DCIT, Madurai v. M/s. Thiagarajar Mills Ltd., Madurai

ITA 1174/CHNY/2010 | 2003-2004
Pronouncement Date: 14-01-2011 | Result: Dismissed

Appeal Details

RSA Number 117421714 RSA 2010
Assessee PAN AAACT4304R
Bench Chennai
Appeal Number ITA 1174/CHNY/2010
Duration Of Justice 5 month(s) 29 day(s)
Appellant DCIT, Madurai
Respondent M/s. Thiagarajar Mills Ltd., Madurai
Appeal Type Income Tax Appeal
Pronouncement Date 14-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 14-01-2011
Date Of Final Hearing 04-01-2011
Next Hearing Date 04-01-2011
Assessment Year 2003-2004
Appeal Filed On 16-07-2010
Judgment Text
IN THE INCOMETAX APPELLATE TRIBUNAL: B- BENCH:CHENN AI (BEFORE SHRI ABRAHAM P. GEORGE. ACCOUNT ANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER) ITA NOS.1173 1174 & 1175/MDS/10 & CO NO.71 /MDS/10 (ARISING OUT OF ITA NO.1175/MDS./10) (ASST. YEARS 2002-03 TO 20 04-05) THE DCIT CO.CIR. I MADURAI VS M/S THIAGARAJAR MILLS LTD. KAPPALLUR MADURAI 625008. (PAN AAACT4304R) (APPELLANT) (RESPONDENT/CROSS-OBJECTOR) APPELLANT BY: RESPONDENT/CROSS OBJECTOR BY: SHRI P.B.SEKARAN CIT-DR. SHRI R.SRINIVASAN ORDER PER ABRAHAM P.GEORGE ACCOUNTANT MEMBER THE FIRST THREE OF THE APPEALS OF THE REVENUE ARE AGAINST THE ORDERS OF THE CIT(A) FOR ASST. YEARS 2002-03 TO 2004-05 W HEREAS THE LAST ONE BEING A CROSS-OBJECTION FILED BY THE ASSESSEE IS F OR ASSESSMENT YEAR 2004-05. 2. APPEALS OF THE REVENUE ARE TAKEN UP FIRST. ITA NOS. 1173-5 & CO 710/MDS/10 2 3. FOR ASST. YEAR 2002-03 REVENUE HAS RAISED TWO GR IEVANCES. FIRST IS THAT THE CIT(A) HELD ASSESSEE TO BE ENTITLED FOR TA X CREDIT UNDER SEC.115JAA OF THE INCOME-TAX ACT 1961 (THE ACT F OR SHORT) BEFORE CHARGING INTEREST UNDER SEC. 234B AND 234C OF THE A CT. SECOND GRIEVANCE IS THAT CIT(A) DELETED INTEREST CHARGED UNDER SEC.2 34D OF THE ACT BASED ON THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF ITO VS EKTA PROMOTERS (P) LTD. (113 ITD 719). 4. WE HAVE PERUSED THE RECORDS AND HEARD BOTH THE P ARTIES. INSOFAR AS THE FIRST ISSUE IS CONCERNED THE MATTER IS NO MORE RES-INTEGRA. THIS IS FOR THE REASON THAT HONBLE APEX COURT IN THE CASE OF C IT VS TULSYAN NERC LTD. (CIVIL APPEAL NOS. 10677-79 OF 2010 VIDE ITS DECISION DATED 16-12- 2010) HAS HELD THAT ANY TAX PAID IN ADVANCE OR PRE- ASSESSED TAX PAID CAN BE TAKEN INTO ACCOUNT IN COMPUTING THE TAX PAYABLE SUBJECT TO ONE CAVEAT. THE CAVEAT MENTIONED BY THE HONBLE APEX COURT IS T HAT THE ASSESSEE WHEN IT UNILATERALLY CLAIMED SET OFF OF MAT CREDIT AND IF SUCH CLAIM OF TAX CREDIT WAS NOT LAWFULLY AVAILABLE TO IT THEN THE A SSESSEE WOULD BE EXPOSED TO LEVY OF INTEREST UNDER SEC. 234B OF THE ACT ON THE SHORTFALL SIN THE PAYMENT OF ADVANCE TAX. HERE THERE IS NO ISSUE FOR THE REVENUE THAT THERE WAS ANY HIGHER CREDIT OF MAT CLAIMED BY THE ASSESSE E THAN WHAT WAS AVAILABLE TO IT. WE ARE THEREFORE OF THE OPINION TH AT THE CIT(A) WAS JUSTIFIED IN HOLDING THE ASSESSEE TO BE ENTITLED FOR TAX CRED IT UNDER SEC.115JAA OF THE ACT BEFORE CHARGING OF INTEREST UNDER SEC. 234B AND 234C OF THE ACT. ITA NOS. 1173-5 & CO 710/MDS/10 3 5. VIS--VIS THE SECOND ISSUE THERE CAN BE NO DOUB T THAT DECISION OF THE SPECIAL BENCH IN EKTA PROMOTERS P. LTD. (SUPRA) JUSTIFIED DELETION OF INTEREST UNDER SEC. 234D OF THE ACT. WE ALSO FIND T HAT THIS DECISION OF THE SPECIAL BENCH HAS BEEN UPHELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF I.T VS. JACAABS CIVIL INCORPOR ATED (235 CTR 123). THUS SEC. 234D OF THE ACT WOULD HAVE EFFECT ONLY F OR ASST. YEAR 2004-05 ONWARDS. THUS INTEREST UNDER SEC. 234D WAS RIGHTLY DELETED BY THE LD. CIT(A). WE DO NOT FIND ANY REASON TO INTERFERE. 