Income Tax Appellate Tribunal - Hyderabad
Dcit, Circle-3(1), Hyd, Hyderabad vs Shriram Life Insurance Co.Ltd., Hyd, ... on 23 March, 2017
1
ITA.No.1274/Hyd/2015 M/s. Shriram
Life Insurance Co., Ltd., Hyderabad.
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B" : HYDERABAD
BEFORE SHRI D. MANMOHAN, VICE PRESIDENT
AND
SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA.No.1274/Hyd/2015
Assessment Year 2007-2008
The DCIT, Circle-3(1) M/s. Shriram Life Insurance
Hyderabad. vs. Co., Ltd., Hyderabad.500032
PAN AAJCS1033P
(Appellant) (Respondent)
For Revenue : Smt. U. Minichandran
For Assessee : Shri E.V. Sri Krishna &
Shri V. Sivakumar
Date of Hearing : 23.03.2017
Date of Pronouncement : 23.03.2017
ORDER
PER D. MANMOHAN, V.P. This appeal by the Revenue is directed against the order dated 19.08.2015, passed by the CIT(A)-3, Hyderabad.
2. Brief facts, necessary for the disposal of the appeal, are stated in brief. Assessee-Company, as the name suggests, is engaged in Life Insurance Business. For the year under consideration, it declared a net taxable income of Rs.15.97 crores on 30.10.2007. Later a revised return was filed on 5th December, 2007 wherein tax on the returned income works-out at Rs.1,99,68,488, being 12.5% of the net taxable income.
2ITA.No.1274/Hyd/2015 M/s. Shriram Life Insurance Co., Ltd., Hyderabad.
2.1. This is the first year from which the Company is mandatorily required to file the returns of income online. While explaining the procedure to be followed, it was submitted that information has to be fed in 'excel utility', which was provided to the department, and after feeding the relevant information the utility would generate xml file which was uploaded to Income Tax Website, to complete e-filing. Being the first year of e-return filing, it did not contain any checks and balances to verify the contents of the amount and other information. The tax amount, rate of tax are to be entered into the utility manually and there was no mechanism to prompt any possible error and mistakes. Due to the above reasoning, certain errors have crept in the return filed whereby it was depicted that the assessee was to be charged to tax at normal rates i.e., 30% instead of the correct rate of 12.5%.
2.2. The A.O. appears to have processed the return but neither the order under section 143(1) nor notice of demand under section 156 was received by the assessee. When the income tax refund order - pertaining to A.Y. 2009-2010 - was received indicating that the refund was adjusted against the demand for the A.Y. 2007-08, the assessee came to know that there was an outstanding demand for A.Y. 2007-08 due to incorrect application of rate of tax. Immediately i.e., in August, 2011 assessee filed application under section 154 of the Act seeking rectification of the order passed by the A.O since it was a technical error. The A.O. rejected the request by observing that assessee is entitled to seek settlement of the grievance as per Law. In the said order dated 17.11.2014 reference was made to the application dated 16.05.2014.
2.3. It may be stated that the order under section 143(1) was actually passed on 18.03.2009 and even reckoned from that date, the application filed under section 154 dated 23.08.2011 was within the 3 ITA.No.1274/Hyd/2015 M/s. Shriram Life Insurance Co., Ltd., Hyderabad.
time permissible under Law but the A.O. having not acted upon the petition, reminder letters were sent from time to time till 2014 and by mistake the A.O. had given reference to the letter dated 16.05.2014. However, the application was not rejected on the ground of delay in filing application under section 154 but on merits by observing as under:
"It is noticed from your return of income filed that you have not claimed any special rate taxes to be paid at the time of filing of return of income. The claim of special rate tax in the return of income, as per column 2b of Part-B-TTI, is specifically stated as NIL. It is only now that you have been seeking a lower rate of taxes to be adopted. As there is no mistake apparent from record, calling for any action from this end, your request cannot be acceded to u/s.154. You may seek for settlement of your grievance as per law."
3. Aggrieved, assessee preferred an appeal before the CIT(A) contending, inter alia, that there is no dispute with regard to the percentage of tax chargeable in respect of Life Insurance Company and in fact, the tax paid by the assessee on the returned income exactly works-out to 12.5% and hence, the A.O. ought not to have gone by the technical mistake committed since the name of the company itself suggests that it is 'Life Insurance Company' on which special rate of tax is applicable.
4. Ld. CIT(A) considered the issue at great length and noticed that the assessee declared its income and computed tax at the special rates applicable to him but filled-in wrong columns. She further observed that the amount of tax due to the income tax department legitimately is only 12.5% whereas A.O. sought to encash the minor technical error, in the first year of e-filing procedure, by taxing the assessee at a higher rate which is not permissible in Law. Accordingly, the A.O. was directed to compute the tax at 12.5% as per Section 115B 4 ITA.No.1274/Hyd/2015 M/s. Shriram Life Insurance Co., Ltd., Hyderabad.
of the Act. Aggrieved by the order of the Ld. CIT(A), Revenue preferred appeal before the Tribunal.
5. As noticed from the grounds of appeal, the first point urged was that the rectification application filed was beyond the time limit prescribed, overlooking the fact that the original rectification petition was filed in 2011 while the return was processed on 18.03.2009 and thus, it was within the time limit provided under the Act.
6. Ld. D.R. fairly admitted the mistake. However, Ld. D.R. submitted that the assessee having not filled-in columns correctly the A.O. has not committed any mistake in adopting the tax rate at 30%.
7. We have heard the rival contentions and carefully perused the record. It is well settled that under Article 265 of the Constitution of India no tax can be collected without the authority of Law. In the instant case, the Law provides for collection of tax at 12.5% only in the case of Life Insurance Companies which are registered with the Insurance Regulatory and Development Authority ("IRDA"). Apart from that the CBDT has issued Circular No.14(XL) 35 dated 11.04.1955 wherein the department was advised not to take advantage of ignorance of assessee to collect more tax than what is legitimately due. In otherwords, the said circular casts a duty upon the A.O. to advise the assessee/guide him and not to take advantage of any error or mistake committed by the assessee inadvertently and such mistakes should be rectified under section 154 of the Act. (See Latest Judgment of Delhi High Court in the case of Vijay Gupta vs. CIT - WP(C) No.1572 of 2013 dated 23.03.2016). In case of any mistake in the return the Revenue should not encash on the mistake committed by the assessee and it is the duty of the A.O. to collect proper tax permissible under Law.
5ITA.No.1274/Hyd/2015 M/s. Shriram Life Insurance Co., Ltd., Hyderabad.
7.1. In fact, the very name of the assessee suggests that it is LIC and it is taxable at 12.5% and thus the mistake, if any, in the original return and the tax levied on the basis of the original return can be considered as a mistake apparent from record and the A.O. is duty bound to correct the same. Since the Ld. CIT(A) has given a direction on the same lines, we do not find any infirmity in the order passed by the CIT(A) and accordingly, the appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on 23.03.2017.
Sd/- Sd/- (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 23rd March, 2017 VBP/- Copy to
1. The DCIT, Circle-3(1), 7th Floor, 'B' Block, IT Towers, A.C. Guards, Hyderabad.
2. M/s. Shriram Life Insurance Co., Ltd., Plot No.31 & 32, 5th Floor, Ramky Selenium, Financial District, Besides Andhra Bank Training Centre, Gachibowli, Hyderabad - 500 032.
3. CIT(A)-3, Hyderabad.
4. Pr. CIT-3, Hyderabad.
5. D.R. ITAT "B" Bench, Hyderabad.
6. Guard File