANCED BOOK PROFITS UNDER SECTION 115JB OF THE ACT. THE SAID JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT AND ALSO THE ORDER OF THE TRIBUNAL IS SQUARELY APPLICABLE TO THE FACTS OF THE PR ESENT CASE. CONSIDERING THE SETTLED NATURE OF THE ISSUE, WE ARE OF THE 4 OPINION THAT THE ASSESSEE IS ENTITLED TO RELIEF AND THE GROUND NO.8 RAISED BY THE ASSESSEE IS ALLOWED . 6. FROM THE ABOVE, IT IS EVIDENT THAT IN VIEW OF THE AMENDED PROVISIONS BROUGHT IN BY THE FINANCE ACT, 2009, THE INTEREST U/S 234B CANNOT BE LEVIED ON THE ADDITIONS MADE FOR THE AY 2006 - 2007 APPLYING THE SAID PROVISIONS RETROSPECTIVELY . CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE AND ALSO FOLLOWING THE PRINCIPLE OF CONSISTENCY, WE ARE OF THE OPINION THAT THE ISSUE MUST BE DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED . 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ORDER PRONO UNCED IN THE OPEN COURT ON 1 1 T H DECEMBER, 2013. S D / - S D / - (DR. S.T.M. PAVALAN) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 1 .12 .2013 . . ./ OKK , 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI