M/s. Gujarat State Petronet Ltd.,, Gandhinagar v. The ACIT.,GNR Circle,, Gandhinagar

CO 299/AHD/2009 | 2006-2007
Pronouncement Date: 23-09-2011 | Result: Allowed

Appeal Details

RSA Number 29920523 RSA 2009
Assessee PAN AABCG1812E
Bench Ahmedabad
Appeal Number CO 299/AHD/2009
Duration Of Justice 1 year(s) 8 month(s) 23 day(s)
Appellant M/s. Gujarat State Petronet Ltd.,, Gandhinagar
Respondent The ACIT.,GNR Circle,, Gandhinagar
Appeal Type Cross Objection
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 23-09-2011
Date Of Final Hearing 27-07-2011
Next Hearing Date 27-07-2011
Assessment Year 2006-2007
Appeal Filed On 31-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI JUDICIAL MEMBER AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.3222 / AHD/2009 (ASSESSMENT YEAR 2006-07) ACIT GANDHINAGAR VS. GUJARAT STATE PETRONET LTD. BHAVAN SECTOR 11 GANDHINAGAR C.O. NO.299 / AHD/2009 IN I.T.A.NO. 3222/AHD/2009 (ASSESSMENT YEAR 2006-07) GUJARAT STATE PETRONET LTD. VS. ACIT GANDHINAGA R BHAVAN SECTOR 11 GANDHINAGAR I.T.A. NO.3272 / AHD/2009 (ASSESSMENT YEAR 2006-07) GUJARAT STATE PETRONET LTD. VS. JCIT GANDHINAGA R BHAVAN SECTOR 11 GANDHINAGAR PAN/GIR NO. : AABCG1812E (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI ALOK JOHRI CIT DR RESPONDENT BY: SHRI S N SOPARKAR AND SHRI JIGAN K SHAH ARS DATE OF HEARING: 06.09.2011 DATE OF PRONOUNCEMENT: 23.09.2011 O R D E R PER BENCH:- I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 2 THESE ARE TWO CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AND THE CROSS OBJECTION IS FILED BY THE ASS ESSEE. ALL THESE APPEALS & C.O. ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A) GANDHINAGAR AHMEDABAD DATED 09.09.2009 FOR THE ASSESSMENT YEAR 2006-07. SINCE CONNECTED ISSUES ARE INVOLVED ALL THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE. 2. SINCE SOME ISSUES ARE INTERCONNECTED WE PROCEE D ON ISSUE BASIS. IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSE E THAT GROUND NO.1 OF THE ASSESSEES APPEAL IS GENERAL. IT WAS SUBMITTED BY HIM THAT THE ISSUE INVOLVED IN GROUND NO.2 OF THE ASSESSEES APPEAL AN D GROUND NO.1 OF THE REVENUES APPEAL IS REGARDING ALLOWABILITY OF DEDUC TION CLAIMED BY THE ASSESSEE U/S 35D. THE FACTS REGARDING THIS ISSUE A RE NOTED BY THE LD. CIT(A) IN PARA 3.1 OF HIS ORDER. IT IS NOTED BY TH E LD. CIT(A) THAT THE A.O. HAS ALLOWED ASSESSEES CLAIM U/S 35D ON AN EXP ENSE OF R.28 41 641/- HE ALSO FURTHER NOTED THAT AS PER TH E DETAILS CONTAINED IN THE ASSESSMENT ORDER THIS CLAIM IN EFFECT PERTAINS TO THE EXPENSES INCURRED IN FINANCIAL YEAR 2000-01 2003-04 AND 2005-06. IT IS FURTHER NOTED BY HIM THAT THE CLAIM OF FINANCIAL YEAR 2000-01 IS FOR THE PURPOSE OF INCORPORATING AND REGISTRATION WHILE FOR THE LATER TWO YEARS IS TOWARDS INCREASE IN AUTHORIZED SHARE CAPITAL AND THE ASSESS EE HAS CLAIMED 1/10 TH AND 1/5 TH RESPECTIVELY OF THESE EXPENSE U/S 35D. THE A.O. R EJECTED THE ENTIRE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE EXPENSE INCURRED ARE CAPITAL IN NATURE AND THE CLAIM OF THE ASSESSEE U/S 35D IS RESTRICTED TO THE ITEMS LISTED IN THIS SECTION WHICH IS PRIMARILY FOR THE INITIAL CAPITAL ISSUE. IT WAS THE SUBMISSION BY THE ASSESSEE BEFORE LD. CI T(A) THAT AN EXPENDITURE OF RS.85 13 410/- WAS INCURRED FOR THE PURPOSE OF FORMATION INCORPORATION AND REGISTRATION ETC. UP TO FINANCIAL YEAR 2000-01 AND DURING THE FINANCIAL YEAR 2003-04 AND 2005-06 THE EXPENDITURE OF I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 3 RS.75 52 500/- AND RS.23 94 000/- RESPECTIVELY WERE INCURRED FOR PAYMENT TO REGISTRAR OF COMPANIES FOR INCREASE IN A UTHORIZED SHARE CAPITAL. LD. CIT(A) HAS ALLOWED PART RELIEF TO THE ASSESSEE. HE HAS ALLOWED DEDUCTION OF RS.8 51 341/- BEING 10% OF THE EXPENSE INCURRED IN THE FINANCIAL YEAR 2000-01 OF RS.85 13 410 ON THE B ASIS OF TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 AND ALSO IN VIEW OF THE SUBMISSION OF THE A.O. IN THE REMAND RE PORT. 3. IN THE COURSE OF ARGUMENTS BEFORE US LD. D.R. O F THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). IT WAS HIS SUBM ISSION THAT HIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE SO FAR A S THE REVENUES APPEAL IS CONCERNED AND COVERED AGAINST THE ASSESSEE SO F AR THE ASSESSEES APPEAL IS CONCERNED AS PER THE TRIBUNAL ORDER IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2005-06 IN I.T.A.NO. 2130 AND 2220/ AHD/2008 DATED 14.08.2008 COPY OF WHICH IS AVAILABLE ON PAGES 64-7 0 OF THE PAPER BOOK. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR THE AS SESSMENT YEAR 2005- 06. WE FIND THAT IN ASSESSMENT YEAR 2005-06 SIMIL AR ISSUE WAS RAISED BY THE ASSESSEE IN ITS APPEAL REGARDING DISALLOWANCE U /S 35D. IN THE REVENUES APPEAL A GROUND WAS TAKEN BY THE REVENUE REGARDING DELETION OF DISALLOWANCE MADE BY THE A.O. U/S 35D. THIS GRO UND OF THE REVENUE WAS ALLOWED BY THE TRIBUNAL ON THIS BASIS THAT THE FEES PAID TO REGISTRAR OF COMPANIES FOR INCREASE IN CAPITAL BASE WAS NOT IN T HE NATURE OF UNDERWRITING COMMISSION AND BROKERAGE OR CHARGES FO R DAILY TYPING AND PRINTING OF ADVERTISEMENT AND PROSPECTUS SO AS TO F ALL U/S 35D(2)(IV). IT WAS HELD THAT THE FEE PAID TO REGISTRAR OF COMPANY FOR ENHANCING THE CAPITAL BASE CLEARLY FALL OUTSIDE THE SCOPE OF SECT ION 35D(2)(IV) OF THE I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 4 INCOME TAX ACT 1961. HENCE IN THE PRESENT YEAR A LSO THE GROUND RAISED BY THE ASSESSEE IS COVERED AGAINST THE ASSESSEE BY THIS TRIBUNAL DECISION IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 200 5-06 AND BY RESPECTFULLY FOLLOWING THE SAME GROUND NO.2 OF THE ASSESSEES APPEAL IS REJECTED. REGARDING GROUND NO.1 OF REVENUES APPEA L WE FIND THAT THE REMAND REPORT OF THE A.O. IS AVAILABLE ON PAGES 37- 38 OF THE PAPER BOOK. IT IS NOTED BY THE A.O. IN PARA 2 OF THE REMAND REP ORT THAT BEFORE HIM IT WAS SUBMITTED BY THE ASSESSEE THAT IN FINANCIAL YEA R 2000-01 THE EXPENDITURE OF RS.85 13 410/- WAS INCURRED ON FORMA TION INCORPORATION AND REGISTRATION EXPENSES ETC. IT IS REPORTED BY T HE A.O. THAT THE ASSESSEES CONTENTION APPEARS TO BE CORRECT IN RESP ECT TO THE CLAIM OF THE ASSESSEE FOR RS.8.51 LACS BEING 10% OF RS.85.13 LAC S. ON THE BASIS OF THIS REMAND REPORT OF THE A.O. CIT(A) HAS ALLOWED PART RELIEF TO THE ASSESSEE OF RS.8.51 LACS AND HAD CONFIRMED THE BALANCE DISAL LOWANCE OFRS.19 90 300/-. CONSIDERING THESE FACTS WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE AND HENCE GROUND NO.1 OF THE REVENUES APPEAL AS WELL AS GROUND NO.2 OF THE ASSE SSEES APPEAL ARE REJECTED. 5. THE 2 ND ISSUE INVOLVED IS REGARDING CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS.75 LACS ON ACCOUNT OF MAKING EQUITY INVESTMENT. THE A.O. HAS HELD THAT THE EXPENDITURE TOWARDS EQUITY S YNDICATION CHARGES WAS MADE ON ACCOUNT OF RAISING CAPITAL AND THEREFOR E LOGICALLY THE SAME CANNOT BE CLAIMED AS REVENUE EXPENDITURE. THE A.O . PLACED RELIANCE ON THE JUDGMENT OF HONBLE ANDHRA PRADESH HIGH COURT R ENDERED IN THE CASE OF VAZIR SULTAN TOBACCO CO. LTD. VS CIT 174 ITR 689 . LD. CIT(A) HAS CONFIRMED THE ASSESSMENT ORDER ON THIS ISSUE. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 5 6. IT IS SUBMITTED BY THE LD. COUNSEL FOR THE ASSES SEE THAT THESE ARE NOT CAPITAL EXPENDITURE AND IN SUPPORT OF THIS CONTENTI ON RELIANCE WAD PLACED ON THE JUDGMENT OF HONBLE ANDHRA PRADESH HIGH COUR T RENDERED IN THE CASE OF WARNER HINDUSTAN LTD. VS CIT AS REPORTED IN 171 ITR 224. AN ALTERNATIVE CONTENTION WAS ALSO RAISED BY HIM THAT IN ANY CASE DEDUCTION SHOULD BE ALLOWED U/S 35D(B). LD. D.R. SUPPORTED T HE ORDERS OF AUTHORITIES BELOW. IT IS ALSO SUBMITTED BY HIM THA T NOW THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGEMENT OF HO NBLE APEX COURT RENDERED IN THE CASE OF BROOK BOND INDIA LTD. AS RE PORTED IN 225 ITR 798 (S.C.). REGARDING THE ALTERNATIVE CLAIM OF THE ASS ESSEE FOR ALLOWING DEDUCTION U/S 35D IT WAS SUBMITTED BY HIM THAT THI S ASPECT WAS NEVER CAME BEFORE THE AUTHORITIES BELOW AND HENCE THIS I SSUE MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR A DECISION ON THIS ASPECT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. SO FAR AS THE ORIGINAL CLAIM OF THE ASSESSEE IS CONCERNED I. E. ALLOWABILITY OF THIS EXPENDITURE OF RS.75 LACS AS REVENUE EXPENDITURE W E ARE OF THE CONSIDERED OPINION THAT THIS ISSUE IS SQUARELY COVE RED AGAINST THE ASSESSEE BY THE JUDGMENT OF HONBLE APEX COURT RENDERED IN T HE CASE OF BROOKE BOND INDIA LTD. (SUPRA). RESPECTFULLY FOLLOWING TH E SAME THIS ASPECT IS DECIDED AGAINST THE ASSESSEE. REGARDING THE ALTERN ATIVE CLAIM OF THE ASSESSEE FOR ALLOWING DEDUCTION U/S 35D WE FIND TH AT AS PER SUB-SECTION (1) OF SECTION 35D IN TWO SITUATIONS DEDUCTION U/ S 35D CAN BE ALLOWED. 1 ST SITUATION IS REGARDING THOSE EXPENSES WHICH WERE INCURRED BEFORE THE COMMENCEMENT OF THE BUSINESS OF THE ASSESSEE. THE CASE OF THE ASSESSEE DOES NOT FALL UNDER THIS SITUATION. THE 2 ND SITUATION IS THOSE EXPENSES WHICH ARE INCURRED AFTER THE COMMENCEMENT OF THE AS SESSEES BUSINESS IN CONNECTION WITH THE EXTENSION OF HIS UNDERTAKING OR IN CONNECTION WITH I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 6 HIS SETTING UP OF A NEW UNIT. FIRST OF ALL THIS ASPECT HAS TO BE EXAMINED AS TO WHETHER THE CASE OF THE ASSESSEE FALLS UNDER THIS SITUATION OR NOT. IF IT IS FOUND THAT THE ASSESSEES CASE IS FALLING UNDER THIS SITUATION THEN NATURE OF THE EXPENSES HAS TO BE EXAMINED AS TO WHETHER TH EY ARE FALLING UNDER ANY TYPE OF EXPENDITURE WHICH ARE ALLOWABLE AS PER SUB-SECTION (2) OF SECTION 35D. SINCE THESE ASPECTS WERE NEVER EXAMIN ED BY THE AUTHORITIES BELOW WE RESTORE THIS MATTER BACK TO THE FILE OF T HE A.O. FOR A DECISION ON THIS ASPECT OF THE MATER. THIS GROUND OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. THE 3 RD ISSUE IS THE CLAIM OF THE ASSESSEE FOR DEPRECIATIO N IN RESPECT OF LAND COMPENSATION PAID BY THE ASSESSEE. IT IS N OTED BY THE A.O. THAT ASSESSEE WAS REQUIRED TO FURNISH BREAK-UP OF EXPEND ITURE INCURRED ON ACQUIRING UNDERGROUND SPACE BUT THE AM(FINANCE) OF THE ASSESSEE COMPANY WHO APPEARED BEFORE HIM ON 04.12.2008 WAS U NABLE TO FURNISH THE DETAILS OF EXPENDITURE INCURRED ON ACQUIRING UN DERGROUND SPACE OF THE LAND. THEREAFTER THE A.O. HELD THAT SINCE THERE I S NO RELIABLE DATA FURNISHED BY THE ASSESSEE TOWARDS THE COST OF UNDER GROUND SPACE WHICH HAPPENS TO BE THE LAND WHICH IS ADDED TO THE COST OF PIPELINE IT IS ESTIMATED THAT 10% OF THE TOTAL COST INCURRED ON PI PELINE IS THE AMOUNT OF LAND COMPENSATION INCLUDED IN THE PIPELINE COST. A CCORDINGLY 10% OF THE DEPRECIATION CLAIMED ON PLANT & MACHINERY (10% OF RS.82 99 01 .712/-) RS 8 29 90 171/- IS DISALLOWED. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) . BEFORE CIT(A) THE ASSESSEE FURNISHED THE DETAILS REGARDING THE EXPENS E INCURRED BY THE ASSESSEE TOWARDS LAND COMPENSATION. IT WAS SUBMITT ED THAT THE ACTUAL CLAIM OF THE ASSESSEE ON ACCOUNT OF DEPRECIATION IN RESPECT OF LAND COMPENSATION IS ONLY RS.4 25 76 832/- AND NOT RS.8 29 90 171/- AS HAS BEEN DISALLOWED BY THE A.O. THE BREAK-UP OF THIS A CTUAL DEPRECIATION I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 7 CLAIMED DURING THIS YEAR AS PER THE ASSESSEE IS NOT ED BY THE CIT(A) IN PARA 34 ON PAGE 24 OF HIS ORDER WHICH IS REPRODUCED BELOW: THE APPELLANT HAS NOW BEEN ABLE TO WORK OUT THE DE TAILS AND ACCORDINGLY THE DEPRECIATION ON EACH OF THE ABOVE IS AS UNDER: NATURE DEPRECIATION CLAIMED DURING ASSESSMENT YEAR 2006-07 (INCLUDING DEPRECIATION ON OPENING BLOCK) RS. ROU CROP COMPENSATION 1 36 89 211 ROU LAND COMPENSATION 1 80 82 119 ROW 1 08 05 502 TOTAL 4 25 76 832 9. LD. CIT(A) OBTAINED THE REMAND REPORT FORM THE A .O. IN THE REMAND REPORT WHICH IS AVAILABLE ON PAGES 37-38 OF THE PAPER BOOK IT IS REPORTED BY THE A.O. THAT FOR THE CLAIM OF THE ASSE SSEE REGARDING DEPRECIATION ON CROP COMPENSATION OF RS.1 36 89 211 /- RELIEF MAY BE ALLOWED TO THE ASSESSEE BUT FOR THE BALANCE AMOUNT OF LAND COMPENSATION PAID IN RESPECT OF ROU AND LAND COMPENSATION OF RS. 180.82 LACS AND ROW OF RS.108.05 LACS = TOTAL RS.288.87 LACS DEDU CTION IS NOT ALLOWABLE TO THE ASSESSEE AS DEPRECIATION. AFTER C ONSIDERING THE REMAND REPORT OF THE A.O. IT WAS HELD BY LD. CIT(A) THAT OUT OF THE TOTAL DISALLOWANCE OF DEPRECIATION MADE BY THE A.O. OF RS .8 29 90 171/- THERE SHOULD BE NO DISALLOWANCE OF DEPRECIATION IN RESPEC T OF CROP COMPENSATION. REGARDING LAND COMPENSATION PART IT WAS HELD BY THE LD. CIT(A) THAT IT CANNOT BE INCLUDED IN THE VALUE OF P LANT & MACHINERY AND HENCE SHALL NOT BE ELIGIBLE FOR DEPRECIATION. REG ARDING THE 3 RD ITEM I.E. THE EXPENSES INCURRED TOWARDS ROW TO THE EXTENT IT IS NOT IN THE FORM OF SECURITY DEPOSIT AND TO THE EXTENT IT HAS BEEN CAPI TALIZED BY THE ASSESSEE IT SHOULD BE INCLUDED IN THE VALUE OF PLANT & MACHI NERY AND SHOULD BE I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 8 ENTITLED FOR DEPRECATION. THE EXTRA DISALLOWANCE O F DEPRECIATION OF RS.4 04 13 339/- BEING THE DIFFERENCE BETWEEN THE E STIMATED DISALLOWANCE OF DEPRECIATION BY THE A.O. OF RS.8 29 90 171/- AND ACTUAL DEPRECIATION CLAIMED BY THE ASSESSEE AS PER DETAILS FURNISHED BE FORE THE LD. CIT(A) IN RESPECT OF LAND COMPENSATION OF RS.4 25 76 832/- WA S ALSO DELETED BY THE CIT(A) FOR THIS REASON THAT IN THIS REMAND REPORT THE A.O. HAS NOT DISPUTED ABOUT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE THAT ACTUAL DEPRECIATION CLAIMED BY THE ASSESSEE IN RESPECT OF LAND COMPENSATION WAS OF ONLY RS.425.76 LACS. NOW THE ASSESSEE IS IN FU RTHER APPEAL BEFORE US FOR THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A) AN D THE REVENUE IS IN APPEAL FOR THE DISALLOWANCE DELETED BY THE LD. CIT( A). 10. AT THE VERY OUTSET IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT MENTIONED IN GROUND NO.3 O F THE REVENUES APPEAL IS INCORRECT AND IT SHOULD BE RS.6 49 08 052 /- ONLY AND NOT RS.6 94 08 052/- BECAUSE THE RELIEF ALLOWED BY THE LD. CIT(A) IS ONLY RS.6 49 08 032/- BECAUSE OUT OF THE TOTAL DISALLOWA NCE MADE BY THE A.O. OF RS.8 29 90 171/- CIT(A) HAS CONFIRMED THE DISAL LOWANCE OF RS.1 80 82 119/- FOR WHICH THE ASSESSEE IS IN APPEA L. IT WAS SUBMITTED BY HIM THAT THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE AS PER GROUND NO.4 OF THE ASSESSEES APPEAL WHICH IS NOT PRESSED. ACCORD INGLY GROUND NO.4 OF THE ASSESSEES APPEAL IS REJECTED AS NOT PRESSED. 11. REGARDING GROUND NO.3 OF THE REVENUES APPEAL IT WAS SUBMITTED THAT IT HAS 3 RD PARTS. IT WAS HIS SUBMISSION THAT THE 1 ST PART IS REGARDING DISALLOWANCE DELETED BY LD. CIT(A) OF RS.1 36 89 21 1/- WHICH IS IN RESPECT OF DEPRECIATION ON CROP COMPENSATION. REGA RDING THIS PART IT WAS HIS SUBMISSION THAT THE RELIEF HAS BEEN ALLOWED BY THE LD. CIT(A) ON THE BASIS OF REMAND REPORT OF THE A.O. AND HENCE THE O RDER OF LD. CIT(A) ON THIS ASPECT SHOULD BE CONFIRMED. ONE MORE CONTENTI ON WAS RAISED ON I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 9 ACCOUNT OF THIS ASPECT THAT BY WAY OF PAYING CROP C OMPENSATION TO THE LAND OWNERS NO CAPITAL ASSET AS SUCH HAS BEEN ACQU IRED BY THE ASSESSEE AND IT IS INCURRED FOR THE PURPOSE OF LAYING DOWN T HE PIPELINE AND HENCE SHOULD BE INCLUDED IN THE COST OF PIPELINE AND THER EFORE DEPRECIATION ON THIS ASPECT SHOULD BE ALLOWED. IT WAS THE SUBMISSI ON OF THE LD. D.R. ON THIS ASPECT THAT CROP COMPENSATION HAS BEEN PAID AS PER THE GUJARAT WATER AND GAS PIPELINE (ACQUISITION OF RIGHTS FOR USER IN LAND) ACT 2000. IT WAS SUBMITTED BY HIM THAT A SAMPLE COPY OF THE RELEVANT ORDER FOR CROP COMPENSATION IS AVAILABLE ON PAGES 53-55 OF THE PAP ER BOOK AND IT CAN BE SEEN THAT THE CROP COMPENSATION WAS PAID AS PER THE PROVISIONS OF SECTION 10 OF GW & GP ACT 2000. IT WAS ALSO SUBMITTED THAT CROP COMPENSATION IS PAYABLE OR PAID TO ONLY THOSE PERSONS WHO IS PAI D LAND COMPENSATION AND HENCE THE CROP COMPENSATION SHOULD ALSO BE INC LUDED IN THE VALUE OF LAND ACQUIRED BY THE ASSESSEE AND THEREFORE THE SA ME CANNOT BE INCLUDED IN THE COST OF PIPELINE AND HENCE NO DEPRECIATION IS ALLOWABLE ON THIS PART OF PAYMENT ALSO. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE ASSESSEE COMPANY HAD TO LAY DOWN THE PIPEL INE ON LAND OF 3 RD PARTY TO WHOM THREE TYPES OF COMPENSATION WERE PAID BY THE ASSESSEE. 