Income Tax Appellate Tribunal - Mumbai
Deputy Commissioner Of Income-Tax vs Oscar Investments Ltd. on 11 May, 2005
Equivalent citations: [2006]98ITD339(MUM), (2006)99TTJ(MUM)1202
ORDER
V.K. Gupta, Accountant Member
1. The above mentioned two cross appeals, one filed by the Department and the other filed by the assessee, for assessment year 1996-97 are consolidated and disposed of by this common order for the sake of convenience since common points/contentions are involved therein. These are directed against the order dated 21-2-2000 of CIT(A)-XLVI, Mumbai.
2. We have heard the arguments of both the sides and have also perused the records.
3. First we take up the appeal filed by the Department being ITA No. 2703/ M/2000. The Department has raised the following grounds of appeal before the Tribunal:
(i) On the facts and circumstances of the case and in law the Id. CIT(A) has erred in deleting the addition of Rs. 3,39,37,000 being deemed dividend under Section 2(22)(e) of the Income-tax Act, 1961.
(ii) On the facts and circumstances of the case and in law the Id. CIT(A) has erred in admitting the new evidence in contravention of Rule 46A of the IT Rules.
(iii) While doing so the CIT(A) has erred further in holding the view that lending and investment activity was substantial part of the business of the lender company M/s. Oscar Laboratories P. Ltd.
3.1 As all the above three grounds are inter-related and constitute single issue, so we are taking them up together for our consideration.
4. The relevant facts, briefly stated, are that the assessee is an investment company and listed on stock exchange. The assessee was having financial transactions with M/s. Oscar Laboratories (P.) Ltd. (hereinafter referred to as "OLPL"), a closely held company within the same group. The Assessing Officer made an addition of Rs. 3,39,37,000, being amount of loan, raised by the assessee-company from OLPL treating such loan as deemed dividend under the provisions of Section 2(22)(e) of the Income-tax Act, 1961 (for short 'Act') because one common shareholder, namely, M/s. Jupiter Investments (P.) Ltd. holding 21.36 per cent shares of assessee-company, was also holding 20 per cent shares in the capital of OLPL, and there were accumulated profits in the books of account of OLPL. Aggrieved by this the assessee preferred an appeal against the assessment order before the CIT(A).
5. The Id. CIT(A) deleted the aforesaid addition by treating lending and investment activity as a substantial part of business carried on by OLPL in the ordinary course of its business although loans raised by assessee-company from OLPL from the date on which Jupiter Investments (P.) Ltd. became shareholder of both companies were otherwise qualified to be treated as deemed dividend. The Id. CIT(A) arrived on this conclusion on the basis of higher proportion of interest on advances/loans and income from investment in securities in the profits of the lender company as compared to the ratio of income from pharma business in the profits. Hence, the present appeal by the Revenue before us.
6. The Id. Departmental Representative drew our attention to serial No. 21 and Note No. 2 of the index of the paper book which runs as under:
Sl Particulars Page Authority with
No. No. which
documents are
on record
1 2 3 4
21. Certificate from M/s. OLPL for allotment of 60-62 CIT(A)
shares to M/s. Jupiter Investments (P.) Ltd.
and copy of Bank statement filed before
CIT(A) under cover of letter dated 26-10-1999.
Note No. 2 : It is further certified that page Nos. 60-62 were furnished as desired by CIT(A) during the course of appellate proceedings.
It was contended by the Departmental Representative that the Id. CIT(A) decided by the issue by admitting additional evidence mentioned stated above along with certified copy of return of allotment filed by the company with Registrar of Companies and acknowledgement receipt thereof. He has contended that no opportunity was given to the Assessing Officer to controvert the same. He has therefore, requested to restore the matter back to the Assessing Officer for fresh adjudication after considering the said evidence. The Id. Departmental Representative, apart from the above contention, drew our attention also to the relevant paragraphs 3, 3.3 of the order of the Assessing Officer for appreciation of factual position as well as para Nos. 4, 14, 15 and 17 of the Id. CIT(A)'s order.
7. The Id. Authorised Representative of the assessee, on the other hand, argued as under:
(i) The assessee-company is a public limited company listed in Stock Exchange in which public are substantially interested and, therefore, provisions of Section 2(22)(e) of the Act are not applicable.
(ii) M/s. Jupiter Investments (P.) Ltd. became a common shareholder in both the companies, ie., borrower company (the assessee) and the lender company (OLPL) on 9th January, 1996. Hence, amount of loan outstanding in books of the assessee before that date could not be treated as deemed dividend. In support of his contention he relied on the decisions in the cases of Rajagiri Rubber & Produce Co. Ltd v. CIT and CIT v. H.K. Mittal .
(iii) Since OLPL, the lender company, gave advances/loans in its ordinary course of business activities, hence such loans/advances were not to be treated as deemed dividend being specifically excluded from the deemed dividend as per the provisions of Sub-clause (ii) of Section 2(22)(e) of the Act. With reference to this contention, he drew our attention to the assessment order of OLPL for the relevant assessment year, financial statements and activity-wise financial result statement of OLPL.
(iv) In respect of submission of additional evidence before the CIT(A) the Id. Authorised Representative of the assessee argued that certified true copy of return of allotment regarding allotment of shares to M/s. Jupiter Investments (P.) Ltd. by OLPL is issued by Registrar of Companies was already filed with the Assessing Officer along with application under Section 154 in the month of August, 1999, therefore, the contentions of the Revenue in this respect were not tenable.
8. To appraise the facts and applicable law in an appropriate manner it is pertinent to reproduce relevant provisions of Section 2(22)(e) of the Act as applicable at the relevant time as under:
' "dividend" includes--
(e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits;
but does not include--
(ii) any advance or loan made to a shareholder or the said concern by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company;
Explanation 3.--For the purpose of this clause -
(a) "concern" means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company,
(b) a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the income of such concern;'
9. The contention of the Authorised Representative of the assessee regarding non-applicability of the provisions of Section 2(22)(e) of the Act to the assessee is not tenable in law because the provisions of Section 2(22)(e) are attracted when any payment is made by a company, not being a company in which the public are substantially interested, by way of advance or loan to any concern in which a shareholder, who holds not less than 10 per cent of voting power of such company, is a member and has a substantial interest in the said concern. In Clause (a) of Explanation 3 to Section 2(22)(e), we find that the "concern" means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company. Since OLPL is closely-held company which has advanced loan to a concern, i.e., assessee-company and the common shareholder M/s. Jupiter Investments (P.) Ltd. holds specified percentage of shares of both companies, therefore, the transaction of loan/advance in the present case can be treated as deemed dividend to the extent of accumulated profits in the books of account of the OLPL.
10. M/s. Jupiter Investments (P.) Ltd. became a shareholder of both companies on 9-1-1996 as evidenced by records of Registrar of Companies and, therefore, amount of loans taken by the assessee-company from OLPL up to the date cannot be treated as deemed dividend.
11. The Id. Authorised Representative of the assessee's third contention is that the lender company gave loans and advances in its ordinary course of business activities to the assessee-company and the lending of money was a substantial part of business of the lender company, therefore, advance/loan made to the assessee-company was not to be treated as dividend as per Clause (ii) of Section 2(22)(e) of the Act. The Authorised Representative of the assessee-company vehemently argued on this point and strongly relied on the order of the CIT(A). Admittedly the Id. CIT(A) has treated lending and investment activity as a substantial part of business of OLPL on the basis of higher proportion of interest earned and profits on sale of investments in the total profits of OLPL as compared to results of Pharma business.
12. We have carefully considered the information and details submitted by the assessee in the paper book. Page 43 of the Paper Book contains details of activity-wise financial results of OLPL for the year wherein only interest costs incurred by OLPL have been attributed to investment/ lending income. The extracts of page No. 43 of the paper book being relevant, are being reproduced as under :--
Activity-wise result for the year ended 31st March, 1996 Investments Pharmaceutical Amount (Rs.) Business Total INCOME Sales - 13,40,55,516 13,40,55,516 Dividend received 52,30,003 - 5,230,003 Interest received 14,67,05,848 - 14,67,05,848 Miscellaneous receipt 105,259 32,428 1,37,687 Profit on sale of 10,65,88,856 - 10,65,88,856 investment Premium on debentures 28,91,457 - 28,91,457 Closing stock (Trade) - 5,89,734 5,89,734 Total 26,15,21,423 13,46,77,678 39,61,99,101 EXPENDITURE Manufacturing - 7,40,13,160 7,40,13,160 Finished Goods - 3,72,92,546 3,72,92,546 Excise Duty - 1,41,79,105 1,41,79,105 Administration Charges - 57,46,374 57,46,374 Personal 25,51,266 25,51,266 Interest 17,84,11,836 - 17,84,11,836 Preliminary Exp. - 1,852 1,852 Written-off Depreciation - 14,11,000 14,11,000 Share of loss from 31,818 - 31,818 partnership
----------- ---------- ------------
Total 17,84,43,654 13,51,95,303 31,36,38,957 Profit before Tax 8,30,77,769 (5,17,625) 8,25,60,144
Pages 13 to 16 of the Paper Book contain details of interest received by the lender company and pages 17 to 19 contain details shareholders of OLPL. These details indicate that OLPL received major portion of interest from companies which are shareholders of OLPL and further such companies appear to be interlinked because of common addresses, common name etc. From the details of investment at pages 30 to 33 it is observed that OLPL has made investment in the shares of the listed companies of the pharma sector and in particular of Ranbaxy Laboratories Ltd. whose associated companies have also paid interest to OLPL (Serial Nos. 14 to 15 of page No. 14 of the Paper Book). The investment in unquoted shares has been made mostly in the share capital of closely-held private, limited companies only which also appear to be inter-connected, directly or indirectly. Unsecured loans/secured loans are also from the companies (page 28 of the paper book) however party-wise details are not in the records. The observations of the Auditors in Clauses 7, 8, 9 and 13 of their report (page 22/23 of Paper Book), being relevant for the purposes of establishing inter-lacing, connectivity, inter-dependence between the OLPL and them, are reproduced as under:
7. The company has taken unsecured loans, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. The terms and conditions on which these loans have been taken are not prima facie prejudicial to the interest of the Company.
8. The Company has granted unsecured loans, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. The terms and conditions on which these loans have been taken are not prima facie prejudicial to the interest of the company.
9. The parties to whom loans or advances in the nature of loans have been given by the Company are generally repaying the Principal amounts as stipulated and are also regular in payment of interest wherever stipulated.
13. The Company has not accepted any deposits from the public to which provisions of Section 58A of the Companies Act, 1956, and the Companies (Acceptance of Deposits) Rules, 1975 apply.
Therefore, accordingly the findings of the statutory auditors in their report lending and borrowing transactions of OLPL appear to be with the companies which are inter-linked, associated directly or indirectly and group companies.
12.1 Further as stated in Clause 4 of significant accounting policies, annexed to and a forming part of the financial statements, the investments are meant for long-term and have been valued at cost and accordingly such investments have been shown in the assets side of balance sheet (page 26 of Paper Book) of OLPL. It is further observed that auditors have treated the lending/investment activities of the lender company as incidental only because they have not given their comments as required under Clauses 4(D)(ii) and 4(D)(iv) of MAOCARO, 1988 (reproduced hereunder) applicable to Companies engaged in the business of financing, investment and lending which are as under:
Additional Reporting requirements under MAOCARO, 1988 for Companies being, Investment Companies/Loan companies.
Clause 4(D)(ii) - Whether adequate documents and records are maintained in a case where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
Clause 4(D)(iv) - If the company is dealing or trading in shares, securities, debentures and other investments, whether proper records have been made therein, and also whether the shares, securities, debentures and other investments have been held by the company in its own name except to the extent of exemption, if any, granted under Section 49 of the Companies Act, 1956.
Further the Assessing Officer of OLPL has, in the assessment order, dealt with the aspect of investment in the shares by OLPL with limited objectives of treatment of profits on sale of shares either as capital gain or business profits, and in the process he has not given any finding regarding borrowing and lending of money by OLPL being an activity carried on by OLPL in the ordinary course of its business. The conclusions of the Assessing Officer that company was dealing or trading in shares and not holding shares as investment are not supported by the facts and material on record as narrated hereinbefore. Merely holding of investments per se will not make a company an investment company unless it was the business of the company to hold the investments or deal in these investments in a systematic or organized manner. Even if the lender company is treated as an investment company that would not help the cause of the assessee because borrowing and lending of money on interest is different and distinct activity then investment activity.
12.2 The contention of the Id. Counsel of the assessee that the investment/ lending activities of OLPL are covered under the other objects clause of memorandum of association also supports that the company was not formed for the purpose of borrowing and lending of money in its ordinary course of business. Although company can pursue activities mentioned in the "other object clause" of Memorandum of Association after passing necessary resolutions and obtaining requisite approval from competent authorities. Such approvals make company legally competent to carry on that activity but when such activities are pursued in a real, substantive and organized manner only then such activities can be termed as activities carried on in the ordinary course of business otherwise these will remain as activities incidental to business.
12.3 The assessee has relied on the financial results of the lender company for the year only and has not submitted the nature of activities of OLPL in earlier and subsequent years to support its contention that investment and financing activity is being carried out by the lender company in the ordinary course of its business and forming substantial part of business. For determination of substantial part of business, the pattern or trend of assets/income composition over a period of years must be considered and asset/income composition of one year alone cannot be a conclusive proof.
12.4 The observation of Assessing Officer that the lender company has not paid interest tax under the provisions of Interest-tax Act, 1974 is also a relevant point for consideration because any person carrying business activity in the ordinary course should have a reasonable knowledge of statutory obligations which one has to perform. The Id. CIT(A) has also not given any findings on this point in his order. Carrying of business involves some real, substantial and systematic or organized course of activity taking into consideration the regulatory framework applicable to those activities and the compliance therewith. Further, the company did not have any technical/managerial staff for the purposes of investment and financing activities which is clearly established from the activity-wise profit results at page 43 of Paper Book. Hence, the activities of borrowings and lending of money on interest, that too, within the group/associated companies cannot constitute an activity in the ordinary course of business and the financial results alone of such transactions cannot be a determinate factor if all other factors required to constitute a business in the real sense are absent. Earning of income from financing/investment activities in such circumstances and in particular situation where such transactions give an impression of facilitation and rotation of money within a specific group of entities would be merely an incidental and natural off shoot of deployment of borrowed funds and hence cannot be termed as a result of organized business activity.
12.5 All activities carried on by the lender company need to be considered to determine the ordinary business of the company. The lender company, no doubt, is engaged in pharma business in an organized manner as is evident from the financial statements and activity-wise results filed by the assessee. The turnover of pharma business is quite substantial and merely on the basis of loss incurred by the lender company in pharma business, the engagement of the company in pharma business in the ordinary course as its primary activity is not ceased. The decisive factor in determining the status of a company is, therefore, the true nature of the primary activity of the company. In the case of CIT v. Distributors (Baroda) (P.) Ltd. , the Hon'ble Supreme Court has also held as under which supports our view:
If a company engages itself in two or more equally or nearly equally important business activities, then it cannot be said that the company's business consists "wholly or mainly" in dealing in a particular thing. Further, even in cases where a company has more than one business activity and one of its activities is more substantial than the other, unless that activity is the primary activity of the company, it cannot be said that that company is engaged "wholly or mainly" in any of its business activities.
Therefore, in the present case, if the Finance & Investment activities of OLPL are treated as one of the business activities even then the lender company cannot be stated to be engaged in the lending of money in the ordinary course of business because this is not the primary activity of the company.
Sub-clause (ii) of Section 2(22)(e) prescribes two conditions i.e., (1) the advance or loan should have been made in the ordinary course of business, and (2) activity of lending of money should be substantial part of the business of the company. Where the advance or loan is not made in the ordinary course of business itself, the question whether such lending of money is substantial part of business would not arise at all. No specific criteria has been provided in the section as to what would constitute "in the ordinary course of business" and how 'substantial part of the business" would be decided. Therefore, broad principles like "primary activity", "Capital employed", "composition of income", "license and legal authorization" etc. are applied to determine the true nature of the activities carried on by any person. Each of these factors would be relevant factor for the determination of true nature of activities in the facts and circumstances of each case. In the present case, no doubt, income from investment/ financing activities is much higher but in the light of our observations in the foregoing paragraphs, this alone is not sufficient and conclusive to treat the financial investment activities of OLPL as being carried out in the ordinary course of its business and forming a substantial part of business.
