The ADIT(Intl.Taxn.), Ahmedabad v. M/s. Adani Exports Ltd, Ahmedabad

ITA 2720/AHD/2008 | 2003-2004
Pronouncement Date: 02-12-2011 | Result: Dismissed

Appeal Details

RSA Number 272020514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 2720/AHD/2008
Duration Of Justice 3 year(s) 4 month(s)
Appellant The ADIT(Intl.Taxn.), Ahmedabad
Respondent M/s. Adani Exports Ltd, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 02-12-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 02-12-2011
Date Of Final Hearing 09-11-2011
Next Hearing Date 09-11-2011
Assessment Year 2003-2004
Appeal Filed On 01-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH . .. . . .. . !'# !'# !'# !'# $ $ $ $ . .. .% $% % $% % $% % $% &' ( &' ( &' ( &' ( & # & # & # & # BEFORE S/SHRI G.C. GUPTA VICE-PRESIDENT AND A. MOHAN ALANKAMONY ACCOUNTANT MEMBER) ITA NO.2720 AND 2775/AHD/2008 [ASSTT.YEAR : 2003-2004 AND 2004-2005] THE ADIT(INTL.TAXN.) NATURE VIEW BUILDING AHMEDABAD. /VS. ADANI EXPORTS LTD. ADANI HOUSE NR.MITHAKHALI CIRCLE NAVRANGPURA AHMEDABAD. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( ( -*+ -*+ -*+ -*+ / RESPONDENT) ( . / &/ REVENUE BY : SHRI D.C.SHARMA 12 . / &/ ASSESSEE BY : SHRI S.N.SOPARKAR 3 . 24'/ DATE OF HEARING : 9 TH NOVEMBER 2011 5%6 . 24'/ DATE OF PRONOUNCEMENT : 2 ND DECEMBER 2011 &7 / O R D E R PER G.C. GUPTA VICE-PRESIDENT: THESE TWO REVENUES APPEALS FOR A.Y.2003-2004 AND 2004-2005 ARE DIRECTED AGAINS T THE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXI AHMEDABAD . SINCE THE IDENTICAL ISSUE IS INVOLVED IN BOTH THESE APPEALS THE APPEALS ARE DISPOSED OF WITH THIS CONSOLIDATED ORDER. 2. THE IDENTICAL GROUNDS OF THE REVENUES APPEALS A RE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD.CIT(A) ERRED IN LAW IN ALLOWING THE APPEAL OF TH E ASSESSEE AND DELETING THE PENALTY LEVIED U/S.271C OF THE ACT FOR FAILURE TO DEDUCT TDS ON USUANCE INTEREST PAID TO NON-RESIDENTS. ITA NO.2720 AND 2775/AHD/2008 -2- 2. THE LD.CIT(A) HAS ERRED IN NOT CONSIDERING THE D ECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF VIJAY SHIP BREAKING CORPAOTION 261 ITR 113. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS ED THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3. THE LEARNED DR HAS RELIED UPON THE ORDER OF THE AO. HE HAS SUBMITTED THAT THE LIABILITY OF THE ASSESSEE TO DED UCT THE TAX AT SOURCE WAS A STATUTORY LIABILITY AND DOES NOT DEPEND ON THE PR ONOUNCEMENT OF THE DECISION OF A COURT AND IN FACT DEPENDS UPON THE RE LEVANT PROVISIONS OF THE LAW. HE SUBMITTED THAT THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN CIT VS. VIJAY SHIP BRAKING CORPORATION 26 1 ITR 113 BEING THAT OF THE JURISDICTIONAL HIGH COURT IT HAS TO BE CONSTRUED THAT THE LAW LAID DOWN BY THE HONBLE HIGH COURT HAD ALWAYS BEEN AND MUST ALWAYS BE UNDERSTOOD TO HAVE BEEN AND THEREFORE THERE WAS A VIOLATION OF THE PROVISION OF LAW ON THE PART OF THE ASSESSEE JUSTI FYING THE IMPOSITION OF PENALTY. HE SUBMITTED THAT THE LIABILITY TO PAY IN TEREST UNDER SECTION 201(1A) OF THE ACT WAS FROM THE DATE OF PAYMENT OF USANCE INTEREST AS THE TAXES WERE NOT DEDUCTED AND PAID ON USUANCE INTERES T. HE REFERRED TO PARA 6.2 AND 6.3 OF THE ORDER OF THE LEARNED JUDICIAL ME MBER DATED 28-12-2006 IN THE ASSESSEES OWN CASE IN ITA NO.1852/AHD/2006 AND CO NO.232/AHD/2006 WHEREIN THE ISSUE OF INTEREST UNDER SECTION 201(1A) OF THE ACT AS TO WHETHER CHARGEABLE FROM THE DATE OF P AYMENT OF USUANCE INTEREST WAS DECIDED BY THE LEARNED THIRD MEMBER. 