TaxTMI 
TaxTMI 
2017 (12) TMI 930
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.... the Hon'ble ITAT was right in law in deleting the interest charged under Section 234B amounting to Rs. 76,52,089/- even though the interest charged under Section 234B was consequential in nature? (ii) Whether on the facts and in circumstances of the case and in law, the Hon'ble ITAT was right in law in deleting the interest charged under Section 234D amounting to Rs. 3,11,509/- and withdrawal of interest under Section 244A amounting to Rs. 10,78,208/- even though the interests charged were consequential in nature and as per provisions of law?" 4. A few facts relevant for the decision of the controversy involved as narrated in ITA No.239 of 2017 may be noticed. The respondent assessee filed its original return of income on November 1, 2004 declaring a loss of Rs. 124,66,88,768/- which was processed under Section 143(1) of the Act, on 13.12.2004 at the declared book profit of Rs. 284,21,60,970/-. Subsequently, the assessee revised its return of income on 23.12.2005, declaring a loss of Rs. 173,16,33,768/- and the book profit of Rs. 374,06,15,970/-.The revised return was accepted by passing an order under Section 154 of the Act and finally regular assessment under Section....
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....r Section 115 JB of the Act. Hence, the instant appeals by the appellant-revenue. 5. We have heard the learned counsel for the appellant-revenue. 6. The assessee-company is paying taxes under Section 115JB of the Act. For the assessment year 2004-05, the assessee had debited an amount of Rs. 8,76,59,179/- in the provision made for doubtful debts. This amount was sought to be added back by the Assessing Officer vide assessment order dated 28/29.12.2006 (Annexure A.1), in computing the book profit for working out book profit tax under Section 115JB of the Act by invoking clause (c) of the Explanation (1) to Section 115JB of the Act. Aggrieved by the said assessment order, the assessee preferred appeal to the CIT(A) who deleted the addition on account of provision for bad and doubtful debt. Thereafter, Finance Act, 2009 through retrospective amendment effective from 1.4.2001 vide clause (i) in Explanation 1 to Section 115JB of the Act inter alia provided that "the amount or amounts set aside as provision for diminution in the value of any asset" shall be added to the profits as shown in the statement of profit and loss for the relevant previous years prepared under sub sectio....
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....ation of mistake (1) With a view to rectifying any mistake apparent from the record an income- tax authority referred to, in section 116 may,- (a) amend any order passed by it under the provisions of this Act; (b) amend any intimation sent by it under sub- section (1) of section 143, or enhance or reduce the amount of refund granted by it under that sub- section. (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub- section (1), the authority passing such order may, notwithstanding anything contained in any law for the, time being in force, amend the order under that sub- section in relation to any matter other than the matter which has been so considered and decided." 9. The object of Sub section (1) of Section 154 of the Act is to rectify any mistake apparent from the record. Under the said provision, the income tax authority is empowered to rectify any mistake apparent on the record and amend any order passed by it under the provisions of the Act. However, this power is circumscribed by certain restriction which is contained in sub section (1A) of Sec....
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.... by CIT(A). Admittedly, in this case, the provisions of Section 154 have been invoked by the Assessing Officer, which he is not competent to do. Clarifying the facts that retrospective amendment made under Section 115 JB of the Act is no doubt a mistake apparent from the record but issue was whether AO can do that when on the same item of expenditure debited in the books of accounts CIT(A) has decided the issue. In our opinion it is only CIT(A) who is competent to assume jurisdiction under Section 154 of the Act. 9. In the case of India Tin Industries Private Limited (1987) 166 ITR 454 their Lordships of the Karnataka High Court came to hold that sub-section (1A) of Section 154 specifically provides that any matter which has not been considered and decided in any proceeding by way of appeal or revision, may be amended by the authority passing such an order in exercise of its power under Section 154(1). Their Lordships further came to hold that the doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by an inferior Tribunal and the other by a superior Tribunal passed in an appeal or revision, t....
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....ssee with the following observations:- "22. Even on merits of the appeal of revenue issue is decided against the revenue. On identical issue considering levy of interest under section 234B of the Act on retrospective amendment in section 115JB of the Act Honourable Bombay High Court in (2015) 60 taxmann.com 303 (Bombay) Commissioner of Income Tax, Mumbai vs. JSW Energy Limited has held that interest under section 234B of the Act cannot be charged when liability on the assessee has arisen because of retrospective amendment in the Act. Honourable High Court has held as under:- "11. Then Mr. Tejveer Singh vehemently contended that in relation to question No.2, the findings require detailed probe by this Court. He submits that the Tribunal was not right in law when it held that no interest under Section 234B of the IT Act can be levied. Though several items have to be calculated while computing book profit and in terms of explanation to section 115JB of the IT Act, that explanation has been brought on the statute book and with retrospective effect from Ist April 2001, therefore, this calculation of the Tribunal is erroneous in law. 12. However, Mr. Kaka, lear....
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.... IT Act within the time prescribed under section 211 of that Act. Noting the rival contentions, the Calcutta High Court proceeded to hold that the last date of relevant financial year was 31st March 2001 and on that date, admittedly, the appellant before it had no liability to pay any amount of advance tax in accordance with the then law prevailing in the country. Consequently, the appellant paid no advance tax and submitted its regular returns on 31st October 2001, within the time fixed by law wherein it declared its total income and the book profit both as Nil. The amendment to section 115JB by virtue of finance Act, 2002 and which was referred to in the Calcutta High Court judgment has retrospective effect from Ist April 2001. 17. In the present case, what the assessee has pointed out is that some of the amounts included in the book profits as per Explanation (h) to section 115JB were brought in by the Finance Act, 2008 with retrospective effect from Ist April 2001. The assessee cannot be held to be liable for failing to make a provision for payment of advance tax which was not possible on the last date as per the law then prevailing. Thus, clause (h) which is reproduce....
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....held that persons situate like the appellants were not liable as service providers. This is also clear from the explanation to the valuation section which says that no act or acts on the part of any person shall be punishable as an offence which would not have been so punishable if the section had not come into force. 8. The liability to pay interest would only arise on default and is really in the nature of a quasi punishment. Such liability although created retrospectively could not entail the punishment of payment of interest with retrospective effect." 20. The Supreme Court held that the liability to pay interest would only arise on default and is really in the nature of a quasi punishment. The liability to tax although credited retrospectively could not entail the punishment of payment of interest with retrospective effect. It is this principle which has been laid down which is followed by the Calcutta High Court. It is that principle relied upon by the Calcutta High Court which has been applied by the Tribunal to the facts and circumstances of the present case. We do not think that the assessee before us can be called upon to pay interest in terms of section....