1 ST IS RIGHT TO USE OF LAND 2 ND IS CROP COMPENSATION AND 3 RD IS RIGHT OF WAY. LD. CIT(A) HAS DECIDED THAT NO DEPRECIATION IS ALLO WABLE TO THE ASSESSEE IN RESPECT OF RIGHT TO USE LAND. REGARDING RIGHT O F WAY IT WAS DECIDED BY THE LD. CIT(A) THAT DEPRECIATION CAN BE ALLOWED BUT THE REVENUE IS IN APPEAL. IT WAS SUBMITTED BY THE LD. COUNSEL FOR TH E ASSESSEE THAT THE ORDER OF CIT(A) ON THIS ASPECT MAY BE REVERSED AND THAT O F THE A.O. CAN BE RESTORED. THE 3 RD ASPECT IS REGARDING THE CLAIM OF THE ASSESSEE OF DEPRECIATION ON CROP COMPENSATION. WE FIND THAT CR OP COMPENSATION IS I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 10 PAYABLE ONLY TO THOSE LAND OWNERS ON WHOSE LAND THE RE WAS ANY STANDING CROP OR STANDING TREES. FOR THE PURPOSE OF LAYING OF PIPELINE THE ASSESSEE IS ACQUIRING THE LAND AND NOT THE CROP AND TREES WH ICH WERE STANDING ON THE LAND. BUT IN THE PROCESS OF LAYING DOWN THE PI PELINE BY USING THE LAND ACQUIRED BY THE ASSESSEE THE CROP AND TREES STANDI NG ON SUCH LAND GET DESTROYED AND HENCE THE ASSESSEE WAS REQUIRED TO C OMPENSATE THE LAND OWNER IN RESPECT OF SUCH CROP OR TREES STANDING ON THE LAND IN ADDITION TO THE LAND COMPENSATION. IN OUR CONSIDERED OPINION COMPENSATION FOR SUCH DAMAGE TO THE LAND OWNER CANNOT BE ADDED TO TH E COST OF LAND BECAUSE EVEN AFTER ACQUIRING LAND THE ASSESSEE COU LD HAVE WAITED TILL THE CROP WAS HARVESTED BY THE LAND OWNER OR BY THE ASSE SSEE AND IN THAT SITUATION NO COMPENSATION WOULD HAVE BEEN REQUIRED TO BE PAID BECAUSE THERE WOULD HAVE BEEN NO LOSS OR DAMAGE TO THE CROP OR THE ASSESSEE COULD HAVE REALIZED BACK BY SELLING THE CROP BUT IT WOULD HAVE RESULTED IN DELAY OF THE PROJECT AND TO AVOID THIS ASSESSEE AGREED T O PAY COMPENSATION FOR DAMAGE TO THE CROP ETC. IN ORDER TO AVOID THE DELAY IN THE PROJECT AND HENCE SUCH COMPENSATION SHOULD BE ADDED TO THE COS T OF PIPELINE AND NOT TO THE COST OF LAND. IN THIS VIEW OF THE MATTER W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) ON THIS ASPECT . WE THEREFORE HOLD THAT THE LD. CIT(A) HAS RIGHTLY ALLOWED DEPRECIATIO N OF RS.1 36 89 211/- BEING SPENT ON CROP COMPENSATION. WE HAVE ALREADY HELD ON THE BASIS OF SUBMISSION OF LD. COUNSEL OF THE ASSESSEE THAT GROU ND NO.4 OF THE ASSESSEES APPEAL IS REJECTED AS NOT PRESSED. IT I S ALSO SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE IN RESPECT OF THE PART GROUND OF REVENUES APPEAL IN RESPECT OF DEPRECIATION ON ROW THAT THE D ISALLOWANCE OF DEPRECIATION OF RS.1 80 82 119/- IN RESPECT OF LAND COMPENSATION FOR ROW MAY BE DECIDED AGAINST THE ASSESSEE AND HENCE WE CONFIRM THE DISALLOWANCE OF DEPRECIATION OF 1 08 05 502/- IN RE SPECT OF DEPRECIATION OF I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 11 ROW TOTAL RS.2 88 87 621/- IS CONFIRMED OUT OF THE TOTAL DISALLOWANCE OF DEPRECIATION MADE BY THE A.O. OF RS.8 29 90 171/-. GROUND NO.4 OF THE ASSESSEES APPEAL IS REJECTED AND GROUND NO.3 OF TH E REVENUES APPEAL IS PARTLY ALLOWED. 13. THE NEXT ISSUE IS REGARDING DEBT SYNDICATION CH ARGES OF RS.16 94 652/- WHICH HAVE BEEN RAISED BY THE REVENU E AS PER GROUND NO.2 OF ITS APPEAL. THIS ISSUE IS ALSO RAISED BY THE AS SESSEE IN ITS CROSS OBJECTION. 14. THE FACTS REGARDING THIS ISSUE ARE THAT IT IS N OTED BY THE A.O. IN PARA 6 OF THE ASSESSMENT ORDER THAT DURING THE SCRUTINY OF EXPENDITURE THE ASSESSEE FURNISHED DETAILS OF RS.16.94 LACS WHICH IS CLUBBED WITH OTHER FINANCIAL CHARGES. IT WAS SUBMITTED BY THE ASSESSE E BEFORE THE A.O. THAT DEBT SYNDICATION AND ADVISORY CHARGES WERE PAID TO M/S. MEGHRAJ FINANCIAL SERVICES INDIA PVT. LTD. TOWARDS DEBT FOR THE NEW PROJECTS BEING TAKEN BY THE ASSESSEE COMPANY. THE A.O. ASKED THE ASSESSEE TO FURNISH DETAILS OF DEBT SYNDICATION CHARGES TO JUSTIFY ITS CLAIM. IN REPLY IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT THE ASSESSEE COMPANY CAPITALIZED INTEREST ON DEBT UTILIZED FOR THE PURPO SE OF QUALIFYING ASSET IN ACCORDANCE WITH AS-16 ON BORROWED COST. ONLY THE R EMAINING AMOUNT WHICH IS NOT UTILIZED FOR THE QUALIFYING ASSET IS C HARGED TO THE P & L ACCOUNT AS REVENUE EXPENDITURE. THE A.O. WAS NOT S ATISFIED WITH THIS REPLY AND HE MADE DISALLOWANCE OF THIS AMOUNT OF RS .16.94 LACS. BEING AGGRIEVED ASSESSEE CARRIED THE MATER IN APPEAL BEF ORE CIT(A) WHO HAS DELETED THIS DISALLOWANCE BY HOLDING THAT DEDUCTION IS ALLOWABLE OF THIS AMOUNT UNDER THE PROVISIONS OF SECTION 36(1)(III). NOW THE REVENUE IS IN APPEAL BEFORE US. 15. IT WAS THE SUBMISSION BY THE LD. D.R. OF THE RE VENUE THAT CIT(A) HAD ALLOWED DEDUCTION ON ACCOUNT OF DEBT SYNDICATIO N CHARGES OF I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 12 RS.16 94 652/- U/S 36(1)(III) WITHOUT CONSIDERING T HE PROVISO TO THIS SECTION AS PER WHICH NO DEDUCTION IS ALLOWABLE TIL L THE ASSETS ARE PUT TO USE. IT IS SUBMITTED BY HIM THAT UNLESS THE PRODUC TION IS STARTED AFTER PUTTING OF ASSETS TO USE NO DEDUCTION IS ALLOWABLE U/S 36(1)(III). OUR ATTENTION WAS DRAWN TO SUBMISSION IN A COPY OF LETT ER DATED 21.7.2010 SUBMITTED BY THE ASSESSEE BEFORE CIT(A). HE HAS DR AWN OUR ATTENTION TO PAGE 2 OF THIS LETTER AS PER WHICH THE ASSESSEE HA S FURNISHED DETAILS OF THIS PAYMENT OF RS.16 94 652/- ON ACCOUNT OF DEBT SYNDIC ATION CHARGES. IT WAS THE SUBMISSION THAT THESE PAYMENTS ARE STATED T O BE ON ACCOUNT OF DISBURSEMENT OF RS.15 CRORES OF LOAN AMOUNTS BY IDF C RS.2 CRORES BY VIJAYA BANK RS.5 CRORES BY SOUTH INDIAN BANK AND R S.4 CRORES BY UTI BANK TOTALING RS.26 CRORES TO BE DISBURSED IN THE M ONTH OF SEPTEMBER 2005. HE HAS SUBMITTED A COPY OF SANCTION LETTER O F LOAN BY IDFC AS PER WHICH TERM LOAN OF RS.200 CRORES WAS SANCTIONED BY IDFC AND ALSO SUBMITTED A SANCTION LETTER OF VIJAY BANK AS PER WH ICH TERM LOAN OF RS.25 CRORES WAS SANCTIONED BY VIJAY BANK IN SEPTEM BER 2003. HE HAS SUBMITTED THAT AS PER THE TERMS AND CONDITIONS BETW EEN THE ASSESSEE AND M/S. MEGHRAJ FINANCIAL SERVICES INDIA PVT. LTD. AS PER THE LETTER DATED 15.02.2005 COPY OF WHICH IS AVAILABLE ON PAGES 46- 47 OF THE ASSESSEES PAPER BOOK THE ASSESSEE WAS REQUIRED TO PAY FEES @ 0.25% + TAXES OF THE AMOUNT SANCTIONED AND ACCEPTED BY THE COMPANY AND T HE PAYMENT TERMS WAS THAT 75% WAS PAYABLE ON ACCEPTANCE OF SANCTION AND THE BALANCE 25% WAS PAYABLE ON DISBURSEMENT. IT IS SUBMITTED BY HI M THAT THESE DETAILS GIVEN BY THE ASSESSEE TO CIT(A) IN LETTER DATED 21. 07.2010 IS NOT TALLYING WITH THESE AGREED TERMS OF THE ASSESSEE WITH M/S. M EGHRAJ FINANCIAL SERVICES PVT. LTD. IT WAS HIS SUBMISSION THAT THIS ISSUE MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION. HE ALSO POINTED OUT THAT SUBSEQUENTLY THE CIT(A) HAS PASSED RECTIFICATION O RDER U/S 154 ON I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 13 08.10.2010 AS PER WHICH HE HAS WITHDRAWN THE RELIE F ALLOWED BY HIM IN HIS ORIGINAL ORDER. AGAINST THIS ORDER OF LD. CIT (A) U/S154 THE ASSESSEE IS ALSO IN APPEAL BUT THIS APPEAL IS NOT LISTED BEF ORE US TODAY BUT IT WAS AGREED BY BOTH THE SIDES THAT THE PRESENT APPEAL AN D THE CO WHICH ARE LISTED TODAY CAN BE DECIDED. 16. IN REPLY IT WAS SUBMITTED BY THE LD. COUNSEL F OR THE ASSESSEE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF INDIA CE MENT LTD. AS REPORTED IN 60 ITR 52 (S.C.) AND EVEN IF DEDUCTION IS NOT AL LOWABLE U/S 36(1)(III) THE SAME IS ALLOWABLE U/S 37 AS PER THE GROUND RAIS ED BY THE ASSESSEE IN THE C.O. REGARDING THIS ASPECT THAT THE EXPENSE WE RE INCURRED PRIOR TO PUTTING TO USE THE CONCERNED ASSETS OR AFTER PUTTIN G TO USE IT WAS SUBMITTED THAT AS PER THE LETTER DATED 21.06.2010 S UBMITTED BY THE ASSESSEE TO THE A.O. IN THE COURSE OF REMAND PROCEE DINGS OUT OF TOTAL DEBT SYNDICATION CHARGES OF RS.61.59 LACS CHARGES OF RS .44.65 LACS WERE INCURRED IN CONNECTION WITH DEBT USED FOR PAYMENTS MADE UP TO THE ASSET IS FIRST PUT TO USE AND IT HAS NOT BEEN CLAIMED BY THE ASSESSEE AND ONLY THE BALANCE AMOUNT OF RS.16.94 LACS BEING THE EXPENSES IN CONNECTION WITH FUNDS USED FOR PAYMENT AFTER ASSET IS PUT TO USE HA S ONLY BEEN CLAIMED AS REVENUE EXPENDITURE AND HENCE EVEN AS PER THE PROV ISO TO SECTION 36(1)(III) THE CLAIM OF THE ASSESSEE IS ALLOWABLE. AT THIS JUNCTURE A QUERY WAS RAISED BY THE BENCH AS TO THE BASIS FOR P AYMENT OF RS.16.94 LACS IN THE PRESENT YEAR BECAUSE AS PER THE DETAILS GIVE N BY THE ASSESSEE TO LD. CIT(A) IN THE LETTER DATED 21.07.2010 AS PER WHICH RS.8 93 7560/- WAS PAID IN CONNECTION WITH DISBURSEMENT OF LOAN AMOUNT OF RS.15 CRORES BY IDFC. IT IS ALSO POINTED OUT THAT AS PER THE TERMS OF THE ASSESSEE WITH M/S. MEGHRAJ FINANCIAL SERVICES PVT. LTD. THEY ARE ENTITLED OF A TOTAL FEE @ 0.25% AND OUT OF THIS ONLY 25% IS PAYABLE AFTER DISBURSEMENT. THE I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 14 BENCH POINTED OUT THAT IF WE CALCULATE THE DEBT SYN DICATION CHARGES ON DISBURSEMENT OF LOAN OF RS.15 CRORES BY IDFC ON 06. 09.2005 SUCH CHARGES COMES TO RS.3 75 000/- + TAXES. AND ONLY 25 % OF THIS IS PAYABLE AFTER DISBURSEMENT AND HENCE THE SAME COMES ONLY T O RS.93 750/- + TAXES WHEREAS THE ASSESSEE IS CLAIMING DEDUCTION OF RS.8 93 750/-. THE BENCH WANTED THE LD. COUNSEL FOR THE ASSESSEE TO RECONCIL E THESE DETAILS WITH THE AGREED TERMS AND CONDITIONS OF THE ASSESSEE WITH M/ S. MEGHRAJ FINANCIAL SERVICES PVT. LTD. IN REPLY IT WAS SUBMITTED BY T HE LD. COUNSEL FOR THE ASSESSEE THAT HE IS NOT READY TO RECONCILE THESE FI GURES AND HENCE THE ENTIRE MATTER MAY BE RESTORED BACK TO THE FILE OF T HE A.O. FORE A FRESH DECISION AND HE SHOULD BE DIRECTED TO DECIDE ALL TH ESE ASPECTS OF THE MATTER AS TO WHETHER DEDUCTION IS ALLOWABLE U/S 36( 1)(III) OR U/S 37. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGMENTS CITED BY THE LD. A.R. OF THE ASSESSEE. W E FIND THAT THE TOTAL AMOUNT WAS DISALLOWED BY THE A.O. SINCE THE ASSESSE E DID NOT FURNISH THE DETAILS BEFORE THE A.O. THE DETAILS WERE SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND HE ALLOWED DEDUCTION TO THE ASSE SSEE U/S 36(1)(III) BUT LATER ON AS PER ORDER PASSED BY CIT(A) U/S 154 HE HAD INVOKED THE PROVISO TO SECTION 36(1)(III) AND WITHDRAWN THE REL IEF ALLOWED BY HIM ON THIS ACCOUNT. ASSESSEE HAS FILED C.O. BEFORE US A ND IT HAS BEEN CLAIMED IN THE C.O. THAT DEDUCTION ON THIS ACCOUNT IS ALLOW ABLE U/S 37. THE DETAILS SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A) AS PER LETTER DATED 21.07.2010 COULD NOT BE RECONCILED BY LD. A.R. ACCO RDING TO THE TERMS AND CONDITIONS BETWEEN THE ASSESSEE AND M/S. MEGHRA J FINANCIAL SERVICES PVT. LTD. UNDER THIS FACTUAL POSITION WE SET ASI DE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER EXAMINING ALL THE ASPECTS OF THE MAT TER. THE ASSESSEE HAS TO I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 15 FURNISH PROPER DETAILS OF THESE EXPENSES AFTER DULY RECONCILING THE SAME WITH THE TERMS AND CONDITIONS AGREED BETWEEN THE AS SESSEE AND M/S. MEGHRAJ FINANCIAL SERVICES PVT. LTD. THE ASSESSEE IS ALSO REQUIRED TO FURNISH EVIDENCE BEFORE THE A.O. IN SUPPORT OF THIS CONTENTION THAT THE LOAN AMOUNT OF RS.26 CRORES WAS USED FOR PAYMENT FO R THOSE ASSETS WHICH WERE ALREADY PUT TO USE BEFORE MAKING PAYMENTS. TH E A.O. SHOULD DECIDE THE ISSUE AS PER LAW AFTER CONSIDERING ALL T HE FACTS AND SUBMISSIONS OF THE ASSESSEE AND THE JUDGMENTS CITED BEFORE US A ND TO BE CITED BEFORE THE A.O. AT THE RELEVANT POINT OF TIME AND HE SHOUL D PASS NECESSARY SPEAKING AND REASONED ORDER AFTER PROVIDING ADEQUAT E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HE SHOULD ALSO DECIDE REGARDING THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF THIS EXPENDITURE ALLO WABLE U/S 37 IF THE SAME IS CONSIDERED AS NOT ALLOWABLE U/S 36(1)(III). ACC ORDINGLY GROUND NO.2 OF THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES WHEREAS THE ONLY GROUND RAISED BY THE ASSESSEE IN THE C.O. IS A LSO ALLOWED FOR STATISTICAL PURPOSES. 18. NOW WE ARE LEFT WITH GROUNDS NO.5 & 6 RAISED BY THE ASSESSEE WHICH ARE AS UNDER: 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN HOLDING THAT THE ACTION OF A.O. OF WITHDRA WING INTEREST U/S 244A OF THE ACT IS CORRECT. IN THE FACTS & CIRCUMST ANCE OF THE APPELLANT'S CASE THE AO OUGHT NOT TO HAVE WITHDRAW N INTEREST. IT IS SUBMITTED IT BE SO HELD NOW. 6. THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) HAS ERRED IN HOLDING THAT INTEREST U/S 234D OF THE ACT IS CHARGEABLE IN CASE OF THE APPELLANT. IN THE FACTS & CIRCUMSTANCES OF THE APPELLANT'S CASE THE AO OUGHT NOT TO HAVE CHARGED INTEREST U/S 234D OF THE ACT. IT IS SUBMITTED IT BE SO HELD NOW. I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 16 19. IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASS ESSEE THAT DUE TO RETROSPECTIVE AMENDMENT IN SECTION 115JB W.E.F. ASS ESSMENT YEAR 2001- 02 THE DEFERRED TAX LIABILITY OF THE ASSESSEE HAS TO BE ADDED BACK WHILE COMPUTING THE BOOK PROFITS FOR THE PURPOSE OF MAT A ND BECAUSE OF THIS REASON THE DEMAND HAS BEEN RAISED BY THE A.O. REGA RDING INTEREST U/S 234D AND THE INTEREST ALREADY PAID BY THE ASSESSEE U/S 244A HAD BEEN WITHDRAWN. IT IS ALSO SUBMITTED BY HIM THAT THIS I SSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION REN DERED IN THE CASE OF SUN PETROCHEMICALS PVT. LTD. IN I.T.A.NO. 1010/AHD/ 2009 DATED 05.06.2009 THE COPY OF WHICH IS AVAILABLE ON PAGES 71-74 OF THE PAPER BOOK. AS AGAINST THIS LD. D.R. OF THE REVENUE SUP PORTED THE ORDERS OF AUTHORITIES BELOW. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE TRIBUNAL DECISION CITED BY THE LD. A.R. WE FIND TH AT IN THE TRIBUNAL DECISION RENDERED IN THE CASE OF SUN PETROCHEMICALS PVT. LTD. (SUPRA) THE ISSUE INVOLVED WAS REGARDING CHARGING OF INTEREST U /S 234B AND NOT U/S 234D AND THERE WAS NO ISSUE REGARDING WITHDRAWAL OF INTEREST U/S 244A. IN THIS CASE THE TRIBUNAL HAD FOLLOWED THE JUDGMEN T OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS REVATHI EQUIPMENT LTD. (298 ITR 67) WHEREIN IT WAS HELD THAT TILL THE FINANCE BILL BEC OMES LAW THE ASSESSEE CANNOT VISUALIZE THAT LIABILITY TO PAY ADVANCE TAX WOULD BE FASTENED ON HIM AND THEREFORE CANNOT PAY THE ADVANCE TAX ON TH E SAME AND HENCE THE ASSESSEE CANNOT BE MADE LIABLE TO PAY INTEREST U/S 234B WHEN BY RETROSPECTIVE AMENDMENT MADE LATER ON THE SAME BEC OMES TAXABLE. BY FOLLOWING THIS JUDGEMENT OF HONBLE MADRAS HIGH COU RT THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL. IN THE PRESENT CASE THE ISSUE IS NOT REGARDING LEVY OF INTEREST U/S 234 B AND HENCE THIS I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 17 TRIBUNAL DECISION IS OF NO HELP IN THE PRESENT CASE . MOREOVER THERE IS BASIC DIFFERENCE IN THE LEVY OF INTEREST U/S 234B A ND U/S 234D. INTEREST U/S 234B IS PAYABLE BY THE ASSESSEE IN RESPECT OF D EFAULT IN PAYMENT OF ADVANCE TAX WHEREAS INTEREST U/S 234D IS PAYABLE O N ACCOUNT OF INTEREST ON EXCESS REFUND GRANTED BY THE A.O. IN THE TRIBU NAL DECISION CITED BY THE LD. COUNSEL FOR THE ASSESSEE IT WAS HELD THAT INTEREST U/S 234B IS NOT PAYABLE IN VIEW OF THE RETROSPECTIVE AMENDMENT IN S ECTION 115JB BECAUSE THE ASSESSEE CANNOT VISUALIZE THE AMENDMENT AND PAY ADVANCE TAX ACCORDINGLY. BUT THE INTEREST U/S 234D IS PAYA BLE ON ACCOUNT OF EXCESS REFUND GRANTED BY THE A.O. WHICH MEANS THAT THE ASSESSEE WAS USING THE FUNDS WHICH ULTIMATELY DID NOT BELONG TO THE ASSESSEE AND HENCE THE INTEREST U/S 234D IS TO COMPENSATE THE R EVENUE FOR THE FUNDS USED BY THE ASSESSEE WHICH DID NOT BELONG TO THE AS SESSEE. EARLIER INTEREST WAS ALLOWED BY THE A.O. U/S 244A ORIGINALL Y ON THE BASIS OF OLD PROVISIONS OF SECTION 115JB WITHOUT ADDING BACK DEF ERRED TAX LIABILITY IN BOOK PROFIT. BUT AFTER RETROSPECTIVE AMENDMENT SU CH DEFERRED TAX LIABILITY IS REQUIRED TO BE ADDED IN BOOK PROFIT AN D HENCE MAT LIABILITY OF THE ASSESSEE INCREASED AND THIS RESULTED IN LESSER AMOUNT OF REFUND BEING ALLOWABLE TO THE ASSESSEE AND NIL AMOUNT WAS ALLOWA BLE TO THE ASSESSEE U/S 244A. SINCE THERE IS NO CASE OF ANY DEFAULT ON THE PART OF THE ASSESSEE IN RESPECT OF WITHDRAWAL OF INTEREST U/S 244A AND FOR CHARGING OF INTEREST U/S 234D THE TRIBUNAL DECISION CITED BY THE LD. A.R. I S OF NO HELP TO THE ASSESSEE BECAUSE IN THIS TRIBUNAL DECISION THE ISS UE WAS DECIDED ON THIS BASIS THAT TILL THE AMENDMENT HAS BECOME EFFECTIVE THE ASSESSEE COULD NOT HAVE ANTICIPATED THE AMENDMENT AND PAID ADVANCE TAX ACCORDINGLY. UNDER THE FACTS OF THE PRESENT CASE WE FEEL THAT T HE INTEREST WITHDRAWN BY THE A.O. U/S 244A AND CHARGED BY HIM U/S 234D IS CO NSEQUENTIAL AND I.T.A.NO.3222 3272 /AHD/2009 C.O.NO.299/AHD/2009 18 HENCE NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. GROUND NO.5 & 6 OF THE ASSESSEE ARE REJECTED. 21. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. THE CROSS OBJECTION OF THE A SSESSEE IS ALSO ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVE NUE IS PARTLY ALLOWED. 22. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEP. 2011. SD./- SD./- (D.K. TYAGI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 23.09.2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION 20/9 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21/9 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.22/9 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 23/9 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 23/9 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23/9/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..