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The DCIT- 7 (3) , Mumbai Versus M/s. Vodafone India Ltd.

2016 (3) TMI 538 - ITAT MUMBAI

Charging of Interest u/s. 234C - default to pay advance tax under section 208 - Held that:- Respectfully, following the decision of Shakti Insulated Wires (P) Ltd. for assessment year 2005-06 (2014 (2) TMI 1246 - ITAT MUMBAI), which ruling, in our view, is squarely applicable to the case on hand, confirm the impugned order of the Ld. CIT(A) in holding that the assessee in the case on hand cannot be charged interest under section 234C of the Act as it had no liability to pay advance tax under sec .....

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MEMBER For The Appellant : Shri Sumit Kumar For The Respondent : Shri Nishant Thakkar ORDER PER JASON P. BOAZ, A.M: This appeal by the Revenue is directed against the order of the CIT(Appeals)-13, Mumbai dated 27/11/2013 for assessment year 2005- 05. 2. The facts of the case, briefly, are as under:- 2.1 The assessee, a company engaged in the business of cellular services, filed its return for assessment year 2005-06 on 05/10/2005 declaring NIL income after claiming deduction u/s. 80IA of the Inc .....

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under clause (c) of Explanation to section 115JB of the Act. This order of the Ld. CIT(A) was upheld by the Hon ble ITAT. On further appeal by the Revenue against the order of the Tribunal, the Hon ble High Court of Punjab & Haryana in its order in ITA No.761 of 2008 dated 21/7/2011 held that since clause (i) of Explanation 1 to Section 115JB of the Act has been inserted retrospectively from 1/4/2001 by Finance Act (No.2), 2009 the same would apply to the subject assessment year 2005-06 and .....

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dated 19/12/2011. 2.2 Aggrieved by the order of assessment for assessment year 2005- 06 dated 04/03/2013, the assessee preferred an appeal before the CIT(Appeals)-13, Mumbai challenging, inter alia, the charging of interest u/s.234C and 234D of the Act in its case. The Ld. CIT(A) disposed off the appeal vide order dated 27/11/2013 allowing the assessee partial relief i.e. deleting the interest charged u/s. 234C of the Act and upholding the charging of interest u/s. 234D of the Act. 3. Being aggr .....

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/- charged u/s. 234C of the Act without properly appreciating the facts that the assessee has failed to pay advance tax liability arising due to respective amendment to section 115JB which was clearificatory in nature. 2. The Ld. CIT(A) s order is contrary in law and on facts and deserves to be setaside. 3. The appellant craves leave to amend or alter any ground or add a new ground that may be necessary. 4. The appellant prays that the order of CIT(A) on the above grounds be set aside and that o .....

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nds raised and placed strong reliance on the order of the Assessing Officer in the matter. 4.2.1 Per contra, the Ld. Representative for the assessee supported the impugned order of the Ld. CIT(A) in deleting the interest it was charged u/s. 234C of the Act. It was submitted that the Ld. CIT(A) was of the view that no advance tax liability subsequently arising due to amendment in law, that too retrospectively, could be fastened on the assessee and, therefore, the assessee could not be charged int .....

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e had no liability to pay advance tax instalments and became liable to do so by virtue of a retrospective amendment made after the close of the financial year, the assessee could not be held to be a defaulter in payment of advance tax and no interest could be charged upon it under section 234C of the Act. In support of this proposition, the Ld. Representative for the assessee placed reliance upon the following decision of Hon ble Courts and Tribunals:- (i) Emami Ltd. vs. CIT (2011),337 ITR 470 ( .....

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onsidered the material on record; including the judicial decisions cited. We find that the similar question of whether interest under section 234B and 234C of the Act can be charged for default in payment of advance tax and for deferment of advance tax, respectively, where the payment of tax became due only because of the amendment by way of insertion of clause(i) to Explanation - 1 to section 115JB of the Act by Finance (No.2) Act,2009 with retrospective effect from 1/4/2001, was considered by .....

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ing the current income for the purpose of computing the advance tax to be paid, could not have foreseen the amendment that will be made in future with retrospective effect. Hence, the advance tax paid by the assessee fell short. Accordingly he submitted that the interest u/s 234B and 234C could not be levied on the tax component attributable to the addition of Provision for bad and doubtful debts . In this regard, he placed reliance on the decision of Co-ordinate bench of Tribunal, wherein one o .....

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ce tax where payment of tax became due only because of retrospective amendment. The following observations made by the Delhi bench of Tribunal in the case of Uttam Sugar Mills are extracted, for the sake of convenience:- 7. The question is as to whether interest u/s 234B and 234C of the Act can be charged for default in payment of advance tax and for deferment of advance tax, respectively, where the payment of tax became due only because of the amendment by way of insertion of Explanation 1(h) t .....

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Chini Mills Ltd (2007)(111 TTJ (Kol) 230. Now, the amendment having come about only by virtue of Finance Act, 2008, obviously there was no malafide intention on the part of the assessee, as has been recognized in Priyanka Overseas Ltd Vs. Dy. CIT (2002)(75 TTJ (Delhi) 783) : (2001)(79 ITD 353)(Delhi), in a similar fact situation. It was noted therein that from CBDT Order No. F 400/234/95-IT (B) dt. 21 st May, 1996, it was clear that the intention of the tax authorities was not to levy interest .....

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