DIVINE HOLDINGS P. LTD, MUMBAI V. DCIT CEN CIR 31, MUMBAI

ITA 8199/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75685 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 18-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Assessee Lawyers: NILESH MEHTA
• Keywords: Diversion of income
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI . . , , BEFORE SHRI B. R. MITTAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 8199/MUM/2010 ( / ASSESSMENT YEAR: 2007-08) DIVINE HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR, DR. ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI-400 018 / VS. DY. CIT, CENTRAL CIRCLE-31, MUMBAI ! ./' ./PAN/GIR NO. AAACD 4959 J ( #$%& / ASSESSEE ) : ( ' / REVENUE ) & ./ I.T.A. NO. 8346/MUM/2010 ( / ASSESSMENT YEAR: 2007-08) DY. CIT, CENTRAL CIRCLE-31, CENTRE RANGE-7, ROOM NO. 709, 4 TH FLOOR, AAYAKAR BHAVAN, M. K. MARG, MUMBAI / VS. DIVINE HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR, DR. ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI-400 018 ! ./' ./PAN/GIR NO. AAACD 4959 J ( ' / REVENUE ) : ( #$%& / ASSESSEE ) #$%& ( ) / ASSESSEE BY : SHRI NILESH MEHTA & SHRI DHARMESH SHAH ' ( ) / REVENUE BY : SHRI SANJEEV JAIN & DR. P. DANIEL * #'+ ( , / DATE OF HEARING : 11.12.2013 -./ ( , / DATE OF PRONOUNCEMENT : 10.03.2014 2 ITA NOS. 8199 & 8346/MUM/2010 (A.Y. 2007-08) DIVINE HOLDINGS PVT. LTD. 0 / O R D E R PER SANJAY ARORA, A. M.: THIS IS A SET OF CROSS APPEALS, I.E., BY THE ASSESS EE AND THE REVENUE, ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEAL S)-40, MUMBAI (CIT(A) FOR SHORT) DATED 10.09.2010, PARTLY ALLOWING THE ASSESS EES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT H EREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2007-08 VIDE ORDER DATED 12.10.2009. THE ASSESSEES APPEAL 2. THE SAME RAISES FIVE GROUNDS, OF WHICH THE FIRST THREE WERE NOT PRESSED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUN SEL, MAKING AN ENDORSEMENT TO THIS EFFECT ON THE APPEAL MEMO. THE FOURTH RAISES THE PR INCIPAL ISSUE, I.E., THE DEDUCTIBILITY OF THE INTEREST EXPENDITURE IN THE SUM OF RS.8,09,700/ -. THE ASSESSEE IS A NOTIFIED PARTY (UNDER THE RELEVANT ACT, BEING THE SPECIAL COURT (T RIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT, 1992), AS IT APPEARS, FROM 08.0 6.1992, AND ALL ITS ASSETS, INCLUDING BANK ACCOUNTS, STAND ATTACHED AND VESTED IN THE CUSTODIA N APPOINTED UNDER THE SPECIAL COURT (TORTS) ACT, 1992. THE ASSESSEE HAD BORROWED CAPITA L AND HAD ALSO BEEN EXTENDED CREDIT (PRIOR TO 08.06.1992) FROM THREE BROKERAGE FIRMS, B EING M/S. HARSHAD S. MEHTA; SHRI ASHWIN S. MEHTA; AND M/S. J. H. MEHTA, WHO HAD PURC HASED SHARES ON BEHALF OF THE