Reassessment—Non-service of notice as per provisions u/s 148
COMMISSIONER OF INCOME TAX vs.CHETAN GUPTA
HIGH COURT OF DELHI
Reassessment—Non-service of notice as per provisions u/s 148— Service of notice a jurisdictional requirement—Assessee had filed a return of income disclosing an income and the return was processed u/s 143(1)—Pursuant to Information received from the ADIT on the basis of a information against assessee in a pen drive found in case of search, AO drew a presumption that the information in the pen drive found in his possession was true and that the primary onus to establish the identity, genuineness and creditworthiness of the creditors whose names appeared therein was on the Assessee—AO concluded that he had reason to believe that the income for the relevant AY was escaped assessment within the meaning of Section 147(b)—ACIT issued a notice u/s 148 and computed the assessment on u/s 143(3)/148 and made addition to the income of the Assessee—Assessee claimed that AO had framed the impugned assessment order without assuming jurisdiction as per law and without serving the mandatory notices u/ss 143 & 148 and thus not valid—CIT (A) had upheld addition concluding that Assessee and his group for their own convenience prefer to receive notice at this place instead of so called address—ITAT followed the decisions of this Court in CIT v. Hotline International Pvt. Ltd and of the Supreme Court in ACIT v. Hotel Blue Moon and held that on account of the absence of a valid service of notice u/s 148 on the Assessee, the re-assessment proceedings were bad in law—Held, issuance of notice to the Assessee and service of such notice upon the Assessee u/s 148 are jurisdictional requirements that must be mandatorily complied with and they are not mere procedural requirements—For the AO to exercise jurisdiction to reopen an assessment, notice u/s 148 (1) has to be mandatorily issued to the Assessee—Further, AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with Section 282 (1) read with Order V Rule 12 CPC and Order III Rule 6 CPC—Onus was on the Revenue to show that proper service of notice has been effected under Section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf— In the present case, the Revenue has failed to discharge that onus—Mere fact that an Assessee or some other person on his behalf not duly authorized participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting proper service of notice on the Assessee u/s 148—Reassessment proceedings finalised by an AO without effecting proper service of notice on the Assessee u/s 148 (1) were invalid and liable to be quashed—Section 292 BB was prospective—Since the Assessee had raised an objection regarding the failure by the Revenue to effect service of notice upon him, the main part of Section 292 BB was not attracted—ITAT had rightly concluded that since no proper service of notice had been effected u/s 148 (1) on the Assessee, the reassessment proceedings were liable to be quashed—Question framed was answered in the affirmative, i.e., in favour of the Assessee and against the Revenue—Revenues appeal dismissed.
HIGH COURT OF DELHI
Reassessment—Non-service of notice as per provisions u/s 148— Service of notice a jurisdictional requirement—Assessee had filed a return of income disclosing an income and the return was processed u/s 143(1)—Pursuant to Information received from the ADIT on the basis of a information against assessee in a pen drive found in case of search, AO drew a presumption that the information in the pen drive found in his possession was true and that the primary onus to establish the identity, genuineness and creditworthiness of the creditors whose names appeared therein was on the Assessee—AO concluded that he had reason to believe that the income for the relevant AY was escaped assessment within the meaning of Section 147(b)—ACIT issued a notice u/s 148 and computed the assessment on u/s 143(3)/148 and made addition to the income of the Assessee—Assessee claimed that AO had framed the impugned assessment order without assuming jurisdiction as per law and without serving the mandatory notices u/ss 143 & 148 and thus not valid—CIT (A) had upheld addition concluding that Assessee and his group for their own convenience prefer to receive notice at this place instead of so called address—ITAT followed the decisions of this Court in CIT v. Hotline International Pvt. Ltd and of the Supreme Court in ACIT v. Hotel Blue Moon and held that on account of the absence of a valid service of notice u/s 148 on the Assessee, the re-assessment proceedings were bad in law—Held, issuance of notice to the Assessee and service of such notice upon the Assessee u/s 148 are jurisdictional requirements that must be mandatorily complied with and they are not mere procedural requirements—For the AO to exercise jurisdiction to reopen an assessment, notice u/s 148 (1) has to be mandatorily issued to the Assessee—Further, AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with Section 282 (1) read with Order V Rule 12 CPC and Order III Rule 6 CPC—Onus was on the Revenue to show that proper service of notice has been effected under Section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf— In the present case, the Revenue has failed to discharge that onus—Mere fact that an Assessee or some other person on his behalf not duly authorized participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting proper service of notice on the Assessee u/s 148—Reassessment proceedings finalised by an AO without effecting proper service of notice on the Assessee u/s 148 (1) were invalid and liable to be quashed—Section 292 BB was prospective—Since the Assessee had raised an objection regarding the failure by the Revenue to effect service of notice upon him, the main part of Section 292 BB was not attracted—ITAT had rightly concluded that since no proper service of notice had been effected u/s 148 (1) on the Assessee, the reassessment proceedings were liable to be quashed—Question framed was answered in the affirmative, i.e., in favour of the Assessee and against the Revenue—Revenues appeal dismissed.
