TaxTMI 
TaxTMI 
2009 (2) TMI 30
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.... appeals pertaining to the Assessee Anand Prakash arise out of the common order dated 20-04-2006 passed by the Income Tax Appellate Tribunal (hereinafter referred to as the "Tribunal") in ITA Nos 3424, 3425, 3432, 3433, 3434 and 3435/Del/2005 pertaining to the Assessment years 1990-91, 1991-92, 1992-93, 1993-94, 1994-95 and 1995-96 respectively. The five appeals pertaining to the assessee Maha Maya General Finance Company Ltd arise out of the common order dated 07-07-2006 passed by the Tribunal in ITA Nos 2215 to 2219/Del/2004 pertaining to the Assessment years 1987-88 to 1991-92 respectively. The Tribunal's order dated 7.7.2006 merely follows its order dated 20.4.2006 in the case of Anand Prakash. The Tribunal noted that the facts in the case of Maha Maya General Finance Company Ltd for the relevant assessment years were identical to that of the Assessee Anand Prakash. 4. In respect of Anand Prakash, the Tribunal, by its impugned order dated 20.4.2006, inter alia, concluded that the chargeability of interest was in the nature of quasi-punishment and applied the decision in the case of Star India Private Limited v. Chief Commissioner of Central Excise 280 ITR 321 (SC) wherein th....
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..... The position with respect of both the assessees is identical. The only difference being the amounts involved and the years in question. In the case of Anand Prakash, the Tribunal, by virtue of the impugned order, observed that at the time when assessee filed his original return of income for all the relevant years, there was no order for grant of interest on additional compensation and that the right to receive additional sums came to the assessee's knowledge by the order dated 04.02.2000 passed by the learned Additional District Judge, which was much later than the dates of completion of assessments by the Assessing Officer. It may also be relevant to note that the amount of interest so accrued to the assessee had been disclosed and taxed in the year of receipt. As noted above, the Tribunal was of the view that chargeability of interest was in the nature of quasi-punishment and, therefore, should not be imposed retrospectively. In coming to this conclusion, the Tribunal applied the decision of the Supreme Court in the case of Star India Pvt. Ltd (supra). Consequently, the Tribunal directed the Assessing Officer to delete the interest so charged under Section 234B of the Act in r....
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....rest under the Income Tax Act. He submitted that the decision of the Supreme Court in Star India Pvt. Ltd (supra) was rendered in the context of the liability to pay service tax in respect of the service of broadcasting. Reference was also made to the decision of the Division Bench of this Court in the case of Union Home Products Ltd v. Union of India and Another: 215 ITR 758, wherein this Court observed, in the context of interest under Section 234A of the said Act, that it is manifest that the amount of which interest is levied, is the amount, which can legitimately be said to be public revenue payable by the assessee but not paid by him. Levy of interest on such amount which an assessee withholds and makes use of cannot be said to be anything but a compensatory measure, meant to offset loss or prejudice which the Revenue suffers on account of non-payment of the said amount. In the context of Section 234 B also, this Court held the interest liability to be only of a compensatory nature. 9. Mr Jolly finally referred to the Supreme Court decision in Bikram Singh and Others v. Land Acquisition Collector and Others: 224 ITR 551: where one of the questions considered was whet....
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....unishment, was an additional argument available to them. In case, it is held to be a levy in the nature of a penalty or a quasi-punishment, it cannot be imposed retrospectively following the principle laid down in Star India Pvt Ltd (supra). 11. We have examined the decisions cited by the counsel on both sides and after considering the submissions made by them, we agree with the learned counsel for the Revenue that the levy under Section 234B of the said Act is compensatory in nature and is not in the nature of penalty. We may also note the decision of the Bombay High Court in the case of CIT v. Kotak Mahendra Finance Ltd: 265 ITR 119 (Bom), wherein the Bombay High Court observed that it was well settled that interest under Section 234B was compensatory in character and that it was not penal in nature. Another decision which would be relevant is of a Division Bench of this Court in the case of Dr Prannoy Roy v. Commissioner of Income-tax and Another : 254 ITR 755 (Del.). In that case, the provisions of Section 234A were in issue. The question before the court was whether interest could be charged under Section 234A when, though the return had not been filed in time, the tax had ....