ACIT 2(3), MUMBAI v. TATA STEEL LTD, MUMBAI

ITA 6892/MUM/2010 | 2003-2004
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 689219914 RSA 2010
Assessee PAN AAACT2803M
Bench Mumbai
Appeal Number ITA 6892/MUM/2010
Duration Of Justice 9 month(s) 18 day(s)
Appellant ACIT 2(3), MUMBAI
Respondent TATA STEEL LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 22-07-2011
Date Of Final Hearing 11-07-2011
Next Hearing Date 11-07-2011
Assessment Year 2003-2004
Appeal Filed On 04-10-2010
Judgment Text
1 ITA NOS.6891 & 6892/MUM/2010 (ASST YEARS 2002-03 & 2003-04) ITA NOS.549 & 550/MUM/2009 (ASST YEARS 2002-03 & 2003-04) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES MUMBAI BEFORE SHRI PRAMOD KUMAR AM & SHRI VIJAY PAL RAO JM ITA NOS.6891 & 6892/MUM/2010 (ASST YEARS 2002-03 & 2003-04) THE ASST COMMR OF INCOME TAX 2(3) MUMBAI VS TATA STEEL LTD BOMBAY HOUSE 24 HOMI MODY ST FORT MUMBAI (APPELLANT) (RESPONDENT) ITA NOS.549 & 550/MUM/2009 (ASST YEARS 2002-03 & 2003-04) TATA STEEL LTD BOMBAY HOUSE 24 HOMI MODY ST FORT MUMBAI VS THE ASST COMMR OF INCOME TAX 2(3) MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AAACT2803M ASSESSEE BY SHRI DINESH VYA/MS S SARASWATHI REVENUE BY SHRI B JAYA KUMAR PER VIJAY PAL RAO JM APPEALS IN ITA NO. 6891 & 6892/MUM/2010 BY THE REV ENUE ARE DIRECTED AGAINST THE COMPOSITE ORDER DATED 26.7.2010 OF THE CIT(A) ARISING FROM THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 263 OF THE I T ACT FOR THE AYS 2002-03 AND 2003-04 RESPECTIVELY. 2 APPEALS IN ITA NOS.549 & 550/MUM/2009 BY THE ASSE SSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF THE CIT DATED 31.3.2008 PA SSED U/S 263 OF THE I T ACT FOR THE ASSESSMENT YEAR 2002-03 AND 2003-04 RESPECTIVELY. 2 ITA NOS.6891 & 6892/MUM/2010 (ASST YEARS 2002-03 & 2003-04) ITA NOS.549 & 550/MUM/2009 (ASST YEARS 2002-03 & 2003-04) 3 THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE CO MMON GROUNDS IN THESE APPEALS: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD CIT(A) ERRED IN HOLDING THAT CREDIT FOR MAT U/S 115JAA/115JB IS TO BE ALLOWED BEFORE CHARGING INTEREST U/S 234B WITHOUT APPRECIATING THE FACT THAT THERE WAS NO PROVISION UNDER THE I T ACT DURING THE RELEVANT ASST YEAR TO ALLOW CREDIT FOR THE TAXES AID U/S 115JAA/115JB BEFORE COMPUTING INTERES T CHARGEABLE U/S 234B OF THE I T ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD CIT(A) ERRED IN HOLDING THAT THE INTEREST U/S 234D IS NOT C HARGEABLE IN SPITE OF THE FACT THAT ASSESSMENT WAS MADE ON 15.12.2008 I.E. AFTER T HE INTRODUCTION OF PROVISIONS OF SEC. 234D IN THE STATUTE W.E.F 1.6.20 03 4 GROUND NO.1 REGARDING ALLOWING THE CREDIT FOR MAT BEFORE COMPUTING INTEREST CHARGEABLE U/S 234B OF THE I T ACT. 5 WE HAVE HEARD THE LD DR AS WELL AS THE LD SR COUN SEL FOR THE ASSESSEE AND CONSIDERED THE RELEVANT RECORDS. THE SR COUNSEL FO R THE ASSESSEE HAS POINTED OUT THAT THIS ISSUE IS COVERED BY THE DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF CIT VS TULSYAN NEC LTD REPORTED IN 330 ITR 226 (SC) . 