Ita/336/2015 Of Principal Commissioner Of Income Tax Faridabad v. M/S Nhpc Ltd

ITA No. 336 of 2015ITA No. 367 of 2015 andITA No. 362 of 2015 IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH 331 Date of Decision : 20.9.2019 ITA No. 336 of 2015 The Pr. Commissioner of Income Tax Faridabad eee APpPellant .!($/$ M/s. NHPC Ltd. ee RESpondent ITA No. 367 of 2015 The Pr. Commissioner of Income Tax Faridabad eee APpellant .!($/$ M/s. NHPC Ltd. ee RESpondent ITA No. 362 of 2015 The Pr. Commissioner of Income Tax Faridabad eee APpellant .!($/$ M/s. NHPC Ltd. ee RESpondent CORAM : HON'BLE MR.JIUSTICE AJAY TEWAR*HON'BLE MR. JUSTICK HARNARESH SINGH GILL Present :Mr. Tajender K. Joshi, Sr. Standing Counselfor the appellant. Mr. Sunish Bindlish, Advocatefor the respondent | 666 AJAY TEWARI, J. (Oral) |.This order shall dispose of ITA Nos.336, 362 and 367 of 2015 as according to the learned counsel for the appellant-revenue, the ITA No. 336 of 2015ITA No. 367 of 2015 andITA No. 362 of 2015 questions of law involved in all these appeals are identical. However, thefacts are being extracted from ITA No. 336 of 2015. 2 The revenue has filed the present ITA No. 336 of 2015 undersection 260A of the Income Tax Act, 1961 (in short “the Act”) against theorder dated 30-9-2014 (Annexure A-III) passed by the Income TaxAppellate Tribunal, Delhi Bench, New Delhi (hereinafter referred to as“the Tribunal”) in ITA No. 2618/Del/2008 for Assessment Year 2005-2006, claiming the following substantial questions of law:- 1)2Whether, on the facts and in circumstances of thecase and in law, the Hon’ble ITAT was right in law indismissing appeal of the Revenue observing that ‘ in view ofcategorical finding of the Supreme Court we hold that theCIT(A) was correct in holding that advance againstdepreciation cannot be added under the computation of thenormal income’, whereas the Hon’ble Supreme Court in itsdecision dated 050/.20010 has held that the ‘advanceagainst depreciation’ 1s ‘income received in advance’, thusmaking the said income subject to ‘Charge’ under Chapter-IT, as business income under Chapter-IV-D read with clause(1) ofsub-section 24 ofsection 2 ofthe Income Tax Act?” '%2Whether, on the facts and in circumstances of thecase and in law, the Hon’ble ITAT was right in law indeleting the addition of Rs.131,75,00,000/- made by theAssessing Officer under section 143(3) (and not undersection JI15/JB) on account of “Advance AgainsDepreciation” ignoring the provisions of section 2(24) readwith section 28 of the Income Tax Act, 1961, which providesthat “income” includes profits and gains and the profits andgains of any business or profession carried on by theassessee at any time during the previous year 1s taxable?”3.2Whether, on the facts and in circumstances of the case and in law, the Hon’ble ITAT was right in law in confirmingthe order of the Ld. CIT(A) in deleting the addition ofRs.86,54,00,000/- made by AO in normal income as well asbook profit computed u/s 115/B on a/c of tariff adjustmentsbeing unascertained liability?” 42Whether, on the facts and in circumstances of the caseand in law, the Hon’ble ITAT was right in law in holdingthat ‘the contention of the AO that this liability has notcrystalized is also not correct and the AO has _ noappreciated the facts in the right perspective’ disregardingthe fact that later on, the CERC actually approved the tariffrates which were different from the rates proposed by theassessee and the quantification of adjustment of tariff wasevidently not an ascertained liability during the year underconsideration?” and in law, the Hon’ble ITAT was right in law in confirmingthe order of the Ld. CIT(A) in deleting the addition ofRs.86,54,00,000/- made by AO in normal income as well asbook profit computed u/s 115/B on a/c of tariff adjustmentsbeing unascertained liability?” 42Whether, on the facts and in circumstances of the caseand in law, the Hon’ble ITAT was right in law in holdingthat ‘the contention of the AO that this liability has notcrystalized is also not correct and the AO has _ noappreciated the facts in the right perspective’ disregardingthe fact that later on, the CERC actually approved the tariffrates which were different from the rates proposed by theassessee and the quantification of adjustment of tariff wasevidently not an ascertained liability during the year underconsideration?” 4.2Whether, on the facts and in circumstances of the caseand in law, the Hon’ble ITAT was right in law in deletingdisallowance of Rs. 26,94,93,951/- made by the AssessingOfficer in computing the book-profit u/s I15/B on a/c ofprovisions made for gratuity, leave encashment, postretirement medical benefits, LTC, Baggage allowance andMatching Contribution on Leave Encashment even when theassessee has failed to establish these provisions to be ofascertained in nature?” 6.2Whether, on the facts and in circumstances of the caseand in law, the Hon’ble ITAT was right in law in deletingdisallowance of Rs.1,00,19,424/- made by the AssessingOfficer in computing the book-profit u/s 115/B in respect ofdepreciation claimed on land after amortization of land bythe assessee because there is no depreciation allowable onland under Companies Act and no rate of depreciation isprovided in schedule XIV of Companies Act?” 72Whether, on the facts and in circumstances of the caseand in law, the Hon’ble ITAT was right in law in applying ITA No. 336 of 2015ITA No. 367 of 2015 andITA No. 362 of 2015 : ratio of decision in case of M/s Apollo Tyres 255 ITR 273(SC) when the computation of book profit was not as perCompanies Act and wrongly claimed depreciation on landnot allowable in Companies Act. 8 2Whether, on the facts and in circumstances of thecase and in law, the Hon’ble ITAT was right in law inconfirming the order ofLd. CIT(A) to allow the contention ofthe assessee company for charging the interest u/s 234B atRs.3,70,58,281/- instead ofRs.4,02,65,082/- and in justifyingthe contention of the assessee regarding applicability ofprovisions Of Income Tax Act viz. Section 234B(2)(i1) readwith section 140A disregarding the fact that the interest wasrightly calculated as per the provisions of section 234B ofthe Income Tax Act and that the issue is highly debatable asstated by the Assessing Officer in the last para of hisorder?” Re: Questions No. 1,2,5,6 & 7 3,It is agreed by the learned counsel for the parties thatquestions No. 1, 2, 5, 6 & 7 are covered against the appellant-revenue byan order and judgment dated 28-2-2018 in the assessee’s case in ITA No,136 of 2015. Accordingly, these questions are decided against theappellant-revenue in terms of order and judgment dated 28-2-2018 in ITANo. 136 of 2015) Re: Questions No. 3 & 4 4It is also agreed by the learned counsel for the parties thatquestions No. 3 & 4 are covered against the appellant-revenue by an orderand judgment dated 21-3-2018 in the assessee’s case in ITA No. 356 of2015. Accordingly, these questions are decided against the appellant-revenue in terms of order and judgment dated 21-3-2018 in ITA No. 356 ITA No. 336 of 2015ITA No. 367 of 2015 andITA No. 362 of 2015 of 2015. Re: Question No. 8 Re: Questions No. 3 & 4 4It is also agreed by the learned counsel for the parties thatquestions No. 3 & 4 are covered against the appellant-revenue by an orderand judgment dated 21-3-2018 in the assessee’s case in ITA No. 356 of2015. Accordingly, these questions are decided against the appellant-revenue in terms of order and judgment dated 21-3-2018 in ITA No. 356 ITA No. 336 of 2015ITA No. 367 of 2015 andITA No. 362 of 2015 of 2015. Re: Question No. 8 5 The facts are admitted. As per the facts on record, the AOcharged interest under Section 234B of the Act at Rs.4,02,65,082/- asagainst Rs.3,70,58,281/- chargeable as per the assessee. Thus, thedifference in interest chargeable under Section 234B of the Act as per theAssessing Officer and the assessee was of Rs.32,06,801/-. It was thecontention of the assessee that liability to pay interest arises on the date offiling the return in terms of Section 140A read with section 234B(2)(i1) ofthe Act and hence, AO was not correct in computing the interest payableat each date of payment of tax by the assessee and reducing such interest,SO computed from the tax paid. 6 The CIT(Appeals) upheld the assessee’s contention holdingthat the adjustment towards interest payable under Section 234B(2)(11) ofthe Act is to be considered only at the time of filing return of income 1.e.when payment of Self-Assessment Tax under Section 140A of the Act isrequired to be made. TiThe revenue filed appeal before the ITAT and challengedthe order passed by the CIT(A). Dismissing the appeal of the revenue theTribunal upheld the order of the CIT(A) relying upon the judgment in thecase of-~M/s Patson Transforms Ltd. Vs. DCIT (2006) 6 SOT 67(Ahd.).It was held by the Tribunal that as per provision of Section 140Aof the Act, it is only at the time of filing of return, the issue ofcomputation of interest under various provisions of the Act i.e. 234A,234B & 234C arise and at that time, if any, interest is payable under these ITA No. 336 of 2015ITA No. 367 of 2015 andITA No. 362 of 2015 provisions, the amount paid shall first be adjusted towards such interest,Accordingly, interest cannot be computed on the date when amount has been paid after |[St]April but before filing of return, 8 The question of law that arises is whether the AssessingOfficer was correct in computing interest on the date of payment of taxesby the assessee and adjusting the amount so paid towards interest. Theprovision of Section 140A of the Act in this respect are unambiguous. Forthe clarity the relevant provisions of Section 140A are reproduced hereunder:- 8140A.