M/s Gwalior Polypipes LTd, Gwalior v. ACIT, Gwalior

ITA 498/AGR/2005 | 1999-2000
Pronouncement Date: 15-04-2010 | Result: Allowed

Appeal Details

RSA Number 49820314 RSA 2005
Assessee PAN AAACG7579D
Bench Agra
Appeal Number ITA 498/AGR/2005
Duration Of Justice 4 year(s) 3 month(s) 25 day(s)
Appellant M/s Gwalior Polypipes LTd, Gwalior
Respondent ACIT, Gwalior
Appeal Type Income Tax Appeal
Pronouncement Date 15-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 15-04-2010
Date Of Final Hearing 15-04-2010
Next Hearing Date 15-04-2010
Assessment Year 1999-2000
Appeal Filed On 20-12-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.498/AGR/2005 ASST. YEAR: 1999-2000 M/S GWALIOR POLYPIPES LTD. VS. ASSTT. C.I.T. RANGE-II M-14 GANDHI NAGAR GWALIOR. GWALIOR. (M.P.) (PAN : AAACG 7579 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C. AGARWAL ADVOCATE RESPONDENT BY : SHRI S.R. SAHU JR. D.R. ORDER PER P.K. BANSAL A.M.: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 09.05.2005 BY WHICH THE CIT(A) HAS CONFIRMED THE OR DER OF THE A.O. LEVYING INTEREST UNDER SECTION 234B & 234C OF THE INCOME-TAX ACT 1961 (T HE ACT HEREINAFTER) BY PASSING ORDER UNDER SECTION 154 RELYING ON THE DECISION OF THE M. P. HIGH COURT IN THE CASE OF ITARSI OIL & FLOURS PVT. LTD. VS. CIT 250 ITR 686. 2. AT THE TIME OF HEARING THE LD. A.R. VEHEMENTLY C ONTENDED THAT THE DECISION OF THE M.P. HIGH COURT RELATES TO THE INTEREST LEVIABLE UNDER S ECTION 234B & 234C IN RESPECT OF THE INCOME ASSESSED UNDER SECTION 115J AND NOT UNDER SECTION 1 15JA. REFERRING TO THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF SNOWCEMA INDIA LIM ITED VS. DY. CIT 221 CTR (BOM) 594 2 IT WAS SUBMITTED THAT THE INTEREST UNDER SECTION 23 4B & 234C CANNOT BE CHARGED IN CASE THE INCOME IS ASSESSED UNDER SECTION 115JA. IN ANY CAS E IT WAS CONTENDED THAT THE ISSUE IS DEBATABLE WHETHER THE INTEREST UNDER SECTION 234B & 234C CAN BE LEVIED OR NOT. IT WAS ALSO POINTED OUT THAT THE DECISION OF THE M.P. HIGH COUR T ALTHOUGH RELATES TO THE INTEREST LEVIABLE UNDER SECTION 115J BUT HAS BEEN REVERSED BY THE DEC ISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KWALITY BISCUITS LTD. VS. CIT 284 ITR 434 (SC) WHICH ALSO RELATES TO THE LEVY OF INTEREST UNDER SECTION 234B & 234C WHILE COMPUT ING INCOME UNDER SECTION 115J. RELIANCE WAS ALSO PLACED ON THE DECISION OF THIS TRIBUNAL IN ITA NO.499/AGR/2005 IN THE CASE OF M/S. VISHWA ORGANICS PVT. LTD. VS. ACIT. 3. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE O RDER OF THE CIT(A). 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDER OF THE M.P. HIG H COURT IN THE CASE OF ITARSI OIL & FLOUR MILLS PVT. LTD. VS. CIT 250 ITR 686. WE NOTED THA T THE DECISION RELATES TO THE LEVY OF INTEREST UNDER SECTION 234B & 234C IN CASE INCOME IS COMPUTE D UNDER SECTION 115J AND NOT UNDER SECTION 115JA. WE ALSO NOTED FROM THE DECISION OF THE MUMBAI HIGH COURT THAT THE INTEREST UNDER SECTION 234B & 234C IS NOT LEVIABLE IN CASE T HE INCOME IS