5.1 AT THE OUTSET WE NOTE THAT THIS ISSUE IS SETTL ED BY VARIOUS DECISIONS OF THE HIGH COURTS AS WELL AS SUPREME COURT INCLUDING THE DECI SION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS APAR INDUSTRIES LTD REP ORTED IN 323 ITR 411(BOM). NOW IN THE LATEST DECISION THE HONBLE SUPREME COURT IN T HE CASE OF TULSYAN NEC LTD (SUPRA) HAS HELD AS UNDER: FROM THE ABOVE IT IS EVIDENT THAT ANY TAX PAID IN ADVANCE/PRE-ASSESSED TAX PAID CAN BE TAKEN INTO ACCOUNT TO COMPUTING THE TAX PAYABLE SUBJECT TO ON CAVEAT VIZ THAT WHERE THE ASSESSEE ON THE BASIS O F SELF COMPUTATION UNILATERALLY CLAIMS SET OFF OR THE MAT CREDIT THE AS SESSEE DOES SO AT ITS RISK AS IN CASE IT IS ULTIMATELY FOND THAT THE AMOUNT OF TAX C REDIT AVAILED OF WAS NOT 3 ITA NOS.6891 & 6892/MUM/2010 (ASST YEARS 2002-03 & 2003-04) ITA NOS.549 & 550/MUM/2009 (ASST YEARS 2002-03 & 2003-04) LAWFULLY AVAILABLE THE ASSESSEE WOULD BE EXPOSED T O LEVY OF INTEREST U/S 234B ON THE SHORTFALL IN THE PAYMENT OF ADVANCE TAX. WE REITERATE THAT WE CANNOT ACCEPT THE CASE OF THE DEPARTMENT BECAUSE IT WOULD MEAN THAT EVEN IF THE ASSESSEE DES NOT HAVE TO PAY ADVANCE TAX IN THE CUR RENT YEAR BECAUSE OF HIS BROUGHT FORWARD MAT CREDIT BALANCE HE WOULD NEVERTHE LESS BE REQUIRED TO PAY ADVANCE TAX AND IF HE FAILS INTEREST /S 234B W OULD BE CHARGEABLE. THE CONSEQUENCE OF ADOPTING THE CASE OF THE DEPARTMENT WOULD MEAN THAT THE MAT CREDIT WOULD LAPSE AFTER FIVE SUCCEEDING ASSESS MENT YEARS U/S 115JAA(3); THAT NO INTEREST WOULD BE PAYABLE ON SUCH CREDIT BY THE GOVERNMENT UNDER THE PROVISO TO SEC. 115JAA(2) AND THAT THE ASSESSEE WOULD BE LIABLE TO PAY INTEREST U/S 234B AND 234C ON THE SHORTFALL IN THE P AYMENT OF ADVANCE TAX DESPITE EXISTENCE OF THE MAT CREDIT STANDING TO THE ACCOUNT OF THE ASSESSEE. THUS DESPITE THE MAT CREDIT STANDING TO THE ACCOUNT OF THE ASSESSEE THE LIABILITY OF THE ASSESSEE GETS INCREASED INSTEAD OF IT GETTING REDUCED. 6 ACCORDINGLY THIS GROUND IS DECIDED AGAINST THE R EVENUE AND IN FAVOUR OF THE ASSESSEE. 