High Court Of Rajasthan
CIT, Kota vs. Chambal Fertilizers & Chemicals Ltd., Gadepan
Assessment Year : 2000-01
Section : 244A, 115JA
Narendra Kumar Jain And Jainendra Kumar Ranka, JJ.
D.B. It Appeal No. 487 Of 2011
January 22, 2013
ORDER
1. Instant appeal has been preferred by the Commissioner of income Tax, Kota, for the Assessment Year 2000-2001, assailing the order dated 28.02.2006 passed by the learned Income Tax Appellate Tribunal, Jaipur Bench, Jaipur In short the ‘ITAT’) for quashing the order under Section 263 of the Income-tax Act, 1961, in short (‘The Act’).
2. The brief facts of the case are given hereunder:-
The respondent-Company being a Ltd. Company, filed its return on 30.11.2000 declaring nil income and paid taxes of Rs. 17,17,98,327/- under (Minimum Alternate Tax) ( in short ‘MAT’) on book profit under Section 115JA of the Act. The return was processed under Section 143(1)(a) by the Assessing Officer on 30.3.2001 and the tax/MAT was also computed by Assessing Officer on the book profit disclosed by the respondent at Rs.16,03,07,717/-. In view of the payment of excess tax paid under MAT at Rs. 17,17,98,327/- the Assessing Officer worked out a refund of Rs. 1,74,90,610/- (17,17,98,327-16,03,07,717) and directed for issuing a refund of Rs. 1,95,89,482/-) to the respondent-company including interest under Section 244A of the Act, accordingly, the refund was issued along with interest.
3. The respondent-company further moved an application under section 154 of the Act on 17.8.2001 claiming further interest under Section 244A for the period 1.4.2001 to 18.7.2001. The Assessing officer, being satisfied granted further interest under Section 244A amounting to Rs. 6,12,171/- for the balance period as claimed.
4. The learned Commissioner of Income Tax , Kota in short (‘CIT) while issuing notice under Section 263 of the Act, had held that the two orders passed by the Assessing Officer dated 30.3.2001 as well as dated 13.6.2002 were erroneous and prejudicial to the interest of revenue on the basis that tax has been paid by the assessee under MAT ,on the book profit under Section 115JA of the Act, which cannot be equated with payment of the advance tax by the respondent on its total income/current income which is chargeable to tax following the financial year under consideration and further that proviso to Sub-section(2) of Section 115JAA dealing with the tax credit in respect of tax paid on deemed income relating to certain companies, clearly stated that no interest shall be payable on the tax credit alone under Sub-section (1) thereof. Accordingly, the CIT by invoking the provisions of Section 263 of the Act directed the Assessing Officer to withdraw the interest so granted under Section 244A of the Act, amounting to Rs. 21,98,872/- and further Rs. 6,12,171/- respectively which was allowed vide two orders dated 30.3.2001 and 13.06.2002 referred to hereinabove.
5. Aggrieved by the order passed by the learned CIT, the respondent-company preferred an appeal before the learned ITAT who, after detailed examination of facts and various Judgments and the scheme of section 115JA of the Act, allowed the appeal of the Respondent-company and quashed the order under Section 263 of the Act passed by the Commissioner of Income Tax, Kota.
6. Being aggrieved by the said order passed by the learned ITAT the appellant preferred the instant appeal under Section 260A of the Act.
7. The appellant has raised and claimed that the following substantial questions of law arise out of the order of the learned ITAT:-
“(1) Whether on the facts and circumstances of the case and in law the Tribunal was legally justified in setting aside the order passed by the learned CIT u/s. 263 by holding that the same was not warranted?
(2) Whether the findings of the Tribunal are perverse in holding that the proviso to Section 115JAA (2) was not applicable in the facts and circumstances of the case?
(3) Whether the Tribunal was legally justified in upholding the order of the Assessing Officer of allowing interest u/s. 244A? and
(4) Whether the Tribunal was justified in holding that Section 263 was not warranted as it was simply a case of wrong recomputation of interest and an error apparent from the face of record?”
8. Learned counsel for the appellant, Mrs. Parinitoo Jain, has drawn our attention to the order of the learned ITAT as well as to the order of learned CIT, Kota and has claimed that substantial questions of law arise out of the order of learned ITAT and that learned ITAT was not justified in quashing the order under section 263 passed by the learned
9. At this juncture, it would be appropriate to refer relevant portion of Section 115JA and Section 115JAA of the Act, which reads as under :-
“115JA. (1) Notwithstanding anything contained in any other provisions of this Act, where in the case of an assessee, being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 [but before the 1st day of April, 2001] (hereafter in this section referred to as the relevant previous year) is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit.
(2) Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956):”
“S1153AA (1) where any amount of tax is paid under sub-section (1) of Section 115JA by an assessee being a company for any assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this Section.
(1A) Where any amount of tax is paid under sub-section (l) of Section 115DB by an assessee, being a company for the assessment year commencing on the lst day of April, 2006 and any subsequent assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section.
(2) The tax credit to be allowed under sub-section (1) shall be the difference of the tax paid for any assessment year under sub-section (1) of section 115JA and the amount of tax payable by the assessee on his total income computed in accordance with the other provisions of this Act:
Provided that no interest shall be payable on the tax credit \ allowed under sub-section (1).
10. It would also be relevant here to quote relevant Sections relating to advance tax payable by Assessee namely Sections 207 and 208 of the Act, which reads as under:-
“Section 207. Tax shall be payable in advance during any financial year, in accordance with the provisions of Sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as ‘Current Income”.”
“Section 208. Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is ‘[ ten thouseand] rupees or more]”
11. Section 209 of the Act, provides that for making calculation for the purpose of advance tax, the assessee shall first estimate its current income and apply that rate of tax of income on that current income. Section 207 as quoted above, provides that advance tax is payable in respect of the “total income” which is also referred as “current income”.
12. In the case of respondent-company itself, the -appellant department in the earlier years was charging interest under Section 234B and Section 234C of the Act, in respect of deemed income under Section 115JA of the Act, in case, there was shortfall of taxes and without any demur, the respondent-company was also depositing the interest in cases there was delay/shortfall in making of instalments of advance tax. Therefore, on this analogy, the ITAT has rightly come to the conclusion that when interest under Sections 234B and 234C is leviable then on the same analogy interest under section 244A is equally allowable to the assessee-respondent.
13. Ultimately, the ITAT after referring to certain Judgments came to the conclusion that when the department is charging interest on the delayed payment of instalments of MAT which the assessee was under obligation to deposit in advance then the department is also bound to pay interest on the excess/surplus payment made by the assessee-respondent which the department has very well enjoyed. It is also observed by the ITAT that when the amount in advance is deposited by the assessee, the assessee, may not be aware that at the end of the financial year, the assessee would fall under Section 115JA of the Act or the amount deposited as an advance tax shall take colour of MAT paid in advance. The liability of depositing mat became payable only because of the legal fiction created by the said Section. It was further observed by the ITAT that as per its income, the respondent-company was not liable to pay regular tax as there was NIL income for the assessment year 2000-2001 and in fact tax paid was payable as MAT on book profit as per Section 115JA of the Act. Ultimately, the ITAT came to the conclusion that the MAT payable, on book profit is subject to determination by way of assessment under the Provisions of the income Tax Act and the MAT deposit made in advance under Section 115DA on the basis of book profit is nothing but bearing the character of tax paid in advance and when the Department was charging interest under section 234B and 234C of the Act, then on the same analogy the interest ought to. have been allowed under Section 244A on the excess deposit. Accordingly, the ITAT came the conclusion that granting of interest under Section 244A of the Act, by the Assessing Officer., as per the two orders were not erroneous and prejudicial to the interest of the revenue on the above analogy and thus quashed the order under Section 263.
14. We have heard the learned counsel Mrs. Parinitoo Jain at length and after hearing her, come to the conclusion that no substantial question of law, arises out of the order of the learned ITAT particularly, in view of the fact that the Hon’ble Apex Court in the Case of Jt. CIT v. Rolta India Ltd. [2011] 330 ITR 470/196 Taxman 594/9 taxmann.com 36 had considered the issue with reference to interest under Section 234b of the Act on applicability of MAT provisions under Section 1153A of the Act, and after detailed analysis held at page 478 as under:-
“The question which remains to be considered is whether the Assessee, which is a MAT Company, was not in a position to estimate its profits of the current year prior to the end of the financial year on 31st March. In this connection the Assessee placed reliance on the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. v. CIT reported in [2000] 243 ITR 519 and, according to the Karnataka High Court, the profit as computed under the income Tax Act, 1961 had to be prepared and thereafter the book profit as contemplated under Section 115J of the Act had to be determined and then, the liability of the Assessee to pay tax under Section 115J of the Act arose, only if the total income as computed under the provisions of the Act was less than 30 per cent of the book profit. According to the Karnataka High Court, this entire exercise of computing income or the book profits of the company could be done only at the end of the financial year and hence the provisions of Sections 207, 208, 209 and 210 predecessors of Sections 234B and 234C) were not applicable until and unless the accounts stood audited and the balance sheet stood prepared, because till then even the Assessee may not know whether the provisions of Section 115J would be applied or not. The Court, therefore, held that the liability would arise only after the profit is determined in accordance with the provisions of the Companies Act, 1956 and, therefore, interest under Sections 234 and 234C is not leviable in cases where Section 115J applied. This view of the Karnataka High Court in Kwality Biscuits Ltd. was not shared by the Gauhati High Court in Assam Bengal Carriers Ltd. v. CIT reported in [1999] 239 ITR 862 and Madhya Pradesh High Court in Itarsi Oil and Flours (P.) Limited v. CIT reported in [2001] 250 ITR 686 as also by the Bombay High Court in the case of CIT v. Kotak Mahindra Finance Ltd. reported in [2003] 130 Taxman 730 which decided the issue in favour of the Department and against the Assessee. It appears that none of the Assessees challenged the decisions of the Gauhati High court, Madhya Pradesh High Court as well as Bombay High Court in the Supreme Court. However, it may be noted that the judgment of the Karnataka High Court in Kwality Biscuits Ltd. was confined to Section 115J of the Act. The Order of the Supreme Court dismissing the Special Leave Petition in limine filed by the Department against Kwality Biscuits Ltd. is reported in (2006) 284 ITR 434. Thus, the judgment of Karnataka High Court in Kwality Biscuits stood affirmed. However, the Karnataka High Court has thereafter in the case of Jindal Thermal Power Company Ltd. v. Dy. CIT reported in [2006] 154 Taxman 547 distinguished its own decision in case of Kwality Biscuits Ltd. (supra) and held that Section 115JB, with which we are concerned, is a self-contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under Section 115JB, it was liable to pay interest under Sections 234B and 234C of the Act. Thus, it can be concluded that interest under Sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB. For the aforestated reasons, Circular No. 13/2001 dated 9.11.2001 issued by CBDT reported in (2001) 252 ITR (St.) 50 has no application. Moreover, in any event, para 2 of that Circular itself indicates that a large number of companies liable to be taxed under MAT provisions of Section 115JB were not making advance tax payments. In the said circular, it has been clarified that Section 115JB is a self-contained code and thus, all companies were liable for payment of advance tax under Section 115J and consequently provisions of Sections 234B and 234C imposing interest on default in payment of advance tax were also applicable.
For the aforestated reasons CIT succeeds in the Civil. Appeal arising out of S.L.P. (C) No. 25746 of 2009 (Jt. CIT v. Rolta India Ltd.) as also in the Civil Appeal arising out of S.L.P. (c) No. 18367 of 2010 (CIT-3 v. Export Credit Guarantee Corporation of India Ltd.). Consequently, Civil Appeal No. 459 of 2006 (Nahar Exports v. CIT) and Civil Appeal No. 7429 of 2008 (Lakshmi Precision Screws Ltd. v. CIT) stand dismissed with no order as to costs.”
This Authority of the Apex Court has already considered the Judgment rendered by the Hon’ble Apex court in the Case of CIT v. Kwality Biscuits Ltd. [2006] 284 ITR 434 which had dismissed the appeal of the revenue by affirming the Judgment of the Hon’ble High court in the Case of kwality Biscuits Ltd. v CIT [2000] 243 ITR 519/110 Taxman 47 (Kar.).
