High Court Of Delhi
CIT vs. Salora International Ltd.
Section 154, 234B, 234C
Asst. Year 1999-2000
Badar Durrez Ahmed & V.K. Jain, JJ.
IT Appeal No. 693 of 2010
4th May, 2010
Counsel Appeared :
Abhishek Maratha, for the Appellant : None, for the Respondent
BADAR DURREZ AHMED, J. :
CM No. 8208 of 2010 The delay in refiling the appeal is condoned. This application stands disposed of. IT Appeal No. 693 of 2010
The Revenue is in appeal against the order dt. 24th Oct., 2008 passed by the Tribunal in ITA No. 2248/Del/2005 pertaining to the asst. yr. 1999-2000.
The question before the Tribunal was as to whether the CIT(A) had erred in allowing the appeal of the assessee filed against the charging of interest under ss. 234B and 234C before allowing MAT credit under s. 115JAA ?
The AO had passed an order under s. 154 of the IT Act, 1961 (hereinafter referred to as ‘the said Act’) on 25th
Oct., 2004 whereby excess MAT credit allowed earlier to the assessee was withdrawn and a demand of Rs. 64,32,260 was raised. The assessee’s contention was that the interest under ss. 234B and 234C of the said Act should have been charged after setting off the MAT credit allowable under s. 115JAA. The AO, however, did not agree with this submission of the assessee.
Being aggrieved thereby, the assessee preferred an appeal before the CIT(A), who examined the question as to whether charging of interest under ss. 234B and 234C was to be done before allowing MAT credit or not. We may point out that the assessee had taken this plea qua interest under ss. 234B and 234C of the said Act by way of a rectification application under s. 154 of the said Act before the AO.
The CIT(A) decided in favour of the assessee and directed the AO to allow MAT credit before charging interest under ss. 234B and 234C of the said Act. The Revenue, being aggrieved by the order passed by the CIT(A), preferred an appeal before the Tribunal, which came up for hearing on 9th Aug., 2007. By virtue of the said order, the Tribunal upheld the rejection of the application under s. 154 of the said Act moved by the assessee before the AO and allowed the appeal of the Revenue. Subsequently, a miscellaneous application was filed by the assessee for recall of the above order which was an ex parte order and certain facts were brought to the notice of the Tribunal, which earlier escaped its notice. Consequently, the Tribunal, by its order dt. 30th April, 2008 passed in the said Misc. Appeal No. 624 of 2007, recalled the earlier order dt. 9th Aug., 2007. While passing the order of recall, the Tribunal noted that initially an intimation under s. 143(1) dt. 29th Sept., 2000 was prepared in which a refund of Rs. 56,84,908 was allowed to the assessee. However, on 22nd Sept., 2004, the AO issued a notice to the assessee proposing to rectify the intimation under s. 154 of the said Act. The particulars of the mistake proposed to be rectified were indicated in the notice as under :
“You have been allowed MAT credit of Rs. 1,07,13,704 whereas the maximum MAT credit allowable in the asst. yr. 1999-2000 under the provisions of s. 115JAA is Rs. 77,72,810. Hence, the excess credit allowed under s. 115JAA for Rs. 29,40,894 needs to be withdrawn.”
8. In response to the said notice, the assessee wrote a letter on 23rd Sept., 2004 and, as observed by the Tribunal, there was no serious objection, in principle, to the rectification as proposed in the notice. Subsequently, on 25th Oct., 2004, the AO passed the rectification order under s. 154 pursuant to the notice issued earlier. The excess MAT credit, which was found to be Rs. 20,76,793, was withdrawn by the said order. In the computation form in ITNS-150 attached to the order under s. 154, the AO charged interest of Rs. 18,92,824 under s. 234B and Rs. 7,31,453 under s. 234C. Because the AO had charged the interest under ss. 234B and 234C, the assessee filed objections by virtue of a letter dt. 18th Nov., 2004, requesting the AO to delete the levy of interest since, according to the assessee, the tax payable was less than the assessed tax. The said application was regarded as an application under s. 154. The AO rejected the said application. However, the assessee’s appeal from the said rejection was allowed by the CIT(A), as indicated above.
As mentioned above, the Tribunal, in the first round, allowed the appeal by the Department thereby restoring the order passed by the AO under s. 154. However, as we have indicated above, that order of the Tribunal has been recalled and the Tribunal considered the matter afresh, which has finally been disposed of by the order dt. 24th Oct., 2008, which is impugned herein by the Revenue.
One of the issues which was of prime importance before the Tribunal was whether the interest under ss. 234B and 234C was levied by the AO by invoking s. 154 of the said Act or not ? The Tribunal observed that from the sequence of events, it would be apparent that it was the AO, who had, in fact, first levied interest by invoking s. 154 of the said Act by passing his order dt. 25th Oct., 2004. The contention was that in doing so, the AO committed two errors. First of all, he had not issued any notice under s. 154 proposing to levy such interest. The extract of the notice set out above, does not indicate any proposal for levy of interest in the manner that the AO ultimately did. The notice merely stated that there was some error in the MAT credit available to the assessee. The second contention was that interest was levied on the footing that the MAT credit cannot be considered to be tax paid in advance and, therefore, it could not be reduced from the assessed tax for the purpose of levy of interest under ss. 234B and 234C.
By virtue of the impugned order, the Tribunal observed that on the earlier occasion, the Tribunal had proceeded on the assumption that it was the assessee who had first made an application to the AO for rectification of the intimation on the footing that the MAT credit should be taken into account before levying interest under ss. 234B and 234C. However, the Tribunal noted that the sequence of events, starting from the issuance of the intimation under s. 143(1) and the issuance of the notice under s. 154 by the AO and the passing of the order under s. 154 on 25th Oct., 2004 clearly were not brought to the notice of the Tribunal in the first round. The Tribunal came to the conclusion that by passing the order dt. 25th Oct., 2004 under s. 154 of the said Act, the AO not only withdrew the excess MAT credit allowed to the assessee but in the garb of creating a demand in ITNS 150 also charged interest under ss. 234B and 234C. The Tribunal also came to the conclusion that the AO completely ignored the settled legal issue that before charging interest under ss. 234B and 234C, MAT credit was to be first allowed to the assessee. The Tribunal also observed that, in fact, the charging of interest under ss. 234B and 234C by the AO, as a consequence of the order passed under s. 154, was a debatable issue, which the AO could not do by invoking the provisions of s. 154. The Tribunal also returned a clear finding that the charging of interest under ss. 234B and 234C was introduced by the AO in his order under s. 154 and not while rejecting the application of the assessee under s. 154. Consequently, the Tribunal held that the CIT (A) was fully justified in directing the AO to allow MAT credit before charging interest under ss. 234B and 234C of the said Act.
12. We find no infirmity in the order passed by the Tribunal. No substantial question of law arises for our consideration.
The appeal is dismissed.
[Citation : 329 ITR 568]