AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 1730
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....se and in the light of the decision of the Supreme Court in A. S. Glittre D/5 I/5 Garonne v. CIT [1997] 225 ITR 739 (SC) read with decision in CCE v. Ratan Melting and Wire Industries [2005] 195 CTR (SC) 12. (i) is not the Circular No. 730 dated December 14, 1995 ([1996] 217 ITR (St.) 1 ) nonest ? (ii) Is not the rectification based on Circular No. 9, dated July 9, 2001 ([2001] 250 ITR (St.) 81 ) in accordance with law ? (iii) Is not the error in the earlier proceedings an error apparent from the record ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and in fact in highlighting various extraneous questions and finding the issue/issues debatable and is not such an approach and the conclusion reached wrong, perverse, unsustainable and uncalled for and unwarranted ?" 2. The assessee is a non-resident shipping company, represented by its agent at that point of time, who also filed an option under section 172(7) to be assessed regularly under the provisions of the Act, before the expiry of the assessment year. Assessment was initiated by an intimation under section 143(1) as per annexure-A, which indicated that interest has been le....
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....gainst the declaration of law made by the Supreme Court or the High Court. A rectification, on the basis of law declared by the Supreme Court or the High Court is permissible as has been found in Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. ITAT [1988] 174 ITR 579 (Ker). 5. The learned counsel appearing for the respondent however would seek to sustain the order of the Tribunal. It is argued that the hon'ble Supreme Court in A. S. Glittre (supra) was concerned with a specific issue : whether there was an entitlement for interest under section 214 and had merely declared such entitlement on the basis of a fiction, as evident from the words employed in section 172(7). There cannot be any declaration ferreted out from the decision as to there being a liability on the assessee, who exercised option under section 172(7) to make payment of advance tax. The assessee hence is also not obliged to pay interest under sections 234B and 234C. 6. It is argued that the option to be exercised is prior to the expiry of the assessment year which could be on 31st of March of the year subsequent to the previous year. The advance tax payment has to be made quarterly, in the previous (financial)....
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....here was a refund due to the assessee on which they claimed interest under section 214.(Pausing here for a moment, section 214 as per sub-section (3) is not applicable to the assessment year commencing on April 1, 1989 or the subsequent years and "interest on refunds" for those years will be under section 244A). The Assessing Officer declined the claim, but the Tribunal allowed it, which decision of the Tribunal was reversed by the High Court. The hon'ble Supreme Court reversing the judgment of this court found that the payment of tax would, on exercise of such option, be treated as advance tax and in that circumstances, there would be an entitlement for interest on a refund being ordered of the amounts paid. It was held that all "the provisions of the Act in the determination of tax liability, including the ancillary, incidental or consequential matters pertaining to it are necessarily attracted" (sic), on such option being exercised. 9. The assessee, who under a summary assessment, pays amounts and then seeks regular assessment on completion of which, he is entitled to a refund, would be entitled to interest under section 244A. As a corollary if there is any shortfall, the a....
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....ng the ancillary or incidental or consequential matters pertaining to it are necessarily attracted." 10. The legal fiction created by sub-section (7) to treat the tax paid under the ad hoc assessment as advance tax, according to the hon'ble Supreme Court, can be given its full effect only if all the provisions of the Act in respect of payment of advance tax is applied, and thus entitling the assessee who exercised an option under sub-section (7), to any interest on tax paid in advance, if there is a refund ordered on regular assessment. As a corollary, we have to understand that when an option is exercised by the assessee to go under the regular assessment as contemplated under the Act necessarily the rights and liabilities as provided for in the provisions under the Act kicks in and the non obstante clause no more has any effect. It is the assessee's option not to be assessed under section 172 in a summary manner and when such option is willingly exercised under sub-section (7) then, the provisions of section 172 cease to have any effect and in such circumstance, the overriding effect of the provision by reason of the non obstante clause also cease to have any effect. Nec....
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....ther to be summarily assessed under that provision or go for regular assessment under the statute; the later option being exercised at any time after the financial year and before the expiry of the assessment year. The assessee has within their knowledge the entire figures for the subject year and could very well arrange its affairs accordingly. Hence, the assessee exercising an option under section 172(7) does so voluntarily with open eyes and when the regular assessment brings in additional liability; it cannot be wriggled out of. 13. On the question of rectification and there being in existence a mistake/ error apparent from the face of the record, we have to briefly state the chronology of events. The decision of the Supreme Court was in the year 1997 and annexure D circular withdrew annexure B circular on July 9, 2001. The assessment order annexure C was dated January 23, 1998; subsequent to the decision of the Supreme Court and without noticing the authoritative pronouncement. The learned counsel for the respondent had an argument that the levy was only on account of withdrawal of the earlier circular and it was not a valid cause for rectification; since it is a mere change ....
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....t payable under clauses (a), (b) and (c) of section 209(1) stood reduced by the advance tax "deductible or collectible" at source. Since under section 195 the entire tax payable by a non-resident was "deductible and collectible" at source, no interest can be levied on the non-resident for the amounts which were so "deductible and collectible" at source, is the finding. It was also held that in that context such interest would be liable to be recovered from the resident-payer who is deemed to be an assessee-in-default under section 201. 16. What distinguishes the above cited case from the instant one is the status of the respondent herein, a charterer or owner of a ship, termed as a special case under Chapter XV of the Act, liable under section 172. Being engaged in shipping business the appellant is treated as a special case and assessed under section 172(1) to (6) during the previous year in which the tax deduction at source would have been possible. Section 172 is a non obstante clause as evident from sub-section (1); providing a separate mode of levy and collection of tax in the case of a cargo or passenger ship belonging to or chartered by a non-resident. It is hence a complet....