ACIT CIRCLE 1, SALEM V. M/s tamilnadu state transport corporation (salem) ltd, Salem

MA 86/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7979 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 04-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SRINIRANJANI
• Keywords: Set aside
• Section: 37(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER MISCELLANEOUS APPLICATION NO.86/CHNY/2019 IN I.T.A.NO.482/MDS/2018 (ASSESSMENT YEAR: 2003-04) THE ACIT, CIRCLE-1, SALEM VS M/S. TAMIL NADU STATE TRANSPORT CORPORATION (SALEM) LTD., NO.12, RAMAKRISHNA ROAD, SALEM 636 007. PAN: AAACT7678J ( / APPLICANT) ( / RESPONDENT) / APPLICANT BY : MS. S. SRINIRANJANI, ADVOCATE /RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT /DATE OF HEARING : 05.07.2019 /DATE OF PRONOUNCEMENT : 10.07.2019 / O R D E R PER S JAYARAMAN, ACCOUNTANT MEMBER:- THE REVENUE FILED THIS MISCELLANEOUS PETITION WITH REFERENCE TO THE ORDER OF THE ITAT IN ITA NO.482/CHNY/2018 DATED 27.11.2018 FOR THE ASSESSMENT YEAR 2003-04. 2. THE REVENUE PLEADED THAT THE CIT(A) HAD SET ASIDE THE ISSUE OF DAMAGES TO THE ASSESSING OFFICER IN ASSESSMENT YEAR 2011-12 WITH A DIRECTION TO ALLOW THE COMPENSATION PART OF THE DAMAGES, WITHOUT 2 MA NO .86 /CHNY/ 2019 ADJUDICATING MERITS OF THE ISSUE AS TO WHAT CONSTITUTE COMPENSATORY DAMAGES OR DAMAGES IN PENAL NATURE. THUS THE DIRECTION OF THE CIT(A) AMOUNTS TO SETTING ASIDE OF THE ISSUES TO THE AO IS WITHOUT JURISDICTION, AS THE LAW DOES NOT PERMIT THE CIT(A) TO SET ASIDE, THEREFORE THE SUBSEQUENT ORDER OF THE ASSESSING OFFICER DATED 10.01.2018 I.E., GIVING EFFECT TO THE ORDER OF THE CIT(A) IS NON-ERST, HENCE NULL AND VOID BECAUSE THE SAME IS BASED ON THE DIRECTION OF THE CIT(A), ISSUED WITHOUT JURISDICTION. FURTHER, THE APPEAL PREFERRED BY THE DEPARTMENT WAS DISMISSED BY THE ITAT AS NOT-MAINTAINABLE BASED ON THE AO'S ORDER DATED 15.11.2017 FOR THE ASSESSMENT YEAR 2011-12, STATING THAT THE AO HAD ALREADY DECIDED THE NATURE OF PAYMENT I.E., THE DAMAGES PAID IN THE ASSESSMENT YEAR 2011-12 IS COMPENSATORY IN NATURE. THEREFORE, THE REVENUE PLEADED THAT THE ORDER OF THE ITAT HAS THE FOLLOWING FACTUAL ERRORS:- 1. THE ORDER OF THE ASSESSING OFFICER DATED 15.11.2017 I.E. GIVING EFFECT OF THE ORDER OF THE CIT(A) IS NON -EST, BECAUSE THE SAME IS BASED ON THE DIRECTION OF THE CIT(A) ISSUED WITHOUT JURISDICTION IN THE SAID APPELLATE ORDER. 2. THE ITAT HAD DISMISSED THE APPEAL AS NON MAINTAINABLE ON THE ASSESSING OFFICER'S ORDER DATED 15.11.2017, WHICH HAS SUCH IS NON-EST ORDER. 3. SPECIFIC GROUNDS WERE RAISED BEFORE THE ITAT AGAINST THE ISSUE OF SETTING ASIDE BY CIT(A). THIS GROUND OF APPEAL WAS NOT ADJUDICATED BY THE ITAT. THE FOLLOWING DECISIONS CLEARLY ESTABLISH THAT THE GROUNDS OF APPEAL WHICH WAS RAISED BEFORE THE TRIBUNAL HAS TO BE ADJUDICATED I. EVERWIN EXPORT COPN. VS. ITO, WARD1(1), TIRUPUR[124 ITD 181 (ITAT CHENNAI 'A' BENCH)] 3 MA NO .86 /CHNY/ 2019 II. CIT VS INDERJEET RELHEN [40 TAXMANN.COM 35(20 13)(P&H)] III. CIT VS GUJARAT POWER COPN.LTD [38 TAXMANN.COM 70 (2013) (GUJARAT)] IV. D.K.ENTERPRISES VS ITAT[99 TAXMANN.COM 151 (2018) (BOMBAY)] AS THE ABOVE MISTAKES ARE APPARENT FROM RECORDS, THE SAME MAY BE RECTIFIED AND RENDERED JUSTICE. 3. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. THE RELEVANT ISSUE IN ITA NO.482/CHNY/2018 FOR THE ASSESSMENT YEAR 2003-04 WAS WHILE MAKING THE ASSESSMENT, THE AO, INTER-ALIA, DISALLOWED THE DAMAGES FOR REMITTANCE OF PENSION FUND TRUST PAID BY THE ASSESSEE AT RS.95,88,351/- HOLDING THAT THE DAMAGES PAID BY THE ASSESSEE FOR THE DELAYED PAYMENTS OF CONTRIBUTION IS NOT COMPENSATORY BUT DAMAGES IN THE NATURE OF PENALTY. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). ON THIS ISSUE, THE CIT(A) CONSIDERED THE ASSESSEES PLEA THAT THE NOMENCLATURE DAMAGE USED IN ACCOUNT HEAD REPRESENT INTEREST @9.5% CHARGED FOR THE DUES PENDING TO BE REMITTED TO PENSION FUND TRUST, BASED ON THE INTEREST RATE ON PF ACCUMULATIONS DECLARED BY THE CENTRAL GOVERNMENT. THE INTEREST RATE IS COMPENSATORY IN NATURE FOR THE INTEREST LOSS FACED BY THE PENSION FUND TRUST FOR NON-REMITTANCE OF DUES AND RELIED ON THE HONBLE SUPREME COURT DECISION IN THE CASE OF SWADESHI COTTON MILLS CO. VS. CIT, 233 ITR 199 ETC. IN ABSENCE OF 4 MA NO .86 /CHNY/ 2019 ANY FINDING BY AO TO ESTABLISH THAT THERE IS A PENALTY COMPONENT, APPLYING THE APEX COURTS RATIO ON THIS ISSUE, THE LD.CIT(A) DIRECTED THE AO TO TREAT THE ABOVE EXPENDITURE AS COMPENSATORY IN NATURE AND ALLOWED THE DEDUCTION UNDER SECTION 37(1) AND THUS ALLOWED THE APPEAL. AGGRIEVED AGAINST THAT ORDER, THE REVENUE FILED AN APPEAL BEFORE THIS TRIBUNAL. IT WAS SUBMITTED THAT IN THE ORDER GIVING EFFECT TO CIT(A) ORDER PASSED BY ACIT, CIRCLE-1, SALEM FOR ASSESSMENT YEAR 2011-12 DATED 15.11.2017, THE AO EXAMINED THIS ISSUE FOR THAT YEAR AND HELD THAT THE ASSESSEES CLAIM OF DAMAGES FOR REMITTANCE OF PENSION FUND TRUST MADE IN THAT YEAR WAS COMPENSATORY IN NATURE. FURNISHING A COPY OF INTEREST RATE DECLARED BY PENSION FUND ACCUMULATION SINCE 1952 TO 2014, IT WAS SUBMITTED THAT SINCE THE AO HAS ALREADY DECIDED THE NATURE OF THIS PAYMENT, I.E., THE DAMAGES PAID BY IT IN ASSESSMENT YEAR 2011-12 IS COMPENSATORY IN NATURE, THIS APPEAL MAY BE ALLOWED. ON DUE CONSIDERATION, THIS ITAT HELD THAT THERE IS MERIT IN THE SUBMISSION MADE BY THE LD.AR AND HENCE DISMISSED THE REVENUES APPEAL IN ITA NO.482/CHNY/2018. 4. FROM THE ABOVE, IT IS CLEAR THAT THE ABOVE APPEAL HAD BEEN DECIDED BASED ON THE FINDINGS RECORDED BY THE LD.CIT(A), ON APPRECIATION OF RELEVANT MATERIAL AND DECISION. FURTHER, FROM THE PLEADINGS OF THE REVENUE, SUPRA, IT IS CLEAR THAT ITS APPEAL FOR 5 MA NO .86 /CHNY/ 2019 ASSESSMENT YEAR 2011-12 IS DISMISSED BY THE ITAT AS NOT MAINTAINABLE. THUS, THE FINDINGS RECORDED BY THE AO IN THE ASSESSMENT YEAR 2011-12 HAS BECOME FINAL. FROM THE PLEADINGS EXTRACTED IN PARA 2, SUPRA, IT IS CLEAR THAT THEY ARE NOT RELATED TO THE APPEAL IN CONNECTION WITH THE ASSESSMENT YEAR 2003-04 I.E., IN ITA NO.482/CHNY/2018 AND HENCE THE REVENUES MISCELLANEOUS PETITION IS DISMISSED. 5. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 10 TH JULY, 2019 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED 10 TH JULY, 2019 RSR . /COPY TO: 1. / APPLICANT 2. / RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. [ /GF.