Income Tax Appellate Tribunal - Kolkata
Ici India Ltd. vs Dcit, Sr-15 on 25 November, 2003
Equivalent citations: [2004]90ITD258(KOL)
ORDER
D.K. Srivastava, Accountant Member
1. While the first appeal, ITA No. 502 (Kol.) of 2002, relating to the assessment year 1989-90 is directed against the order dated 11.1.2002 passed by the Commissioner of Income-tax (Appeals) X, Kolkata ('CIT(A)' in short), the second appeal, ITA No. 500 (Kol.) of 2002, relating to the assessment year 1992-93 is directed against the order dated 25.2.2002 passed by the CIT(A). Since the main issue involved in both the appeals is common, both the appeals are disposed off by a common order.
2. In ITA No. 502 (Kol.) of 2002 (A Y 1989-90), the appellant-assessee has taken the following grounds of appeal:
"(1) That the Learned Commissioner of Income-tax (Appeals) has wrongly concluded that the transfer of Fertilizer and Fibres Undertakings as a going concern falls within the purview of Section 32A(5) of the IT Act for withdrawal of Investment Allowance granted for plant and machinery purchased during A Y 1989-90."
"(2) That the Learned Commissioner of Income-tax (Appeal) has erred in ignoring the fact that plant and machinery purchased during AY 1989-90 continues to be utilized in the Fertilizer and Fibres Undertakings notwithstanding the fact that the two undertakings have been transited as going concern."
"(3) That the Learned Commissioner of Income-tax (Appeal) has erred in concluding that interest is leviable under Section 155 of the IT Act for recall of Investment Allowance claim granted to the Company in the earlier years."
"(4) The appellant craves leave to alter, modify or otherwise amend the ground of appeal hereinbefore stated should it become necessary."
*Note: The Ld. Counsel for the assessee has not pressed Ground No. 3.
3. In ITA No. 500 (Kol.) of 2002 (A Y 1992-93), the appellant-assessee has taken the following grounds of appeal:
"(1) That the Learned Commissioner of Income-tax (Appeals) has wrongly concluded that the transfer of Fertilizer and Fibres Undertakings as a going concern falls within the purview of Section 32A(5) of the IT Act for withdrawal of Investment Allowance granted for plant and machinery purchased in the earlier years."
"(2) That the Learned Commissioner of Income-tax (Appeal) has erred in ignoring the fact that plant and machinery purchased in the earlier years continues to be utilized in the Fertilizer and Fibres Undertakings notwithstanding the fact that the two undertakings have been transferred as going concern."
"(3) That the Learned Commissioner of Income-tax (Appeal) has erred in concluding that interest is leviable under Section 155 of the IT Act for recall of Investment Allowance claim granted to the Company in the earlier years."
"(4) The appellant craves leave to alter, modify or otherwise amend the ground of appeal hereinbefore stated should it become necessary."
4. As evident from the above, the main issue common in both the appeals is whether the CIT(A) is justified in confirming the action of the Assessing Officer ("AO" in short) in withdrawing the investment allowance already granted, in terms of the provisions of Section 32A(5) and Section 155(4A) of the Income-tax Act, 1961 ("Act" in short). Another issue arising in the appeal for A Y 1992-93 is whether the CIT(A) is justified in confirming the action of the AO in revising the amount of interest as a result of the increase in the total income of the assessee consequent upon the aforesaid order of the AO passed in terms of Section 32A and 155(4A) of the Act.
5. Briefly stated, the facts of the case, as recorded by the authorities below, are that the AO, while perusing the return for AY 1994-95, found that the assessee had sold/transferred certain items of plant and machinery of Fertilizer Division and Fibres Division during the year ended 31st March 1994. He also found that the assessee had capitalized Rs. 12,85,69,303/- worth of plant and machinery in AY 1989-90 in the Fertilizer Division, which was subsequently sold/transferred in the year ended 31.3.1994. On the aforesaid capitalized value, investment allowance of Rs. 2,57,13,859/- was granted to the assessee in AY 1989-90. The assessee had similarly capitalized Rs. 1,43,85,716/- worth of plant and machinery in AY 1989-90 in the Fibres Division, which too was sold/transferred in the year ended 31.3.1994. On this capitalized value also, investment allowance of Rs. 28,77,143/- was granted in AY 1989-90. Thus total investment allowance granted to the assessee in AY 1989-90 was Rs. 2,85,91,002/-. Since the plant and machinery of Fertilizer Division and Fibres Division were sold/transferred within eight years of their installation, the AO invoked the provisions of Section 32A(5) and 155 (4A) of the Act and Withdrew the investment allowance already granted in AY 1989-90, by his order dated 13.9.1995. As a consequence of the aforesaid order, the AO carried out necessary rectifications so as to give consequential effect to the investment allowance to be carried forward to subsequent assessment years which resulted in the creation of demand of Rs. 4,36,23,595/- for AY 1992-93 including interest charged.
6. Aggrieved by the aforesaid orders of the AO, the assessee preferred appeals for both the assessment years before the CIT(A). As far as AY 1989-90 is concerned, the assessee contended before the CIT(A) that since the assessee-company had not transferred the plant and machinery per se out of the Fertilizer and Fibres Undertakings, the transfer of the above two undertakings did not fall within the mischief of Section 32A(5) and hence the investment allowance already allowed to the assessee during last eight years, wherever applicable, could not be withdrawn under Section 32A(5) of the Act. In appeal for AY 1992-93, the assessee further contended that notwithstanding and without prejudice to the aforesaid submission, even if the AO was justified in recalling the investment allowance granted to the assessee-company for the plant and machinery, there was no interest leviable according to Section 155 of the Act under which the AO had carried out the rectification of earlier assessments. The assessee, however, did not succeed before the CIT(A). The assessee is now in appeal before the Tribunal.
ITA No. 502 (Kol.) of 2002 for AY 1989-90
7. Appearing for the appellant-assessee, Dr. Debi Pal, learned senior counsel for the assessee has made three-fold submissions. His first submission was that the assessee had sold the entire Fertilizer Division and Fibres Division as going concerns by way of slump sale in the year ended 31st March 1994 to Chand Chhap Chemicals & Fertilizer Ltd. (CCFCL) and Terene Fibres Ltd. (TFIL) respectively and not the plant or machinery per se as included in the aforesaid Divisions. According to him, what the assessee transferred was the entire Division of Fertilizer and Fibres by way of slump transaction including the plant and machinery installed and used in them with the result that the aforesaid plant and machinery so transferred as part of the aforesaid Divisions continued to be installed and used for the purposes of the business in the same way as before their sale/transfer. His second submission was that Sub-section (5) of Section 32A of the Act would be applicable only when the plant and machinery per se was sold or transferred and not when they were transferred as part of the entire business. He has emphasized upon the fact that while in the latter situation the installation and user of the plant and machinery for the purposes of business is maintained, the position in the former situation is altogether different. He has thus drawn a distinction between a situation where the plant and machinery per se is sold or transferred and thereby attracts the provisions of Section 32A(5) and a situation where the entire business including the plant and machinery is transferred as slump sale which, according to him, is outside the scope of Sub-section (5) of Section 32A. His third submission was that the legislative intent behind Section 32A is to encourage the industrial development of the country by providing incentive, in the form of investment allowance Under Section 32A, on investment in the acquisition, installation and consequential use of plant or machinery for the purposes of business. He has also submitted that so long as the plant and machinery on which the investment allowance had been granted continued to be installed and used for the purposes of the aforesaid business, the investment allowance once granted could not be withdrawn. He has further contended that the legislative intent in enacting Sub-section (5) of Section 32A is clear in as much as it seeks withdrawal of investment allowance only when plant and machinery per se is sold or transferred and not otherwise. He has also submitted that any construction that defeated the aforesaid legislative intent or led to unreasonableness or anomaly between the legislative intent and literal interpretation should be discarded. According to him, in such an anomalous situation, the provisions of Section 32A(5) should be read and interpreted in a reasonable manner that secures the legislative intent as also the object of the statute. For this proposition, he relied on the authorities reported in 208 ITR 649, 656 (SC); 131 ITR 597, 604 (SC) and 156 ITR 323, 339 (SC).
8. Ld. DR, appearing for the respondent, has relied on the order of the Ld. CIT(A).
9. We have heard the parties, considered their submissions and perused the record placed before us. Relevant provisions concerning the withdrawal of investment allowance are as under:
Section 32A(1): "In respect of a ship or an aircraft or machinery or plant specified in Sub-section (2), which is owned by the assesses and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent, of the actual cost of the ship, aircraft, machinery or plant to the assessee:"
Section 32A(5): "Any allowance made under this section in respect of any ship, aircraft, machinery or plant shall be deemed to have been wrongly made for the purposes of this Act -
(a) if the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed; or
(b) xxxxxxxxxxxxxxxx; or
(c) xxxxxxxxxxxxxxxx, and the provisions of Sub-section (4A) of Section 155 shall apply accordingly :
Provided that nothing in Clause (a) shall apply -
(i) where the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee to the Government, a local authority, a corporation established by a Central, State or Provincial Act or a Government company as defined in Section 617 of the Companies Act, 1956 or (1 of 1956); or
(ii) where the sale or transfer of the ship, aircraft, machinery or plant is made in connection with the amalgamation or succession, referred to in Sub-section (6) or Sub-section (7)."
Section 155(4A): "Where an allowance by way of investment allowance has been made wholly or partly, to an assessee in respect of a ship or an aircraft or any machinery or plant in any assessment year under Section 32A and subsequently -
(a) at any time before the expiry of eight years from the end of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee to any person other than the Government, a local authority, a corporation established by a Central, State or Provincial Act or a Government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956), or in connection with any amalgamation or succession referred to in Sub-section (6) or Sub-section (7) of Section 32A; or
(b) xxxxxxxxxxxxxxxxxxxxxxx, or
(c) xxxxxxxxxxxxxxxxxxxxxxx -
the investment allowance originally allowed shall be deemed to have been wrongly allowed, and the Assessing Officer may, notwithstanding anything contained in this Act, recompute the total income of the assessee for the relevant previous year and make the necessary amendment, and the provisions of Section 154 shall, so far as may be, apply thereto, the period of four years specified in Sub-section (7) of that section being reckoned, -
(i) in a case referred to in Clause (a), from the end of the previous year in which the sale or other transfer took place;
(ii) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;
(iii) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxi.
Explanation: For the purposes of Clause (b), "new ship" or "new aircraft" or "new machinery or plant" shall have the same meanings as in the Explanation below Sub-section (2) of Section 32A".
Section 2(47): "transfer", in relation to a capital asset, includes -
(i) the sale, exchange or relinquishment of the asset; or
(ii) the extinguishment of any rights therein; or
(iii) xxxxxxxxxxxxxxxxxxxxxxxx; or
(iv) xxxxxxxxxxxxxxxxxxxxxxxx; or
(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 (4 of 1882); or
(vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property.
Explanation: For the purposes of Sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in Clause (d) of Section 269UA;"
(Emphasis supplied)
10. Bare perusal of Section 32A(5)(a) shows that the following conditions must be satisfied to attract the withdrawal of investment allowance:
(i) The allowance in respect of eligible assets, e.g., plant and machinery must have been granted to an assessee in his income-tax assessment;
(ii) The same plant and machinery must have been sold or otherwise transferred by the said assessee to any other person; and
(iii) Such sale or otherwise transfer must have been effected before the expiry of eight years from the end of the previous year in which it was acquired or installed.
11. As far as the present appeal is concerned, there is no dispute that (i) the investment allowance as indicated by the AO in his order under Section 155 of the Act was granted to the assessee on the plant and machinery in Fertilizer Division and Fibres Division in assessment year 1989-90; (ii) the assessee has sold/transferred the aforesaid Divisions together with the aforesaid plant and machinery as included therein to another person(s) as indicated above; and (iii) such sale or otherwise transfer has been effected in the year ended 31st March 1994, i.e., well before the expiry of eight years from the end of the previous year in which they were acquired or installed. The case of the assessee thus squarely falls within the ambit of Section 32A(5).
12. The contention of the learned counsel for the assessee that the investment allowance already granted could not be withdrawn Under Section 32A(5)(a) as the eligible assets continued to be part of the same undertaking and also continued to be installed and used therein for the purposes of the same business and in the same way as before their transfer, misses a crucial aspect of Section 32A in that it requires that the eligible assets should be owned by an assessee as also that the same should be "wholly used for the purposes of the business carried on by him." As held in TR Ganapathy Chettiar v. ITO, 70 ITD 127 (TM); (1999) 65 TTJ (Mad.) (TM) 562, the investment allowance Under Section 32A is very much attached to the person who is the owner of the plant and machinery rather than attached to the plant and machinery itself, irrespective of the fact which assessee holds the plant and machinery. We are in respectful agreement with the aforesaid proposition. Reading Section 32A(1) together with the provisions of Sub-section (5) of Section 32A and Sub-section (4A) of Section 155, it becomes abundantly clear that the investment allowance is granted to an assessee on the condition that he will not only continue to own and use the eligible asset for the purposes of the business carried on by him but also that he will not sell or otherwise transfer the same within the prohibited period of eight years. The investment allowance is granted Under Section 32A on the statutory condition that the same shall be withdrawn if the assessee sells or otherwise transfers the eligible asset within a period of eight years from the end of the previous year in which it was acquired or installed. If, after availing the investment allowance, an assessee is found to have sold or transferred the eligible asset before the expiry of the aforesaid period, the investment allowance so made is 'deemed to have been wrongly made' in terms of the provisions of Clause (a) of Sub-section (5) of Section 32A and the same is required to be withdrawn under the provisions of Sub-section (4A) of Section 155. Thus, Clause (a) of Sub-section (5) of Section 32A provides for the consequences, by enacting a deeming provision, that would follow if an assessee, instead of retaining the use of the eligible asset for the prescribed period for the purposes of business carried on by him, sells or otherwise transfers the same to another person within a period of eight years from the end of the previous year in which it was acquired or installed. When Clause (a) of Sub-section (5) of Section 32A of the Act makes it plain what the effect of non-observance of the stipulation contained therein is to be, we have no option but to give effect to such consequences once non-observance of the conditions giving rise to such consequences is established.
13. There is no dispute as regards the fulfillment of all the conditions of Clause (a) of Sub-section (5) of Section 32A except that the contention of the Ld. Counsel is that there is no sale or transfer of machinery and plant per se but of the entire Fertilizer Unit and Fibres Unit including the machinery and plant therein and hence the same is outside the mischief of Sub-section (5) of Section 32A. The question that arises is whether the sale or transfer of the aforesaid units including the eligible assets therein can be construed to be a sale or transfer of the machinery and plant within the meaning of Clause (a) of Sub-section (5) of Section 32A.
14. In our view, the issue before us is squarely covered by a decision of the Hon'ble Bombay High Court in S M Chemicals & Electronics (P) Ltd. v. CIT, 215 ITR 943; 81 Taxman 84, against the assessee. In that case, the issue before the Hon'ble Court was whether the sale of business as a going concern constituted transfer of machinery for the purposes of withdrawal of investment allowance within the meaning of Section 32A(5)and 155(4A) of the Act. In that case also, the learned counsel for the assessee had unsuccessfully contended that the assessee having sold the entire business undertaking consisting of a number of devices as a going concern, the provisions of Sections 155(4A) had no application because, in such a case, according to him, the machinery as such was not sold or otherwise transferred which was a condition precedent for the withdrawal of the development rebate. Taking note of the provisions of Sub-section (5) of Section 32A and Sub-section (4A) of Section 155, the Court held:
"The language of the above provisions is clear and unambiguous. The intention of the Legislature is to withdraw the benefit of development rebate given to the assessee in respect of certain machinery if such machinery is sold or "otherwise transferred" by the assessee within the stipulated period. The expression "otherwise transferred" is a very wide expression and takes within its sweep transfer of the assets from the assessee to some other person by any means or mode whatsoever. There can be no controversy about the fact that, as a result of the sale of the business undertaking of the assessee as a whole as a going concern, the machinery in question also got transferred to the purchaser of the business, viz.; Messrs. Ofisade Pvt. Ltd. That being so, the provisions of Sections 34(3)(b), 155(5), 32A(5) and 155(4A) are squarely attracted and the Income-tax Officer, in such an event, was justified in withdrawing the development rebate and investment allowance allowed to the assessee in respect of such machinery."
15. Referring to the aforesaid observations of the Bombay High Court in S M Chemicals & Electronics (P) Ltd. (supra), the Madras High Court in CIT v. P K Ramaswamy Raja 223 ITR 324 (Mad.); 95 Taxman 173 has held:
"The expression Transfer" occurring in Section 155(5) has not been defined. However in legal parlance, it bears a wide connotation. Even the transfer of a mere fractional interest in properly would come within the conception of transfer of property. There is an indication in Section 155(5) itself that Parliament intended the term "transfer" to be understood in the widest sense possible. This is seen from the expression "sold or otherwise transferred". The transfers, as it were, are divided into two categories, sales and non-sales. The expression 'otherwise' exhausts all the categories of transfers other than sales which are transfers of a kind for consideration. The expression "otherwise" occurring in a combination of words has sometimes been regarded as indicating the application of the ejusdem generis rule. The subject and context of Section 155(5) clearly point to the intention of Parliament that the machinery which has obtained a grant of development rebate by reason of its having come under the ownership of the assessee should continue to remain in the same ownership and should not be parted with by him for a period of at least eight years from the date of installation. In this context, therefore, any parting with that asset would involve a breach of the statutory condition, subject to which alone development rebate is originally granted. It stands to reason, therefore, that the expression "otherwise transferred" must be given such wide amplitude of meaning as is consistent with its ordinary connotation. There can be no warrant for cutting down that meaning, to any extent."
16. Now we shall proceed to consider the submissions of the learned counsel for the assessee. His submission is that the term 'sold or otherwise transferred' in Section 32A(5)(a) does not include slump sale of the unit as a whole as in that case the plant or machinery is not transferred per se but as part of the unit. The term 'sale' is not defined in the Act. However, Section 54 of the Transfer of Property Act, 1882 defines 'sale' as "transfer of ownership in exchange for a price paid or promised or part paid and part promised." Section 6 of the Transfer of Property Act, 1882 defines transfer of property' as an "act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons: and 'to transfer property' is to perform such act. Section 6 of the said Act includes a company in the term 'living person'. The term 'transfer', in relation to a capital asset, is defined by Sub-section (47) of Section 2 of the Act to include, inter-alia, "(i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein." It is not in dispute that the assessee has sold/transferred the aforesaid Divisions together with the plant and machinery on which the investment allowance had been granted in AY 1989-90. The aforesaid machinery and plant which were earlier owned by the assessee stood simultaneously transferred along with the respective units/divisions, by an act of the transferor, to another person with the result that the assessee stood completely divested of the possession as well as the general property in plant and machinery upon their transfer together with the respective divisions/units. The requirement of the eligible assets having been sold or otherwise transferred within the meaning of Clause (a) of Sub-section (5) of Section 32A is fulfilled, in the present case before us, as (i) the assessee has transferred the ownership over the whole units/divisions together with the eligible assets included therein in favour of the transferees; and/or (ii) the assessee has relinquished the eligible assets in favour of the transferees by virtue of the sale/transfer of the aforesaid units/divisions embracing within them the eligible assets also; and/or (iii) there is extinguishment of rights enjoyed by the transferor over the eligible assets as a necessary concomitant of the sale/transfer of the aforesaid units/divisions comprising, inter-alia, the eligible assets. In our view, it makes no difference whether the eligible assets are sold or otherwise transferred as such or transferred as part of the unit/division as, in both the situations, the aforesaid legal incidents necessarily follow in so far as they concern the eligible assets. It may be relevant to point out that the assessee has led no evidence to show that it retained the dominion over the eligible assets even after the sale/transfer of the units of which the aforesaid assets were a part. It is also not the case of the assessee that its rights over the eligible assets did not extinguish upon sale/transfer of the units/divisions including the eligible assets therein. Simply because the plant and machinery have not been sold or transferred as such but as part of and together with the whole unit does not, in our view, mean that they have not been sold or otherwise transferred within the meaning of Clause (a) of Sub-section (5) of Section 32A of the Act.
17. The position may be examined from another angle. It is the assessee's case that it sold/transferred the Fertilizer Division and Fibres Division as going concerns which also mean that it transferred everything, viz., the machinery and plant included therein. Transfer of business/unit as a 'whole' and as 'going' concerns necessarily involves transfer of all the components/parts/assets included therein. In our opinion, there is no substance in the assessee's contention that the sale/transfer of the aforesaid units/divisions as a whole does not mean sale/transfer of the machinery and plant included therein. Our view is also supported by the legal principle that whole includes part as also the maxim that "the greater contains the less" - Omne majus continent in se minus. It will, therefore, be contradiction in terms to say that though the entire business/unit has been sold/transferred, its parts/components/assets comprising the business/unit have not been sold/transferred. We are therefore of the view that transfer of the division/unit as a whole extinguishes the rights of the transferor not only over the entire division/unit but also over everything, e.g., machinery and plant included therein unless the contrary is proved. As pointed out above, the assessee has not led any evidence to show that it retained the rights over the machinery and plant after their transfer as a part of the aforesaid units/divisions.
18. In view of the above, we hold that the assessee has, on the facts and in the circumstances of the case, sold or otherwise transferred the machinery and plant within the meaning of Clause (a) of Sub-section (5) of Section 32A and that it makes no difference to the aforesaid position that the assessee has sold/transferred them as a part of larger transaction covering the sale/transfer of the whole unit comprising, inter-alia, the machinery and plant. The provisions of Section 32A(5)(a) read with Section 2(47) are plain and unambiguous and squarely cover the impugned transaction.
19. We shall now deal with the next submission of the learned senior counsel for the assessee that the literal interpretation of the phrase 'if the ship, aircraft, machinery or plant is sold or otherwise transferred' as occurring in Clause (a) of Sub-section (5) of Section 32A would defeat the legislative intent and the underlying object of Section 32A of the Act which is to encourage investment in the eligible assets for the purpose of business. His submission was that the aforesaid phrase, therefore, deserved to be interpreted reasonably so as to secure the legislative intent and object of the statute. According to him, this is possible by excluding slump transactions or the transactions involving the sale/transfer of the unit/division as a whole from the ambit of the aforesaid phrase. According to him, it could never have been the intention of the Legislature that the aforesaid phrase would be so interpreted as to include even the slump sales of the entire unit or division as in the case of slump sales the requirement of investment in eligible assets for the purpose of the business is not at all disturbed. According to him, if the legislative intention was to include even the slump sales, nothing prevented the Legislature from saying so in the statute itself.
20. We have carefully considered the aforesaid submissions of the Ld. Counsel for the assessee. In our view, the words of Clause (a) of Sub-section (5) of Section 32A and Sub-section (4A) of Section 155 are plain and simple to convey the legislative intent beyond doubt. The phrase 'sold' or 'otherwise transferred' occurring therein has been judicially interpreted to be terms of the widest import. Inclusive nature of the definition of transfer' in Section 2(47) also supports the aforesaid view. There is no dispute that the assessee had parted with the possession and ownership over the eligible assets also consequent upon sale of the Fertiliser and Fibre Units, in favour of the transferee-companies. We have no doubt that the sale/transfer of the entire unit/division also amounts to transfer of everything (e.g., machinery or plant) included in the unit/division. No ambiguity or anomaly is involved in it. The legislative intent is clear that the benefit of investment allowance shall be withdrawn if it is found that the eligible assets have been sold or otherwise transferred within the prohibited period. In the context of such clear legislative intent as expressed in the statute itself, it is not open to us to go behind them to find out the supposed legislative intent and place our own interpretation on the words used in Clause (a) of Sub-section (5) of Section 32A and Sub-section (4A) of Section 155 as suggested by the Ld. Counsel for the assessee. In taking the aforesaid view, we are supported by innumerable judicial authorities, some of which are cited below:
21. In Partington v. Att. Gen. (1869) LR 4 HL 100, 122, Lord Cairns observed:
".......as I understand the principle of all fiscal legislation, it is this: if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however, apparently within the spirit of law the case might otherwise appear to be."
22. In Canadian Eagle Oil Co. v. R. (1946) AC 119, 140, Viscount Simon, LC said:
"In the words of Rowlatt J (in Cape Brandy Sundicate v. IRC (1921) 1 KB 64, 71) whose outstanding knowledge of this subject was coupled with a happy conciseness of the phrase "in a taxing Act one has to look at what is dearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
23. In CWT v. Hashmatunissa Begum 176 ITR 98 (SC); AIR 1989 SC 1024, the Court held:
"One of the pillars of statutory interpretation viz., the literal rule, demands that, if the meaning of the statutory interpretation is plain, the courts must apply it regardless of the result."
24. The aforesaid statement of law has been approved and followed by the Hon'ble Supreme Court in innumerable cases. Since the language of Clause (a) of Sub-section (5) of Section 32A is clear and unambiguous and the case of the assessee squarely falls within its ambit, there is no option but to uphold the charge fastened upon the assessee by the aforesaid provision.
25. In our view, the legislative policy for availing the investment allowance is also quite clear. If the assessee wants to successfully avail the investment allowance, it must fulfil, inter-alia, the statutory condition of not selling or otherwise transferring the eligible assets within the prohibited period. This condition has to be strictly fulfilled by the assessee. If it fails to observe the said condition, the investment allowance availed by it has to be withdrawn. This is where Clause (a) of Sub-section (5) of Section 32A comes into play. If the Revenue wants to withdraw the investment allowance, it must establish that the case is squarely covered by the aforesaid provisions. In CIT v. Veeraswami Nainar 55 ITR 35 {affirmed by the Hon'ble Supreme Court in Indian Overseas Bank v. CIT 77 ITR 512 (SC)}, the Court held:
"Where therefore conditions are expressly imposed to entitle an assessee to an exemption, deduction or allowance, these conditions cannot be ignored on any theory of beneficial interpretation. It will follow that in order that an assessee can claim an allowance by way of development rebate Under Section 10(2)(vib) he should comply with the conditions imposed in the proviso thereto as otherwise, under the express terms of that proviso, he would not be entitled to the allowance. Where he fails to satisfy the conditions requisite for obtaining the allowance, it will not be for the Court to embark upon what the general object of the exemption was, and whether the conditions imposed were of a theoretical or technical nature, which, in the interests of justice should be dispensed with."
26. Similar views have been expressed in Union of India v. Wood Papers Ltd. (1990) 4 SCC 256. In the face of clearly and unambiguously expressed intention of the Legislature in the provisions of Clause (a) of Sub-section (5) of Section 32A and Sub-section (4A) of Section 155 that the investment allowance already granted shall be withdrawn if the assessee sells or otherwise transfers the eligible assets to another person within the prohibited period, it is not possible to alter the meaning of the words 'sold or otherwise transferred' as used therein so as to exclude the cases of slump sale from its ambit. In Orissa State Warehousing Corporation v. CIT 237 ITR 589, the Hon'ble Supreme Court held:
"A fiscal statute has to be interpreted on the basis of the language used therein and not dehors the same. No words ought to be added and only the language used ought to be considered so as to ascertain the proper meaning and intent of the legislation. The Court is to ascribe natural and ordinary meaning to the words used by the Legislature and ought not, under any circumstances, substitute its own impression and ideas in place of the Legislature's intent as is available from a plain reading of the statutory provisions. Individual cases of hardship and injustice do not and cannot have any bearing for rejecting the natural construction:"
27. In the Institute of Chartered Accountants of India v. Price Waterhouse (1997) 6 SCC 312; (1997) 90 Comp. Cases 113, the Hon'ble Supreme Court held:
"The elementary principle of interpreting or construing a statute is to gather the mens or sententia legis of the Legislature. Interpretation postulates the search for the true meaning of words used in the statute as a medium of expression to communicate a particular thought. Statute being edict of the Legislature, it is necessary that it is expressed in clear and unambiguous language. Where, however, the words were dear, there is no obscurity, there is no ambiguity and the intention of the Legislature is clearly conveyed, there is no scope for the Court to innovate or take upon itself the task of amending or altering the statutory provisions. In such situation the Judges should not proclaim that they are playing the role of a law maker merely for an exhibition of judicial valour. They have to remember that there is a line, though thin, which separates adjudication from legislation. That line should not be crossed. What is to be borne in mind is as to what has been said in the statute as also what has not been said. A construction which requires for its support, addition or substitution of words or which results in rejection of words, has to be avoided, unless it is covered by the rule of exception."
28. In Pandian Chemicals Ltd. v. CIT, (2003) 5 SCC 590; (2003) 262 ITR 278, p.281 (SC), the Hon'ble Supreme Court has held that the provision for encouraging industrial activity as contained in Section 80HH can be liberally interpreted only if there is doubt with regard to the express language used. It held that there was no scope for importing any rule of interpretation when the words used in the provision were unequivocal. The Court held:
"The learned counsel for the appellant then contended that having regard to the object with which Section 80HH was introduced in the statute-book, this Court should give a liberal interpretation to the words in a manner so as to allow such object to be fulfilled. The rules of interpretation would come into play only if there is any doubt with regard to the express language used. Where the words are unequivocal, there is no scope for importing any rule of interpretation as submitted by the appellant."
29. In view of such clear statement of law, we are unable to agree with the Ld. Counsel for the assessee that the phrase 'sold or otherwise transferred' should be interpreted in a manner that excludes the transfer of 'machinery or plant' from the ambit of Sub-section (5) of Section 32A when they are simultaneously transferred as part of a unit or division.
30. We may now refer to the judicial authorities cited by the Ld. Counsel for the assessee to see whether they assist the assessee in any way. Judicial authorities cited by the assessee are: 208 ITR 649, 656 (SC); 131 ITR 597, 604 (SC) and 156 ITR 323, 339 (SC). We have carefully gone through them.