COMPUTED UNDER SECTION 115JA. IN VIEW OF THIS FACT IN ANY CASE WHETHER THE INTEREST UNDER SECTION 234B & 234C CAN BE LEVIED OR NOT IS A DEBATABLE POINT. JURISDICTIO N UNDER SECTION 154 CAN BE INVOKED IF THERE IS A MISTAKE APPARENT ON RECORD. WHERE THERE CAN BE TWO CONCEIVABLE OPINION PROVISIONS OF SECTION 154 CANNOT BE INVOKED. IN VIEW OF THE DECI SION OF THE MUMBAI HIGH COURT IN FAVOUR OF THE ASSESSEE THEREFORE THERE CAN BE VIEW THAT THE INTEREST UNDER SECTION 234B & 234C CANNOT 3 BE LEVIED WHERE THE INCOME HAS BEEN COMPUTED UNDER SECTION 115JA. SIMILAR VIEW HAS BEEN TAKEN BY THE LD. THIRD MEMBER IN THE CASE OF M.P. T ELELINKS LTD. VS. ACIT IN ITA NOS.401 & 402/AGR/ 2005 IN WHICH VIDE ORDER DATED 31.12.200 8 IT WAS HELD AS UNDER :- WHETHER THE A.O COULD BE SAID TO HAVE A VALID JURI SDICTION TO INITIATE ACTION AND RECTIFY THE ORDER U/S 154 OF THE ACT BY RELYING UPON THE JUDGMENT OF THE M.P.HIGH COURT IN THE CASE OF ITARSI OILS & FLO UR PVT. LTD IT MUST BE APPRECIATED WAS NOT CONCERNED WITH THE PROVISIONS OF SECTION 115 JA OF THE ACT AND THERE WAS A SHORT FALL IN THE PAYMENT OF ADVANC E TAX. QUESTION AROSE WHETHER INTEREST U/S 234 B AND 234C CAN BE VALIDLY LEVIED. THE HIGH COURT ANSWERED THE ISSUE IN FAVOUR OF THE REVENUE BY AFFI RMING THE ORDER OF THE TRIBUNAL. THE M.P.HIGH COURT WAS OF THE VIEW THAT W HEN-EVER THE ASSESSEE IS LIABLE TO PAY ADVANCE TAX U/S 208 OF THE ACT EVEN THOUGH THE INCOME IN QUESTION IS A BOOK PROFIT DETERMINED U/S 115JA HE HAS TO PA Y THE TAX AND HE HAS TO PAY THE INTEREST. THIS DECISION WAS RENDERED ON 31.08.1 999. AT THAT POINT OF TIME THERE WAS CLEAVAGE OF JUDICIAL OPINION AS TO LEVY O F INTEREST U/S 234B & 234C IN THE EVENT OF SHORT FALL OF THE PAYMENT OF ADVANCE T AX WHILE THE BOOK PROFIT U/S 115 J WERE COMPUTED. THE M.P.HIGH COURT IN THE CASE OF ITARSI OILS & FLOUR PVT.LTD.(SUPRA); THE BOMBAY HIGHCOURT IN THE CASE O F CIT VS KOTAK MAHINDRA FINANCE LTD. 265 ITR 119; GAUHATI HIGH COURT IN THE CASE OF ASSAM BENGAL CARRIERS LTD. VS CIT 239 ITR 862; AND MADRAS HIGH C OURT IN THE CASE OF CIT VS HOLIDAY TRAVELS P.LTD. 263 ITR 307 HAVE TAKEN A VIEW THAT SUCH LEVY OF INTEREST WAS JUSTIFIED WHEREAS THE KARNATAKA HIGH C OURT IN THE CASE OF KWALITY BISCUITS LTD. 243 ITR 519 HAS EXPRESSED A CONTRARY VIEW. APPEAL FILED BY THE REVENUE BEFORE THE HONBLE SUPREME COURT AGAINST OR DER OF THE HIGH COURT IN CIT VS KWALITY BISCUITS LTD.(SUPRA) GOT DISMISSED BY THE HONBLE SUPREME COURT IN 284 ITR 434 MEANING THEREBY THE DECISION O F THE KARANATAKA HIGH COURT IN KWALITY BISUCITS LTD. 243ITR 519 GOT AFFIR MED. THE DECISION OF THE HONBLE SUPREME COURT WAS RENDERED ON 26.04.2006. WHEN THE ASSESSEES APPEALS WERE BEFORE THE TRIBUNA L THE DECISION OF THE SUPREME COURT WAS VERY MUCH AVAILABLE TO THE BE NEFIT OF THE TRIBUNAL . THE VERY BASIS FOR THE A.O TO START 154 PROCEEDINGS WAS THE DECISION RENDERED BY THE M.P.HIGH COURT UNDER THE PROVISIONS OF SEC.115J OF THE ACT. THE DECISION OF THE M.P.HIGH COURT GOT REVERSED BY THE HONBLE SUPREME COURT BY VIRTUE OF ITS DECISION IN THE CASE OF KWALITY BISCUITS LTD. WHIC H WAS AGAIN A CASE U/S 115J OF THE ACT. ALL THIS ONLY SHOWS THAT THE MATTER WAS SU BJECT TO A JUDICIAL CONTROVERSY AND THUS THE A.O RESORTED TO THE PROCEEDINGS U/S 15 4 ON A ISSUE WHICH WAS HIGHLY DEBATABLE AND FURTHER QUESTION WOULD ARISE WHETHER IT IS OPEN TO THE AO WHO ISSUED INTIMATION U./S 143(1) TO RECTIFY THE SA ID INTIMATION U/S 154 JUST TO GIVE EFFECT TO A DECISION OF THE JURISDICTIONAL HIG H COURT WHEN THAT DECISION ITSELF GOT REVERSED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF 4 KWALITY BISCUITS LTD.(SUPRA). IN MY OPINION THE HO NBLE M.P.HIGH COURT ITSELF IN THE CASE OF CIT VS JAGANNATH NARAYAN KUTUMBIK 14 4 ITR 526 HAS ANSWERED THIS QUESTION. THE M.P. HIGH COURT IN THAT CASE WAS CONCERNED WITH LEVY OF INTEREST U/S 214 OF THE ACT. THE QUESTION OF PAYMEN T OF INTEREST ON EXCESS ADVANCE TAX PAIOD WAS SUBJECT MATTER OF JUDICIAL CO NTROVERSY AND ON ONE HAND THE GUJARAT HIGH COURT IN THE CASE OF CHANDRAKANT D AMODARDAS VS ITO 123 ITR 748 AND ON THE OTHER HAND THE ANDHRA PRADESH H IGH COURT IN THE CASE OF KANGUNDI INDUSTRIAL WORKS (P) LTD. VS ITO 121 ITR 3 39 AND KERLA HIGH COURT IN THE CASE OF A.SETHUMADHAVAN VS CIT 122 ITR 587 H AVE TAKEN CONTRARY VIEWS. WHEN THE M.P.HIGH COURT IN THE CASE CITED SUPRA H AS HELD THAT WHEN THERE CAN CONCEIVABLY BE TWO OPINIONS ON A PARTICULAR ISSUE SECTION 154 WILL NOT BE ATTRACTED AND THAT WHETHER AN ISSUE WAS DEBATABLE O R NOT WOULD DEPEND ON ITS INTRINSIC CHARACTER AND NOT WHAT A PARTICULAR HIGH COURT HELD AT A PARTICULAR TIME. EVEN ASSUMING THAT THE GUJARAT HIGH COURT HAS TAKEN A VIEW IN FAVOUR OF THE ASSESSEE IN INTERPRETING THE LANGUAGE OF SEC.21 4 IT DID NOT MEAN THAT THE ISSUE HAD BECOME NON- CONTROVERSIAL OR FREE FROM DE BATE. THEREFORE SINCE THE ASSESSEES ENTITLEMENT TO INTEREST U/S 234 WAS CONT ROVERSIAL AND DEBATABLE ISSUE IT COULD NOT BE RECTIFIED BY THE ITO VS 154 OF THE ACT. IN THE LIGHT OF THIS BINDING DECISION OF THE JURISDICTIONAL HIGH COURT IT WAS NO T OPEN TO THE A.O WHO HAS GIVEN AN INTIMATION U/S 143(1) AND SEEKS TO RECTIFY IT BY AN ORDER PASSED U/S 154 ON SUCH A DEBATABLE ISSUE. ALTHOUGH IT CAN BE SAID THAT HE WAS BOUND BY THE DECISION OF THE JURISDICTIONAL HIGHCOURT BUT THAT J URISDICTIONAL HIGH COURTS DECISION GOT REVERSED BY THE HONBLE SUPREME COURT S DECISION. AT THE STAGE WHEN THE MATTER WAS PENDING BEFORE THE HIOGH COURT OR EVEN AT THE STAGE OF THE TRIBUNAL FULL EFFECT TO THE DECISION OF THE HONBL E SUPREME COURT SHOULD BE GIVEN. IT IS ALTOGETHER DIFFERENT TO SAY THAT THE D ECISION OF THE M.P.HIGHCOURT IN THE CASE OF ITARSI OILS & FLOUR PVT. LTD (SUPRA) WA S ITSELF U/S 115J OF THE ACT AND NOT U/S 115JA OF THE ACT. IF THE BENCH WERE TO TAKE A VIEW THAT THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN KWALITY BI SCUITS LTD. U/S 115J IS NOT APPLICABLE TO THE FACTS OF THE CASE U/S 115JA THE VERY BASIS FOR ASSUMPTION OF JURISDICTION BY THE AO DOES NOT