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THESE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT O N THE ISSUE WHETHER THE INTEREST UNDER SECTION 201(1A) WAS CHARGEABLE F ROM THE DATE OF PAYMENT OF USANCE INTEREST THE SAME WAS COVERED IN FAVOUR OF THE ITA NO.2720 AND 2775/AHD/2008 -3- ASSESSEE BY THE DECISION OF THE HONBLE ANDHRA PRAD ESH HIGH COURT IN THE CASE OF CIT VS. VISHAKHAPATNAM PORT TRUST 144 ITR 146. HE SUBMITTED THAT DURING THE RELEVANT PERIOD THE DECISION OF TH E HONBLE ANDHRA PRADESH HIGH COURT WAS AVAILABLE AND THE ASSESSEE W AS UNDER BONA FIDE BELIEF THAT NO TDS WAS TO BE DEDUCTED ON THE USANCE INTEREST AS SECTION 195(1) WAS NOT APPLICABLE. THE LEARNED COUNSEL SUB MITTED THAT THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN VIJAY SHIP BRAKING CORPORATION AND OTHERS (SUPRA) WAS DELIVERED BY THE HONBLE HIGH COURT ON 20-3-2003. HE SUBMITTED THAT BEFORE THE PRONOUN CEMENT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT THE DEC ISION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN VISHAKHAPATNAM PORT TR UST (SUPRA) WAS PREVAILING FOR MORE THAN 20 YEARS. HE SUBMITTED TH AT IN ASSESSEES OWN CASE ON THE ISSUE WHETHER THE INTEREST UNDER SECTIO N 201(1A) OF THE ACT WAS CHARGEABLE FROM THE DATE OF PAYMENT ON USUANCE INTEREST THERE WAS A DIFFERENCE OF OPINION BETWEEN TWO LEARNED MEMBERS O F THE ITAT AHMEDABAD BENCH AND THIRD MEMBER WAS APPOINTED WHO GAVE HIS JUDGMENT ON 31-5-2007. ACCORDINGLY THE POSITION O F THE LAW WAS NOT CLEAR TILL 31-5-2007 AND TWO VIEWS WERE POSSIBLE AN D THE ASSESSEE ADOPTED THE VIEW WHICH WAS BASED ON THE DECISION OF THE HON BLE ANDHRA PRADESH HIGH COURT IN VISHAKHAPATNAM PORT TRUST (SUPRA) AND THEREFORE THERE WAS A BONA FIDE BELIEF ON THE PART OF THE ASSESSEE THAT THE TAX WA S NOT REQUIRED TO BE DEDUCTED ON PAYMENT MADE ON USUANCE INTEREST PAYMENT. HE SUBMITTED THAT SINCE THE BELIEF OF THE ASSESSEE WAS BONA FIDE IT TAKES THE CASE OF THE ASSESSEE OUT OF THE PENALTY PROVISI ON OF SECTION 271C OF THE ACT. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY. WE FIND THAT THE DECISION OF THE HONBLE ANDHRA PRADESH IN VISHAKHAP ATNAM PORT TRUST ITA NO.2720 AND 2775/AHD/2008 -4- (SUPRA) ON THE ISSUE THAT THE INTEREST UNDER SECTIO N 201(1A) WHETHER CHARGEABLE FROM THE DATE OF PAYMENT OF USANCE INTER EST WAS IN FAVOUR OF THE ASSESSEE. THE DECISION OF THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF VIJAY SHIP BREAKING CORPORATION (SUPRA) WAS DELIVERED BY THE HONBLE HIGH COURT ON 20-3-2003 AND WAS REPORTED IN ITR ON 12-5-2003. THUS BEFORE THE PRONOUNCEMENT OF THE DECISION OF T HE HONBLE GUJARAT HIGH COURT THE DECISION OF THE HONBLE ANDHRA PRAD ESH HIGH COURT IN THE CASE OF VISHAKHAPATNAM PORT TRUST (SUPRA) WAS A VAILABLE FOR MORE THAN TWENTY YEARS. THE SLP FILED BY THE REVENUE AG AINST THE SAID DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT W AS REJECTED BY THE HONBLE APEX COURT. THE BELIEF OF THE ASSESSEE THAT IT WAS NOT LIABLE TO PAYMENT OF TDS ON USUANCE INTEREST WAS BASED ON THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF VI SHAKHAPATNAM PORT TRUST (SUPRA). IN OUR CONSIDERED VIEW THE PARAMET ERS TO DECIDE VALIDITY OF TAXES OR INTEREST LIABILITY OF AN ASSESSEE AND T HAT OF THE APPLICABILITY OF PENALTY