31. In the first case cited by the assessee, namely, CWS (India) Ltd. v. CIT 208 ITR 649, the Hon'ble Supreme Court observed:
"While we agree that literary construction may be the general rule in construing taxing enactments, it does not mean that it should be adopted even if it leads to a discriminatory or incongruous result Interpretation of statutes cannot be a mechanical exercise. Object of all the rules of interpretation is to give effect to the object of the enactment having regard to the language used. The intention of Parliament in enacting Section 40(a)(v) can be gleaned from the memorandum explaining the provision of the Finance Bill, 1968, which sets out the object behind this clause. The Full Bench of the Kerala High Court has set out the memorandum in the judgment under appeal. In this connection, we may refer to the well-recognised rule of interpretation of statutes that where a literal interpretation leads to absurd or unintended result, the language of the statute can be modified to accord with the intention of Parliament and to avoid absurdity. The following passage from Maxwell's Interpretation of Statutes (12th Edn.) may usefully be quoted:
"1. Modification of the language to meet the intention. - Where the language of the statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity which can hardly have been intended, a construction may be put upon it which modifies the meaning of the words and even the structure of the sentence. This may be done by departing from the rule of grammar, by giving an unusual meaning to particular words, or by rejecting them altogether, on the ground that the legislature could not possibly have intended what its words signify, and that the modifications made are mere corrections of careless language and really give the true meaning. Where the main object and the intention of a statute are clear, it must not be reduced to a nullity by the draftman's unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used. Lord Reid has said that he prefers to see a mistake on the part of the draftsman in doing his revision rather than a deliberate attempt to introduce an irrational rule: The cannons of construction are not so rigid as to prevent a realistic solution.'"
(emphasis supplied)
32. In the second case cited by the assessee, namely, K.P. Verghese v. ITO 131 ITR 597, the Hon'ble Supreme Court observed:
"We must therefore eschew literalness in the interpretation of Section 52, Sub-section (2) and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the legislature, the court may modify the language used by the legislature or even 'do some violence' to it, so as to achieve the obvious intention of the legislature and produce a rational construction (vide Luke v. Inland Revenue Commissioner [1963 AC 557). The Court may also in such a case read into the statutory provision a condition which, though not expressed, is implicit as constituting the basic assumption underlying the statutory provision.
(emphasis supplied)
33. In the third case cited by the assessee, namely, CIT v. J.H. Gotla 156 ITR 323, the Hon'ble Supreme Court has cited, with approval, the following passage from its judgment in K.P. Verghese v. ITO 131 ITR 597.
"In the case of Varghese v. ITO [1981] 131 ITR 597, this court emphasised that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided.
Where the plain literal interpretation of a statutory provision produces a manifestly unjust result which could never have been intended by the Legislature, the court might modify the language used by the Legislature so as to achieve the intention of the Legislature and produce a rational construction. The task of interpretation of a statutory provision is an attempt to discover the intention of the Legislature from the language used. It is necessary to remember that language is at best an imperfect instrument for the expression of human intention. It is well to remember the warning administered by Judge Learned Hand that one should not make a fortress out of the dictionary but remember that statutes always have some purpose or object to accomplish and sympathetic and imaginative discovery is the surest guide to their meaning."
34. In all the authorities cited by the Ld. Counsel for the assessee, the proposition is that the plain and literal interpretation of a statutory provision can be discarded if it produces a manifestly unjust result or leads to absurdity which could never have been intended by the Legislature. It is well recognised that the intention of the Legislature is best gathered from the words used in the statute. This rule can, however, be discarded if the provisions are ambiguous or the Legislature has failed to express itself clearly or it produces manifestly unjust result which the Legislature could never have intended or leads to absurdity. In the present case before us, we do not find that the literal interpretation of the phrase 'sold or otherwise transferred' occurring in Clause (a) of Sub-section (5) of Section 32A, as judicially interpreted, produces such a result which the Legislature could never have intended or leads to any absurdity or unreasonableness. These provisions are neither vague nor can it be said that the Legislature has failed to express itself clearly. It cannot be said that the phrase 'sold or otherwise transferred' as occurring in Section 32A(5)(a) leads to manifestly unjust or unreasonable results merely because they provide for the forfeiture of the benefit already availed in case they are literally interpreted. Besides, the provisions of Section 32A(5) and 155(4A) incorporate a well-intentioned and deliberate legislative policy to grant the investment allowance on the condition that the eligible assets, on which investment allowance has been granted, should not only continue to be owned by the assessee but also that he should continue to use them wholly for the purposes of his business till the expiry of the prohibited period and that the benefit of investment allowance should be withdrawn if the eligible assets are sold or otherwise transferred to another person within the prohibited period as such sale or transfer causes a breach of the condition on which the investment allowance was granted. We find no conflict or anomaly in the plain meaning of the words 'sold or otherwise transferred' occurring in Sub-section (5) of Section 32A and the legislative policy which it seeks to achieve. Rather they harmonise well with each other. Therefore, the authorities cited on behalf of the assessee do not help in taking a view different from the one being taken by us on the facts and in the circumstances of the case before us.
35. In the case before us, the assessee has, on one hand, failed to observe the statutory condition of retaining the eligible assets (of not selling or otherwise transferring them till the expiry of the prohibited period) for the purpose of the business carried on by it till the expiry of the stipulated period, the Revenue, on the other hand, has successfully established that the case of the assessee is squarely covered by the provisions of Clause (a) of Sub-section (5) of Section 32A and Sub-section (4A) of Section 155.
36. In view of the above, we see no reason to interfere with the order of the CIT(A). Consequently, first two grounds of appeal are decided against the assessee.
37. Third ground of appeal relating to the levy of interest is misconceived in as much as this issue does not arise either out of the order of the AO or the CIT (A). In fact, perusal of the impugned order passed by the AO Under Section 155 shows that he has not charged any interest under the said order. The learned counsel for the assessee was apprised of the aforesaid position. In all fairness, he did not press this ground. Consequently this ground of appeal is also dismissed.
38. As a result of the above, assessee's appeal for AY 1989-90 is dismissed.
ITA No. 500 (Kol.) of 2002 for A Y 1992-93
39. The investment allowance has been withdrawn for AY 1989-90 which we have already upheld. Consequent upon the withdrawal of investment allowance in AY 1989-90, the AO has carried out consequential rectifications through the impugned order in AY 1992-93 leading to enhancement of total income as originally assessed. Since we have already upheld the withdrawal of investment allowance in AY 1989-90, the consequential rectifications carried out by the AO in the assessment year under appeal do not warrant any interference. Accordingly, first two grounds of appeal are dismissed.
