The ACIT, Circle-1, Rajahmundry v. M/s Godavari Transports, Rajahmundry

ITA 439/VIZ/2005 | 2001-2002
Pronouncement Date: 07-01-2010 | Result: Dismissed

Appeal Details

RSA Number 43925314 RSA 2005
Bench Visakhapatnam
Appeal Number ITA 439/VIZ/2005
Duration Of Justice 4 year(s) 2 month(s) 24 day(s)
Appellant The ACIT, Circle-1, Rajahmundry
Respondent M/s Godavari Transports, Rajahmundry
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 07-01-2010
Assessment Year 2001-2002
Appeal Filed On 13-10-2005
Judgment Text
PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 439/VIZAG/2005 ASSESSMENT YEAR: 2001-02 ACIT CIRCLE-1 RAJAHMUNDRY VS. SRI GODAVARI TRANSPORTS RAJAHMUNDRY (APPELLANT) (RESPONDENT) GIR NO.314 APPELLANT BY: SHRI R.K. SINGH DR RESPONDENT BY: SHRI G.V.N. HARI CA ORDER PER SHRI B R BASKARAN ACCOUNTANT MEMBER : THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 04.08.2005 PASSED BY THE LD CIT (A) RAJAHMUNDRY AND IT RELATES TO THE ASSESSMENT YEAR 2001-02. 2. THE ONLY ISSUE URGED IN THIS APPEAL IS WHETHER T HE LD CIT (A) IS JUSTIFIED IN HOLDING THAT THE INTEREST U/S 234C SHOULD BE CHARGE D ONLY FOR THE PERIOD OF DEFAULT INSTEAD OF 3 MONTHS PROVIDED FOR IN THE SAI D SECTION. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSMENT IN THE HANDS OF THE ASSESSEE RELATING TO THE ASSESSMENT YE AR 2001-02 WAS COMPLETED U/S 143 (3) OF THE ACT ON 30-01-2004. IN THE SAID O RDER THE AO CHARGED INTEREST OF RS.1 92 418/- U/S 234C OF THE ACT FOR THREE MONT HS PERIOD. ACCORDING TO THE ASSESSEE IT HAD PAID ADVANCE TAX FEW DAYS AFTER TH E DUE DATE AND HENCE THE INTEREST SHOULD NOT HAVE BEEN CHARGED FOR THREE MON THS. HENCE THE ASSESSEE PAGE 2 OF 5 MOVED A PETITION U/S 154 REQUESTING THE AO TO CHARG E INTEREST U/S 234C ONLY FOR THE PERIOD OF DEFAULT INSTEAD OF CHARGING FOR 3 MON THS. THE AO VIDE HIS ORDER DATED 05.01.2004 REJECTED THE PETITION OF THE ASSE SSEE BY STATING THAT THE ASSESSEE IS REQUIRED TO PAY INTEREST FOR A PERIOD O F 3 MONTHS AS PER THE PROVISIONS OF SEC.234C. IN THE APPEAL PREFERRED BY THE ASSESSEE THE LD CIT (A) DIRECTED THE AO TO CHARGE INTEREST ONLY UPTO THE PE RIOD OF DEFAULT. LD CIT(A) PLACED HIS RELIANCE ON THE DECISION OF THE ITAT AM RITSAR IN THE CASE OF KAILASH ASSOCIATES VS. DCIT REPORTED IN 50 ITD 437. AGGRIEV ED BY THE ORDER OF THE LD CIT (A) THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES. THE LD AR ALSO PLACED BEFORE US A COPY OF ORDER OF ITAT KOLKATA IN THE CASE OF VESUVIUS INDIA LTD. VS. ASSTT.COMMISSIONER OF INCOME TAX REPORTED IN ITA NO.12 58/KOL/2006 WHEREIN THE DECISION OF AMRITSAR BENCH IN THE CASE OF KAILASH ASSOCIATES AND ALSO A DECISION OF MUMBAI BENCH OF TRIBUNAL HAVE BE EN TAKEN INTO ACCOUNT. THE OBSERVATIONS OF KOLKATA BENCH ARE EXTRACTED BELOW: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION MADE BY BOTH THE SIDES PERUSED THE ORDERS OF THE REVENUE AUTHORITIE S AND THE VARIOUS DECISIONS RELIED ON BY THE LEARNED COUNSEL. 5.1 WE FIND THAT THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF KAILASH ASSOCIATES (SUPRA) AFTER CONSIDERING THE PR OVISIONS OF S.234C HAS HELD AS UNDER (SHORT NOTES): SEC.234C PROVIDES THAT WHERE IN ANY FINANCIAL YEAR THE ADVANCE TAX PAID BY THE ASSESSEE ON HIS CURRENT INCOME: (I) ON OR BEFORE THE DUE DATE OF THE FIRST INSTALLMENT (15 TH SEPTEMBER) IS LESS THAN 20 PER CENT OF THE TAX DUE ON THE RETURNED INCOME; OR (II) ON OR BEFORE THE DUE DATE OF THE SECOND INSTALLMENT (15 TH DECEMBER) IS LESS THAN 50 PER CENT OF THE TAX DUE ON THE RETURNED INCOME; THEN THE ASSESSEE SHALL PAY SIMPLE INTEREST AT 1.5 PER CENT PER MONTH OF THE SHORTFALL FROM 20 PER CENT IN CASE FALLING IN (I) A BOVE AND OF THE SHORTFALL FROM 50 PER CENT IN THE CASE FALLING IN ( II) ABOVE. IN EACH CASE INTEREST SHALL BE CHARGEABLE FOR A PERIOD OF T HREE MONTHS. IF THE RESTRICTION FOR THE LEVY OF INTEREST FOR A MAXI MUM PERIOD OF THREE MONTHS HAS NOT BEEN PROVIDED THEN IT WOULD RE SULT IN THE LEVY PAGE 3 OF 5 OF INTEREST TWICE AND IN SOME CASES THRICE FOR THE SAME DEFAULT. THERE BEING A REQUIREMENT OF MAKING 50 PER CENT OF THE TAX PAYABLE BY 15 TH DEC. 1990 WHICH INCLUDES 20 PER CENT PAYABLE BY 15 TH SEPT. 1990 THERE WOULD BE NO JUSTIFICATION FOR THE LEVY OF INTEREST IN RESPECT OF SHORTFALL/NON-PAYMENT OF FIR ST INSTALLMENT OF ADVANCE TAX BEYOND THE PERIOD OF THREE MONTHS WHEN INTEREST IS CHARGEABLE FOR THE ENTIRE AMOUNT OF SHORTFALL/NON-P AYMENT OF SECOND INSTALLMENT OF ADVANCE TAX WHICH IS TO THE E XTENT OF 50 PER CENT OF THE TOTAL TAX PAYABLE. SIMILARLY THERE IS RATIONALE BEHIND LIMITING THE LEVY OF INTEREST IN RESPECT OF SECOND INSTALLMENT OF ADVANCE TAX. SEC.234B PROVIDES FOR THE LEVY OF INTE REST ON ACCOUNT OF NON-PAYMENT OF ADVANCE TAX/SHORT PAYMENT OF ADVA NCE TAX LESS THAN 90 PER CENT OF ASSESSED TAX @ 2 PER CENT PER M ONTH. SEC.234 (SIC. 234B) TAKES OVER AFTER THE EXPIRY OF THE FINA NCIAL YEAR. THAT EXPLAINS THE REASON FOR LIMITING THE LEVY OF INTERE ST IN RESPECT OF SECOND INSTALLMENT OF ADVANCE TAX FOR A PERIOD OF T HREE MONTHS ONLY. THUS CONSIDERING THE PROVISIONS OF S.216 WHI CH HAVE BEEN REPLACED BY S.234C THE PROVISIONS OF S.234B AND TH E OVERALL SCHEME OF PAYMENT OF ADVANCE TAX AND LEVY OF INTERE ST SIMPLE INTEREST AT 1.5 PER CENT PER MONTH IS CHARGEABLE UN DER S.234C FOR THE PERIOD OF DEFAULT SUBJECT TO THE MAXIMUM PERIOD OF THREE MONTHS AND NOT COMPULSORILY FOR A PERIOD OF THREE M ONTHS IRRESPECTIVE OF THE PERIOD OF DEFAULT. THAT BEING S O THE INTEREST IN THIS CASE CHARGEABLE UNDER S.234C WORKS OUT TO RS.1 9 701. THE EXTRA INTEREST CHARGED UNDER S.234C OF RS.6 640/- I S ACCORDINGLY DELETED. 5.2 WE FURTHER FIND THAT THE TRIBUNAL MUMBAI BENCH IN THE CASE OF PANTHER INVESTRADE LTD.(SUPRA).(MUMBAI J BENCH IN ITA NO.1361/MUM/2003 DATED 28 TH FEB. 2006) IN THE LIGHT OF THE DECISION OF THE BOMBAY HIGH CO URT IN THE CASE OF KOTAK MAHINDRA FINANCE LTD. (SUPRA) AND ALSO TH E DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF DR. S. REDD APPA & ORS.(SUPRA) WE AGREE WITH THE REASONING GIVEN BY T HE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF KAILASH & ASSO CIATES (SUPRA) WHEREIN IDENTICAL COMPUTATION OF INCOME MADE BY THE ASSESSEE HAS BEEN ACCEPTED. THE INTEREST IN OUR VIEW IS CHARGE ABLE FOR THE PERIOD OF DEFAULT SUBJECT TO A MAXIMUM PERIOD OF TH REE MONTHS AND NOT COMPULSORILY FOR A PERIOD OF THREE MONTHS IRRES PECTIVE OF THE PERIOD OF DEFAULT. IN OTHER WORDS IF THE ASSESSEE HAD DELAYED THE PAYMENT OF SUCH ADVANCE TAX SUCH PAYMENT CANNOT BE RECEIPTED TO AND ACCOUNTED FOR TO THE NEXT INSTALLMENT DUE BUT HAS TO BE CONSIDERED AS DELAYED PAYMENT. SUBJECT TO THE RULES FOR ROUNDING OFF THE PERIOD OF DEFAULT THE INTEREST SHOULD NOT B E CHARGED IF THE PAGE 4 OF 5 ASSESSEE HAS PAID THE MONEY AFTER THE DUE DATE PRES CRIBED FOR THE PAYMENT OF ADVANCE TAX. WE WOULD LIKE TO GIVE AN EX AMPLE. IF THE ASSESSEE IS LIABLE TO PAY RS.1 00 000 BY 15 TH OF JUNE OF A FINANCIAL YEAR AND HAS PAID IT ON 16 TH JUNE OF THE SAME FINANCIAL YEAR THE ASSESSEE SHOULD BE LIABLE TO PAY INTEREST FOR THE P ERIOD OF ONE MONTH AT 1.5 PER CENT ON THE AMOUNT OF RS.1 00 000 AND NOT FOR A PERIOD OF THREE MONTHS ON THE SAID AMOUNT BY IGNORI NG SUCH PAYMENT. A CITIZEN WHO PAID ADVANCE TAX BELATEDLY C ANNOT BE WORSE OFF THAN THE PERSON WHO HAS NOT PAID AT ALL. IF THE DEPARTMENTAL CONTENTIONS WERE TO BE ACCEPTED THE PERSON WHO DID NOT PAY THE TAX WILL STAND TO GAIN. IF AS PER THE ILLUSTRATION GIVEN ABOVE A WHO HAS PAID THE TAX ON 16 TH OF JUNE HAS TO PAY LESS INTEREST THAN B WHO HAS NOT PAID ANY ADVANCE-TAX TILL THE NEXT INST ALLMENT FALLEN DUE. IF THE DEPARTMENTAL STAND WERE TO BE ACCEPTED B OTH A AND B WILL BE CHARGED WITH THE SAME LIABILITY TOWARDS INT EREST. THIS WILL ACT TO THE DISADVANTAGE OF A PERSON WHO HAS TAKEN EXTRA PAIN TO PAY THE TAX DUE TO THE GOVERNMENT AS A TRUE CITIZEN. MO REOVER THE GOVERNMENT HAS ALREADY USED THE MONEY OF RS.1 00 00 0 DEPOSITED INTO ITS COFFERS ON 16 TH JUNE. IGNORING SUCH PAYMENT IT WILL BE UNFAIR AND INEQUITABLE ON THE PART OF THE REVENUE T O ASK THE TAXPAYER TO PAY INTEREST ON A SUM WHICH WAS ALREADY PAID BY HIM ON 16 TH JUNE. THIS WILL ONLY RESULT IN ABSURD POSITION. TH IS CANNOT BE THE INTENTION OF THE LEGISLATURE. 7. IN THE LIGHT OF THE DISCUSSION ABOVE AND RESPEC TFULLY FOLLOWING THE AMRITSAR BENCH DECISION OF THE TRIBUNAL WE ACC EPT THE ASSESSEES WORKING OF INTEREST UNDER S.234C OF THE ACT AND DIRECT THE AO ACCORDINGLY. 5. IN NUTSHELL THE ACT DID NOT CONTEMPLATE A SITUAT ION WHERE THE ASSESSEE COULD PAY ADVANCE TAX BEFORE THE NEXT INSTALLMENT F ALLS DUE. IT APPEARS THAT THE PERIOD OF THREE MONTHS WAS PROVIDED IN THE ACT UNDE R THE ASSUMPTION THAT THE ASSESSEE WHO HAS FAILED TO PAY ANY INSTALLMENT OF A DVANCE TAX WOULD PAY THE ADVANCE TAX ONLY IN THE NEXT DUE DATE. UNDER THESE CIRCUMSTANCES SINCE A PARTICULAR VIEW HAS BEEN TAKEN BY THREE BENCHES OF THE TRIBUNAL WE DO NOT WANT TO TAKE A CONTRARY VIEW. ACCORDINGLY WE UPHOLD THE ORDER OF THE LD CIT (A). SINCE THE ACTUAL DATES OF PAYMENT OF ADVANCE TAX CO ULD NOT BE FOUND OUT FROM THE RECORD WE SET ASIDE THE ISSUE TO THE FILE OF T HE ASSESSING OFFICER WITH A PAGE 5 OF 5 DIRECTION TO CHARGE INTEREST FROM THE DUE DATE TO T HE DATE OF PAYMENT IN ACCORDANCE WITH THE PROVISIONS FOR CALCULATION OF I NTEREST. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON 07-01-2010 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM 7 TH JANUARY 2010. COPY TO 1 THE ACIT CIRCLE-1 RAJAHMUNDRY. 2 M/S.SRI GODAVARI TRANSPORTS 81-33-10 VENKATESWA RANAGAR PRAKASAM NAGAR BLOCK-II RAJAHMUNDRY 533 105. 3 THE CIT RAJAHMUNDRY 4 THE CIT(A) RAJAHMUNDRY 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM