High Court of Allahabad
CIT vs. Deep Awadh Hotels (P.)Ltd.
Section 234B
Sunil Ambwani&Pankajmithal, JJ.
ITA No. 81 & 82 of 2002
3rd August, 2011
Counsel appeared for the Petitioner.: for the Respondent
SUNIL AMBWANI& PANKAJ MITHAL, JJ.
We have heard Shri A.N. Mahajan, learned counsel for the department. Shri Ashish Bansal appears for the assessee.
In both the income tax appeal Nos.81 and 82 of 2002 the department has raised following substantial questions of law to be considered by the Court:-
“1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that the assessee was an Industrial Undertaking for the purpose of business of manufacture or production of any article or thing and consequently entitled to investment allowance under section 32A (1) of the Income Tax Act, 1961?
Whether on the facts and in the circumstances of the case, the order of the Commissioner of Income Tax (Appeals) is liable to be set aside when in fact machinery installed in Hotel is not entitled to Investment Allowance?
Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was correct in law in deleting interest under section 234B of the Income Tax Act, 1961 particularly when charging of interest under that section is mandatory for default in payment of advance tax?”
So far as the first question is concerned, we find that the Tribunal has set aside the order of the CIT (A) and A.O. and has remanded the matter to be decided in accordance with law. The appeal against the remand order unless it decides any question or raise any substantial question of law is not ordinarily maintainable. The submission that the assessing authority is bound by the judgment in Anand Theater’s case as there is a direction that the issue may be decided afresh in view of the decision of the Supreme Court in Anand Theater, does not appear to have any substance in as much as the Tribunal has clearly stated that the A.O. will decide the matter in view of the case of the Anand Theater, as per law. If there is any other view taken by the Supreme Court or any larger bench decision covers the issue, the A.O. should not ignore it.
Shri A.N. Mahajan submits that in Hotel and Allied Traders Pvt. Ltd. Vs. Commissioner of Income Tax, 2000 (245) ITR 538 the Supreme Court has decided the question regarding investment allowance under Section 32A of the Income Tax Act. We are of the opinion that the A.O. is required to consider all the cases, which are cited before him.
On the third question it is submitted by Shri A.N. Mahajan that in para 16 of the order of the Tribunal the plea that the interest under Section 234 (B) cannot be charged unless it is included in the assessment order or in the extra sheet or additional sheet attached with the assessment order in relation to computation and charging of interest. Shri Mahajan submits that the Tribunal has wrongly relied upon Ranchi Club Ltd. Vs. Commissioner of Income Tax &Ors. is not correct. He submits that the charging of interest under Section 243A, 243B and 243C is mandatory. He has relied upon the judgments in CIT Vs. Anjum M.H. Ghaswala & Ors., 2001 (252) ITR 1, which has been followed by the Kerala High Court in Dr. R.P. Patel Vs. Commissioner of Income Tax, Kottayam, (2009) 182 Taxman 305 (Ker.) and in M/s Nilgiri Sleepers (Pvt.) Ltd. Vs. the Commissioner of Income Tax I, Patna, 2010 Tax LR 105 (Pat.). A perusal of the judgments cited by Shri Mahajan leads to the conclusion that the charging of interest after the amendment of the statute by Direct Tax Laws (Amendment Act), 1987 w.e.f. 1.4.1989 payable under Section 234A, 243B, and 243C is mandatory and no discretion is vested in the assessing officer in this regard. The provisions prior to the amendment gave discretion in regard to waiver of interest. Once interest is mandatory the liability false automatically on the assessee on default. The rest is only working out the amount.
In Kalyan Kumar Ray Vs. CIT, (1996) 191 ITR 654 it was held that calculation part of tax payable need not be done in the assessment order itself. It can be done separately in from No.ITNS 150, subject to the condition that the said from is signed or initiated by the Income Tax Officer.
In the case of Commissioner of Income Tax Vs. Anjum M.H. Ghaswala&Ors. (Supra) the question of waiver of interest by the Settlement Commissioner was involved. The Supreme Court held that once charging interest is mandatory, even the Settlement Commissioner cannot allow waiver.
In Commissioner of Income-Tax Vs. Insilco Ltd., 2005 (278) ITR 1 (SC) the Supreme Court remanded the matter to decide whether the law laid down in Ranchi Club has been changed by the decision of the case in Anjum M.H. Ghaswala.
In CIT Vs. Ranchi Club Ltd., (2001) 247 ITR 209 decided by the three judges of the Supreme Court, the SLP was dismissed on merits. The facts stated in the note published in ITR demonstrate that the High Court had held that the order of the assessing authority in the assessment order to charge interest is to be specific and clear and the assessee must be made to know that the assessing officer after applying its mind has ordered charging of interest. We do not find that the judgment in Ranchi Club Ltd. has either been expressly overruled or any different view has been taken in Anjum M.H. Ghaswala’s case. We also do not find force in the argument advanced by Shri Mahajan that even if assessment order or computation sheets do not provide for interest, since interest is mandatory, it can be charged in the demand notice, which according to Shri Mahajan is signed by the Assessing Officer. Even if any provision of law is mandatory and provides for charging of tax or interest, the view taken in Ranchi Club Ltd. is that such charge by the assessing officer should be specific and clear and assessee must be made to know that the assessing officer has applied its mind and has ordered charging of interest. The mandatory nature of charging of interest and the actual charging of interest by application of mind and the mention of the proviso of law under which such interest is charged are two different things.
In the present case although it is stated by Shri Mahajan that in the demand notice there was charging of interest, there is no such pleading or ground taken, nor do we find that any such point was raised in the Tribunal.
The third question is thus decided against the department and in favour of the assessee. Both the income tax appeals are dismissed.
[Citation : 350 ITR 185]