PROVISION ARE ENTIRELY DIFFERENT. WHILE DEC IDING THE ISSUE THAT THE INTEREST U/S.201(1A) OF THE ACT WHETHER CHARGEABLE FROM THE DATE OF PAYMENT OF USANCE INTEREST THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF VIJAY SHIP BREAKING CORPORATION (SUPRA) IS OF BINDING NATURE WHICH LAYS LAID DOWN THE LAW THAT THE INTEREST UNDE R SECTION 201(1A) OF THE ACT WAS CHARGEABLE FROM THE DATE OF PAYMENT OF USANCE INTEREST AND IT IS SETTLED LAW THAT ONCE HONBLE APEX COURT OR JURI SDICTIONAL HIGH COURT LAY DOWN THE LAW IT HAS TO BE TAKEN THAT THE POSIT ION OF LAW AS LAID DOWN BY THE HONBLE APEX COURT OR JURISDICTIONAL HIGH CO URT HAD ALWAYS BEEN AND MUST ALWAYS BE UNDERSTOOD TO HAVE BEEN AND IT M AKES NO DIFFERENCE THAT THE SAID DECISION WAS NOT AVAILABLE ON THE DAT E WHEN THE LIABILITY OF THE ASSESSEE ARISES. HOWEVER WHILE JUDGING THE VI RES OF THE PENALTY IMPOSED WE HAVE TO SEE WHETHER THE ASSESSEE ACTED UNDER SOME BELIEF ITA NO.2720 AND 2775/AHD/2008 -5- AND WHETHER THE BELIEF OF THE ASSESSEE WAS BONA FIDE . IN CASE THE ASSESSEE WAS UNDER A BONA FIDE BELIEF NOT TO DEDUCT THE TDS ON CERTAIN AMOUNT IT SHALL NOT BE LIABLE FOR IMPOSITION OF PENALTY EVEN IF DUE TO DECLARATION OF LAW BY THE JURISDICTIONAL HIGH COURT ON A LATER DAT E THE ASSESSEE MAY BE MADE LIABLE TO MAKE THE PAYMENT OF ANY TAX OR INTER EST APPLICABLE TO IT. IN THE CASE BEFORE US THE ASSESSEE ACTED IN ACCORDANC E WITH THE RATIO OF DECISION OF A HONBLE HIGH COURT AND ACCORDINGLY IT COULD NOT BE SAID THAT THE CONDUCT OF THE ASSESSEE WAS NOT BONA FIDE. THE BELIEF OF THE ASSESSEE IS FURTHER FORTIFIED BY THE FACT THAT IN A SSESSEES OWN CASE ON THE ISSUE WHETHER THE INTEREST UNDER SECTION 201(1A) OF THE ACT WAS CHARGEABLE FROM THE DATE OF PAYMENT OF USANCE INTER EST THERE WAS A DIFFERENCE OF OPINION BETWEEN TWO LEARNED MEMBERS O F THE ITAT AHMEDABAD BENCHES AND THE MATTER WAS REFERRED TO TH E HONBLE PRESIDENT ITAT FOR APPOINTMENT OF A THIRD MEMBER T O DECIDE THE ISSUE. THE LEARNED THIRD MEMBER GAVE DECISION ON 31-5-2007 AND ACCORDINGLY THE POSITION OF LAW WAS NOT CLEAR TILL 31-5-2007 AN D TWO VIEWS WERE POSSIBLE AND THE ASSESSEE HAS ADOPTED A VIEW FAVOUR ABLE TO IT WHICH WAS BASED ON THE POSITION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF VISHAKHAPATNAM PORT TRUST (SUPRA). THERE B EING CONFLICTING DECISION OF TWO HIGH COURTS AND THERE BEING DIFFERE NCE OF OPINION BETWEEN TWO MEMBERS OF THE TRIBUNAL IT IS CLEAR TH AT TWO VIEWS ON THE ISSUE WERE POSSIBLE. IN THESE FACTS OF THE CASE W E ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE WAS HAVING BONA FIDE BELIEF THAT THE TAX WAS NOT REQUIRED TO BE DEDUCTED ON PAYMENT MADE ON USUANCE INTEREST AND THIS BONA FIDE BELIEF OF THE ASSESSEE TAKES THE CASE OF THE ASSE SSEE OUT OF THE CLUTCHES OF PROVISIONS OF THE PENALTY UNDER SECTION 271C OF THE ACT. IN THIS VIEW OF THE MATTER WE HOLD THAT THERE IS NO M ISTAKE IN THE ORDER OF THE CIT(A) IN CANCELLING PENALTY IMPOSED UNDER SECTION 271C OF THE ACT FOR ITA NO.2720 AND 2775/AHD/2008 -6- BOTH THE ASSESSMENT YEARS. ACCORDINGLY THE GROUND S OF THE REVENUE RAISED IN THESE APPEALS ARE DISMISSED. 6. IN THE RESULT BOTH THE REVENUES APPEALS ARE DI SMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( .% $% /A.MOHAN ALANKAMONY) &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !'# !'# !'# !'# /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD