TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1355
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons 35AB and 35D of the Act; & (3) that the CIT (A) erred in upholding the levy of interest u/s 234B of the Act until the date of present assessment without appreciating that the interest levy was to be pegged to the date of first regular assessment. 3. Before taking up the issues raised by the assessee for adjudication, we would like to place on record the back-ground of the case. 3.1. The assessee is in the business of electronic equipment and components. For the assessment year under consideration, the assessee had furnished its return of income, admitting a taxable income of Rs.1,61,710/- way back on 29.12.1992 which was subsequently revised, admitting a loss of Rs.49,20,860/-. While concluding the original assessment on 31.3.1995 u/s 143 (3) of the Act, the AO, based on the Directors' report, came to the conclusion that the manufacture of gas discharge tubes were still under implementation stage till the end of the year under consideration and that the assessee had not started commercial production during the year under dispute. Accordingly, the main income of the assessee was from interest on deposits with the banks against which the assessee's claims of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rging of interest u/s 234B of the Act up-to the date of order u/s 143 (3) r.w.s. 250 of the Act dated 31.11.2000. After hearing the assessee's representative, the CIT (A) had, in his order dated 18.3.2003, recorded his findings thus: "4.3...............As per the provisions of section 234B (1), interest has to be levied up-to the date of determination of total income under sub-section (1) of section 143 or to the date of regular assessment. As per section 2(40), 'regular assessment' means the assessment made under sub-section (3) of section 143 or section 144. In the present case, the regular assessment u/s 143(3) was made on 31.3.1995. In the circumstances and in view of the decision of Kochi Tribunal referred supra, I am inclined to agree with the contention of the appellant that the interest u/s 234B should be restricted to the date of original assessment made u/s 143(3) dated 31.3.1995. In the circumstances, the assessing officer is directed to levy interest u/s 234B for the period up-to 31.3.1995." 3.1.3. With regard to the assessee's objection to the manner of allocation of Rs.11.82 lakhs, the CIT (A) had observed that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ook a stand that '3.........the capitalization and amortization of expenditure has been carried out for allowance in future years. The allocation of Rs.11,82,039/- has been made amongst building, plant and machinery, vehicles and furniture but depreciation would be allowable in future years and not in AY 1992-93. This matter has become final in the first appeal itself (Para 2.3 and 2.4) . Regarding the set off of business loss, the matter does not emerge out of CIT (A)'s order dt. 18.3.2003. The matter of setting off of business loss against the income from 'other sources' has already been considered and rejected in the orders u/s 143(3) r.w.s. 250 dated 25.3.1999 and 30.11.2000. In the said orders, a clear cut finding was recorded to the effect that the commercial production had not commenced during the previous year relevant to AY 1992-03. In the circumstances, the points raised in the cross objection does not exist at all for consideration now." With regard to charging of interest u/s 234B of the Act, the AO took a stand that "4............The assessment made on 31.3.1995 was set aside by CIT (A) in toto at the request of the assessee and there were no subsisting orders even up-....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a regular assessment (including an assessment passed in compliance with directions of a higher appellate authority), sec. 244 A(3) clearly specifies that the extent of the eligibility of the appellant to receive the same is determinable as on the date of the order granting the refund, which translates to a regular assessment order. Thus, the confluence of the principle is evident both in cases of interest due to the appellant and that due from him in both these sections of law. 4.2.1. I find that the above principles are judicially recognized in South Indian Bank Ltd v. CIT (2010) 325 ITR 517 (Ker) where the ld. High Court also referred to the mandatory nature of the levy as brought out in the Apex Court judgment in CIT v. Anjum MH Ghaswala (2001) 252 ITR 1 (SC) . The ld. Supreme Court also held in ITO v. KL Srihari (HUF) (2001) 250 ITR 193, also in the general context of sec. 234B(3), that reassessment amounts to a fresh assessment of the entire income effacing the original order". 3.2. Aggrieved, the assessee has come up before us with the present appeal. During the course of hearing, the learned AR submitted that the learned CIT (A) erred in declining to consider....