STITCHWELL QUALITEX (RF) vs.INCOME TAX OFFICER & ANR
HIGH COURT OF DELHI
Depreciation—Plant and Machinery used for the purpose of business—Disallowance—Assessee was a registered firm carrying on business of manufacturing bag stitching machines in a factory situated at Noida since 1981—In the year 1987 the assessee applied for and was allotted plot at Noida—It constructed a factory building thereon in the AY 1989-90 and the cost of the factory building was Rs. 9,77,775.58—Machinery worth Rs. 1,10,825 was installed in the said factory (styled Unit II) in the previous year 1989-90—Assessee had claimed depreciation of Rs. 1,97,458 in the AY 1990-91—AO disallowed same on grounds that assesee had failed to show that he had undertaken any manufacturing activity during the AY in question—CIT (A) however accepted the plea of the assessee that the plant and machinery was installed in the previous year 1989-90 (AY 1989-90)—CIT (A) had allowed the depreciation and came to the conclusion that the assets were kept ready for actual use and were profit making apparatus—Tribunal referred to the decision of the Supreme Court in Federation of Andhra Pradesh Chambers of Commerce and Industry v. State of Andhra Pradesh and concluded that in order to claim depreciation, it is important, inter alia, that the asset must be actually used for the purpose of business and held that "the CIT (A) was not justified in granting depreciation—Held, it was held in National Thermal Power Corporation Limited v. CIT, two conditions are necessary to be fulfilled before an allowance by way of depreciation u/s 32 can be granted to the Assessee—first was ownership of the asset and the second, the user of the assets for the purposes of the business—It was held that the expression "used for the purpose of business" in Section 32 of the Act was interpreted to include a case where the asset is kept ready for use but is not actually put to use—Supreme Court in Federation of Andhra Pradesh Chambers of Commerce v. State of Andhra Pradesh was interpreting the word "used" occurring in Section 3 of the Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963—Building and machinery in Unit II were used for the purpose of the business of the Assessee during the AY in question—Hence, impugned order of the ITAT on the issue was set aside—Assessees appeal was allowed
HIGH COURT OF DELHI
Depreciation—Plant and Machinery used for the purpose of business—Disallowance—Assessee was a registered firm carrying on business of manufacturing bag stitching machines in a factory situated at Noida since 1981—In the year 1987 the assessee applied for and was allotted plot at Noida—It constructed a factory building thereon in the AY 1989-90 and the cost of the factory building was Rs. 9,77,775.58—Machinery worth Rs. 1,10,825 was installed in the said factory (styled Unit II) in the previous year 1989-90—Assessee had claimed depreciation of Rs. 1,97,458 in the AY 1990-91—AO disallowed same on grounds that assesee had failed to show that he had undertaken any manufacturing activity during the AY in question—CIT (A) however accepted the plea of the assessee that the plant and machinery was installed in the previous year 1989-90 (AY 1989-90)—CIT (A) had allowed the depreciation and came to the conclusion that the assets were kept ready for actual use and were profit making apparatus—Tribunal referred to the decision of the Supreme Court in Federation of Andhra Pradesh Chambers of Commerce and Industry v. State of Andhra Pradesh and concluded that in order to claim depreciation, it is important, inter alia, that the asset must be actually used for the purpose of business and held that "the CIT (A) was not justified in granting depreciation—Held, it was held in National Thermal Power Corporation Limited v. CIT, two conditions are necessary to be fulfilled before an allowance by way of depreciation u/s 32 can be granted to the Assessee—first was ownership of the asset and the second, the user of the assets for the purposes of the business—It was held that the expression "used for the purpose of business" in Section 32 of the Act was interpreted to include a case where the asset is kept ready for use but is not actually put to use—Supreme Court in Federation of Andhra Pradesh Chambers of Commerce v. State of Andhra Pradesh was interpreting the word "used" occurring in Section 3 of the Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963—Building and machinery in Unit II were used for the purpose of the business of the Assessee during the AY in question—Hence, impugned order of the ITAT on the issue was set aside—Assessees appeal was allowed
ASSISTANT COMMISSIONER OF INCOME TAX vs.FOUR DIMENSIONS SECURITIES (INDIA) LTD.
BOMBAY TRIBUNAL
Reassessment—Validity of reopening of assessment u/s 147—Income escaping assessment—Original return filed by the assessee was processed u/s 143(1)—Assessee's case was selected for scrutiny and the assessment u/s 143(3) was completed—Subsequently, AO reopened the assessment observing that certain income of assessee had escaped assessment—In the reasons recorded for reopening, it had been mentioned that the assessee had credited the P&L account with an amount of Rs.21,96,630 on account of profit on sale and purchase of shares and units—That the said profit was set off against the loss from redemption of mutual funds amounting to Rs.5,21,76,870—AO thereby observed that the loss from the sale of mutual funds was to be computed under the head 'Capital gains/capital loss' as the said loss was incurred by the assessee from investment activity in mutual funds—AO further observed that the assessee had sold/redeemed the mutual funds within 9 months of the record date of dividends—Hence, the provisions of section 94(7) as amended vide Finance Act, (2) of 2004 w.e.f. 01.04.05 were applicable and the loss so incurred was liable to be disallowed—Held, it was found from the reasons recorded by the AO and even from the assessment order made pursuant to the reopening of the assessment that the AO's conclusion that the loss in mutual funds was capital loss was not based on any peculiar fact but only on surmises and conjunctures and was nothing but a change of opinion—Merely because dividend was earned on these units, that itself, could not be held to be a criteria for treating the transactions as capital in nature—Similarly merely because the dividend was exempt that itself could not be a ground to hold that the mutual funds were held as investments where the assessee had specifically treated the same as stock in trade in its accounts—Further the amended provisions of s 94(7) were not applicable for the year under consideration—Hence reopening of assessment was not justified—No infirmity was found in the order of the CIT(A) holding that the mutual funds held by the assessee were stock in trade and not an investment activity of the assessee—Revenue's appeal dismissed accordingly
BOMBAY TRIBUNAL
Reassessment—Validity of reopening of assessment u/s 147—Income escaping assessment—Original return filed by the assessee was processed u/s 143(1)—Assessee's case was selected for scrutiny and the assessment u/s 143(3) was completed—Subsequently, AO reopened the assessment observing that certain income of assessee had escaped assessment—In the reasons recorded for reopening, it had been mentioned that the assessee had credited the P&L account with an amount of Rs.21,96,630 on account of profit on sale and purchase of shares and units—That the said profit was set off against the loss from redemption of mutual funds amounting to Rs.5,21,76,870—AO thereby observed that the loss from the sale of mutual funds was to be computed under the head 'Capital gains/capital loss' as the said loss was incurred by the assessee from investment activity in mutual funds—AO further observed that the assessee had sold/redeemed the mutual funds within 9 months of the record date of dividends—Hence, the provisions of section 94(7) as amended vide Finance Act, (2) of 2004 w.e.f. 01.04.05 were applicable and the loss so incurred was liable to be disallowed—Held, it was found from the reasons recorded by the AO and even from the assessment order made pursuant to the reopening of the assessment that the AO's conclusion that the loss in mutual funds was capital loss was not based on any peculiar fact but only on surmises and conjunctures and was nothing but a change of opinion—Merely because dividend was earned on these units, that itself, could not be held to be a criteria for treating the transactions as capital in nature—Similarly merely because the dividend was exempt that itself could not be a ground to hold that the mutual funds were held as investments where the assessee had specifically treated the same as stock in trade in its accounts—Further the amended provisions of s 94(7) were not applicable for the year under consideration—Hence reopening of assessment was not justified—No infirmity was found in the order of the CIT(A) holding that the mutual funds held by the assessee were stock in trade and not an investment activity of the assessee—Revenue's appeal dismissed accordingly
NATUBHAI GOMANBHAI PATEL vs.ASSISTANT COMMISSIONER OF INCOME TAX
AHMEDABAD TRIBUNAL
Penalty u/s 271(1)(c)—New scheme of assessment in search cases—Validity of penalty—Original return of income was filed by assessee showing income of specified amount—Search operation u/s 132 was conducted at the premises of third party during which various documents and materials pertaining to assessee were found showing his investment in some project—In the post search enquiries, statement of the assessee was also recorded wherein he admitted to have made investment in concerned project—On the basis of documents and material found during the search and the statement recorded of the assessee admitting the investment, notice u/s 153C was issued—In response to this notice the assessee filed return of income showing total income of specified amount—Notice u/s 143(2) along with the questionnaire was issued asking the assessee as to why all the investments made in property should not be treated as unexplained investment—Thereafter, the assessee filed a revised return of income declaring income at specified amount including additional income of Rs.8,00,000 for undisclosed investment—AO accepted the income declared in the revised return however, proceeded to initiate penalty proceedings u/s 271(1)(c) treating the additional income of Rs.8,00,000 as undisclosed income—ACIT imposed penalty u/s 271(1)(c)—CIT(A) also confirmed the action of the ACIT and held that the AO was justified in levying the penalty—Held, Section 153A(1)(a) makes it clear that once the notice was received by the assessee for furnishing the return of income u/s 153A, then the provisions of s 139 would come into effect for the purpose of filing such return of income—In instant case the return was revised before the completion of the assessment by AO—It was decided by Gujarat High Court in the case of Kirit Dahyabhai Patel vs. ACIT that penalty u/s 271(1)(c) was to be levied on the income assessed over and above the income returned u/s 153A—It was opinioned that the penalty u/s 271(1)(c) cannot be levied on the income shown in the return filed u/s 153—Where income as shown in the revised return of income at Rs.10,38,538 was accepted by the AO and no other addition was made as such, assessee's case was not a fit case for the imposition of penalty u/s 271(1)(c)—Following the judgment of Gujarat High Court, the AO was directed to delete the penalty—Assessee's appeal allowed
AHMEDABAD TRIBUNAL
Penalty u/s 271(1)(c)—New scheme of assessment in search cases—Validity of penalty—Original return of income was filed by assessee showing income of specified amount—Search operation u/s 132 was conducted at the premises of third party during which various documents and materials pertaining to assessee were found showing his investment in some project—In the post search enquiries, statement of the assessee was also recorded wherein he admitted to have made investment in concerned project—On the basis of documents and material found during the search and the statement recorded of the assessee admitting the investment, notice u/s 153C was issued—In response to this notice the assessee filed return of income showing total income of specified amount—Notice u/s 143(2) along with the questionnaire was issued asking the assessee as to why all the investments made in property should not be treated as unexplained investment—Thereafter, the assessee filed a revised return of income declaring income at specified amount including additional income of Rs.8,00,000 for undisclosed investment—AO accepted the income declared in the revised return however, proceeded to initiate penalty proceedings u/s 271(1)(c) treating the additional income of Rs.8,00,000 as undisclosed income—ACIT imposed penalty u/s 271(1)(c)—CIT(A) also confirmed the action of the ACIT and held that the AO was justified in levying the penalty—Held, Section 153A(1)(a) makes it clear that once the notice was received by the assessee for furnishing the return of income u/s 153A, then the provisions of s 139 would come into effect for the purpose of filing such return of income—In instant case the return was revised before the completion of the assessment by AO—It was decided by Gujarat High Court in the case of Kirit Dahyabhai Patel vs. ACIT that penalty u/s 271(1)(c) was to be levied on the income assessed over and above the income returned u/s 153A—It was opinioned that the penalty u/s 271(1)(c) cannot be levied on the income shown in the return filed u/s 153—Where income as shown in the revised return of income at Rs.10,38,538 was accepted by the AO and no other addition was made as such, assessee's case was not a fit case for the imposition of penalty u/s 271(1)(c)—Following the judgment of Gujarat High Court, the AO was directed to delete the penalty—Assessee's appeal allowed
[2015] 61 taxmann.com 90 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax
v.
Chander Prakash Pabreja
COMPAT: No dominance of Republic mall in West - Delhi; Cites other big players' presence
COMPAT dismisses appeal, confirms CCI order rejecting buyer's ('appellant') 'abuse of dominance' complaint against TDI Infrastructure Limited, developer of TDI Fun Republic Mall in West Delhi ('respondent'); Upholds CCI finding that respondent did not enjoy dominant position in presence of various real estate developers, like Parsvanath, DLF, MGF in Delhi/NCR region; Notes appellant's failure to produce any document/evidence to prove that alleged mall was the only mall in West Delhi; Observes that it was a case of breach of contract and no competition law issue arises; Thus, dismisses appeal, however, gives appellant leeway to seek appropriate relief from competent judicial forum:COMPAT
COMPAT : Builder collecting instalments despite plan rejection an 'unfair practice'; Awards interest
COMPAT holds respondent-builder guilty of unfair trade practice under MRTP Act, as they did not inform complainant-buyer about non-sanctioning of building plans and demanded installments despite building plan rejection; Holds such conduct of respondent prejudicial to interests of consumers who had booked space in proposed building, states that, "the respondents not only kept them in dark about the status of the building plans and construction of building but also extracted money in the form of installments of price"; However, rejects complainant's contention that respondent reduced the space booked by complaint which amounted to restrictive & unfair trade practice, absent evidence to prove execution of any concluded contract, relies on SC ruling in case of Mahindra and Mahindra Ltd. vs. Union of India; Further rejects complainant's plea of compensation, as in absence of sanctioned plans respondent could not have constructed any building, thus, there was only hypothetical loss, if any, caused to complainant; However, awards interest on installments retained by respondent for more than 10 to 13 years:COMPAT
CCI: Gurgaon choc-a-block with real estate developers; Rejects unfair booking terms allegation
CCI dismisses flat buyer's complaint against Gurgaon based real estate developer ('opposite party') alleging that it abused its dominance by imposing unfair terms in booking application form and Buyer's Agreement; Informant alleged that opposite party demanded certain additional payments with respect to amenities, which were earlier promised free of cost; For examining opposite party's dominant position, delineates relevant market as market for "services for development and sale of residential apartments in Gurgaon"; Observes that there exist many other bigger and established real estate developers like DLF Homes, Emaar MGF, Godrej Properties etc. who provide similar services as that of opposite party; Thus, holds opposite party as not dominant:CCI
CCI: Approves acquisition of upto 26% shares of IIFL by Mauritius investment cos.
CCI approves proposed combination relating to acquisition of up to 26% of equity share capital of IIFL Holdings Limited ('Target') by FIH Mauritius Investments Limited and I Investments Limited ('Acquirers') through an open offer; Notes that Acquirers belong to Fairfax Group and are investment holding cos. & Target is engaged in provision of financial services in India which, inter alia, include merchant banking, investment advisory services etc; Thus, holds that there is no horizontal overlap of activities between parties; Further notes that post combination, there will be no change in control as business operations of IIFL will continue under its present management and there are no veto / special rights granted to Fairfax group; Thus, holds that proposed combination is not likely to have an appreciable adverse effect on competition in India:CCI
CCI approves acquisition of Sujana Tower's 'tower business' by Agarwal Steel Structures
CCI approves proposed combination relating to acquisition of tower business of Sujana Towers Limited ('Target') by Agarwal Steel Structures (India) Private Limited ('Acquirer'); Tower business comprises of designing, manufacturing and commissioning of towers and provision of services related to installation of towers, which may be used for power transmission etc, and by acquisition of such tower business shall increase acquirer's manufacturing capacity; Notes that both acquirer and target co. are engaged in tower business, and target co. in addition is also engaged in manufacturing/trading of iron & steel products, steel re-rolling which can serve as raw material for towers parts/substation structures; Accordingly, with respect to vertical relationship between the parties, notes that Acquirer is major supplier of various types of components/parts of tower to Target co., however observes that for year 2014-15, sales made were of nominal amount; Further, observes that purchases from Acquirer represented a small portion of total raw material consumed by Target co.; Also notes that post combination, market share of Acquirer in Tower Business in India will not be significant and there are number of players present in Tower Business such as BS Ltd, Adhunik Alloys, Jyoti Structures which would provide competitive constraint to Acquirer; Thus, holds that the proposed combination is not likely to have any adverse effect on competition in India:CCI
MUMBAI, SEPT 22, 2015: THE issue before the Bench is - Whether the amount payable by the assessee u/s 140A, over and above the shortfall arising after the credit for payment of TDS and advance tax, can be considered as tax before the processing of return u/s 143(1). NO is the answer.Facts of the caseThe assessee company has wrongly mentioned 'excess&# 39; in place of 'shortfall&# 39; of advance tax & TDS paid in the computation of income. This had resulted in less payment of Self assessment tax. Both as per Revenue as well as the assessee, the Apex court in the case of Modi Industries Ltd. vs. CIT 2002-TIOL- 446-SC-IT explained that there was no right to get interest except as provided by the statute. The same stands reiterated, more recently, in CIT vs. Gujarat Fluoro Chemicals2013- TIOL-47-SC- IT-LB, again by its larger bench, explaining its decision in Sandvik Asia Ltd. v. CIT 2006-TIOL- 07-SC-IT as being rendered in the peculiar facts of the case, without impacting the settled law in the matter; where it was held that the Legislature by the Act No. 4 of 1988 (w.e.f. 01.04.1989) has inserted Section 244A which provides for interest on refunds under various contingencies. We clarify that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. The Apex Court in Union of India vs. Tata Chemicals Ltd. 2014-TIOL- 27-SC-IT, relied upon in Stockholding Corporation of India, clarified that the residuary clause (section 244A(1)(b)) shall cover all payments of tax, so that whenever tax was found to have been paid in excess of the amount which the assessee was obliged or otherwise required to pay under any provision of the Act, he shall be entitled to interest, being compensatory, there-under. However, the decision in Gujarat Fluoro Chemicals was also rendered in the context of s. 244A, even as the propositions of law stated in Modi Industries Ltd. would equally apply to refund of tax under the Act. The words of a Statute must prima facie be given their ordinary meaning. When the words are clear, plain and unambiguous, then the Courts are bound to give effect to that meaning irrespective of the consequences. Further, efforts should be made to give meaning to each and every word used by the Legislature and it is not a sound principle of construction to brush aside words in a Statute as being inapposite surpluses, if they can have proper application in circumstances conceivable within the contemplation of the Statute. Reference for the purpose be made toTata Chemicals Ltd. Also refer, CIT v. Calcutta Knitwears 2014- TIOL-30-SC- IT.In the present case, the break-up of the prepaid tax of Rs.2057.84 lacs showed the volume of the tax payable as well as the shortfall in advance tax (Rs.4.02 lacs), which clearly suggested no interest u/s. 234B being leviable, which was only where the advance tax fell short of 90% of the assessed tax. The payment of the excess Rs.260.98 lacs (i.e., Rs.265 lacs - Rs.4.02 lacs), adjusted downward for the amount of interest, if any, u/s.234B, cannot be regarded as payment of tax, much less as tax paid (or required to be) by way of self-assessment, or self assessment tax by definition. Tax stands clearly defined u/s. 2(43) to mean income tax chargeable under the provisions of the Act. The payment of advance tax was on the basis of an estimation of current income (section 209), which provision, as well as s. 210, stood noted in Engineers India Ltd., which could therefore be in excess, i.e., without attracting the disqualification of being advance tax. Without doubt, AO can u/s 210 call for the estimation of the assessee' s income for the year, as also the tax for the immediately preceding year, and where found to be in excess of the amount payable in terms of the clear provision, claim the same to be not advance tax. In fact, section 4(2), clearly brings the tax deducted at source or paid in advance within the purview of section 4(1). But for the said provision, the Central Act providing for the charge of income tax and, at a prescribed rate, being applicable from an assessment year, the tax charged could not be recovered during the relevant previous year. The argument shall, therefore, not hold good for prepaid taxes in general, the interest on refund of which is governed by section 244A(1)(a). The payment u/s.140A is to be made after the close of the year, on the basis of the assessee' s own return for the year, as prepared. The payment made in excess of that required to be paid u/s.140A cannot therefore be regarded as payment there-under and, thus, as payment of self-assessment tax. The same does not fall under any other provision as well. Being not chargeable u/s. 4(1), it cannot be regarded as payment of tax, which cannot be so merely for the reason that the assessee had chosen to pay it. The same simply represents the deposit, made on an ad hoc basis, without any basis in fact or in law.It was also pointed out that as per law refund can be granted only on tax (or penalty), or even of interest, i.e., of a payment made under any provision of the Act. The said excess assumes the character of tax upon processing of the assessee' s return or on making the assessment for the relevant year. It may be appreciated that prior to this point in time, the A.O. had no power to refund the amount. It was only on the processing of the return of income, mandatory in all cases, setting off the said payment against the assessee' s tax liability for the year, i.e., by regarding it as paid toward tax, that the same assumes the character of a tax paid, entitled to refund u/s.143(1) r/w s. 237. Even so, it would be tax paid on processing (or assessment), and not as self assessment tax. Reference in this regard may be made to the decision in the case of Modi Industries Ltd. It was explained therein that once the amount of advance tax was treated as payment of tax in respect of income of the relevant previous year and credit as such for the amount has been given in the assessment order, the amount looses the character of advance tax, and becomes income tax in respect of income for the year. The Apex Court clarified this while analysing the interest allowed u/s.214 i.e., on refund of advance-tax, which was, as in the case of 244A, from the first day of the relevant assessment year, to the date of the assessment order. Reference was also made to illustrate the manner whereby an amount paid changes its character on assessment, i.e., on being allowed credit against the tax on income for the relevant previous year. The amount of excess, paid, thus, de hors any provision of law, would, nevertheless, come to be regarded as toward tax on the adjustment afore-said. The Intimation u/s.143(1) determining the amount payable was deemed notice of demand u/s.156, vide proviso thereto.Prior to the processing/assessme nt, the A.O. was not empowered to take cognizance of this amount, much less refund it. In fact, even if therefore regarded as payment of tax from the date of payment of sum, i.e., in excess of that payable on the basis of the return, the delay in its refund, i.e., up to the date of processing/assessme nt, was attributable to the assessee and, as such, no interest would stand to be allowed for the period commencing from the date of payment to the date of adjustment as income tax in respect of income for the relevant previous year. This, then, provides the second, alternate reason for allowing interest on the excess payment (of Rs.2.61 crores) only from the date of processing of the payment of the return, and not from the date of actual payment. Further, the date of payment is to be given the meaning specified under the Act, and cannot, in view thereof, be read de hors the same, i.e., giving its plain meaning. When the statute gives a particular meaning to a particular set of words, interpretation has to be made accordingly. The apex court in West Bengal State Warehousing Corporation vs. Indrapuri Studio Pvt. Ltd. (in Civil Appeal No. 3865 of 2006 dated 19.10.2010) held that the use of the word 'means&# 39; in a definition signifies a hard and fast definition.Having heard the matter, the Tribunal held that,++ the Apex Court as per its larger bench decisions in Modi Industries Ltd. and Gujarat Fluoro Chemicals settled that there is no right to get interest of refund except as provided by the statute. The proposition of the interest being exigible on any amount paid, irrespective of either any obligation to pay or even its character under the Act, and from the date of its payment (i.e., except in the case of prepaid tax), cannot, in view thereof, be countenanced. Section 244A covers the allowance of interest on refund arising on payment of tax or penalty under the Act, and is a separate code in itself, providing for both the right to interest as well as the manner of its computation, including the resolution of any dispute qua the determination of the issue of the attribution of the delay, if any, in the grant of refund. The provision is to read in terms of its clear language, albeit holistically, following the cardinal principles of the interpretation of statutes, as clarified by the apex court in, inter alia, Tata Chemicals Ltd. Words assigned a particular meaning shall have to be interpreted strictly. The tax refund is, by definition, refund of tax paid under whatsoever provision in excess of the tax liability under the Act, as finally determined (Tata Chemicals Ltd.). The amount, however, ought to be paid by way of tax, in discharge of an obligation cast or required to be paid under any provision of law. Interest, though compensatory, may not necessarily follow for any excess payment and, further, has to be only of excess tax paid to the Revenue, for the period provided by the specific provision of law. The same can supply the termini points, which could either be actual or artificial. For prepaid taxes, it is, irrespective of the date of payment, the first day of the relevant AY. In all other cases, it is the date of payment of tax as provided for, i.e., the date of payment in excess of the amount thereof as specified in the notice of demand. The same is to be given a strict meaning. As such, it refers to the actual date of payment provided that what is paid is tax. As a natural corollary, it is the date on which the amount assumes the character of tax;++ where an amount is paid with reference to or in violation of the provision, it cannot be said to be paid there-under. Section 140A requires payment of tax on the basis of the return, where-under only the assessee is to prefer his claims under the Act. The same, thus, contemplates an assessment by the assessee of its tax liability under the Act, as crystallized per the return finalized, i.e., for filing under the Act, paying the shortfall there-under, if any, along with the interest to date. How could it, even where not unambiguously worded, be otherwise, i.e., follow as it does the scheme of the Act. Any amount paid over and above the said shortfall cannot be regarded as tax, which, by definition, is that chargeable under the Act. [ss.2(43) r/w s. 4]. To regard any amount deposited as self assessment tax would be to do violence to the clear language of the provision of the Act, as well as its scheme. The said case excess, however, on being allowed credit for against the tax payable, assumes the character of tax, i.e., upon the processing of the return for the relevant year, filed subsequently by the assessee, which constitutes a notice of demand u/s.156, vide proviso thereto. Prior thereto, AO cannot take cognizance thereof, much less refund it. This, then, is the earliest point of time at which such excess can be regarded as payment of tax, exigible to refund u/s. 143(1) r/w s. 237. Not so regarding would make the machinery unworkable and prejudicial to the assessee. The assessee shall, therefore, be entitled to refund from this date to that of the grant of the refund. The amount cannot be regarded as payment of tax at any point of time earlier to the date of credit referred to at para (g) above, i.e., prior to the processing of the return of income resulting in the refund. Even otherwise, the delay in the grant of refund, i.e., for the intervening period between the date of payment and date of processing of return, is to be necessarily ascribed to the assessee, disentitling him for the interest for the said period. As such, even regarding it as payment of tax from inception, i.e., for the sake of argument, would be of little moment. Our decision is consistent with the said law as explained by SC as per its decisions referred to earlier and, further, also the judgment by the jurisdictional HC in Stockholding Corporation of India. The latter, in ratio, decides the issue of grant of interest u/s.244A on the payment of self assessment tax, and from the date of its payment. The interest being allowed in the present case, i.e., on the excess amount paid with reference to the return, is only tax and not of self assessment tax, i.e., paid on self assessment on the basis of the return, so that it would not be from the anterior in time to it being regarded as tax;++ we are fortified in our stand by the decision in Engineers India Ltd., rendered after considering other decisions in the matter. The Court, firstly, observes with reference to Gujarat Fluoro Chemicals that there was no liability on the Revenue to pay interest on refund beyond the liability created by the statutory provisions, noting that in Tata Chemicals Ltd. the collection of tax was subsequently found illegal (para 33). As such, there was no general rule that whenever a refund of income tax paid in excess is to be made, the Revenue must necessarily pay interest on the refund amount. It is the Revenue or the assessee, whoever is responsible for the excess payment, which must bear the interest burden or, as the case may be, loss of interest (para 34). The assessee having paid to in excess, as found per Intimation u/s. 143(1), was not entitled to interest thereon or prior thereto;++ we have, it may be noted, applying the decision in Modi Industries Ltd, stated that in-as-much as the credit is allowed for such payment, and only rightly so, against tax payable on the basis of the return, i.e., upon its processing u/s. 143(1), the same assumes the character