ASSESSEE, THE PAYMENT FOR WHICH HAD NOT BEEN MADE. THE CUSTODIAN HAD SOLD SOME SHARES AND INVESTED THE MONIES REALIZED IN TERM DEPOSITS W ITH BANKS AS PER THE ORDER OF THE SPECIAL COURT TRYING THE OFFENCES UNDER THE RELEVAN T ACT. THE CUSTODIAN, REPRESENTING THE BROKERAGE FIRMS AS WELL, HAS APPARENTLY CLAIMED INT EREST AT RATES VARYING FROM 15% TO 18% P.A. (IN MP NO. 41 OF 1999) BEFORE THE SPECIAL COURT. THE ASSESSEE, ACCORDINGLY, WORKED OUT HIS LIABILITY, AS IT APPEARS, AT 12% P.A ., FOR THE RELEVANT YEAR AT RS.1,18,95,460/-. WHILE RS.1,10,85,760/- OF THE SAM E WAS DISALLOWED SUO MOTU U/S.14A, THE BALANCE IMPUGNED AMOUNT OF RS.8,09,700/- IS CLA IMED AS EXPENDITURE AGAINST THE INTEREST ARISING (AT RS.52,95,434/-) ON THE BANK TE RM DEPOSITS. IT IS THE CLAIM FOR DEDUCTION 3 ITA NOS. 8199 & 8346/MUM/2010 (A.Y. 2007-08) DIVINE HOLDINGS PVT. LTD. OF THIS AMOUNT FROM THE INCOME FROM OTHER SOURCES B Y WAY OF INTEREST WHICH IS THE SUBJECT MATTER OF DISPUTE. THE ASSESSEES CASE IS THAT INTEREST HAD ALSO BEEN ALLOWED BY IT TO THE PROMOTERS FOR A.Y. 1991-92, WHICH HAD BEEN ALLOWED IN ASSESSMENT U/S.143(3). THERE WAS A CLEAR NEXUS OF FUNDS BORROWED AND THE ASSETS IN-AS-MUCH AS THE SAME WERE UTILIZED FOR INVESTMENT IN SHARES, PART OF WHICH WERE LATER LIQUIDATED, INVEST ING THE SALE PROCEEDS IN BANK DEPOSITS, YIELDING INTEREST. AS SUCH, THE INTEREST, WORKED OU T ON A PROPORTIONATE BASIS, IS DEDUCTIBLE AGAINST THE BANK INTEREST INCOME. THE REVENUES CASE, ON THE OTHER HAND, IS THAT THOU GH A REASONABLE NEXUS CAN BE SAID TO BE ESTABLISHED BETWEEN THE BORROWED CAPITAL AND THE TERM DEPOSITS YIELDING INTEREST INCOME, THE LIABILITY TO PAY INTEREST IS I NCHOATE. NO RIGHT IN FAVOUR OF THE CREDITORS HAD ARISEN FOR THE ASSESSEE TO CLAIM INTEREST. THE MATTER IS IN DISPUTE BEFORE THE SPECIAL COURT, AND IN CASE A LIABILITY TOWARD INTEREST ARIS ES CONSEQUENT TO ITS DECISION, SO THAT THE ASSESSEE IS HELD LIABLE TO PAY THE SAME FOR THE BOR ROWINGS/SUMS UNDER REFERENCE, DEDUCTION IN ITS RESPECT MAY BE ALLOWED BY THE A.O. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THOUGH INITIALLY THE CASE WAS ARGUED BEFORE US AS COVERED BY THE ORDERS BY THE TRIBUNAL, WHERE THE MATTER HAD BEEN SET ASIDE TO TH E FILE OF THE FIRST APPELLATE AUTHORITY (IN VIEW OF NON CONSIDERATION OF THE SPECIFIC GROUND RA ISED BEFORE HIM QUA THE REJECTION OF ACCOUNTS), SO THAT THE SAME COURSE BE FOLLOWED FOR THE INSTANT CASE AS WELL, A PERUSAL OF THE RECORD REVEALED THAT THERE WAS NO CASE TOWARD R EJECTION/NON-RELIABILITY OF ACCOUNTS AT ANY STAGE. THE SAID ORDERS BEING, THUS, NOT APPLICA BLE IN THE FACTS OF THE CASE, THE PARTIES WERE SPECIFICALLY CONFRONTED ON THIS ASPECT. SPECIF IC REFERENCE WAS MADE BY THE LD. AR THEREAT TO THE TRIBUNALS ORDER IN JYOTI H. MEHTA (IN ITA NOS.5484 & 5485/MUM/2011 DATED 14.10.2013/PB PGS.5-10). HOWEVER, EVEN AS POI NTED OUT UPON GOING THROUGH THE CONTENTS OF THE SAID ORDER DURING THE COURSE OF HEA RING ITSELF, NO SUCH INFIRMITY, I.E., AS ATTENDS THAT CASE, INFLICTS THE INSTANT CASE NOR AN Y ISSUE IN RESPECT OF REJECTION/NON RELIABILITY OF THE BOOKS OF ACCOUNT ARISES OR GROUN D IN ITS RESPECT ASSUMED BEFORE THE 4 ITA NOS. 8199 & 8346/MUM/2010 (A.Y. 2007-08) DIVINE HOLDINGS PVT. LTD. AUTHORITIES BELOW, SO THAT THE SAID PLEA IS TO NO A VAIL. ON MERITS, THE CASE OF THE PARTIES BEFORE US, AS DELINEATED ABOVE, WAS MUCH THE SAME, I.E., AS BEFORE THE AUTHORITIES BELOW. 3.2 WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE MATTER. THE BASIC CONDITION FOR ALLOWANCE OF AN EXPENSE IS ITS ACCRUAL; THE ASSESSE E ADMITTEDLY FOLLOWING MERCANTILE METHOD OF ACCOUNTING FOR THE PURPOSE OF RETURNING I NCOME UNDER THE ACT AND, THUS, ITS DETERMINATION; IT BEING RATHER OBLIGED TO DO SO IN TERMS OF ITS GOVERNING ACT, THE COMPANIES ACT, 1956. THE ACCRUAL OF AN EXPENSE, OR INCOME FOR THAT MATTER; THE TWO BEING CORRESPONDING TO EACH OTHER, IS ESSENTIALLY A MATTER OF FACT, TO BE DETERMINED ON AN APPRECIATION OF UNDERLYING RIGHTS AND OBLIGATIONS. WE MAY TOWARD THIS ADVERT TO A RECENT DECISION BY THE APEX COURT IN CIT VS. EXCEL INDUSTRIES [2013] 358 ITR 295, WHEREIN ITS STANDS CLARIFIED THAT WHERE THE RIGHT TO RECEIVE TH E PAYMENT OR, CORRESPONDINGLY, THE OBLIGATION TO MAKE THE PAYMENT HAS ARISEN, EVEN IF FOR A LATER DATE, THERE IS ACCRUAL OF INCOME OR, AS THE CASE MAY BE, EXPENDITURE. REFEREN CE IN THIS CONTEXT MAY ALSO BE MADE TO ITS DECISIONS IN K.C.P. LTD. VS. CIT [2000] 245 ITR 421 (SC); P. MARIAPPA GOUNDER VS. CIT [1998] 232 ITR 2 (SC); CIT V. HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD . [1986] 161 ITR 524 (SC); AND CIT VS. SHOORJI VALLABHDAS & CO. [1962] 46 ITR 144 (SC). 3.3 IN THE FACTS OF THE INSTANT CASE, A PART OF THE MONEY ON WHICH INTEREST IS BEING CLAIMED IS BY WAY OF BORROWED CAPITAL WHILE THE BAL ANCE REPRESENTS THE UNPAID PURCHASE PRICE OF SHARES. THE PARTIES MAKING THE PURCHASES O N BEHALF OF THE ASSESSEE ARE NOT IN THE BUSINESS OF FINANCING, SO THAT THE AMOUNT COULD ONL Y BE CONSIDERED AS A DEBT, ARISING IN THE COURSE OF TRADE, AND PAYABLE IN DUE COURSE. THE BIFURCATION OF THE TOTAL AMOUNT (ON WHICH INTEREST IS BEING CLAIMED) BETWEEN THE TWO CA TEGORIES IS NOT AVAILABLE ON RECORD. THE AMOUNT IS OUTSTANDING PRIOR TO 08.06.1992. THER E IS HOWEVER NOTHING ON RECORD TO SUGGEST THAT THE INTEREST WAS BEING PAID ON THE SAI D SUM, WHOLLY OR PARTLY, PRIOR TO 08.06.1992. THE QUESTION THEN IS: ON WHAT BASIS A L IABILITY TO INTEREST, I.E., TO PAY THE SAME, CAN BE SAID TO HAVE BEEN ARISEN? THERE IS NOT HING ON RECORD TO SUGGEST SO, EXCEPT, AS IS BEING CLAIMED, OF A CLAIM IN ITS RESPECT HAVI NG BEEN MADE BEFORE THE SPECIAL COURT BY 5 ITA NOS. 8199 & 8346/MUM/2010 (A.Y. 2007-08) DIVINE HOLDINGS PVT. LTD. THE CUSTODIAN REPRESENTING THE SAID PARTIES, WHO AR E ALSO NOTIFIED PARTIES. IN FACT, THE ORDER OF THE SPECIAL COURT (IN MP NO. 41 OF 1999 DATED 30 .04.2010) IS ON RECORD (PB PGS. 30-35, CONTAINING ONLY PAGES 1-3 AND 137-139 OF THE ORDER) , WHICH BEARS NO MENTION OF ANY INTEREST BEING PAID TO ANY NOTIFIED PARTY BY OTHER SUCH OR TO ANY OUTSIDE PARTY. FURTHER, EVEN IF NO INTEREST WAS INITIALLY CONTRACT ED FOR OR INTENDED BETWEEN THE PARTIES, THERE IS NO REASON WHY INTEREST COULD NOT BE STIPULATED OR PROVIDED FOR LATER, PARTICULARLY CONSIDERING THAT THE AMOUNT/S REMAINS UNPAID DESPITE LAPSE OF SEVERAL YEARS. NO INTEREST, AS IT APPEARS, STANDS THOUGH PAID FOR ANY OF THE INTERVENING YEARS. HOWEVER, THE INSTANT CASE/S IS ON A DIFFERENT FOOTING, WITH ALL THE ASSETS HAVING BEEN ATTACHED AND UNDER THE CONTROL OF THE CUSTODIAN, ALSO REPRESENTI NG THE THREE BROKERAGE FIRMS FROM WHOM THE BULK OF THE CAPITAL ON WHICH THE INTEREST IS BEING CLAIMED, AS IT APPEARS, ARISES. AS SUCH, FIRSTLY, THE PAYMENT OR NOT SO OF INTEREST , PRIOR TO 08.06.1992, IS OF LITTLE CONSEQUENCE. TWO, PROVISION OF INTEREST CANNOT BE M ADE BY THE PARTIES OF THEIR OWN FREE WILL, WITH THEIR AFFAIRS BEING MANAGED BY THE CUSTO DIAN, WITH IN FACT THE INVESTMENT IN THE TERM DEPOSITS ITSELF HAVING ALSO BEEN MADE ONLY ON THE DIRECTION BY THE SPECIAL COURT. IN THIS VIEW OF THE MATTER, THE LD. CIT(A) IN OUR OPIN ION HAS CORRECTLY APPRECIATED THE FACTS AND THE LAW TO HOLD THAT THE MATTER OF GRANT OF INT EREST BEING SUB-JUDICE BEFORE THE SPECIAL COURT, THE SAME MAY BE ALLOWED WHERE SO GRANTED FOR THE RELEVANT YEAR. WE CONFIRM HIS DIRECTION, SUBJECT TO A MODIFICATION THAT THE INTER EST TO BE ALLOWED, IN-AS-MUCH AS THE SAME IS TO BE BY WAY OF DEDUCTION AGAINST INTEREST INCOM E, ASSESSABLE AS INCOME FROM OTHER SOURCES, CANNOT EXCEED THE RATE AT WHICH THE INTERE ST ON DEPOSIT/S STANDS EARNED BY THE ASSESSEE, ON AN AVERAGE, FOR THE RELEVANT PERIOD. W E STATE SO AS ONLY THE EXPENSE INCURRED FOR THE PURPOSE OF EARNING THE INTEREST INCOME IS T O BE ALLOWED U/S. 57 OF THE ACT. PAYMENT OF INTEREST AT A HIGHER RATE IMPLIES A GROSS LOSS, WITH NO CONTRACTUAL OBLIGATION TO PAY INTEREST HAVING BEEN ESTABLISHED, SO THAT THE PAYME NT OF INTEREST AT A HIGHER RATE CANNOT EITHER CONCEIVABLY, I.E., UNDER THE CIRCUMSTANCES, OR IN TERMS, BE SAID TO BE FOR THE PURPOSE OF EARNING INTEREST. WE DECIDE ACCORDINGLY. 