Tca/396/2010 Of The Commissioner Of Income Tax v. Https://Hcservices.ecourts.gov.in/Hcservices

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE MR. JUSTICE F.M. IBRAHIM KALIFULLAANDTHE HON'BLE MR. JUSTICE M.M. SUNDRESH The Commissioner of Income TaxCircle X, Chennai.... Appellant in both the appeals/Appellant-vs- M/s. Abdul Wahid and Company,26, Vepery High Road,Periamet, ... Respondent in both theChennai – 600 003. appeals/Respondent Tax Case Appeals under Section 260 – A of the Income Tax Act1961 against the order of the Income Tax Appellate Tribunal, "B"Bench, Chennai, dated 21.08.2009 passed in I.T.A. Nos: 541 and543/Mds/2009 for the assessment years 1998 – 1999 and 1999 - 2000against office of the Commissioner of Income Tax (Appeals)-IV Chennaidated 29.12.2008 and made in Appeal no CIT(A)-IV, Chennai 25 & 26 of2008-2009 against the Proceedings of the Assistant Commissioner ofIncome Tax Circle-X Chennai-6, dated 28.3.2008 and PA. No.AAAFT 0482R Assesment year 1998-99, 1999-2000 The revenue has come forward with these appeals raising thefollowing substantial questions of law : https://hcservices.ecourts.gov.in/hcservices/ " 1. Whether on the facts and circumstances of thecase, the Tribunal is right in holding that the additionaltax liability due to the amendment cannot give rise to alevy of interest under Section 234-B of the Income Tax Act ?" 2. The additional tax liability on the assessee for therelevant assessment years namely 1998-1999 and 1999-2000 came to beimposed by the order of assessment dated 28.03.2006. The issue isconcerned with interest leviable under Section 234 B of the IncomeTax Act on the belated payment of additional tax for the relevantyears. It is not in dispute that the assessee was liable to paysuch additional tax by virtue of the non availability of 90% ofprofit on DEPB credits by way of deduction under Section 80 HHC dueto the insertion of Section 80 HHC (3) retrospectively from01.04.1998 by the Amendment Act of 2005. By virtue of the saidstatutory amendment, the assessing officer found that the assesseefailed to furnish the details for satisfying the two conditionsenumerated in the Proviso to Section 80 HHC (3) and consequently, theliability for payment of additional tax was created. In suchcircumstances, the question for consideration was whether suchliability to payment of additional tax would also create a furtherliability of payment of interest under Section 234 (B) of the Act onthe ground that such additional tax payable with effect from01.04.1998 for the assessment years 1998-1999 and 1999-2000 was notpaid in time. It is in that respect, the Commissioner (Appeals) aswell as the Tribunal held that such a liability of payment ofinterest under Section 234 (B) cannot be fastened on the assessee.The Tribunal, in its order, while dealing with the said issue hasheld that, " From the decision of the Hon'ble Jurisdictional HighCourt as well as the Tribunal and also in the order of theDelhi Benches of this Tribunal in case of HaryanaWarehousing Corporation vs. Deputy Commissioner of IncomeTax reported in 75 I.T.D. 155, it is clear that the assesseecannot be made liable for the interest under Section 234 Bof the Income Tax Act, 1961 when at the time of payment ofadvance tax the liability was not foreseeable. In thepresent case, the liability has arisen only due to thesubsequent amendment in the year 2005 with retrospectiveeffect. The additional tax liability due to the subsequentamendment cannot give rise to a levy of interest underSection 234 B because at the time of payment of the advancetax under no means, the assessee could foresee the saidadditional tax liability. Accordingly, by following theabove noted decisions / orders, we decide this issue infavour of the assessee and against the Revenue. The orderof the Commissioner of Income Tax (Appeals) is upheld." 3. We are in full agreement with the principles stated by theTribunal while upholding the order of the Commissioner (Appeals).When the liability for payment of additional tax itself was createdfor the first time, based on the subsequent amendment, in the year2005, with retrospective effect from 01.04.1998, it would beincongruent to expect the assessee to have satisfied the requirementof payment of advance tax as prescribed under Section 234 (B) of theIncome Tax Act. Therefore, while the liability for additional tax byvirtue of the amendment was found to be satisfied by the respondent /assessee, the payment of interest under Section 234 (B) for failureto pay advance tax in anticipation of such liability created on afuture year, based on an amendment, cannot be made. We are,therefore, convinced that the conclusion arrived at by the C.I.T.(Appeals) as well as that of the Tribunal cannot be found fault with.We therefore do not find any scope to entertain these appeals. Thesubstantial question of law raised in these tax case appeals areanswered in favour of the assessee. Connected miscellaneous petitionis closed. gp /True Copy/ To1. The Income Tax AppellateTribunal," B " Bench, Rajaji Bhavan, Besant Nagar, Chennai.90. Sd/-Asst.RegistrarSub.Asst.Registrar 2.The Commissioner of Income TaxAppeals (IV), 121 Mahatma Gandhi RoadNungambakkam, Chennai-34. 3. The Assistant Commissioner of Income Tax Circle X, Kannammai Buildings, 611 Anna salaiChennai.-6. RSM(CO)EU 15.07.2010. T.C. (A) Nos: 396 and398 of 2010