Commissioner Of Income Tax v. Mitsubishi Heavy Industries Ltd

$~R59, 60 & 61 *IN THE HIGH COURT OF DELHI AT NEW DELHI R59 +ITA 345/2005 COMMISSIONER OF INCOME TAX..... AppellantThrough :Mr. Ashok K. Manchanda andMr.Raghvendra Singh, Advocates forIncome Tax Department. versus MITSUBISHI HEAVY INDUSTRIES LTD. ..... Respondent Through :None. WITH R60 +ITA 347/2005 COMMISSIONER OF INCOME TAX ..... AppellantThrough :Mr. Ashok K. Manchanda andMr.Raghvendra Singh, Advocates forIncome Tax Department. versus MITSUBISHI HEAVY INDUSTRIES LTD. Through :None. ..... Respondent AND R61 +ITA 358/2005 COMMISSIONER OF INCOME TAX ..... AppellantThrough :Mr. Ashok K. Manchanda andMr.Raghvendra Singh, Advocates forIncome Tax Department. versus MITSUBISHI HEAVY INDUSTRIES LTD.Through :None. ..... Respondent CORAM:JUSTICE S.MURALIDHARJUSTICE PRATHIBA M. SINGH O R D E R%27.07.2017 1. The two substantial questions of law which arise in all threeappeals were framed by this Court by order dated 18[th]January, 2006and read as follows:- "1. Whether the Tribunal was right in holding thatSections 201(1) & (IA) of the Income Tax Act, 1961were penal in nature and that sufficient cause was arelevant consideration while holding the assessee asan assessee in default? 2. In case question No.1 is answered in theaffirmative, whether the retrospective amendment bythe Finance Act, 2001 to Section 201 of the IncomeTax Act constitutes a sufficient cause for purposesof determining whether the assessee was or was notin default?" 2. Learned counsel for the Appellant/Revenue has drawn the attentionof this Court to the decision of the Supreme Court in Commissioner of Income Tax v. M/s Eli Lilly & Company (India) 312 ITR 225(2009) (SC) in which it was held that interest under Section 201 (1A)of the Income Tax Act 1961 ('Act') is a compensatory measure forwithholding the tax which ought to have gone to the exchequer. It hasfurther been observed that the object underlying Section 201(1) of theAct is to recover the tax. In the case of short deduction, the object isto recover the shortfall. 3. The impugned order of the ITAT which holds that Section 201 (1)and 201 (1A) of the Act are 'penal' in nature is plainly contrary to theabove decision of the Supreme Court. Accordingly, Question (1)above is answered in negative i.e. in favour of Revenue and againstthe Assessee. 4. Since the Question (1) is answered in the negative, Question (2)does not arise for consideration. 5. These appeals are, accordingly, allowed. The impugned order ofthe ITAT is set aside. S.MURALIDHAR, J. JULY 27, 2017j PRATHIBA M. SINGH, J.