Carborundum Universal Limited, CHENNAI V. DCIT, CHENNAI

ITA 802/CHNY/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4337 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-04-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 03-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , '.. % , * BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.802/MDS/2014 + + /ASSESSMENT YEAR: 2003-04 M/S.CARBORUNDUM UNIVERSAL LTD., PARRY HOUSE, 43, MOORE STREET, CHENNAI-600 001. VS. THE DY. COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT, CHENNAI. [PAN: AAACC 2474 P ] ( . /APPELLANT) ( /0. /RESPONDENT) . 1 / APPELLANT BY : MR.R.VIJAYARAGHAVAN, /0. 1 /RESPONDENT BY : MR.SASIKUMAR, JCIT 1 /DATE OF HEARING : 17.04.2017 1 /DATE OF PRONOUNCEMENT : 08.06.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 26.12.2013 OF COMMISSIONER OF INCOME TAX (APPEALS), CHENNAI, IN ITA NO.11/12-13/LTU(A) FOR THE AY 2003-04. 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO THE C HARGING OF INTEREST U/S.220(2) OF IT ACT. THE ASSESSMENT IS COMPLETED IN THIS CASE U/S.143(3) ITA NO.802/MDS/2014 :- 2 -: BY AN ORDER DATED 28.02.2006. THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DELETED THE ADDITION BY AN ORDER DATED 19.01.2006. THE AO HAS GIVEN EFFECT TO THE ORDER O F THE LD.CIT(A) ON 11.07.2008. THE HONBLE ITAT VIDE ORDER DATED 03.0 6.2009 RESTORED THE ORDER OF THE AO. WHILE GIVING EFFECT TO THE ORDER OF THE HONBLE ITAT, THE AO CHARGED INTEREST U/S.220(2) AS FOLLOWS: ON RS.1,02,47,362/- FROM APRIL, 2006 TO AUGUST, 200 6 RS. 5,12,368 ON RS.57,98,393/- FROM SEP.2006 TO NOV. 2006 RS. 1, 73,952 ON RS.56,60,702/- FROM DEC.2006 TO JULY, 2008 RS. 1 1,32,140 ON RS.83,42,147/- FROM AUG.2008 TO OCT.2012 RS. 42, 54,495 TOTAL RS. 60,72,955 3.0 AGAINST THE ORDER OF THE AO, CHARGING INTEREST U/S .220(2) FOR A SUM OF RS. 60,72,955/- THE ASSESSEE WENT ON APPEAL BEFORE THE LD.CIT(A) A ND THE LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. HENCE, THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. 4.0 APPEARING FOR THE ASSESSEE, LD.SR.COUNSEL ARGUED T HAT THE INTEREST U/S.220(2) IS CHARGEABLE DURING THE PERIOD OF DEMA ND OUTSTANDING AND WHEN THERE WAS NO DEMAND THE INTEREST IS NOT CHARGE ABLE. MERELY BECAUSE THE ITAT RESTORED THE ORDER OF THE AO, AO CANNOT BE ENTITLED TO CHARGE THE INTEREST FOR THE ENTIRE PERIOD FROM THE ORIGINAL DA TE OF DEMAND FALLEN DUE. THE ASSESSEE WAS NOT IN DEFAULT FOR NON-PAYMENT OF TAXES DURING THE PERIOD WHEN THE DEMAND WAS DELETED BY APPELLATE AUT HORITIES THUS NO INTEREST IS CHARGEABLE DURING SAID PERIOD. THE LD. AR RELIED ON THE AMENDMENT MADE TO SEC.220 WHICH IS EFFECTIVE FROM 0 1.10.2014 AND ITA NO.802/MDS/2014 :- 3 -: ARGUED THAT THE AMENDMENT WAS NOT CLARIFICATORY AND HENCE APPLICABLE PROSPECTIVELY. 5.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. IN THIS CASE THE AO PASSED THE ASSESSMENT MAKING S OME ADDITIONS AND THE LD.CIT(A) DELETED THE ADDITION AND THE DEMA ND WAS REDUCED CONSEQUENT TO THE ORDER OF THE CIT(A). SUBSEQUENTLY ON APPEAL BY THE REVENUE, THE HONBLE ITAT RESTORED THE ORDER OF THE AO AND THE AO CHARGED THE INTEREST U/S 220(2) FROM THE DATE OF TH E DEMAND ORIGINALLY FALLEN DUE AFTER ASSESSMENT. LD. ARS CONTENTION IS THAT ON ACCOUNT OF THE ORDER OF THE LD.CIT(A) DURING THE PERIOD 19.12.2006 TO 03.06.2009, THERE WAS NO OUTSTANDING DEMAND TO TREAT THE ASSESSEE AS ASSESSEE IN DEFAULT AND THUS NO INTEREST IS CHARGEABLE. THE PROVISO TO SEC.220(2) IS INTRODUCED IN FINANCE ACT, 2014 W.E.F. 01.10.2014 A ND APPLICABLE PROSPECTIVELY. THOUGH, THERE WERE DECISIONS IN FAV OUR OF THE REVENUE SINCE THE ACT HAS BEEN AMENDED TO CHARGE INTEREST F ROM THE ORIGINAL DATE OF ASSESSMENT IN THE CASE OF CONSEQUENT APPELLATE O RDERS THE SAME IS APPLICABLE PROSPECTIVELY FROM 01.10.2014. THUS, TH ERE IS NO PROVISION IN THE INCOME TAX ACT TO CHARGE INTEREST U/S.220(2) DU RING THE INTERVENING PERIOD. THEREFORE, WE HOLD THAT THE INTEREST U/S.2 20(2) IS NOT CHARGEABLE DURING THE INTERVENING PERIOD FROM 19.12.2006 TO 0 3.06.2009 ACCORDINGLY WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AN D DIRECT THE AO PASS ITA NO.802/MDS/2014 :- 4 -: ORDERS CHARGING THE INTEREST DURING THE PERIOD IN W HICH THE ASSESSEE IS TREATED AS ASSESSEE IN DEFAULT. 6.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 08, 201 7, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ' . . % ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 6 /DATED: JUNE 08, 2017. TLN 1 /%7 87 /COPY TO: 1. . /APPELLANT 4. 9 /CIT 2. /0. /RESPONDENT 5. 7 / /DR 3. 9 ( ) /CIT(A) 6. + /GF