(1) Where any tax 1s payable on the basis ofany return required to be furnished undersection&1:O”section 14? or section 148or section 153A or,as the case may be , section I5SBUC, after taking intaccount the amount of tax, if any, already paid underany provision of this Act, the assessee shall be liableto pay such tax , together with interest payable underany provision of this act for any delay in furnishingthe return or any default or delay in payment ofadvance tax, before furnishing the return and thereturn shall be accompanied by proof of payment ofsuch tax and interest. Explanation:Where the amount paid by the assesseeunder this sub-section falls short of the aggregate ofthe tax and interest as aforesaid, the amount so paidShall first be adjusted towards the interest payable asaforesaid and the balance, if any, shall be adjustedtowards the tax payable. (LA) For the purpose of sub-section (1) interestpayable under section 234A shall be computed on theamount of the tax on the total income as declared in ITA No. 336 of 2015ITA No. 367 of 2015 andITA No. 362 of 2015 the return as reduced by the advance tax, if any, paidand any tax deducted or collect at source. (1B) For the purpose of sub-section (1), interestpayable under section 234B shall be computed on anamount equal to the assessed tax or, as the case maybe, on the amount by which the advance tad paidfailsshort ofthe assessed tax. (LA) For the purpose of sub-section (1) interestpayable under section 234A shall be computed on theamount of the tax on the total income as declared in ITA No. 336 of 2015ITA No. 367 of 2015 andITA No. 362 of 2015 the return as reduced by the advance tax, if any, paidand any tax deducted or collect at source. (1B) For the purpose of sub-section (1), interestpayable under section 234B shall be computed on anamount equal to the assessed tax or, as the case maybe, on the amount by which the advance tad paidfailsshort ofthe assessed tax. Explanation:- For the purpose of this sub-section,‘assessed tax’ means the tax on the total income asdeclared in the return as reduced by the amount oftaxdeducted or collected at source, in accordance withthe provisions ofchapter XVII, or any income which 1s|subject to such deduction or collection and which istaken into account in computing such total income.XXxX..%%0 Q As per section 140A of the Act where any tax is payable onthe basis of any return, the assessee shall be liable to pay such taxtogether with interest and the return is required to be accompanied byproof of payment of such tax and interest. Thus, the computation ofinterest and liability to pay such interest arises at the time of filing return.The Explanation below this Section 140A of the Act in fact supports theabove interpretation. As per this explanation, where the amount paid bythe assessee under this section falls short of the aggregate of the tax andinterest, the amount so paid shall first be adjusted towards the interestpayable and the balance shall be adjusted towards the tax payable. Theamount paid here will be the aggregate of the amount paid under thissection not the individual amount. This exercise is to be done at the timewhen the return is being filed so that in case any assessee has not paid the ITA No. 336 of 2015ITA No. 367 of 2015 andITA No. 362 of 2015 = full amount i.e. tax and interest then, the amount paid shall first beadjusted towards interest and liability to pay interest on balance tax shall continue. Q.The learned counsel for the appellant could not controvertthe above interpretation. The judgment delivered in the case of M/sPatson Transforms Ltd. Vs. DCIT (Supra) relied upon by the CIT(Appeals) and the Tribunal has examined this issue in detail withexample. We are in agreement with the conclusion of CIT(Appeals) andthe Tribunal based on the above judgment. 10.Question No. 8 is therefore answered in favour of theassessee and against the Revenue. ll.Consequently, all the appeals stand disposed of. 12.Since the main case have been disposed of, pending C.M if any, also stands disposed of, (AJAY TEWARIT) JUDGE 20.9.2019anuradha (HARNARESH SINGH GILL)JUDGE Whether speaking/reasoned)Yes/NoWhether reportable)Yes/No