6 ITA NOS. 8199 & 8346/MUM/2010 (A.Y. 2007-08) DIVINE HOLDINGS PVT. LTD. 4. THE FIFTH GROUND IS TOWARD COMPUTATION OF BOOK P ROFIT U/S.115-JB AT RS.52,51,234/-. THE PRINCIPAL ADJUSTMENT MADE BY TH E A.O. TO THE FIGURE OF NET LOSS DISCLOSED BY THE ASSESSEES BOOKS, IN COMPUTING THE BOOK PROFIT IS IN RESPECT OF INTEREST CLAIM OF RS.118.95 LACS. THE SAME STANDS HELD BY TH E LD. CIT(A) AS NOT AN ACCRUED LIABILITY, SO THAT IT CANNOT BE SAID TO REPRESENT A N ASCERTAINED LIABILITY, AND ADJUSTMENT IN ITS RESPECT, ACCORDINGLY, CONFIRMED THE APPEAL. TH E COMMON CONTENTION BEFORE US WAS OF THE SAME BEING CONSEQUENTIAL INASMUCH AS IF THE INT EREST IS HELD AS AN UNASCERTAINED LIABILITY, AND THUS NOT ALLOWABLE, THE SAME WOULD A LSO PRECLUDE ITS DEDUCTION IN COMPUTING THE BOOK PROFIT. ACCORDINGLY, THE SAME DECISION AS IN RESPECT OF GROUND NO. 4 WOULD FOLLOW FOR THIS GROUND AS WELL. IN FACT, THIS IS PR ECISELY WHAT THE LD. CIT(A) HAS ALSO HELD VIDE PARA 9 OF HIS ORDER, SO THAT HIS ORDER MERITS BEING UPHELD. HOWEVER, THE ASSESSEE HAS SUO MOTU DISALLOWED RS.110.86 LACS OUT OF THE TOTAL INTEREST CLAIM OF RS.118.96 LACS U/S.14A OF THE ACT. THE SAME BEING QUA A DIRECT INTEREST EXPENDITURE WOULD ALSO HAVE A DIRECT BEARING ON THE COMPUTATION OF THE BOOK PROFI T UNDER EXPLANATION 1(F) BELOW SECTION 115JB(2). IN OTHER WORDS, THE REDUCTION OF THE IMPU GNED SUM IN COMPUTING THE BOOK PROFIT U/S.115JB SHALL BE SUBJECT TO THE INTEREST L IABILITY BEING ASCERTAINED AND, TWO, ONLY TO THE EXTENT IT DOES NOT REPRESENT A DIRECT INTERE ST EXPENDITURE COVERED UNDER EXPLANATION 1(F) ; THE ASSESSEE HAVING ITSELF DISALLOWED RS.110.86 L ACS U/S.14A, SO THAT IT IS IN RESPECT OF AN EXPENDITURE BOOKED IN ACCOUNTS AND, FURTHER, IN RELATION TO INCOME THAT DOES NOT FORM PART OF THE TOTAL INCOME. WE DECIDE ACCORDINGL Y. 5. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND VID E ITS APPLICATION DATED 09.11.2013. IT IS CLAIMED, WITH REFERENCE TO THE ORDER DATED 30 .04.2010 BY THE SPECIAL COURT (SUPRA), REPRODUCING ITS RELEVANT PART (PARA 29) THAT IN-AS- MUCH AS THE SEVERAL PARTIES OF THE HARSHAD MEHTA GROUP WERE OPERATING JOINTLY AND IN T ANDEM; THE PROPERTY WAS HELD BY THEM JOINTLY AND, COULD BE USED FOR DISCHARGING THE LIABILITIES OF SHRI HARSHAD S. MEHTA. ON THAT BASIS, IT IS CONTENDED, BY RAISING A SPECIF IC GROUND IN ITS RESPECT, THAT THE ASSESSEES INCOME BELONGS TO SHRI HARSHAD S. MEHTA, AND OUGHT TO BE ASSESSED IN HIS HANDS. IT IS CLEAR THAT THE ORDER BY THE SPECIAL CO URT IS IN RESPECT OF THE USER OF THE ASSETS OF 7 ITA NOS. 8199 & 8346/MUM/2010 (A.Y. 2007-08) DIVINE HOLDINGS PVT. LTD. ONE FOR THE DISCHARGE OF LIABILITY OF ANOTHER IN-AS -MUCH AS