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pital assets instead and also charge interest u/s 234B of the Act only from 1.4.92 to 31.3.1995. Subsequently, when the issues were raised by both the parties before the earlier Bench of this Tribunal, the learned DR submitted, the Tribunal remanded both the issues to the AO without even considering the issues on merits. It was, therefore, contended that since the Tribunal only sought the AO to have a re-look at the issues and did not give any specific directions/advice on merits; there was no any infirmity either in the order of the AO or the findings of the CIT (A) warranting this Bench's interference. 3.3. We have carefully considered the rival submissions, perused the relevant materials on record, the findings of the CIT (A) and also the earlier Bench of this Tribunal. 3.3.1. At the outset, we would like to reiterate that the CIT (A) erred in coming to a conclusion that the earlier Bench had set-aside the matter raised by the Revenue for fresh consideration without going into merits. He had, further, come to the conclusion that 'the appellant had filed certain cross objections raising certain other issues which were not adjudicated in the Tribunal's order of remand, and even ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....apital asset as claimed by the respondent. ii. The learned CIT (A) ought to have directed the assessing authority to follow the order of the CIT (Appeals) in ITA 167/DCIT 8(1)/00-01 dated 13.9.2002 in the respondent's own case for the purpose of allocation of the above expenditure towards capital asset. 2. The assessee has filed additional grounds of cross objection which reads as under: The learned CIT (A) ought to have appreciated that the business of the respondent had started during the relevant assessment year and consequently ought to have directed the assessing authority to set off the business loss as returned' 3. At the time of hearing the learned counsel for the assessee submitted a paper book consisting of pages 1 - 82. His submission is that the issue should be set aside to the file of assessing officer for fresh adjudication. The learned Departmental Representative agreed with this proposition that the issue should be set aside to assessing officer for fresh adjudication. 4. As both the parties have requested that the issue to be set aside to the file of assessing officer, we ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct in observing that the ITAT did not examine the issue on merits at all, but, only advised to re-look by the AO. When both the parties have pleaded for restoration of the issue(s) to the AO for fresh adjudication, naturally, the earlier Bench was left with no other alternative, but, to accede to their requests. Likewise, after having duly considered of its admissibility, the earlier Bench restored the additional ground of the cross objection of the assessee also along with the issues raised by both the parties to the file of the AO for fresh adjudication. 3.3.4. We have also noticed that the CIT (A) had observed in his finding that - "4.1.1......In case, the appellant felt that the ITAT's directions were not being acceded to, the correct course for him [the assessee] would have been to file a miscellaneous petition before the ld. ITAT seeking specific redressal...." In this connection, we would like to point out that the earlier Bench had, after having considered the submissions of both the parties and, particularly, the learned Departmental Representative having agreed with the proposition that the issue should be set asid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owever, in the assessment order under dispute, it was submitted, though the income determined was Rs.61,79,980/-, the interest charged was Rs.33,12,792/- on a tax demand of Rs.19,71,949/- which was arbitrary and incorrect. The learned AR further submitted that the AO appeared to have calculated the interest up-to the date of the assessment order [19.7.2007] even though, in the body of the order, he had averred that 'interest u/s 234B was charged up-to 25.3.1999.' It was, therefore, pleaded that the interest chargeable, as conceded by the AO in his order under dispute, be restricted up-to 25.3.1999 [Rs.14.55 lakhs] and, thus, the excess interest charged requires to be deleted. 5.1. We have carefully considered the submission of the learned AR and also perused the relevant assessment order under consideration. As could be seen from the assessment order made u/s 143(3) r.w.s. 250 of the Act dated 25.3.1999, the interest charged u/s 234B of the Act was only Rs.14,55,913/- [source: Pages 19 to 27 of PB AR]. In the assessment order u/s 143(3) r.w.s. 254(1) of the Act dated 19.7.2007 under consideration, even though, the AO had stated at Para 4 of the order that '.....on the facts and in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....here, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) or sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and- (i) in a case where the interest is increased, the assessing officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded." 5.1.4. In the present case, the assessment was u/s 143(3) of the Act on 31.3.1995 with a taxable income of Rs.65,76,980/- and interest u/s 234B of the Act was charged at Rs.17,28,233/-. Subsequently, when an assessment was made in compliance with the order CIT (A) dated 29.3.1996 u/s 143(3) r.w.s. 250 of the Act on 25.3.1999 on a total inco....