13. In view of the above facts and provisions of law we summarize our findings as under:
(i) The loans/advances raised by the assessee-company would fall within the ambit of provisions of Section 2(22)(e) as the lender company is a closely-held company in which public are not substantially interested.
(ii) The objects clause of memorandum of association of a company is not as conclusive proof for determining the nature of activity as substantial part of business as it only enables the company to carry out activities specified therein.
(iii) The pattern or trend of capital employed, utilization of assets and composition of income over a period of years and not of one year shall be the factor that will influence the determination of activity substantial as part of business. Significance/contribution of each activity would play a crucial role in deciding the business carried on by the company in ordinary course and substantial part thereof, even if such contribution is a negative income (loss). Investment activity and financing activity are distinct and different from each other, hence classification of one activity as business carried on in the ordinary course would not automatically result in the classification of other activity as business being carried on by the company on the ordinary course.
(iv) After taking into consideration the totality of the facts and circumstances it is clear that the lender company is not engaged in the lending of money in the ordinary course of business merely because the income from financing and activities is more than the income from pharma business, therefore, the question of deciding this activity being substantial does not arise. Further the financing and investment activities of lender company cannot be treated as substantial part of business because it is not the primary activity of the lender company.
(v) The applicability of regulatory framework to the activities of the company and compliance therewith is an essential factor to determine the nature of activity, i.e., whether such activity is an activity carried on in the ordinary course of business or it is an incidental business activity.
(vi) The loans and advances raised by the assessee-company after 9th January, 1996 till 31st March, 1996 to the extent of accumulated profits in the books of account of lender company or the amount of such loans and advances whichever is less shall be included in the income of the assessee as deemed dividend which works out at Rs. 10,00,000 as per copy of account placed at page 6 of the Paper Book.
(vii) With regard to Ground No. 2 regarding admission of new evidence by the Id. CIT(A), we would have preferred to restore the issue to the file of the Assessing Officer for affording an opportunity to examine the aforesaid evidence referred to as "new" and then to decide the issue but in view of our understanding and analysis of the facts that even thereafter the resultant situation that would emerge will remain the same because copy of the return of allotment filed by the assessee with the Registrar of Companies clearly establishes the fact that M/s. Jupiter Investment (P.) Ltd. became the shareholder in the lender company on the specified date evidenced thereby, therefore this ground of the Revenue is rejected.
14. Coming to the appeal filed by the assessee being ITA No. 1729 /M/2000 for the very assessment year 1996-97, the only effective ground taken is that the Id. CIT(A) has erred in upholding the loans raised from M/s. Oscar Pharmaceuticals (P.) Ltd. (OPPL) as deemed dividend under Section 2(22)(e) of the Act and thereby confirming the addition of Rs. 23,822. The facts relating to this issue are identical with those as narrated in the Revenue's appeal No. 2703/M/2000. The Assessing Officer has treated Rs. 23,822 as deemed dividend out of the amount of loans raised by the assessee from lender company OPPL being to the extent of accumulated profits in the books of account of the lender company. The Id. CIT(A) confirmed the addition by holding that after treating the loan as deemed dividend one need not come to the last day of the accounting period because Section 2(22)(e) requires that whenever loan is advanced to a shareholder or to a concern, accumulated profits up to the date of such advance must be ascertained and since on the date of loan the loss etc. was not determinate, therefore, the accumulated profits were taken at Rs. 23,822 and amount of loan to this extent was treated as deemed dividend.
15. With regard to the said addition the Id. Authorised Representative of the assessee contended that as per the balance sheet of the assessee as on 31-3-1996 there was a balance of Rs. 23,822 under the head "reserves and surpluses". However the debit balance (loss) of Rs. 2,00,278 was also appearing in the balance sheet which was required to be adjusted against the aforesaid reserves to arrive at the figure and accumulated profits which were in fact negative, i.e., Rs. 1,76,456 (Rs. 23,822 - Rs. 2,00,278). Since there were no accumulated profits, there can be no question of any deemed dividend. The Id. Departmental Representative relied on the order of the CIT(A).
16. We have considered the rival submissions, the relevant material on record and the orders of the authorities below. It is noted that the amount of Rs. 23,822 appearing under the head of reserve and surplus was arrived at only at the year end. Therefore, the debit balance of Rs. 2,00,278 profit and loss account appearing in the assets side should have been taken into consideration to arrive at the figure of accumulated profits. Other facts being identical to the facts narrated in ITA No. 2703/M/2000 hereinabove need no repetition.
