The Learned Counsel On Either Side Would Submit That Thedispute With Regard To What Would Be The Terminal Date Forcharging Interest In Such Case Was Put To Rest v. Income Tax Settlement

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 06.09.2016 CORAM:THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMW.P.Nos.22685 of 2004&W.M.P.No.27423 of 2004 Mohan Aluminium Pvt. Ltd.,228, Premvihar Upper Palace OrchardsSadhashiv NagarBangalore – 560 080... Petitionervs.1. Income Tax Settlement Commission Additional Bench 488-489 Anna Salai Chennai – 600 0352. Union of India Represented by the Chairman Central Board of Direct Taxes North Block, New Delhi3. Commissioner of Income Tax III Central Revenue Building Queens Road, Bangalore – 560 0014. Assistant Commissioner of Income Tax Circle 12(1), 14/3, Rastrothana Bhavan IV Floor Nrupathanga Road (Opp RBI) Bangalore... Respondents PRAYER: Writ Petitions filed under Article 226 of theConstitution of India praying for the issuance of a writ ofcertiorari calling for the records of the first respondentIncome Tax Settlement Commissioner Additional Bench, Chennai inits File Settlement Application No.12/111/76/95-IT dated03.02.2004 and quash the same For Petitioner:Mr.J.BalachanderFor Respondents:Mr.T.Pramod Kumar Chopda O R D E R Heard Mr.J.Balachander, learned counsel for the petitionerand Mr.T.Pramod Kumar Chopda, learned senior standing counselappearing for the respondents. 2. The petitioner has filed this writ petition challengingthe order passed by the Settlement Commissioner AdditionalBench, Chennai dated 28.10.2002 for the Assessment Year 1995-96.The only issue to be decided is as to what would be the terminaldate for charging interest under Section 234B of the Income TaxAct, 1961. 3. The facts in the instant case are as follows: The petitioner filed return of income for the relevantAssessment Year on 30.11.1995. An intimation under Section 143(1)(a)of the Act was given by the Assessing Officer on14.11.1996. But even before that the petitioner had filed apetition before the Settlement Commission on 01.01.1996 underSection 245 C of the Act. Thus, due to the filing of thepetition before the Commission, the Assessing Officer did notproceed further with the intimation under Section 143 (1) (a)of the Act. The Settlement Commission passed an order underSection 245D(1) of the Act entertaining the settlementapplication on 04.07.1997. Ultimately, the case was settledunder Section 245D (4) of the Act vide order dated 28.10.2002.As against the said order, the Revenue preferred an appeal tothe Hon'ble Supreme Court and the matter was heard along withthe other connected matters and the Hon'ble Supreme Court hadremanded the matter for fresh consideration. At this stage, ithas to be pointed out that the terminal date for charging ofinterest as per the order passed by the Settlement Commissiondated 28.10.2002 was 14.11.1996 i.e., the date on which theintimation under Section 143 (1) (a) of the Act was given. Theappeal filed by the Revenue as against the order of theSettlement Commission in the petitioner's case and the othersimilar matters were allowed and the matter was remanded to theSettlement Commission for fresh consideration with the followingdirection: “To sum up, the inevitable conclusion is thatinterest has to be charged for the period beginningfrom the first day of April next following the relevantfinancial year upto the date of commission's order atthe rate applicable, on interest chargeable underSection 234B, when an order u/s.245D(4) is passed,followed by quantification u/s.245D(6). The SettlementCommission on such remand directed that the interest ischargeable upto the date of order under Sub-Section 4of Section 245D, which is in the petitioner's case on 28.10.2002 and the same is questioned by the petitionerin this writ petition.” “To sum up, the inevitable conclusion is thatinterest has to be charged for the period beginningfrom the first day of April next following the relevantfinancial year upto the date of commission's order atthe rate applicable, on interest chargeable underSection 234B, when an order u/s.245D(4) is passed,followed by quantification u/s.245D(6). The SettlementCommission on such remand directed that the interest ischargeable upto the date of order under Sub-Section 4of Section 245D, which is in the petitioner's case on 28.10.2002 and the same is questioned by the petitionerin this writ petition.” 4. The learned counsel on either side would submit that thedispute with regard to what would be the terminal date forcharging interest in such case was put to rest by theConstitution Bench of the Hon'ble Supreme Court in Brij Lal andOrs. Vs. Commissioner of Income Tax reported in (2010) 328 ITR477 wherein the Hon'ble Supreme Court held that the terminaldate for charging interest will be the date on which the orderunder Section 245D (1) is passed i.e., the date on which theSettlement Commission entertains the application for settlement.By applying the said decision to the instant case, theappropriate date for charging interest would be 04.07.1997. Accordingly, the writ petition is allowed and the impugnedorder dated 03.02.2004 is set aside and it is ordered that theinterest under Section 234A shall be charged upto the date oforder under Section 245D (1) i.e., 04.07.1997 in stead of28.10.2002 i.e, order under Section 245D (4) of the Act. Thefourth respondent is directed to pass the consequential orderpursuant to the above direction. No costs. Consequently, theconnected miscellaneous petition is closed. Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar. gpaTo 1. Income Tax Settlement Commission Additional Bench 488-489 Anna Salai Chennai – 600 035 2. The Chairman Union of India Central Board of Direct Taxes North Block, New Delhi 3. Commissioner of Income Tax III Central Revenue Building Queens Road, Bangalore – 560 001 Central Revenue Building Queens Road, Bangalore – 560 001 4. Assistant Commissioner of Income Tax Circle 12(1), 14/3, Rastrothana Bhavan IV Floor Nrupathanga Road (Opp RBI) Bangalore Circle 12(1), 14/3, Rastrothana Bhavan IV Floor Nrupathanga Road (Opp RBI) Bangalore +1 CC to J. Balachander, Advocate Sr.No.50388 W.P.No.22685 of 2004MP (CO)MD : 22/09/2016