7 GROUND NO.2 REGARDING PROSPECTIVE OR RETROSPECTIV E EFFECT OF THE PROVISIONS OF SEC. 234D. 8 WE HAVE HEARD THE LD DR AS WELL AS THE LD SR COUN SEL FOR THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD SR COUNSEL FOR THE ASSESSEE HAS POINTED OUT THAT LEVY OF INTEREST U/S 234D IS NOT A PPLICABLE FOR THE AYS 2002-03 AND 2003-04 AS THE PROVISIONS OF SEC. 234D ARE APPLICAB LE ONLY FROM THE AY 2004-05. HE HAS RELIED UPON THE DECISION OF THE SPECIAL BENCH O F THE TRIBUNAL IN THE CASE OF ITO VS EKTA PROMOTERS P LTD REPORTED IN 305 ITR (AT) 1 (DE L)(SB). HE HAS ALSO RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE DIT VS JACAB CIVIL INCORPORATED REPORTED IN 235 CTR 123(DEL). THE LD SR COUNSEL HA S ALSO REFERRED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS M/S BAJAJ HINDUSTAN LTD IN INCOME TAX APPEAL NO.198 OF 2009 DATED 15 TH APRIL 2009. DURING THE COURSE OF ARGUMENTS THIS BENCH HAS POINTED OUT TO LD SR COUNS EL ABOUT THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS M/S KERALA CHEMICALS & PROTEINS LTD 4 ITA NOS.6891 & 6892/MUM/2010 (ASST YEARS 2002-03 & 2003-04) ITA NOS.549 & 550/MUM/2009 (ASST YEARS 2002-03 & 2003-04) IN 323 ITR 584 (KER). ON THE OTHER HAND THE LD DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER IN LEVY OF INTEREST U/S 234D. 9 AFTER CONSIDERING THE RIVAL CONTENTION AND CAREFU L PERUSAL OF THE ORDERS RELIED UPON BY BOTH THE PARTIES WE FIND THAT THE JURISDIC TIONAL HIGH COURT IN THE CASE OF BAJAJ HINDUSTAN LTD (SUPRA) HAD AN OPPORTUNITY TO D EAL WITH THE QUESTION AS UNDER: (D) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE ITAT WAS RIGHT IN HOLDING THAT THE INTEREST U/S 234D CANN OT BE CHARGED IN RESPECT OF REFUNDS GRANTED PRIOR TO 1.6.2003. 9.1 THE HONBLE HIGH COURT HAS OBSERVED IN PARA 5 W HILE ADJUDICATING THE QUESTION ABOVE AS UNDER: 5. SO FAR AS THE LAST QUESTION CONCERNED IT IS SEE N THAT THE SUBJECT PROVISION CAME ON STATUTE BOOK W.E.F 1.6.2003. IF THAT BE SO THE SAID PROVISION DOES NOT HAVE RETROSPECTIVE EFFECT. IN THIS VIEW OF THE MATTER WE DO NOT SEE APPEAL GIVING RISE TO ANY SUBSTANTIAL QUESTION OF LAW. APP EAL IS THEREFORE DISMISSED IN LIMINI WITH NO ORDER AS TO COSTS. 10 THUS IT IS CLEAR THAT PROVISIONS OF SEC. 234D C AME INTO EXISTENCE ON THE STATUTE BOOK W.E.F 1.6.2003 DOES NOT HAVE RETROSPECTIVE EFF ECT. THE HONBLE DELHI HIGH COURT IN THE CASE OF JACABS CIVIL INCORPORATED (SU PRA) HAS HELD THAT THE PROVISION FOR CHARGING OF INTEREST MUST BE CONSTRUED AS A SUBSTAN TIVE LAW AND NOT ADJUSTABLE LAW AND THEREFORE THE SAME CANNOT BE RETROSPECTIVE BUT WOULD BE APPLICABLE PROSPECTIVE. 10.1 HOWEVER THE HONBLE KERALA HIGH COURT IN THE CASE OF M/S KERALA CHEMICALS & PROTEINS LTD ( SUPRA) WHILE ADJUDICATING THE ISSU E OF EFFECTIVE DATE FROM WHICH INTEREST COULD BE LEVIED U/S 234D HELD AS UNDER: IN OUR VIEW THIS PROVISION ON INTEREST IS NOT INTROD UCED WITH REFERENCE TO ANY ASSESSMENT YEAR WHICH IS OBVIOUS FROM THE FACT THA T IT IS NOT EFFECTIVE FROM THE 5 ITA NOS.6891 & 6892/MUM/2010 (ASST YEARS 2002-03 & 2003-04) ITA NOS.549 & 550/MUM/2009 (ASST YEARS 2002-03 & 2003-04) BEGINNING OF THE FINANCIAL YEAR. ON THE OTHER HAND THIS PROVISION ON INTEREST WILL APPLY TO ALL CASES OF REFUND GRANTED U/S 143(1 ) BUT INTEREST COULD BE LEVIED ONLY WITH EFFECT FROM 1.6.203. EVEN THOUGH REFUND IN THIS CASE WAS GRANTED WHILE SENDING INTIMATION U/S 143(1) ON 28.6.2000 AN D REGULAR ASSESSMENT U/S 143(3) WAS COMPLETED CONVERTING THE REFUND TO DEMAN D OF TAX ON 22.1.2004 INTEREST COULD BE DEMANDED ONLY FOR THE PERIOD FROM 1.6.2003 TILL 22.1.2004 WHICH IS WHAT IS DONE BY THE ASSESSING OFFICER. WE DO NOT FIND ANY JUSTIFICATION FOR THE COMMISSIONER TO GIVE ANY RETROSPECTIVITY TO S ECTION 234D WHICH IS WHAT HE HAS DONE BY DIRECTING THE ASSESSING OFFER TO REVIS E THE ASSESSMENT LEVYING INTEREST FROM THE DATE OF REFUND. IN FACT COMMISSIONER HAS NO AUTHORITY TO GIVE RETROSPECTIVE OPERATION TO A SUBSTANTIVE PROVISION OF L AW PROVIDING FOR INTEREST. REVENUE HAS NO ANSWER TO OUR QUERY AS TO WHETHER INTERE ST U/S 234D COULD BE LEVIED IN CASES OF REGULAR ASSESSMENT COMPLETED U/S 143(3) PRIOR TO 1.6.2003 LEADING TO DEMAND OF REFUNDED AMOUNT AS TAX DETERMIN ED ON REGULAR ASSESSMENT. WE ARE THEREFORE OF THE VIEW THAT THE CO MMISSIONERS ORDER U/S 263 WAS RIGHTLY FOND TO BE UNTENABLE BY THE TRIBUNAL . HOWEVER WE VACATE THE FINDING OF THE TRIBUNAL THAT SCCTION234D IS APPLICA BLE ONLY FROM THE ASSESSMENT YEAR 2004-05 ONWARDS. THE VIEW TAKEN BY THE ASSESSIN G OFFICER THAT SECTION APPLIES FROM 1.6.2003 IS THE CORRECT POSITION. 10.2 HONBLE HIGH COURT HAS TAKEN A VIEW THAT THIS PROVISION OF INTEREST IS NOT INTRODUCED WITH REFERENCE TO ASSESSMENT YEAR AS IT IS MANIFEST FROM THE FACT THAT THE LEVY OF INTEREST U/S 234D IS NOT EFFECTIVE FROM THE BEGINNING OF THE FINANCIAL YEAR BUT FROM THE DATE ON WHICH THE REFUND HAS BEEN GRANTED U/S 143(1). THUS THE HONBLE HIGH COURT OBSERVED THAT INTEREST WOULD BE LEVIED O NLY W.E.F 1.6.2003 WHEN THIS PROVISIONS HAS BEEN INTRODUCED IN THE STATUTE. 11 UNDISPUTEDLY THIS PROVISION CANNOT BE GIVEN ANY RETROSPECTIVE EFFECT AS HELD BY THE HONBLE KERALA HIGH COURT AS WELL AS THE HON BLE JURISDICTIONAL HIGH COURT. HOWEVER INTEREST U/S 234D COULD BE LEVIED IN THE C ASE WHERE THE REFUND HAS BEEN GRANTED U/S 143(1) BUT THE REGULAR ASSESSMENT HAS BEEN FRAMED AFTER 1.6.2003. THE VIEW TAKEN BY THE TRIBUNAL THAT SECTION 234D IS APPLICABLE FROM THE ASSESSMENT YEAR 2004-05 HAS BEEN REVERSED BY THE HONBLE KERAL A HIGH COURT. 