THEY FORM PART OF A GROUP, OPERATING IN TANDEM. THE INCOME UNDER THE ACT, HOWE VER, IS TO BE DETERMINED QUA A PERSON. THERE IS NO CHARGE OR CLAIM THAT THE OTHER PARTIES, INCLUDING THE ASSESSEE, AN INCORPORATED ENTITY, ARE A BENAMI OF SHRI HARSHAD S . MEHTA OR HAVE NOT RECEIVED THE INCOME IN THEIR OWN RIGHT. THE ISSUE, AS WE PERCEIV E, IS ESSENTIALLY OF THE SAME AS REPRESENTING EITHER A DIVERSION OF INCOME BY OVER-R IDING TITLE OR AN APPLICATION OF INCOME. THE SAID CLAIM, IN FACT, IT WOULD BE READILY SEEN, ALSO RUNS COUNTER TO AND IS INCONSISTENT WITH THE ASSESSEES CLAIM FOR INTEREST, EITHER UNDE R THE REGULAR PROVISIONS OR UNDER THE MAT PROVISIONS, TO OTHER PARTIES IN-SO-FAR AND TO T HE EXTENT IT RELATES TO OTHER NOTIFIED PARTIES FORMING PART OF THE SAID GROUP. THIS ISSUE WE OBSERVE STANDS ALSO DISCUSSED BY THE TRIBUNAL IN M/S. PALLAVI HOLDINGS PVT. LTD. (IN ITA NO.8599/MUM/2010 DATED 17.07.2013/COPY ON R ECORD) WHEREIN, FOLLOWING ITS EARLIER ORDER IN HITESH S. MEHTA VS. DCIT (IN ITA NOS. 7726 & 7727/MUM/2010 DATED 26.04.2013), IT STANDS HELD THA T NO DIRECTION BY THE TRIBUNAL IS WARRANTED IN-AS-MUCH AS THE MATTER IS SUB-JUDICE BE FORE THE HONBLE SUPREME COURT WHOSE DECISION THEREON SHALL IN ANY CASE PREVAIL (R EFER PARA 6). RESPECTFULLY FOLLOWING THE SAME, WE DECIDE LIKEWISE. WE MAY HOWEVER ADD THAT I F AND TO THE EXTENT THE ASSESSEES INCOME IS FINALLY HELD AS LIABLE TO BE ASSESSED IN THE HANDS OF SH. HARSHAD S. MEHTA, NO LIABILITY AND, THUS, DEDUCTIBILITY OF INTEREST TO P ARTIES FORMING PART OF THE HARSHAD MEHTA GROUP, WHOSE INCOME IS ALSO THUS BY VIRTUE THEREOF LIABLE TO ASSESSED IN HIS HANDS, WOULD ARISE IN-AS-MUCH AS THE SAME WOULD THEN TRANSLATE I NTO OR BECOME A PAYMENT TO SELF, I.E., INDEPENDENT OF AND DE HORS OF THE DECISION IN ITS RESPECT ON MERITS IN TERMS O F PARAS 3.3 AND 4 OF THIS ORDER. WE DECIDE ACCORDINGLY. REVENUES APPEAL 6. THE SOLE ISSUE RAISED BY THE REVENUE IS THE DELE TION OF THE INTEREST CHARGED U/SS.234A, 234B AND 234C OF THE ACT FOLLOWING THE D ECISIONS BY THE TRIBUNAL, LISTED BY THE LD. CIT(A) IN HIS ORDER. THE MATTER HAS SINCE B EEN DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. DIVINE HOLDINGS PVT. LTD . IN ITA NO.3334 OF 2010 8 ITA NOS. 8199 & 8346/MUM/2010 (A.Y. 2007-08) DIVINE HOLDINGS PVT. LTD. DATED 07-03-2012 (COPY ON RECORD) WHEREIN THE HONB LE COURT, RELYING ON THE DECISION BY THE APEX COURT IN THE CASE OF CIT VS. ANJUM M. H. GHASWALA [2001] 252 ITR 1 (SC); TAX RECOVERY OFFICER VS. CUSTODIAN [2007] 7 SCC 461; AND SOLIDAIRE INDIA LTD. VS. FAIRGROWTH FINANCIAL SERVICES LTD. [2001] 3 SCC 71, AMONG OTHERS, HELD THAT THE CHARGE OF INTEREST UNDER THE ACT IS MANDATORY AND SHALL NO T ABATE; ITS FINDINGS BEING AT PARA 14 OF ITS ORDER, READING AS UNDER: 14. IN PARAGRAPH 14 OF THE JUDGMENT, EXTRACTED ABO VE, THE SUPREME COURT HAS HELD THAT THE PROVISIONS OF THE SPECIAL C OURT ACT, WHEREVER THEY ARE APPLICABLE SHALL PREVAIL OVER THE PROVISIONS OF THE INCOME TA X ACT, 1961. THE WORDS WHEREVER THEY ARE APPLICABLE ARE CRUCIAL. THE SPECIAL COURT ACT MAKES NO PROVISION IN REGARD TO THE DETER MINATION OF THE LIABILITY TO PAY INTEREST UNDER THE INCOME TAX ACT, 1961. THA T LIABILITY IS CLEARLY REFERABLE TO THE PROVISIONS EMBODIED IN SECTIONS 23 4A, 234B AND 234C. IN THE CIRCUMSTANCES, THE TRIBUNAL, IN OUR VIEW, WAS I N ERROR IN COMING TO THE CONCLUSION THAT INTEREST UNDER SECTIONS 234A, 234B AND 234C CANNOT BE LEVIED ON AN ASSESSEE WHO IS A NOTIFIED PARTY UNDER THE SPECIAL COURT ACT. BY THE CIRCULAR WHICH HAS BEEN ISSUED BY THE BOARD, THE POWER TO GRANT SUCH A WAIVER OR REMISSION HAS BEEN VESTED WITH THE CHIE F COMMISSIONER. IN TERMS OF THE JUDGMENT OF THE SUPREME COURT IN HARSHAD SHANTILAL MEHTA (SUPRA) THE NOTIFIED PERSON, THE ASSESSEE IN THE PR ESENT CASE, IS NOT WITHOUT REMEDY SINCE IT IS OPEN TO THE ASSESSEE TO TAKE REC OURSE TO THE REMEDY AVAILABLE UNDER THE DIRECTION DATED 26 JUNE 2006. W E ACCORDINGLY ANSWER THE QUESTIONS OF LAW AS FRAMED IN THE NEGATIVE. HOW EVER, WE CLARIFY THAT IT WOULD BE OPEN TO THE NOTIFIED PERSON TO SEEK A WAIV ER OR REDUCTION BY MAKING AN APPLICATION TO THE CHIEF COMMISSIONER OF INCOME TAX IN TERMS OF THE ORDER DATED 26 JUNE 2006 OF THE CENTRAL BOAR D OF DIRECT TAXES. THE APPEAL IS ACCORDINGLY DISPOSED OF. IN VIEW OF THE SAID DECISION BY THE HONBLE JURISDI CTIONAL HIGH COURT, THE ISSUE WITH REGARD TO THE CHARGE OF INTEREST IN THE ASSESSMENT OF NOTIFIED PARTIES STANDS SQUARELY COVERED IN FAVOUR OF THE REVENUE. WE, THEREFORE, UP HOLD THE LEVY OF INTEREST UNDER THE RELEVANT SECTIONS. THE REVENUE, ACCORDINGLY, SUCCEE DS. THE ASSESSEE, THOUGH, IS AT LIBERTY TO PURSUE THE REMEDY AS AVAILABLE TO IT UNDER THE L EGAL FRAMEWORK. 9 ITA NOS. 8199 & 8346/MUM/2010 (A.Y. 2007-08) DIVINE HOLDINGS PVT. LTD. 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES AND THE REVENUES APPEAL IS ALLOWED. &/ 1 #$%& ( 2( 345 6 0 ' 7 ( 89 : ' ( ' 7 ( 89 ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 10, 201 4 SD/- SD/- (B. R. MITTAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * + MUMBAI; ;# DATED : 10.03.2014 '.#../ ROSHANI , SR. PS !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. !< / THE APPELLANT 2. =!< / THE RESPONDENT 3. * > ( ) / THE CIT(A) 4. * > / CIT - CONCERNED 5. A'BC = #D$ , , D$/ , * + / DR, ITAT, MUMBAI 6. CE% F+ / GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , * + / ITAT, MUMBAI