THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 04.05.2010
+ ITA 693/2010
COMMISSIONER OF INCOME TAX ... Appellant
- versus -
SALORA INTERNATIONAL LTD ... Respondent
Advocates who appeared in this case:-
For the Appellant : Mr Abhishek Maratha For the Respondent : None CORAM:- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may be allowed to
see the judgment ?
2. To be referred to the Reporter or not ?
3. Whether the judgment should be reported in Digest ?
BADAR DURREZ AHMED, J (ORAL)
CM 8208/2010
The delay in re-filing the appeal is condoned.
This application stands disposed of.
ITA 693/2010
1. The revenue is in appeal against the order dated 24.10.2008
passed by the Income Tax Appellate Tribunal in ITA 2248/Del/2005
pertaining to the assessment year 1999-2000.
2. The question before the Tribunal was as to whether the
Commissioner of Income Tax (Appeals) had erred in allowing the appeal of
the assessee filed against the charging of interest under Section 234B and
234C before allowing MAT credit under Section 115JAA?
ITA 693/2010 Page No.1 of 6
3. The Assessing Officer had passed an order under Section 154 of
the Income Tax Act, 1961 (hereinafter referred to as „the said Act‟) on
25.10.2004 whereby excess MAT credit allowed earlier to the assessee was
withdrawn and a demand of Rs 64,32,260/- was raised. The assessee‟s
contention was that the interest under Section 234B and 234C of the said
Act should have been charged after setting off the MAT credit allowable
under Section 115JAA. The Assessing Officer, however, did not agree with
this submission of the assessee.
4. Being aggrieved thereby, the assessee preferred an appeal before
the Commissioner of Income Tax (Appeals), who examined the question as
to whether charging of interest under Section 234B and 234C was to be
done before allowing MAT credit or not. We may point out that the
assessee had taken this plea qua interest under Section 234B and 234C of
the said Act by way of a rectification application under Section 154 of the
said Act before the Assessing Officer.
5. The Commissioner of Income Tax (Appeals) decided in favour
of the assessee and directed the Assessing Officer to allow MAT credit
before charging interest under Section 234B and 234C of the said Act. The
revenue, being aggrieved by the order passed by the Commissioner of
Income Tax (Appeals), preferred an appeal before the Tribunal, which came
up for hearing on 09.08.2007. By virtue of the said order, the Tribunal
upheld the rejection of the application under Section 154 of the said Act
moved by the assessee before the Assessing Officer and allowed the appeal
ITA 693/2010 Page No.2 of 6
of the revenue.
6. Subsequently, a miscellaneous application was filed by the
assessee for recall of the above order which was an ex parte order and
certain facts were brought to the notice of the Tribunal, which earlier
escaped its notice. Consequently, the Tribunal, by its order dated
30.04.2008 passed in the said MA No. 624/2007, recalled the earlier order
dated 09.08.2007.
7. While passing the order of recall, the Tribunal noted that initially
an intimation under Section 143(1) dated 29.09.2000 was prepared in which
a refund of Rs 56,84,908/- was allowed to the assessee. However, on
22.09.2004, the Assessing Officer issued a notice to the assessee proposing
to rectify the intimation under Section 154 of the said Act. The particulars
of the mistake proposed to be rectified were indicated in the notice as
under:-
“You have been allowed MAT credit of Rs 1,07,13,704/-
whereas the maximum MAT credit allowable in the
assessment year 1999-2000 under the provisions of
Section 115JAA is Rs 77,72,810/-. Hence, the excess
credit allowed under Section 115JAA for Rs 29,40,894/-
needs to be withdrawn.”
8. In response to the said notice, the assessee wrote a letter on
23.09.2004 and, as observed by the Tribunal, there was no serious
objection, in principle, to the rectification as proposed in the notice.
Subsequently, on 25.10.2004, the Assessing Officer passed the rectification
order under Section 154 pursuant to the notice issued earlier. The excess
ITA 693/2010 Page No.3 of 6
MAT credit, which was found to be Rs 20,76,793/-, was withdrawn by the
said order. In the computation form in ITNS-150 attached to the order
under Section 154, the Assessing Officer charged interest of Rs 18,92,824/-
under Section 234B and Rs 7,31,453/- under Section 234C. Because the
Assessing Officer had charged the interest under Section 234B and 234C,
the assessee filed objections by virtue of a letter dated 18.11.2004,
requesting the Assessing Officer to delete the levy of interest since,
according to the assessee, the tax payable was less than the assessed tax.
The said application was regarded as an application under Section 154. The
Assessing Officer rejected the said application. However, the assessee‟s
appeal from the said rejection was allowed by the Commissioner of Income
Tax (Appeals), as indicated above.
9. As mentioned above, the Tribunal, in the first round, allowed the
appeal by the department thereby restoring the order passed by the
Assessing Officer under Section 154. However, as we have indicated
above, that order of the Tribunal has been recalled and the Tribunal
considered the matter afresh, which has finally been disposed of by the
order dated 24.10.2008, which is impugned herein by the revenue.
10. One of the issues which was of prime importance before the
Tribunal was whether the interest under Section 234B and 234C was levied
by the Assessing Officer by invoking Section 154 of the said Act or not?
The Tribunal observed that from the sequence of events, it would be
apparent that it was the Assessing Officer, who had, in fact, first levied
ITA 693/2010 Page No.4 of 6
interest by invoking Section 154 of the said Act by passing his order dated
25.10.2004. The contention was that in doing so, the Assessing Officer
committed two errors. First of all, he had not issued any notice under
Section 154 proposing to levy such interest. The extract of the notice set
out above, does not indicate any proposal for levy of interest in the manner
that the Assessing Officer ultimately did. The notice merely stated that
there was some error in the MAT credit available to the assessee. The
second contention was that interest was levied on the footing that the MAT
credit cannot be considered to be tax paid in advance and, therefore, it could
not be reduced from the assessed tax for the purpose of levy of interest
under Section 234B and 234C.
11. By virtue of the impugned order, the Tribunal observed that on
the earlier occasion, the Tribunal had proceeded on the assumption that it
was the assessee who had first made an application to the Assessing Officer
for rectification of the intimation on the footing that the MAT credit should
be taken into account before levying interest under Section 234B and 234C.
However, the Tribunal noted that the sequence of events, starting from the
issuance of the intimation under Section 143(1) and the issuance of the
notice under Section 154 by the Assessing Officer and the passing of the
order under Section 154 on 25.10.2004 clearly were not brought to the
notice of the Tribunal in the first round. The Tribunal came to the
conclusion that by passing the order dated 25.10.2004 under Section 154 of
the said Act, the Assessing Officer not only withdrew the excess MAT
credit allowed to the assessee but in the garb of creating a demand in ITNS
ITA 693/2010 Page No.5 of 6
150 also charged interest under Section 234B and 234C. The Tribunal also
came to the conclusion that the Assessing Officer completely ignored the
settled legal issue that before charging interest under Section 234B and
234C, MAT credit was to be first allowed to the assessee. The Tribunal also
observed that, in fact, the charging of interest under Section 234B and 234C
by the Assessing Officer, as a consequence of the order passed under
Section 154, was a debatable issue, which the Assessing Officer could not
do by invoking the provisions of Section 154. The Tribunal also returned a
clear finding that the charging of interest under Section 234B and 234C was
introduced by the Assessing Officer in his order under Section 154 and not
while rejecting the application of the assessee under Section 154.
Consequently, the Tribunal held that the Commissioner of Income Tax
(Appeals) was fully justified in directing the Assessing Officer to allow
MAT credit before charging interest under Section 234B and 234C of the
said Act.
12. We find no infirmity in the order passed by the Income Tax
Appellate Tribunal. No substantial question of law arises for our
consideration.
The appeal is dismissed.
BADAR DURREZ AHMED, J
V.K. JAIN, J
MAY 04, 2010
SR
ITA 693/2010 Page No.6 of 6