6. IN THE RESULT APPEAL OF THE REVENUE FOR ASST. Y EAR 2002-03 IS DISMISSED. 7. NOW WE TAKE UP APPEAL OF THE REVENUE FOR ASST. Y EAR 2003-04. HERE ALSO TWO GRIEVANCES HAVES BEEN RAISED BY REVENUE. F IRST IS REGARDING COMPUTATION OF RELIEF UNDER SEC. 80HHC. AO HAD DEDU CTED THE RELIEF GIVEN TO THE ASSESSEE UNDER SEC. 80IA OF THE ACT BEFORE C OMPUTING THE DEDUCTION AVAILABLE UNDER SEC.80HHC OF THE ACT. LD. CIT(A) DID NOT ACCEPT THIS WORKING ON THE APPEAL FILED BY THE ASSESSEE FOR ACCORDING TO HIM IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SCM CREATIONS (304 ITR 319) DEDUCTION UNDER SEC.80H HC HAD TO BE WORKED OUT WITHOUT DEDUCTING THE DEDUCTION AVAILABL E TO THE ASSESSEE UNDER SEC. 80IA OF THE ACT. 8. NOW THE ARGUMENT BEFORE US IS THAT THE VIEW TAKE N BY THE CIT(A) WAS NOT CORRECT. ACCORDING TO THE REVENUE THERE WA S A SUBSEQUENT ITA NOS. 1173-5 & CO 710/MDS/10 4 DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF GENERAL OPTICS (ASIA) LTD. V. ACIT (315 ITR 400) IN WHICH I T WAS HELD THAT DEDUCTION UNDER SEC. 80HHC WITHOUT REDUCING THE RELIEF AVAILA BLE UNDER SEC.80IA OF THE ACT WAS AVAILABLE ONLY FOR YEARS PRIOR TO ASST. YEAR 1999-2000. 9. AS AGAINST THIS THE CONTENTION OF THE LD. AR WA S THAT JURISDICTIONAL HIGH COURT IN ANOTHER CASE NAMELY CIT VS. MRF LTD. (TAX CASE (APPEAL) NO.1020 OF 2009 DATED 27-10-2009) HAD FOLLOWED THE DECISION IN SCM CREATIONS(SUPRA) ON SIMILAR ISSUE AND THE ASST. YEA R THERE WAS 2004-05. THEREFORE ACCORDING TO HIM THE LATER DECISION IN MRF LTDS CASE(SUPRA) HAD TO BE FOLLOWED. 10. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. NO DOUBT IN THE CASE OF GENERAL OPTICS (ASIA) LTD. (S UPRA) HONBLE JURISDICTIONAL HIGH COURT HAS AFTER CONSIDERING SUB -SEC. 9A INSERTED IN SEC.80IA W.E.F. 01-04-1999 HELD THAT PRIOR TO INSER TION OF SUCH SUB-SECTION DEDUCTION UNDER SEC. 80HHC OF THE ACT WAS ALLOWABL E WITHOUT FIRST DEDUCTING RELIEF AVAILABLE UNDER SEC. 80IA OF THE A CT. NEVERTHELESS IN THE SUBSEQUENT DECISION DATED 27-10-2009 OF MRF LTD.(SU PRA) ASSESSMENT YEAR INVOLVED WAS A.Y 2004-05. HONBLE JURISDICTION AL HIGH COURT HAD FOLLOWED ITS OWN DECISION IN SCM CREATIONS (SUPRA) WHEREIN IT WAS HELD THAT DEDUCTION UNDER SEC.80HHC SHOULD BE WORKED OUT WITHOUT REDUCING THE RELIEF UNDER SEC. 80IA OF THE ACT. SINCE THE LA TTER DECISION RELATES TO AN ASSESSMENT YEAR IN WHICH SUB-SEC.9A STOOD INSERTED IN SEC. 80IA OF THE ITA NOS. 1173-5 & CO 710/MDS/10 5 ACT WE FIND IT APPROPRIATE TO FOLLOW THE SAME. WE CANNOT THEREFORE FIND ANY ERROR IN THE ORDER OF THE CIT(A) AND THE DIRECTION S GIVEN IN THIS REGARD. 