TMI Blog2017 (12) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 115 JB of the Act had already been decided by CIT(A). It has been correctly recorded by the Tribunal that only CIT(A) was competent to assume jurisdiction under Section 154 of the Act. Interest charged under Section 234D and withdrawal of interest under Section 244A - Held that:- Firstly, once it is held that invoking of power of rectification under Section 154 of the Act was unjustified, the consequential conclusion would be that the chargeability of interest under Sections 234B and 234D of the Act would not arise. To put it differently, since the Assessing Officer is not empowered to invoke the provisions of Section 154 of the Act, on the matter already decided by CIT(A) under Section 154(1A) of the Act, therefore, interest under Sections 234B and 234D of the Act was consequential in nature. Viewing from another angle, Section 234B of the Act provides for recovery of interest for default in payment of advance tax. The assessee is liable to pay simple interest where he is unable to pay advance tax under Section 208 of the Act but has failed to pay such tax or where the advance tax paid is less than 90% of the assessed tax. Where the advance tax is based on the law pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n November 1, 2004 declaring a loss of ₹ 124,66,88,768/- which was processed under Section 143(1) of the Act, on 13.12.2004 at the declared book profit of ₹ 284,21,60,970/-. Subsequently, the assessee revised its return of income on 23.12.2005, declaring a loss of ₹ 173,16,33,768/- and the book profit of ₹ 374,06,15,970/-.The revised return was accepted by passing an order under Section 154 of the Act and finally regular assessment under Section 143(3) of the Act was framed vide order dated 29.12.2007 determining a book profit of ₹ 483,33,60,110/-.The assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] and obtained relief of ₹ 109,27,44,140/- and thus the book profit was determined at ₹ 374,06,15,970/-. Thereafter, Section 115JB of the Act was amended by Finance Act, 2009. The amendment was made effective w.e.f. 1st April 2001. In view of the amendment and to recompute the book profit of the assessee company, the Assessing Officer issued notice under Section 154 of the Act dated 15.3.2011 which was served upon the assessee to represent his case on 23rd March 2011. Vide letter dated 23rd March 2011, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee preferred appeal to the CIT(A) who deleted the addition on account of provision for bad and doubtful debt. Thereafter, Finance Act, 2009 through retrospective amendment effective from 1.4.2001 vide clause (i) in Explanation 1 to Section 115JB of the Act inter alia provided that the amount or amounts set aside as provision for diminution in the value of any asset shall be added to the profits as shown in the statement of profit and loss for the relevant previous years prepared under sub section (2) for ascertaining the book profit under the said Section. Whereupon, the Assessing Officer initiated proceedings under Section 154 of the Act and made addition to the book profit of the assessee on account of provision for bad and doubtful debts by applying clause (i) to Explanation 1 to Section 115JB of the Act holding that the amounts set aside as provision for diminution in value of the assets covers this item of expenditure/deduction and is thus required to be added. An appeal was carried to CIT(A) urging that order passed under Section 154 of the Act was invalid. The CIT(A) upheld the action of the Assessing Officer holding that rectification was done in view of retrospectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to any matter other than the matter which has been so considered and decided. 9. The object of Sub section (1) of Section 154 of the Act is to rectify any mistake apparent from the record. Under the said provision, the income tax authority is empowered to rectify any mistake apparent on the record and amend any order passed by it under the provisions of the Act. However, this power is circumscribed by certain restriction which is contained in sub section (1A) of Section 154 of the Act. The language of Section 154(1A) of the Act is abundantly clear whereby any matter which is considered and decided by the appellate authority cannot be reopened or rectified by the authority passing such order. In other words, an authority is empowered to amend or rectify an order passed by it in relation to any matter other than the matter which has been considered and decided in appeal or revision. The principle on the basis of which this provision has been incorporated is the doctrine of merger. 10. Applying on the touchstone of the above enunciated principle to the factual matrix involved herein, it may be noticed that the issue relating to deduction of provisions of bad and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any matter which has not been considered and decided in any proceeding by way of appeal or revision, may be amended by the authority passing such an order in exercise of its power under Section 154(1). Their Lordships further came to hold that the doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by an inferior Tribunal and the other by a superior Tribunal passed in an appeal or revision, there is a fusion or merger of the two orders irrespective of the subject matter of the appeal. The order of assessment made by the Income Tax Officer merges in the order of the Commissioner in so far as it relates to items considered and decided by the Commissioner. That part of the order of assessment, which relates to items not forming the subject-matter of the appellate order and left untouched does not merge in the order of the Commissioner. Even after an appeal from an order of assessment is decided by the Commissioner, a mistake in that part of the order of assessment which was not the subject-matter of the appeal and was thereafter left untouched by the Commissioner, can be rectified by the Income Tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. He submits that the Tribunal was not right in law when it held that no interest under Section 234B of the IT Act can be levied. Though several items have to be calculated while computing book profit and in terms of explanation to section 115JB of the IT Act, that explanation has been brought on the statute book and with retrospective effect from Ist April 2001, therefore, this calculation of the Tribunal is erroneous in law. 12. However, Mr. Kaka, learned senior counsel invited our attention to section 234B of the IT Act to submit that this is provision to recover interest for default in payment of advance tax. It directs payment of simple interest and in terms of this provision provided any assessee who is liable to pay advance tax under section 208 has failed to pay such tax or where the advance tax paid is less than 90% of the assessed tax. Thus, this is a provision where under interest could be recovered wherein advance tax for the assessment year fails to take note of the amendment to the Income Tax Act which is brought in subsequently. When the Parliament stepped into to amend the Act though with retrospective effect but in 2008, then there is no default in paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, what the assessee has pointed out is that some of the amounts included in the book profits as per Explanation (h) to section 115JB were brought in by the Finance Act, 2008 with retrospective effect from Ist April 2001. The assessee cannot be held to be liable for failing to make a provision for payment of advance tax which was not possible on the last date as per the law then prevailing. Thus, clause (h) which is reproduced above having been brought in with retrospective effect but by Finance Act 2008, the advance tax computation by the assessee for the year 2006-07 cannot be faulted and it cannot be said that the assessee is in default and therefore, there is any liability to pay interest in terms of section 234B of the Income Tax Act, 1961. 18. In the case of Star India (P) Limited vs. CCE (2006) 280 ITR 321/150 Taxman 128 the Hon ble Supreme Court held that the service of broadcasting was made a taxable service with effect from July 16, 2001, by the Finance Act, 2001. The appellant disputed its liability to make any payment for service tax on the ground that it did not broadcast. The Commissioner, however held against the appellant. The matter was carried before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entail the punishment of payment of interest with retrospective effect. It is this principle which has been laid down which is followed by the Calcutta High Court. It is that principle relied upon by the Calcutta High Court which has been applied by the Tribunal to the facts and circumstances of the present case. We do not think that the assessee before us can be called upon to pay interest in terms of section 234B, once the explanation was introduced or brought in with retrospective effect but by Finance Act, 2008. Then there was no liability to pay interest in terms of this provision. That was because the assessee cannot be termed as defaulter in payment of advance tax. The advance tax computation on the basis of the unamended (sic) provision therefore could not have been entertained. 21. We do not see any broader or wider question arising for our determination as the view taken even on this question is neither perverse or neither vitiated by any error of law apparent on the face of the record. 23. Therefore, respectfully following the decision of Hon ble Bombay High Court we also hold that no interest shall be chargeable under section 234B of the Act on tax liability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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