15. In the Case of CIT v. Apar industries Ltd. [2010] 323 ITR 411/190 Taxman 353, the Bombay High Court was considering the issue as to whether the Minimum Alternate Tax (MAT) to which the assessee is undisputedly entitled must be given before computing interest payable by the assessee under Section 234B of the Act or whether as contended by the Revenue, the credit is allowable after the liability to pay interest under Section 234B as computed, after considering the various judgments of various courts, the Bombay High Court, came to the conclusion that MAT credit is to be allowed first and then if at all and in case, even thereafter, there is a shortfall then the interest under Section 234B of the Act, could be charged. In this very case, there is another issue which is before us and that is with regard to allowability of interest under Section 244A on account of excess payment of TDS, advance tax, self-assessment tax etc. the Court in this regard held at page 429 as under:-
“Insofar the second question is concerned, counsel appearing on behalf of the Revenue has conceded before the court that it would be consequential to the determination of the first question. As already noted earlier in this judgment, as against the tax payable of Rs. 2.46 crore, the tax paid by the assessee amounted to Rs. 4.24 crore after giving due adjustment for MAT credit, TDS, advance tax and self-assessment tax. The assessee was, therefore, entitled to a refund of excess tax paid for the assessment year 2000-01 over and above the tax which was computed as being due and payable. Interest under Section 244A was allowable. As we have already noted, it has been stated on behalf of the Revenue during the course of the hearing that the answer to the second question would be consequential to the determination of the first question. Consequently, the second question shall stand answered in favour of the assessee and against the Revenue.”
16. The Hon’ble Karnataka High Court in the Case of CIT v. Vijaya Bank [20l1] 338 ITR 489/201 Taxman 3711/12 taxmann.com 485 (Kar.), under identical circumstances held that MAT provisions were applicable and the Hon’ble Court observed as under:-
“Therefore, the object behind insertion of section 244A as understood by the Department is that, an Assessee is entitled to payment of interest for money remaining with the Government which would be ordered to be refunded. Therefore, if that object behind the insertion of Section 244A, the contention of the Revenue that if the case does not fall under either of the clauses in Section 244A, no interest is payable, is without any substance.
Clauses (a) and (b) specifically refer to the instances where interest is paid under the Act. It is not exhaustive. It is possible, in a given case, that after the expiry of the financial year, the Assessee may pay tax either along with the self-assessment return or even before the return is filed, if ultimately the said payment is found to be in excess and the Department chooses to refund the said amount, then the question would be, from what date interest is payable since interest is payable on such refunds under Section 244A. In the absence of an express proviso as contained in Clause (a), it cannot be said that the interest is payable from the 1st of April of the assessment year. At the same time, as the said payment of tax was not made in pursuance of a notice of demand issued under Section 156, explanation to Clause (b) has no application. In such cases, as the opening words of Clause (b) specifically referred to “as in any other case”, the interest is payable from the dates of payment of the tax. As Clause (b) expressly provides in any other case the payment of tax subsequent to the first day of April of the assessment year, either before or along with filing of the return would squarely fall under Clause (b) and therefore, when the said amount is ordered to be refunded, the interest is to be calculated from the date of such payment of tax. Having regard to the scheme of Section 244A, and the circular issued by the Board which shows how the Department has understood the Section coupled with the fact that the principle underlying the said section is that, any excess payment of tax paid by the Assessee is not only to be refunded but it has to be refunded with interest, if the case of the Assessee does not fall under clause (a) or the explanation to Clause (b), the excess tax paid shall be refunded with interest from the date of payment of such tax.
In the instant case, it is not in dispute that the Assessee has paid a sum of Rs. 15.5 crore on 29.06.2002, even before the date of filing of the returns. It is that amount which is ordered to be refunded as excess payment Though the occasion to order for refund arose after the assessment order in which the payment of tax was adjusted towards the tax liability, the case does not fall under Clause (a) or explanation to Clause (b). The said excess payment is to be refunded with interest from the date of payment of such tax, that is from 29.06.2002, till the date of refund. This is precisely what the Appellate Commissioner as well as the Tribunal has said. It is in accordance with law. No illegality nor any case for interference is made out. The substantial question of law is answered in favour of the Assessee and against the revenue. Appeal stands dismissed. No costs.”
17. We have gone through/the language of Section 234A.234B and 234C of the as well as the language of Section 244A and we feel that language is almost same in all the above inasmuch as, while in Section 234A,234B and 234c, the department is entitled to charge/levy interest in case, there is short fall of payment of advance tax or otherwise, however, in case, the assessee has deposited the excess amount by way of advance tax or TDS the assessee thus, become entitled to grant of interest under Section 244A of the Act.
18. Revisional powers conferred on the Commissioner under Section 263 of the Act is wide, it enables the CIT to call for and examine the record of the case or pass any order under the Act and also empowers him to make or cause to be made such an inquiry as he deems fit and necessary in order to find out, if the order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of Revenue, however, he has to have certain material to come to the conclusion. Once, he comes to the above conclusion that there is material, the CIT is empowered to pass an order as per the circumstances of the case which may warrant as he is empowered to take recourse to any of the three courses indicated in Section 263 only. Therefore, it is clear that CIT does not have unfettered and unchequered discretion/power to reverse the order. He can do so within the bounds of the law and has to satisfy the need of fairness in action and fair play with due respect to the principles of Audi Alteram Partem as envisaged in the Constitution. The law is well settled that the CIT cannot invoke the powers to correct each and every mistake or error committed by the Assessing Officer. Every loss to the Revenue, cannot be treated as prejudicial to the interest of the Revenue and if the Assessing Officer has adopted one of the course permissible under the law or where two views are possible and the Assessing Officer has taken one view which the CIT does not agree, it cannot be treated as an order erroneous and prejudicial to the interest of the Revenue, the Assessing Officer exercises quasi-judicial power vested in him and if he exercises such powers in accordance with law, arrives at a just conclusion such conclusion cannot be termed to be erroneous only because the CIT dose not feel satisfied with the conclusion.
19. In view of the fact that in the case of assessee-respondent itself, while interest was being charged in the. past under Sections 234B and 234C of the Act, therefore, the Assessing officer rightly allowed the interest under Section 244 A of the Act. Granting interest by the Assessing officer under section 244A was not erroneous in our view, two views are possible and when two views are possible even otherwise provisions of Section 263 cannot be invoked. Further in view of the catena of Judgments referred to above, the respondent-company was even otherwise entitled to interest under section 244A of the viewed from all angles, the learned ?? rightly come to the correct ?? and rightly quashed the order of the CIT under section 263 of the Act.
20. Thus, insofar as the issue involved in the present appeal is concerned, when it has been decided by the Hon’ble Apex Court in the case referred to above (supra), having been covered, as such, the Assessiong Officer, was quite justified in allowing the interest under section 244A of the Act.
21. We have extracted the proposed substantial questions of law hereinabove and in question (ii), the issue which has been raised about applicability of proviso to section 115JAA(2) of the Act, however, the said proviso is not applicable insofar as the matter is concerned, firstly, the present appeal relates to the Assessment Year 2000-2001 when section 115JA was applicable and secondly proviso to section 115JAA itself, came to be introduced from 1.4.2006 therefore, even otherwise, the question No. (ii) is misconceived and not relevant to the year under appeal. Therefore, even otherwise, the CIT while invoking the provisions of section 263 was not correct in drawing analogy of section 115JAA and its proviso which oven otherwise was not applicable for the year under appeal. The legislatures in its own wisdom have not enacted such proviso or bar for payment of interest in excess deposit under Section 115JA of the Act, with which we are concerned in this appeal.
22. In view of the aforesaid judgments of the Apex Court and various other Courts, granting of interest under Section 244A of the Act, is justified, therefore, the learned CIT had committed an error in invoking the provisions of Section 263 of the Act and the learned ITAT had rightly quashed the invoking of the provisions of Section 263 of the Act. No substantial questions of law arise out of the order of the ITAT in view of the above judgments, the appeal, being devoid of merit is dismissed in limine.
[Citation : 360 ITR 225]