11. SECOND GRIEVANCE RAISED BY THE REVENUE IS REGAR DING INTEREST UNDER SEC.234D WHICH WAS DELETED BY THE CIT(A) RELYING ON DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN EKTA PROMOTERS (SU PRA). WE HAVE ALREADY HELD IN FAVOUR OF THE ASSESSEE IN THIS REGARD FOR A SST. YEAR 2002-03. WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW FOR TH E IMPUGNED ASSESSMENT YEAR. 12. IN THE RESULT APPEAL OF THE REVENUE FOR ASST. YEAR 2003-04 STANDS DISMISSED. 13. IN ITS APPEAL FOR ASST. YEAR 2004-05 THE SOLE G RIEVANCE RAISED BY REVENUE IS REGARDING WORKING OUT OF DEDUCTION UNDER SEC. 80HHC OF THE ACT. CIT(A) HAD HELD THAT SUCH WORKING OUT HAD TO B E DONE WITHOUT FIRST DEDUCTING THE RELIEF AVAILABLE TO THE ASSESSEE UNDE R SEC. 80IA OF THE ACT. 14. THIS ISSUE HAS ALREADY BEEN DECIDED BY US IN FA VOUR OF THE ASSESSEE FOR ASST. YEAR 2003-04. HENCE WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 15. NOW WE ARE LEFT WITH THE CROSS-OBJECTION FILED BY THE ASSESSEE FOR ASST. YEAR 2004-05. ITS GRIEVANCE IS THAT INTEREST UNDER SEC.244A WAS DENIED TO IT ON A GROUND THAT THE REFUND DUE DID NO T EXCEED 10% OF THE TAX DEMAND ARISING FROM ORDER OF ASSESSMENT UNDER SEC.1 43(3). ITA NOS. 1173-5 & CO 710/MDS/10 6 16. LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE U S THAT DECISION OF THE APEX COURT IN THE CASE OF MODI INDUSTRIES LTD. V. CIT (216 ITR 759) WAS DIRECTLY IN ITS FAVOUR. ACCORDING TO THE LD. AR REGULAR ASSESSMENT MENTIONED IN PROVISO TO CLAUSE (A) OF SUB-SEC. (1) OF SEC.244A OF THE ACT REFERRED ONLY AN ORIGINAL ASSESSMENT WHICH WAS NOT MODIFIED IN APPEAL OR REVISION. 17. PER CONTRA THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RECORDS. CIT(A) HAS CLEARLY MENTIONED AT PARA-5 OF HIS ORDER THAT THERE WAS NO REFUND GIVEN TO THE ASSESSEE AS PER THE ORDER PA SSED UNDER SEC. 143(3) OF THE ACT. NEVERTHELESS ON ACCOUNT OF FURTHER APP EAL PREFERRED BY THE ASSESSEE AND ORDERS ARISING OUT OF SUCH APPEALS THE ASSESSEE BECAME ENTITLED TO A REFUND OF ` 34 12 368/-. HERE THE REFUND HAD ARISEN PURSUANT TO APPELLATE ORDERS AND SUCH REFUND CAME OUT OF ADVANC E-TAX OF ` 4 37 76 000/- AND TDS OF ` 4 83 159/-. WE FIND THAT THE ORDER OF THE HONBLE APEX COURT IN THE CASE OF MODI INDUSTRIES L TD. (SUPRA) HAS CLEARLY HELD THAT ONCE ADVANCE TAX WAS TREATED AS PAYMENT O F TAX AND CREDIT FOR SUCH AMOUNT HAS BEEN GIVEN IN THE ASSESSMENT ORDER THE AMOUNT LOOSES THE CHARACTER OF ADVANCE-TAX AND BECOME TAX PAID IN RESPECT OF THE INCOME OF THE RELEVANT PREVIOUS YEAR. ONCE IT IS SO ASSES SEE WOULD BECOME ELIGIBLE FOR INTEREST UNDER SEC. 244A OF THE ACT U NDER CLAUSE (B) OF SUB- SEC.(1) OF SEC.244A OF THE ACT. THE REFUND COULD BE CONSTRUED ONLY AS ITA NOS. 1173-5 & CO 710/MDS/10 7 ARISING OUT OF TAX PAID PURSUANT TO ORDER OF ASSESS MENT. WE ARE THEREFORE OF THE OPINION THAT ASSESSEE IS ELIGIBLE FOR INTERE ST. AO IS DIRECTED TO GRANT INTEREST UNDER SEC. 244A OF THE ACT. CIT(A)S ORDER IN THIS REGARD IS SET ASIDE. CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 19. TO SUMMARISE THE RESULT APPEALS OF THE REVENUE ARE DISMISSED WHEREAS CROSS-OBJECTION FILED BY THE ASSESSEE FOR A SST. YEAR 2004-05 IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 14-1-2011. SD/- SD/- ( GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 14TH JANUARY 2011 NBR CC: ASSESSEE/ ASSESSING OFFICER/ CIT(A)/ CIT/ D .R/ GUARD FILE. ITA NOS. 1173-5 & CO 710/MDS/10 8