SURVIVE. WHETHER WO RDING OF SECTION 115J AND 115JA ARE DIFFERENT AND WHETHER THERE COULD BE A RE CTIFICATION AND THEREFORE THE DECISION OF THE HONBLE SUPREME COURT IN KWALITY BI SCUITS LTD IS NOT APPLICABLE CAN AGAIN BE SUBJECT MATTER OF FURTHER CONTROVERSIE S . AFTER ALL THE KARNATAKA HIGH COURT HAS CANCELLED THE LEVY OF INTEREST U/S 2 34B MAINLY ON THE REASONING THAT THE CHARGING U/S 115J IS ON THE BASIS OF BOOK PROFIT SHOWN BY THE ACCOUNTS OF THE PREVIOUS YEAR WHICH ARE PREPARED ONLY AFTER THE YEAR IS OVER WHEREAS ADVANCE TAX ON ESTIMATION HAS TO BE PAID BEFORE THE CLOSE OF THE PREVIOUS YEAR. THE COMPUTATION U/S 115J HAS TO BE ONLY WHEN THE P &L A/C WAS PREPARED ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT AND THE BOOK PROFIT CAN BE DETERMINED ONLY AFTER THE PREVIOUS YEAR ENDED AND T HEREFORE THE CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT CANNOT BE MAD E. IT WAS ALSO OF THE VIEW THAT WHEN A DEEMING FICTION IS BROUGHT UNDER THE ST ATUTE IT IS TO BE CARRIED TO ITS LOGICAL CONCLUSION BUT WITHOUT CREATING FURTHER DEE MING FICTION SO AS TO INCLUDE OTHER PROVISIONS OF THE ACT WHICH ARE NOT SPECIFICA LLY MADE APPLICABLE. THE HONBLE SUPREME COURT WHEN IT HAS CONFIRMED THE VIE W OF THE KARNATAKA HIGH 5 COURT HAS IMPLIEDLY APPROVED BOTH THE GROUNDS ON WH ICH KARANATAKA HIGH COURT HAS CANCELLED THE LEVY OF INTEREST U/S 234B A ND 234 C OF THE ACT WHEN THERE WAS COMPUTATION OF BOOK PROFIT U/S 116J OF TH E ACT. IT CAN BE POSSIBLY ARGUED THAT U/S 115JA THERE ARE PROVISIONS WHEREBY OTHER PROVISIONS OF THE ACT ARE SPECIFICALLY MADE APPLICABLE AND THEREFORE THE LEVY OF INTEREST U/S 234B & 234C COULD POSSIBLY BE JUSTIFIED. BUT THE MAIN LINE OF ARGUMENT THAT THE BOOK PROFIT CAN BE DETERMINED ONLY AT THE END OF THE FIN ANCIAL YEAR AND THEREFORE PAYMENT OF ADVANCE TAX CANNOT BE MADE TILL SUCH BOO K PROFIT ARE DETERMINED STILL SURVIVES FOR A DEBATE AND DISCUSSION CORRECT NESS OF WHICH CAN BE ESTABLISHED ONLY BY A LONG DRAWN PROCESS OF REASONI NG. WHETHER MISTAKE IN SUCH A SITUATION COMMITTED BY THE AO COULD BE ONE WHICH COULD BE TREATED AS APPARENT AND OBVIOUS IN THE FACTS EXPLAINED AND IN THE SITUATION AND POSITION OF LAW AS EXPLAINED ABOVE IT IS VERY DIFFICULT TO SAY THAT THE A.O IS JUSTIFIED IN ACTING U/S 154 OF THE ACT. THEREFORE ON THIS PRELI MINARY GROUND I AGREE WITH THE VIEW EXPRESSED BY THE JM IN VACATING THE ORDER RECT IFICATION PASSED BY THE AO FOR THESE TWO YEARS. 5. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE LD. THIRD MEMBER WE ARE OF THE VIEW THAT THE A.O. WAS NOT CORRECT IN LAW IN INVOKI NG THE PROVISIONS OF SECTION 154 FOR LEVYING INTEREST UNDER SECTION 234B & 234C OF THE ACT. IN THIS CASE AS THE INCOME HAS BEEN DETERMINED UNDER SECTION 115JA OF ACT WE ACCORDING LY QUASH THE ORDER PASSED BY THE A.O. 6. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 15.04.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 15 TH APRIL 2010. PBN/* 6 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY