Income Tax Appellate Tribunal - Delhi
Escorts Finance Ltd, vs Assessee on 21 June, 2007
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'C' NEW DELHI)
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER
AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A. No.3779/Del/2007
Assessment year : 2003-04
DCIT, M/s Escorts Finance Ltd.,
Circle-11 (1), N-6, Pratap Building,
New Delhi. V. Connaught Place, N. Delhi.
AND
I.T.A. No.3818/Del/2007
Assessment year : 2003-04
M/s Escorts Finance Ltd., DCIT.
N-6, Pratap Bldg. Circle-11 (1),
Connaught Place, N.Delhi. v. New Delhi.
(Appellant) (Respondent)
PAN /GIR/No.AAACE
/GIR/No.AAACE-
AAACE-0763-
0763-B
Appellant by : Shri Simran Mehta, Advocate &
Shri Arun Bhatia, C.A.
Respondent by : Smt. Anusha Khurana, Sr. DR.
ORDER
PER TS KAPOOR, AM:
These cross appeals are filed against the order of Ld CIT(A)-XIII, New Delhi dated 21.6.2007. These appeals were heard together and for the sake of convenience are being disposed off by this common 2 ITA No3779 & 3818/Del/207 order. The grounds taken by the Department as well as in the cross appeals are as under:-
I.T.A. No. No. 3779/Del/2007: (Departmental appeal):
1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance for doubtful debts of `.27,60,000/- made in the assessment .
2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of `.8,45,000/-
made in the assessment on account of income reversals for previous years.
3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of `.79,80,000/- made in the assessment u/s 14A.
4. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing of the appeal.
I.T.A. No. 3818/Del/2007: (Assessee's appeal):
1. That the CIT(A) erred both on facts and in law in disallowing depreciation @ 40% on vehicles which had been leased out.
2. That the CIT(A) erred in taking the view that the principles of res judicata did not apply in as much as during the year under consideration, there were no fresh leasing transactions and the brought forward WDV was entitled to depreciation @ 40% which 3 ITA No3779 & 3818/Del/207 had been allowed by the Hon'ble Tribunal till assessment year 2002-03.
3. That the CIT(A) erred both on facts and in law in confirming an addition of `.21,75,000/- on account of dividend when iln fact the same was exempt within the meaning of section 10(34) read with the provisions of section10(33) of the Act.
4. That the CIT(A) erred in upholding the levy of interest u/s 234B and 234D when in fact no such interest was leviable in the alternative, the CIT(A) should have directed consequential reduction.
5. That the CIT(A) erred in upholding the action of the Assessing Officer in withdrawing interest u/s 244A and in any case consequential relief should have been directed.
6. The appellant reserves to itself, the right to add, alter, amend substitute withdraw and or any ground(s) of appeal at or before the date of hearing.
2. The brief facts of the case are that that the assessee is a non banking finance company and is governed by the Reserve Bank of India guidelines issued from time to time. These guidelines are mandatory which an NBFC has to follow while computing the net profits of the company. The assessee is also engaged in the business of letting out on hire motor vehicles, motor taxies and lorries and other commercial vehicles. These assets are purchased by the assessee and are let out to others on lease-hold basis. The return of income for 4 ITA No3779 & 3818/Del/207 assessment year 2003-04 was filed on 2.12.2003 declaring an income of `.2,69,59,688/-.
3. The case of the assessee was selected for scrutiny. During assessment proceedings, the Assessing Officer made certain additions to the income of assessee which are as follows:-
i) Disallowance of provision for doubtful
debt as per RBI directions. `.27,60,000/-
ii) Excess income reversals for
previous year. `. 8,45,000/-
iii) On account of deduction u/s 35D. `.21,01,228/-
iv) On account of excess depreciation on
leased vehicles. `.1,24,01,235/-
v) Dividend income. `. 21,75,000/-
vi) Expenses attributable to exempted income. `. 79,80,000/-
4. The first two additions were deleted by ld CIT(A) which the revenue has challenged before this Tribunal. The third one was remanded back to the file of the Assessing Officer and is not a part of either revenue or assessee's appeal. The additions made at points (iv) to (vi) are part of assessee's appeal which are before us for adjudication.
5. We will be first dealing with revenue's appeal.
Disallowance of Provisions for doubtful debts:
6. During assessment proceedings, the Assessing Officer noted that assessee had debited an amount of `.27,60,000/- being provisions for doubtful debts. He further observed that u/s 37(1) of the Income Tax
5 ITA No3779 & 3818/Del/207 Act, 1961 only such expenditures are allowed to be deducted from the business income as are incurred in the previous year and since provisions were created to meet out the liability on account of expenditure that are likely to be incurred in subsequent year, the same should not be allowed to be deducted and therefore he made an addition of `.27,60,000/- to the income of assessee.
7. During appellate proceedings before Ld CIT(A), the Ld AR argued that provisions of `.27,60,000/- for bad and doubtful debts was created in accordance with Reserve Bank of India guidelines. He further argued that similar additions were made in the earlier years also for assessment year 1998-99, 1999-00 and 2000-01 and the Hon'ble ITAT had allowed deduction for these provisions. The ld CIT(A) after hearing submissions of assessee deleted the addition of `.27,60,000/-. The relevant portion of Ld CIT(A) is reproduced below:-
"I have considered the submissions made by Ld AR and perused the order passed by ITAT 'G' Bench, New Delhi in I.T.A. No.611/Del/2005 for assessment year 2000-01 in the appellant's own case. The Hon'ble ITAT Delhi Bench 'G' relied on the decision of Chennai Bench of the Tribunal in the case of Overseas Sanmar Finance Ltd., v. JCT 86 ITD 602 (Chennai) and the decision of the Delhi Bench of the Tribunal in the case of Tedco Investment and Financial Services Pvt. Ltd. v. DCIT 82 TTJ 259 (Del.) and held that the appellant is entitled to deduction for the provision made for doubtful debt in line prescribed by RBI in various circulars that are applicable to NBFC. As the Hon'ble ITAT decided the issue in favour of appellant through the above mentioned orders in appellant's own case, hence respectfully following the same, the Assessing Officer is directed to delete the 6 ITA No3779 & 3818/Del/207 addition made on account of disallowance of `.27,60,000/- being provision for bad and doubtful debts.
8. Aggrieved, the revenue is in appeal before us.
9. The Ld DR argued that the matter regarding disallowance of provision for bad and doubtful debt though was decided by Hon'ble Tribunal in assessee's own case in earlier years in favour of assessee but for assessment years 2000-01 & 2001-02, the Hon'ble Tribunal in assessee's own case relying upon the judgment of Special Bench case in the case of New India Industries Ltd. v. ACIT reported at 112 TTJ (Del.) had held that provisions for bad and doubtful debt merely on the basis of RBI guidelines and not writing of such in Profit & Loss Account is not allowable. In this respect, she took us to page 13 of paper book where relevant portion of the Tribunal order was placed.
10. The Ld AR, on the other hand, argued that provisions for bad and doubtful debt was strictly in accordance with guidelines of RBI and therefore should be allowed as business expenditure of the company.
11. We have heard the rival submissions of both the parties and have gone through the material available on record. We find that this matter is covered against the assessee by assessee's own case for assessment year 2000-01 & 2001-02 wherein the Hon'ble Tribunal had followed Special Bench decision in the case of New India Industries Ltd. (supra) and wherein it was held that RBI Act do not over-ride the provisions of the Income Tax Act, 1961 so far as compliance of Income tax provisions are concerned. Respectfully following the above order of the Tribunal we also are of the opinion that provisions for bad and doubtful debt though statutorily required under the RBI guidelines do 7 ITA No3779 & 3818/Del/207 not qualify for deduction as a business expenditure. Therefore, the first ground of appeal is decided in favour of the revenue.
Excess Income Reversals for previous year:
12. During assessment proceedings, the Assessing Officer noted that assessee had debited to its P&L Account a sum of `.8,45,000/- being income reversal relating to earlier years. The Assessing Officer further noted that during previous year also, similar addition was made on similar grounds and therefore in this year under same circumstances, he added back the amount of `.8,45000/- to the income of assessee.
13. During appellate proceedings before Ld CIT(A), the Ld AR submitted that in the previous year also, similar addition was made and was deleted by Hon'ble ITAT order for assessment year 1998-99, 1999-00 & 2000-01. The Ld CIT(A) after hearing the submissions of Ld AR deleted the addition of `.8,45,000/-. The relevant portion of Ld CIT(A)'s order is reproduced below:-
"I have perused the appellant's order passed by Delhi Bench 'D' in I.T.A. No.1263/Del./2002 for assessment year 1998-99, Delhi Bench 'C', New Delhi in I.T.A. No.3695/Del/.2002 for assessment year 1999-00 and Delhi Bench 'G' New Delhi in I.T.A. No.611/Del/2005 in appellant's own case as per which the Tribunal decided the issue in favour of the appellant. Respectfully following the same, I direct the Assessing Officer to delete the addition of `.8,45,000/- on account of income reversal during the previous year under consideration."
14. Aggrieved, the revenue is in appeal before us.
8 ITA No3779 & 3818/Del/207
15. The Ld DR explained that similar dispute had arisen for the assessment year 2000-01 and 2001-02 and Hon'ble Tribunal had sent back the matter to the file of Assessing Officer for fresh consideration and she further brought to our notice that Hon'ble ITAT had referred the matter back with the directions to Assessing Officer to allow the expenditure after ascertaining that amount written off is same which was recognized as income in the earlier year.
16. The Ld AR argued that the net profit of NBFC can be calculated only after complying with guidelines of RBI and assessee had done exactly as per the guidelines and therefore, it should be allowed as a business expenditure of the company.
17. We have heard the rival submissions of both the parties and have gone through the material available on record. The Hon'ble ITAT for assessment year 2000-01 & 2001-02 had remitted back the matter to the office of Assessing Officer with directions to ascertain whether the said reversal of income was part of income declared in earlier years and if the answer is yes then allow it otherwise not. Respectfully following the earlier order of the Tribunal in assessee's own case we also remit back this point to the file of Assessing Officer to ascertain whether `.8,45,000/- was part of income declared in earlier year and if the answer is yes the same may be allowed.
Disallowance of Expenditure attributabnle to exempted income:
18. Ground No.3 relates to disallowance of expenses attributable to exempted income of `.79,80,000/-. During assessment proceedings the Assessing Officer noted that the assessee company had earned 9 ITA No3779 & 3818/Del/207 interest on bonds exempt u/s 10(23G) of the Act amounting to `.1,47,07,534/-. The assessee was confronted and was asked to explain the applicability of section 14A of the Act. In response the assessee replied that provisions of section 14A are not attracted as this section pre-supposes for incurrence of certain expenditure for earning exempt income. However, the Assessing Officer did not agree with the contentions of assessee and made addition of `.79,80,000/- u/s 14A of the Act. The relevant portion of Assessing Officer's order is reproduced below:-
"The contention of the assessee is not acceptable as the fact remain that section 14A clearly prescribed that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to the income which does not form part of total income under this Act. The invocation of section 14A is automatic and comes into operation without any exception as soon as the dividend income is claimed as exempt. Since the entire tax free interest income from bonds have been claimed exempt and are not part of total income under this Act. Hence, section 14A is clearly attracted in this case and any expenditure relatable to earning of exempt income shall have to be disallowed. No evidence has been furnished by the assessee company to establish that no expense has been incurred in earning of interest income from bonds. This is specially required in the light of fact that certain expenses like salary, employees welfare expenses, postage and telegram expenses, traveling and conveyance expenses and rent etc. are common expenses with regard to dividend income/interest free income and normal/regular business activity of the assessee company -------- The disallowance of administrative expenses and interest
10 ITA No3779 & 3818/Del/207 expenses on earning of tax free interest/income claimed exempt is also held/permitted by the verdict of Hon'ble Supreme Court in the case of CIT v. United General Trust Ltd. 200 ITR 488 (SC)------.
The Assessing Officer, then calculated an amount of `.79.80 lakhs being amount of interest paid attributable to earning of exempt income and made the addition accordingly.
19. Aggrieved the assessee filed appeal before Ld CIT(A).
20. Before Ld CIT(A), the Ld AR submitted that Assessing Officer has not proved any nexus between the expenditure incurred vis-a-vis earning of exempted income and relied upon the decision of ITAT for assessment year 1999-00 wherein the addition made by the Assessing Officer had been deleted by Hon'ble ITAT. Ld CIT(A) after going through the judgment had observed that ITAT in its judgment in I.T.A. No.3695/Del/2002 in appellant's own case had deleted the addition. Thus respectfully following the above order of Tribunal, the Ld CIT(A) deleted the addition.
21. Aggrieved, the revenue is in appeal before us.
22. The Ld DR argued that in view of exempt income earned by the assessee, the disallowance made by the Assessing Officer is justified. She argued that Ld CIT(A) was not justified in deleting the addition u/s 14A on the basis of earlier year Tribunal order
23. The Ld AR, on the other hand, argued that Ld CIT(A) had rightly deleted the addition as it was done keeping in view the facts and circumstances of the case which were similar to earlier year and in 11 ITA No3779 & 3818/Del/207 earlier year the Hon'ble Tribunal had confirmed the deletion made by Ld CIT(A) in respect of disallowance u/s 14A of the Act.
24. We have heard the rival submissions of both the parties and have gone through the material available on record. We are of the considered opinion that this point should be examined by the Assessing Officer afresh in view of Hon'ble Delhi High Court judgment in the case of Maxop Investment Ltd. wherein Hon'ble Court has held that Assessing Officer had to first give finding as to the fact that he is not satisfied with the correctness of the claim in respect of such expenditure. The Hon'ble Court had further observed that while rejecting the claim of assessee with regard to expenditure or no expenditure as the case may be in relation to exempt income, the Assessing Officer would have to indicate cogent reasons for the same. Respectfully following the Hon'ble Delhi High Court judgment, we remit this point back to the office of Assessing Officer with directions to examine and give finding and arrive at the disallowance of interest or other expenses accordingly in the light of such findings.
25. In view of the above, the appeal filed by revenue is decided accordingly.
26. Now we take up the appeal filed by assessee.
27. The first ground of appeal relates to disallowance of excess depreciation being @ 40% on vehicles which had been leased out. The Assessing Officer during assessment proceedings noted that the assessee had claimed depreciation on motor lorries/taxis and motor cars etc, at higher rate of 40% in case of motor lorries/taxies and 25% and in respect of motor cars instead of normal depreciation @ 20%.
12 ITA No3779 & 3818/Del/207 The Assessing Officer noted that during previous year also addition were made on similar grounds for claiming excess depreciation. Therefore, following earlier year, the Assessing Officer made an addition of `.1,24,01,235/- on account of excess depreciation. During appellate proceedings, the assessee was asked to submit certain details for the purpose of verification as to whether assessee was eligible for higher depreciation of 40%. However, despite various reminders by ld CIT(A), the assessee did not file the necessary particulars/information. In view of the circumstances, the Ld CIT(A) finally gave notice for upholding the disallowance of excess depreciation if the information was not furnished within certain time. In response to that, the assessee replied that "what ever was stated before the Assessing Officer is identical to the submission made before your goodself and we would like to reiterate that at no stage of the proceedings has it been contended that the details pertaining to the vehicles leased out are being filed. Since it is the stand all alone that no fresh leasing transactions have been undertaken in the assessment year under appeal and in that sense of the matter, the issue is purely consequential since higher rate of depreciation i.e. 40% has been allowed by the Tribunal right up to the assessment year 2002-03." The Ld CIT(A) held that principle of res judicata is not applicable to Income tax proceedings and because appellant had failed to justify its claim of depreciation at higher rate despite sufficient number of opportunities granted to it, he upheld the action of Assessing Officer in restricting the claim of depreciation to 20%.
28. Aggrieved the assessee is in appeal before us.
29. At the outset, the Ld AR argued before us that no fresh leasing transactions were done during the year under consideration. The depreciation was claimed at the opening balance of WDV brought 13 ITA No3779 & 3818/Del/207 forward from previous year and during previous year, the depreciation was being claimed at 40% and therefore on the basis of continuity and in view of the fact that vehicles remained continued to be let out on hire, the claim of depreciation at 40% was law full and justified. In this respect he took us to page 81-83 of paper book wherein schedule of depreciation and depreciation chart as per Income Tax Act for the year ended on 31.3.2003 were placed. He invited our attention to the fact that no addition on account of purchase of motor car was made during the year and therefore it can be said that no fresh leasing of vehicles were done during the year under consideration. Reliance was put in the case of CIT v. MGF 285 ITR 142 wherein similar issue was decided in favour of the assessee.
30. On the other hand, the Ld DR contended that onus was on the assessee to prove that motor cars/lorries were actually let out on hire and the assessee did not file required information before Assessing Officer and during appellate proceedings despite various requests. In this respect she invited our attention to page 7-8 of Ld CIT(A)'s order and read out the following:-
"In response to a letter written by DCIT, Circle-11 (1), New Delhi you have filed a letter dated 11.1.2007 before the Assessing Officer stating that the company has not entered into any fresh leasing transactions. It has not been mentioned in your communication as to the assessment year in which the information is sought. You further contended that the issue before ld CIT(A) pertains to rate of depreciation of vehicles leased out of which ITAT and CIT(A) in earlier years held the issue in favour appellant being covered issue. The information called for is stated to be of no consequence. Again through letter 14 ITA No3779 & 3818/Del/207 dated 13.2.2007 you mentioned that since there is no fresh leasing transactions during the year 2003-04 hence the question of depreciation is inconsequential. In a reply dated 26.3.2007 filed before Ld DCIT, Circle-11 (1). New Delhi you have further mentioned that the relevant replies in connection with the aforesaid information have already been filed with the undersigned from time to time. I have gone through the replies filed by you and the contention put forth by you before Assessing Officer are found to be not correct. No information has been filed with this office with respect to leased vehicles. Even on 19.3.2007, Shri JP Chawla, attended this office and in his presence the undersigned talked to telephonically and informed about your willingness and or for filing of necessary particulars/information before the Assessing Officer but despite that you have not filed any detail as asked for by the Assessing Officer knowing fully that the principle of res judicata is not applicable to Income tax proceedings. The claim relates to the year under consideration and hence the same can be subject to verification for determining its correctness. "
In the light of above she argued that without necessary information/verifications being available with Assessing Officer and Ld CIT(A), the claim of depreciation at higher rate of 40% was not justified and hence the Assessing Officer had rightly restricted the allowance of deduction and Ld CIT(A) had rightly upheld the addition.
31. We have heard the rival submissions of both the parties and have gone through the material available on record. We have observed from the material available and contentions of parties that there was no fresh leasing activity done by the assessee as is apparent from 15 ITA No3779 & 3818/Del/207 page 81-83 of paper book wherein no fresh purchases of motor cars/lorries etc,. was made during the year and hence it can be concluded that assessee was claiming depreciation on old vehicles only which were already let out on hire and on which the assessee had already been allowed depreciation @ 40%. In the case law relied upon by the Ld AR of CIT v. MGF (supra) it was clearly held by Hon'ble Delhi High Court that vehicles owned by a non banking finance company leased to third party are eligible for higher rate of depreciation @ 40%. Respectfully following the Hon'ble Delhi High Court judgment, we hold the view that assessee was rightly eligible for depreciation at higher rate.
In view of the above, the first ground of appeal succeeds.
32. The second ground relates to addition on account of dividend income. The Assessing Officer had disallowed an amount of `.21,75,000/- which was being claimed by the assessee as dividend u/s 10(33) of the Act. The assessee had claimed that this income is on account of 14 ½ % dividend on preference shares of M/s Chetan Foundry for the period 29.8.1999 to 28.8.2007 and claimed exemption u/s 10(33)of the Act. However, the Assessing Officer did not agree with the contentions of the assessee and made addition of `.21,75,000/- on the basis that dividend income during that year was not exempt.
33. During appellate proceedings before Ld CIT(A) the Ld AR submitted that appellant company had claimed the said dividend to be exempt u/s 10(33) of the Act which was in operation till 31.3.2003 there being an amendment w.e.f. 1.4.2003. The ld AR had further submitted vide letter dated 13.11.2006 that section 10(33) was omitted by Finance Act, 2002 w.e.f. 1.4.2003 i.e. assessment year 16 ITA No3779 & 3818/Del/207 2003-04 and the same was introduced in the guise of section 10(34) of the Act w.e.f. 1.4.2004. The Ld AR also submitted that in the meantime section 80M was introduced w..e.f. 1.4.2003 for the intervening period namely assessment year 2003-04, however, the Ld CIT(A) did not agree with the contentions of assessee and up held the addition made by the Assessing Officer. The relevant portion of Ld CIT(A)'s order is reproduced below:-
"I have considered the submissions made by the appellant on the issue under consideration. The provisions of section 10(33) are not applicable to assessment year 2003-04 as new provisions of section 10(34) came into being through Finance Act, 2003 w.e.f. 1.4.2003 i.e. for assessment year 2003-04. The new provisions mentions about any income arising from the transfer of capital asset being a unite of Unit Scheme, 1964 referred to in Schedule-I to UTI and hence the new provisions are not applicable. The old provisions of section 10(33) were omitted by Finance Act, 2002 w.e.f. 1.3.2003 i.e. for assessment year 2003- 04 and hence the old provisions are also not applicable to the instant case. Section 10(34) is also not applicable to the instant case for reasons that it is inserted by Finance Act, 2003 w.e.f. 1.4.2003 assessment year 2004-05 whereas the impugned assessment order relates to assessment year 2003-04. I have also gone through the provisions of section 80M of the Act which deals with the deduction in respect of certain intercorporate dividends. This section says where the gross total income of a domestic company in any previous year includes any income by way of dividend from another domestic company there shall in accordance with and subject to the provisions of this section be allowed in computing the total income of such domestic
17 ITA No3779 & 3818/Del/207 company, a deduction of an amount equal to so much of the amount of income by way of dividend from another domestic company as does not exceed the amount of dividend distributed by the first mentioned domestic company on or before the due date--------. The above section clearly prescribes the condition which are to be met with before seeking any deduction u/s 80M of the Act whereas in the instant case, the appellant is not able to either to meet out the condition as prescribed in section 80M of the Act or to file any documentary evidence to justify its claim of deduction that the dividend of `.21,75,000/- is not taxable. In view of this as well as observations before hand that the provisions of section 10(33) & 10(34) are not applicable to the instant case, I hold that the Assessing Officer has rightly subjected amount of `.21,75,000/- to tax."
34. Aggrieved the assessee filed appeal before this Tribunal.
35. The Ld AR argued that complete details were filed with Assessing Officer regarding receipt of dividend on preference shares which were exempt u/s 10(34) or section 80M of the Act as intercorporate dividend.
36. The Ld DR, on the other hand, argued that the assessee was not eligible for exemption u/s 10(33) or 10(34) or section 80M of the Act as was elaborated by Ld CIT(A) in his order.
37. We have heard the rival submissions of both the parties and have gone through the material available on record. We have observed that in the submissions filed before Ld CIT(A) and placed at page 79 of the paper book, the assessee talked about only section 10(33) of the Act whereas in its further submission of dated 13.11.2006 placed at 18 ITA No3779 & 3818/Del/207 page 86 of the paper book, the assessee talked about section 80-M also which was introduced w.e.f. 1.4.2003. The deduction u/s 10(33) was denied as according to Assessing Officer the dividend income pertained to the period 28.9.1999 to 28.8.2001 and was not covered by section 115-O. However, Assessing Officer did not talk about section 10(34) or section 80M. The Ld CIT(A) upheld the denial of deduction u/s 10(33), 10(34) & section 80M on the basis that section 10(33) dealt with only gains arising on account of transfer of units of unit Scheme, 1964 & section 10(34) came into being from assessment year 2004-05. As regards deduction u/s 80M the Ld CIT(A) held that deduction was available subject to fulfillment of certain conditions and assessee had not filed any evidence of fulfilling these conditions.
From the plain reading of section 80M, it becomes clear that there was a provision for deduction for intercorporate dividends for assessment year 2003-04 subject to the fulfillment of certain conditions. However, since the claim of assessee was not examined by the Assessing Officer u/s 80M, we remit back this point to the file of Assessing Officer for ascertaining as to whether the assessee was eligible as per law for deduction u/s 80M or not. In view of the above, the second ground of appeal succeeds for statistical purposes.
Charging of Interest:
38. Charging of interest u/s 234B & 234D and withdrawal of interest u/s 244A.
39. The assessee has taken these as ground No.4 & 5 of the appeal.
19 ITA No3779 & 3818/Del/207
40. The Ld AR argued before us that interest u/s 234D is not applicable as the applicability of this section is from assessment year 2004-05 in view of Special Bench judgment in the case of ITO v. Ekta Promoters Pvt. Ltd. 305 ITR 1. He further argued that interest u/s 234B can be charged only after giving effect and is of consequential nature. Similarly, he argued that withdrawal of interest u/s 244A is of consequential in nature.
41. The Ld DR relied upon the order of Assessing Officer.
42. We have heard the rival submissions of both the parties and have gone through the material available on record. We are of the considered opinion that charging of interest u/s 234D is not applicable for assessment year 2003-04 in view of case law relied upon by the assessee. As regards interest u/s 234B and 244A, we are of the opinion that these are of consequential nature and the determination of interest under these sections will depend upon the final out come of the case. In view of the above, ground No.4 & 5 are also allowed.
42. In the result, the appeal filed by the revenue is allowed and the appeal filed by the assessee is allowed.
43. Order pronounced in the open court on the 6th day of July, 2012.
Sd/- Sd/- (R.P. TOLANI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dt. 06.7.2012. HMS Copy forwarded to:- 1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.
20 ITA No3779 & 3818/Del/207 By Order (ITAT, New Delhi).
Date of hearing Date of Dictation 15.6.2012 Date of Typing 22.6.2012 Date of order signed by both the Members & pronouncement. Date of order uploaded on net & sent to the Bench concerned.