40. Third ground of appeal is that the CIT (A) has erred in holding that interest is leviable under Section 155 of the Act on recall of Investment Allowance made in favour of the assessee-company in the earlier years. Withdrawal of the investment allowance in AY 1989-90 led, as a consequence thereof, to the enhancement of income as also the tax thereon as originally assessed in the assessment year under appeal. The assessee's plea before the AO was that interest Under Section 234B should not be charged which was rejected by the AO on the ground that the mandatory provisions of Sub-section (4) of Section 234B required him to revise/re-compute the interest upon increase or reduction in the amount on which interest was payable as a result of order Under Section 154 or 155. The assessee appealed before the CIT (A) without success.
41. The learned counsel for the assessee submits that, notwithstanding and without prejudice to his submissions against the withdrawal of investment allowance, even if the AO is held justified in recalling the investment allowance granted to the assessee, in terms of the provisions of Sub-section (5) of Section 32A and Sub-section (4A) of Section 155, there is no interest leviable according to Section 155 of the Act under which the AO has carried out the rectification. He submits that the withdrawal of investment allowance is made under the deeming provisions of Section 32A(5) and 155(4A) and those deeming provisions stop at that and do not extend to authorize the levy of interest. According to him, the aforesaid deeming provisions have to be restricted in their application to what is specifically covered by them. Sum and substance of his argument is that Section 155 authorises only withdrawal of investment allowance and not the levy of interest and, therefore, the levy of interest by an order Under Section 155 needs to be deleted.
42. The Ld. D R, appearing for the Department, relies on the provisions of Sub-section (4) of Section 234B and submits that the AO is under a statutory duty to revise the amount of interest as and when an order is passed Under Section 154 or 155 revising the total income on which interest had been originally charged. He submits that computation of interest Under Section 234B(4) is consequential depending upon the increase or reduction in the assessed total income as a result of the rectification carried out by the AO.
43. We have considered the rival submissions. The assessee's grievance, as evident from the ground of appeal, is that no interest is leviable according to Section 155 of the Act under which the AO has carried out the rectification. It deserves to be clarified that the AO has not levied the interest Under Section 155 but has merely revised or recomputed the amount of interest as originally levied in terms of the provisions of Sub-section 234B(4). It is, therefore, necessary to appreciate the statutory framework for levy of interest as also for the variation in the amount of interest so levied. Conceptually, levy of interest is different from varying the amount of interest so levied. While levy of interest is the initial step to be taken upon determination of income either Under Section 143(1) or by way of regular assessment, variation in the amount of interest so levied can take place only after the interest has been initially levied. Variation in the amount of interest levied becomes necessary in the event of increase or reduction in the amount of assessed tax, with reference to which interest is statutorily required to be calculated, as a result of an order of rectification, appeal, revision or settlement. While Sub-section (1) of Section 234B deals with levy of interest, Sub-section (4) thereof deals with the situations in which the amount of interest as originally levied is required to be varied so as to maintain its co-relation with the amount of assessed tax as finally determined.
44. Relevant provisions of Sub-section (4) of Section 234B under which the AO has varied/revised the amount of interest originally levied are as under:
"(4) Where, as a result of an order under Section 154 or Section 155 or Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264 or an order of the Settlement Commission under Sub-section (4) of Section 245D, the amount on which interest was payable under Sub-section (1) "(or Sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and -
(i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable and such notice of demand shall be deemed to be a notice under Section 156 and the provisions of this Act shall apply accordingly;
(ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded."
45. A bare reading of the aforesaid provision reveals two striking aspects of the provision; one, it uses the word "shall," and two, its applicability is not subject to any reasonable cause. The use of the word 'shall' makes it obligatory on the part of the AO to increase or reduce the amount of interest, as the case may be, if there is any increase or reduction in the amount on which interest was determined to be payable under Sub-section (1) or (3) of Section 234B, as a result of an order Under Section 154 or 155 or 250 or 254 or 260 or 262 or 263 or 264 or 245D(4). The AO has no discretion in the matter once the conditions mentioned in Section 234B(4) are fulfilled. It is mandatory on the part of the AO to revise the amount of interest if the case is covered by Section 234B(4). It is not subject to any reasonable cause being shown by the assessee either. What is therefore required to be seen in the present case is whether there is an order Under Section 154 or 155 or 250 or 254 or 260 or 262 or 263 or 264 or 245D(4) causing any reduction or increase in the amount of tax on which interest was originally payable under Sub-section (1) or Sub-section (3) of Section 234B. If the answer is yes, the AO has to automatically reduce or increase, as the case may be, the amount of interest as originally levied. In the matter before us, the AO has passed the impugned order Under Section 154/155 which led to the increase in the amount of tax on which interest was determined to be payable Under Section 234B(1)/(3). In that view of the matter, his action in revising the amount of interest under the provisions of Sub-section (4) of Section 234B is justified.
46. In taking the aforesaid view, we have the support of the ratio laid down by the Hon'ble jurisdiction High Court in Kanoi Industries P. Ltd. v. ACIT 261 ITR 488. In the context of the provisions for levy of interest under Sub-section (1A) of Section 201, the Hon'ble Court has held as under:
"The use of the expression 'shall' in Sub-section (1A) makes the liability to pay interest in the circumstances mentioned mandatory. Unlike Sub-section (1), no pre-condition of reasonable cause for non-payment of tax in time has been included in Sub-section (1A). Unlike the restriction provided for in Sub-section (1), Sub-section (1A) does not contain any restriction for charging interest thereunder. The provision of Sub-section (1A) is mandatory and automatic. .......... The liability is absolute. It is obligatory for the Assessing Officer to charge interest upon non-compliance of any of the provision requiring deduction at source if noticed by him."
47. We shall now deal with the submission of the learned counsel for the assessee that the fiction created by Sub-section (4A) of Section 155 can be used only for the withdrawal of investment allowance and not for the purpose of levy of interest or for revising the amount of interest if already levied. While we are in agreement with the submission of the learned counsel for the assessee that the fiction created by Sub-section (4A) of Section 155 cannot be extended beyond the language of the said provisions by which it is created or by importing another fiction, we are, however, not in agreement with his submission that the legal fiction created by Sub-section (5) of Section 32A or Sub-section (4A) of Section 155 does not extend to or authorize the AO to invoke Section 234B(4) of the Act for revising the amount of interest as originally computed. It is well-established that once a legal fiction is created, full effect to that legal fiction must be given and imagination should not be allowed to boggle the full operation of the fiction. Sub-section (5) of Section 32A provides in unambiguous terms that, in cases falling under Section 32A(5), the investment allowance as originally made "shall be deemed to have been wrongly made for the purposes of this Act." The fiction created by Section 32A(5) thus extends to and is available for all the purposes of the Income-tax Act as if no such allowance was made at all. The fact that any investment allowance was made in the past has to be ignored for all intent and purpose of the Act including Section 234B(4). This is also supported by the provisions of Sub-section (4A) of Section 155 which again creates the legal fiction that, in the event of subsequent transgressing of the conditions laid down under Section 32A, the investment allowance originally allowed "shall be deemed to have been wrongly allowed, and the Assessing Officer may, notwithstanding anything contained in this Act, recompute the total income of the assessee for the relevant previous year and make the necessary amendment." If an assessee is found to have contravened the condition of retaining the ownership and user of the eligible asset for the purposes of the business carried on by him for the entire period stipulated by Section 32A, the law places such an assessee in the same position in which he would have been if he had not been allowed the investment allowance. It is for this reason that Section 155(4A) treats, in cases falling Under Section 32A(5) and Section 155(4A), the investment allowance originally granted as manifestly erroneous and, in that view of the matter, the law further requires, in specific terms, that the AO shall not only re-compute the total income for the relevant previous year but also make the necessary amendments in consequence thereof. Thus, the function of the AO does not stop Under Section 155(4A), as contended by the learned counsel for the assessee, with the withdrawal of investment allowance and consequential re- computation of total income of the relevant previous year but also extends to making the necessary amendments in consequence thereof. We are of the view that revision/variation in the amount of interest as originally levied would be a necessary amendment required to be carried out, in terms of the provisions of Section 155(4A), by the AO in the light of the tax as assessed upon withdrawal of the investment allowance. In any case, the provisions of Sub-section (4) of Section 234B stand on their own in the field covered by them. This is particularly so because they are specifically made to apply in cases covered, inter-alia, by Sections 154 and 155. Therefore, the applicability of Section 234B(4) in the present case cannot be excluded.
48. The learned counsel for the assessee has laid great emphasis that it was not possible for the assessee to foresee, in the previous year relevant to the assessment year under appeal, the sale or transfer of the eligible assets taking place several years after the expiry of the said previous year and consequential withdrawal of investment allowance. According to him, it was because of this inability of the assessee that it was not possible to pay advance tax in that year and hence it could not be charged interest for default in the matter of advance tax even Under Section 234B.
49. We have carefully considered the aforesaid submissions in which the assessee has pleaded 'reasonable cause' explaining as to why it should not be made liable to pay interest. As stated earlier, the applicability of Section 234B(4) is not subject to any reasonable cause being shown by the assessee. It simply mandates the AO to revise the amount of interest consequent upon revision in the amount with reference to which interest has been levied. It does not by itself create any liability to interest but seeks to alter the liability already created Under Section 234B(1)/(3). Since the plea of reasonable cause is not made available to the assessee Under Section 234B(4), the assessee cannot avoid its liability there-under on that ground. However, leaving aside, for a while, the plea of reasonable cause which is not available to the assessee Under Section 234B(4), the fact remains that the assessee was well aware at the stage of claiming the investment allowance that the grant of investment allowance was subject to the statutory condition that the concerned eligible assets would have be retained and used for the purposes of the business carried on by it till the expiry of the prohibited period and that any transgression of the aforesaid condition would entail withdrawal of the investment allowance and attract necessary consequences as provided in law including Section 234B(4). The public revenue, while granting the investment allowance to the assessee, had suffered and forgone the tax as also the interest thereon on this condition. Now that the assessee has failed to observe the statutory condition on which investment allowance was granted, the Revenue is entitled to be restored to the same position in which it would have been if the investment allowance had not been granted. Placing the Revenue in the same position requires that it should be compensated not only for the loss of tax but also for the loss of interest with reference to the amount of assessed tax, which it was entitled to recover if the assessee had not claimed the investment allowance. As held in several cases, interest is nothing but compensation for the use of money. It is in this background that the legal fiction created by Section 32A(5) and 155(4A) also mandates and requires the AO to carry out the 'necessary amendment' upon withdrawal of investment allowance. Revision in the amount of interest is a logical action upon withdrawal of investment allowance and falls within the purview of 'necessary amendment' as required to be made by Section 155(4A). Besides, the provisions of Sub-section (4) of Section 234B are unambiguous and clear in that they also specifically require the AO to revise the amount of interest so as to bring the same in conformity with an order Under Section 154/155. The case of the assessee squarely falls Under Section 234B(4). It has been held by the Hon'ble Supreme Court in the case of CIT v. T.V. Sundaram Iyengar & Sons (P.) Ltd. [1975] 101 ITR 764 that if the language of the statute is clear and unambiguous, it would be wrong to discard the plain meaning of the words used in the section in order to meet a potential injustice. The Hon'ble Karnataka High Court in the case of Union Home Products Ltd. v. Union of India, [1995] 215 ITR 758; [1996] 84 Taxman 303, has observed that the basic character of the levy of interest is compensatory and hence the supposed hardships or inequitable consequences will not empower an appellate authority to modify or rewrite the statutory provision.
50. After careful consideration of all the aspects of the case, we feel that the order of the CIT(A) upholding the action of the AO in revising the amount of interest Under Section 234B(4) does not merit any interference. Consequently, we uphold the same and dismiss the appeal of the assessee.
51. In view of the above, appeals filed by the assessee for both the assessment years are dismissed.