of tax on such adjustment, so that interest shall arise to the assessee from that date up to the date of grant of refund. The jurisdictional High Court also observed this at para 8 of its Judgment in Stockholding Corporation of India, stating that the A.O. passed the assessment order on 31.12.1996, accepting the entire amount paid as self assessment tax as payment of tax. In the facts of the case, the refund to the extent of Rs.260.98 lacs, adjusted for the amount of interest u/s.234B, if any, up to 31.05.1994, shall arise only subsequent to the date of processing u/s.143(1), i.e., up to the date of grant of refund. In-as-much as the law does not contemplate grant of refund exclusive of interest, the same must necessarily be worked out at gross of interest u/s.244A up to the date of refund. The shortfall, if any, of the refund amount with reference to the amount so computed, would, therefore, have to be apportioned between the principal (tax) and interest amounts, so that interest u/s.244A shall arise on the un-refunded tax, while no interest u/s.244A is exigible under the Act on the unpaid interest there-under. The balance tax refund of Rs.20.98 lacs (i.e., Rs.2061.86 lacs - Rs.2040.88 lacs), would be governed by s. 244A(1)(a). We decide accordingly. In the result, the assessee' s appeal is allowed on the afore-said terms
ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS
F Where main object of assessee was to commercially exploit properties by providing amenities and facilities for convenience and comfort of customers, income to be assessed as business income : Shreeji Exhibitors v. Asst. CIT (Mumbai) p. 596 (14-8-2015)
F Salary or fees for technical services : Consultants filing return with Department and paying tax, not a case of short deduction of tax at source : Deputy CIT v. Consulting Engineering Services (India) P. Ltd. (Delhi) p. 604 (5-8-2015)
F Treatment in books of account not determinative of liability towards income-tax : Minda Corporation Ltd. v. Deputy CIT (Delhi) p. 615 (31-7-2015)
F Bona fide mistake on part of assessee in offering income under head "capital gains", penalty not leviable : Simran Singh Gambhir v. Deputy DIT (International Taxation) (Delhi) p. 624 (21-7-2015)
F Related parties : Provision empowering Assessing Officer to determine fair price, condition precedent : Aquila Software Services Hyderabad P. Ltd. v. Deputy CIT (Hyd) p. 630
F Where assessee demolishing existing structure and constructing commercial property and letting out building, exemption cannot be granted : Kolli Gopi Krishna v. Deputy DIT-I (International Taxation) (Hyd) p. 638
F Capital gains : Adventure in nature of trade : Kolli Gopi Krishna v. Deputy DIT-I (International Taxation) (Hyd) p. 638
F Payments in cash beyond specified limit : Commissioner (Appeals) considering amount as genuine expenditure, payments allowable : Kolli Gopi Krishna v. Deputy DIT-I (International Taxation) (Hyd) p. 638
F Unexplained cash deposits : Explanation that deposit of cash from out of earlier withdrawals of cash plausible, addition not justified : Kolli Gopi Krishna v. Deputy DIT-I (International Taxation) (Hyd) p. 638
F Where assessee repaying money in excess of amount borrowed to third parties and such payments not connected with business of assessee, payments neither allowable as bad debts nor as business expenditure : Malar Hospitals Ltd. v. Asst. CIT (Chennai) p. 647
F Trust not entitled to depreciation on cost of assets allowed as application of income of trust : Carry forward and set off of excess application of income not permissible on commercial principles : St. Thomas Orthodox Syrian Cathedral Parish Trust v. Joint CIT (OSD) (Chennai) p. 654
F No need to deduct tax at source on commission or brokerage paid by BSNL to its public call office franchisees : ITO (TDS-2) v. General Manager, Bharat Sanchar Nigam Ltd. (Hyd) p. 669
F Business expenditure : Order restricting disallowance on discount given to collection centres as against disallowance made by Assessing Officer proper : Asst. CIT v. SRL Ranbaxy Ltd. (Delhi) p. 676
F Amount of discount for rendering service outside India not taxable in India : Asst. CIT v. SRL Ranbaxy Ltd. (Delhi) p. 676
F Where sale on principal to principal basis and not agency, discount not commission and tax need not be deducted at source : Bharti Hexacom Ltd. v. ITO (TDS)-II (Jaipur) p. 686
F Where services not fees for technical services as envisaged u/s. 194J, not liable for deduction of tax at source : Bharti Hexacom Ltd. v. ITO (TDS)-II (Jaipur) p. 686
F Double taxation avoidance agreement : Where payments by assessee not constituting fees for technical services, no obligation to deduct tax at source : ITO, TDS v. Nokia India P. Ltd. (Delhi) p. 708 (8-7-2015)
F Charitable purpose : Law applicable to depreciation : Rama Naick Charitable Trust v. Deputy DIT Exemptions II (Chennai) p. 732 (21-8-2015)
F Excess application of income not allowable where assessee generating income not for charitable purposes : Rama Naick Charitable Trust v. Deputy DIT Exemptions II (Chennai) p. 732
F Interest income to be chargeable under head "income from other sources" on failure to substantiate that assessee already commenced its business operations : Tidel Park Ltd. v. Asst. CIT (Chennai) p. 743 (19-8-2015)
F Denial of indexation not a case of concealment or furnishing inaccurate particulars, penalty not imposable : LIC Nomura Mutual Fund Asset Management Company Ltd. v. Deputy CIT (Mumbai) p. 748 (14-8-2015)
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