17. In view of the above we are of the considered opinion that the Id. CIT(A) was not justified in ignoring the debit balance of Rs. 2,00,278 in arriving at the figure of accumulated profits and, therefore, the order of the Id. CIT(A) in confirming the addition is set aside. This ground of the assessee is accordingly allowed.
18. The assessee has raised an additional ground of appeal pertaining to levy of interest under Sections 234B and 234C which for decision. The Authorised Representative of the assessee relied on judgment of Hon'ble Supreme Court in the case of CIT v. Ranchi Club . The Id. Departmental Representative argued that the facts and circumstances of the case relied by the Authorised Representative of the assessee were different and also contended that in view of subsequent decisions of Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala and Hindustan Bulk Carriers [2003] 259 ITR 449 wherein it has been held that the interest under the aforesaid section is mandatory, therefore, this ground of the assessee cannot be accepted. We have heard the rival submissions and perused the aforesaid decisions and in our humble understanding the Hon'ble Supreme Court in the matter of CIT v. Ranchi Club Ltd. decided the issue on facts and did not declare any law. Subsequently, in the matter of CIT v. Anjum M.H. Ghaswala , Larger Bench of Hon'ble Supreme Court held that interest under Sections 234A, 234B and 234C was mandatory in nature and this decision was affirmed by the Hon'ble Supreme Court in the matter of CIT v. Hindustan Bulk Carriers [2003] 259 ITR 449 and again in the matter of CIT v. Santram Mangatram Jewellers .
In the matter of Vinod Khurana v. CIT , Hon'ble Punjab and Haryana High Court considered the issue of relationship between assessment order and notice of demand and after following the decision of Hon'ble Supreme Court in the matter of Kalyan Kumar Ray v. CIT held that demand notice is a part of assessment order and conclusion of interest is mentioned on the calculation sheet attached with notice of demand and signed by Assessing Officer, then it would be deemed that Assessing Officer had charged the interest according to law. The interpretation of Sections 234A, 234B and 234C has considerably changed after decision of Hon'ble Supreme Court in Anjum MM. Ghaswala (supra), Hindustan Bulk Carrier's case (supra), Sant Ram Mangatram Jewellers' case (supra). All the three decisions of Supreme Court have consistently and in unequivocal terms have held that interest under these sections is mandatory in nature and no authority has power to waive these interests except under the circumstances and by the authorities mentioned in the instructions of the Board dated 23-5-1996. The decision of Hon'ble Supreme Court in Ranchi Club Ltd. s case (supra) is apparently contradictory with the subsequent decisions of larger Benches of Supreme Court in the cases referred hereinabove. In Ranchi Club Ltd.'s case (supra), the inference from the decision is that if Assessing Officer does not charge the interest through assessment order then he cannot charge it at all, meaning thereby, that by not charging these interests in the assessment order, he has waived them. On the other hand, subsequent three decisions of Supreme Court as referred to above clearly hold that these interests being mandatory, no body can waive it except provided in the said circular of CBDT. The authority mentioned in instructions dated 23-5-1996 is Chief Commissioner who under specific circumstances and conditions, if satisfied by assessee, can waive interest wholly or partially. But the Assessing Officer is not the authority mentioned in that instructions. In other words Assessing Officer does not have any authority whatsoever to waive any interest chargeable under these sections if default of the nature described in the section exists. Thus, out of apparently two contradictory propositions of law as annunciated by Hon'ble Supreme Court, we are bound to follow the one which is pronounced later and by a larger Bench of Hon'ble Supreme Court. In view of the later decisions of Hon'ble Supreme Court interest under these sections is mandatory and Assessing Officer has no authority to waive it even by implication by not mentioning the same in the assessment order or notice of demand or calculation sheet. Therefore, we are further of the view that interest being mandatory and Assessing Officer having no power to waive it overtly or by implication, the Assessing Officer can charge these interests by invoking the power under Section 154 of the Act if not originally charged in the assessment order. Accordingly this ground of the assessee is rejected.
19. In the result, the appeal filed by the Revenue is partly allowed. The appeal filed by the assessee is also partly allowed.