6 ITA NOS.6891 & 6892/MUM/2010 (ASST YEARS 2002-03 & 2003-04) ITA NOS.549 & 550/MUM/2009 (ASST YEARS 2002-03 & 2003-04) 11.1 AVERTING TO THE FACTS OF THE CASE IN HAND WE FIND THAT FOR THE ASSESSMENT YEAR 2002-03 THE RETURN WAS PROCESSED U/S 143(1) AND RE FUND WAS GRANTED TO THE ASSESSEE ON 31.3.2004. SIMILARLY FOR THE ASSESSMEN T YEAR 2003-04 THE ASSESSMENT WAS PROCESSED U/S 143(1) AND REFUND WAS GRANTED ON 19.3 .2005. THEREFORE IN BOTH THE ASSESSMENT YEARS THE REFUND WAS GRANTED AFTER 1.6.2 003 WHEN THE PROVISION OF SEC. 234D WAS INTRODUCED IN THE STATUTE. SECTION 234 D R EADS AS UNDER: 234D (1) SUBJECT TO THE OTHER PROVISIONS OF THIS AC T WHERE ANY REFUND IS GRANTED TO THE ASSESSEE UNDER SUB SEC. (1) OF SEC. 1 43 AND A) NO REFUND IS DUE ON REGULAR ASSESSMENT ; OR B) THE AMOUNT REFUNDED UNDER SUB SECTION (1) OF SEC 143 EXCEEDS THE AMOUNT REFUNDABLE ON REGULAR ASSESSMENT. THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF ONE HALF PERCENT ON THE WHOLE OR THE EXCESS AMOUNT SO REFUNDE D FOR EVERY MONTH OR PART OR A MONTH COMPRISED IN THE PERIOD FROM THE DATE OF GRANT OF REFUND TO THE DATE OF SUCH REGULAR ASSESSMENT. (2) WHERE AS A RESULT OF AN ORDER U/S 154 OR SECTION 1 55 OR SECTION 250 OR SEC. 254 OR SEC 260 OR SEC 262 OR SEC 263 OR SEC 264 OR AN O RDER OF THE SETTLEMENT COMMISSION UNDER SUB SEC (4) OF SEC 245D THE AMOUNT OF REFUND GRANTED UNDER SUB SEC (1) OF SEC 143 IS HELD TO BE CORRECTLY ALLOWED EITHER IN WHOLE OR IN PART AS THE CASE MAY BE THEN THE INTEREST CHA RGEABLE IF ANY UNDER SUB SEC (1) SHALL BE REDUCED ACCORDINGLY. EXPLANATION _ WHERE IN RELATION TO AN ASSESSMENT YE AR AN ASSESSMENT IS MADE FOR THE FIRST TIME U/S 147 OR SEC 153A THE AS SESSMENT SO MADE SHALL BE REGARDED AS A REGULAR ASSESSMENT FOR THE PUR5PSOES OF THIS SECTION. 12 IN THE CASE IN HAND THE DATE OF REFUND IS SUBSE QUENT TO THE AMENDMENT BROUGHT IN TO THE STATUTE; THEREFORE THE PROVISION OF SEC. 234D ARE APPLICABLE. ACCORDINGLY THIS GROUND IS DECIDED IN FAVOUR OF TH E REVENUE. ITA NOS.549 & 550/MUM/2009( BY THE ASSESSEE) 7 ITA NOS.6891 & 6892/MUM/2010 (ASST YEARS 2002-03 & 2003-04) ITA NOS.549 & 550/MUM/2009 (ASST YEARS 2002-03 & 2003-04) 13 THERE IS A DELAY OF 240 DAYS IN BOTH THE APPEALS FILED BY THE ASSESSEE. AT THE TIME OF HEARING THE LD SR COUNSEL FOR THE ASSESSEE HAS STATED THAT SINCE THE REVENUES APPEALS ARE DECIDED ON MERIT; THEREFORE THE ASSESSEE DOES NOT PRESS THE APPEALS AGAINST THE ORDER U/S 263 AS THE SAME HAS B ECOME INFRUCTUOUS OR OTIOSE. ON THE OTHER HAND THE LD DR HAS NO OBJECTION IF TH E APPEALS OF THE ASSESSEE ARE DISMISSED AS PLEADED BY THE ASSESSEE. ACCORDINGLY WE DISMISS THE APPEALS FILED BY THE ASSESSEE. 14 IN THE RESULT THE APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED WHEREAS THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THE 22 ND DAY OF JULY 2011. SD/- SD/- ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED:22 ND JULY 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI