2023 (1) TMI 1203 - AT - Income Tax

Tribunal partially allows appeal on excess interest under Section 234C, citing failure to consider stock market conditions.

ASK Investment Managers Limited Versus DCIT-6 (1) (2), Mumbai

The Tribunal partly allowed the appeal of the assessee concerning the excess interest charged under Section 234C of the Act. The Tribunal found that the ... Levy of interest u/s 234C and 234B - Estimation of income for advance tax - assessee has submitted that it is engaged in the business Portfolio Management Services and excess interest was charged by the CPC, Banglore because of performance fees which was reported by the assessee from its client on 31.03.2019 - HELD THAT:- As in the case of Prime Securities Ltd. [2010 (12) TMI 475 - BOMBAY HIGH COURT] and decision of Kotak Securities Ltd [2011 (7) TMI 1395 - ITAT MUMBAI] and Kumari Kumar Advani [2016 (7) TMI 1600 - ITAT MUMBAI] held that in the case of the assessee it had estimated its income and liability for payment of advance tax in accordance with law that was in force, therefore, there was no failure on the part of the assessee to pay advance tax in accordance with provision of Sec. 208 and 209. In the case of Prime Securities [2010 (12) TMI 475 - BOMBAY HIGH COURT] it is held that it was not possible for the assessee to anticipate the events that were to take place in next financial year and pay advance tax on the basis of those anticipated events. After considering all we observe that lower authorities had not controverted the facts reported by the assessee that because of uncertainty about the equity market it cannot estimate before hand amount of performance fees as discussed supra for the purpose of calculation of advance tax. No material has been brought by the revenue to controvert the aforesaid factual submission made by the assessee, therefore, following the finding of judicial pronouncements in the cases as referred above we consider that decision of ld. CIT(A) is not justified, therefore, we allow the ground of appeal of the assessee. Issues Involved:1. Failure of the CIT (A) to pass an order on all grounds of appeal.2. Failure of the CIT (A) to pass order on excess levy of interest under Section 234C of the Act.3. Failure of the CIT (A) to pass order on excess levy of interest under Section 234B of the Act.Issue 1: Failure of the CIT (A) to pass an order on all grounds of appeal:The appeal was filed against the order passed by NFAC, Delhi, for A.Y. 2019-20. The appellant contended that the CIT (A) erred in passing an order on all grounds of appeal without considering the submissions. The appellant requested a speaking order on all grounds of appeal. The fact in brief was that the CPC, Bangalore, processed the return of income and charged interest under Sections 234B and 234C of the Act. The appellant argued that the CIT (A) dismissed the appeal without proper consideration. During the appellate proceedings, the appellant's counsel emphasized the uncertainty of stock market performance fees and cited relevant precedents. The Departmental Representative supported the lower authorities. The Tribunal observed that the CIT (A) did not consider the uncertainty regarding performance fees based on stock market conditions. Relying on judicial pronouncements, the Tribunal allowed the ground of appeal of the assessee.Issue 2: Failure of the CIT (A) to pass order on excess levy of interest under Section 234C of the Act:The appellant challenged the excess interest charged under Section 234C of the Act. The appellant, engaged in Portfolio Management Services, argued that performance fees could only be ascertained on the last day of the year due to stock market volatility. The appellant cited relevant decisions to support their case. The Tribunal noted that the lower authorities did not dispute the uncertainty of estimating performance fees due to market volatility. Considering the precedents and factual submissions, the Tribunal found the CIT (A)'s decision unjustified and allowed the ground of appeal.Issue 3: Failure of the CIT (A) to pass order on excess levy of interest under Section 234B of the Act:The appellant also contested the excess interest charged under Section 234B of the Act. Since the Tribunal had already allowed the appeal regarding excess interest under Section 234C, the issue related to Section 234B became infructuous and did not require adjudication. Therefore, this ground was dismissed as it was no longer relevant after the decision on Section 234C.In conclusion, the Tribunal partly allowed the appeal of the assessee concerning the excess interest charged under Section 234C of the Act, while dismissing the issue related to excess interest under Section 234B as it became irrelevant.