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2016 (8) TMI 61 - AT - Income TaxRectification of mistake - chargeability of interest u/s 234B - whether the Assessing Officer could not have set-aside levy of interest u/s 234B of the Act while dealing with an application made by the assessee u/s 154 ? - Held that - According to the assessee, during the previous year related to the assessment year under consideration, it could not have visualized the subsequent amendment made by Finance Act No. 2 of 2009 to Sec. 115JB of the Act with retrospective effect from 1.4.2001 whereby the Provision for bad and doubtful debts was liable to be assessed for determining the income u/s 115JB of the Act. The aforesaid argument of the assessee cannot be faulted.Accordingly, we set-aside the order of CIT(A) and direct the Assessing Officer not to levy interest u/s 234B of the Act with respect to the addition relating to Provision for bad and doubtful debt made while computing the tax liability u/s 115JB of the Act. Thus, the assessee succeeds on this aspect. The action of Assessing Officer in the course of disposing of assessee s impugned application u/s 154 of the Act belies the stand of the Revenue. Notably, in its application seeking rectification of the interest charged u/s 234B of the Act, assessee also claimed that interest u/s 234D of the Act was wrongly charged, and also that the credit for tax was not correctly granted. The impugned order of the Assessing Officer dated 2.4.2013 reveals that so far as assessee s pleas for rectification relating to charging of interest u/s 234D of the Act and non-granting of credit of tax is concerned, same have been accepted. Thus, the inconsistency on the part of Revenue does not lend any credence to its objection of not rectifying the order with respect to the interest charged u/s 234B of the Act. Thus, on this aspect also, we find no reason to uphold the stand of the Revenue. - Decided in favour of assessee.
Issues Involved:
Charging of interest u/s 234B of the Income Tax Act based on a subsequent amendment in law. Analysis: Issue 1: Charging of interest u/s 234B of the Act based on a subsequent amendment in law The appeals were directed against the orders of CIT(A) for the Assessment Years 2003-04 & 2004-05, arising from orders passed by the Assessing Officer under section 154 of the Income Tax Act, 1961. The common issue raised in both appeals was the charging of interest u/s 234B of the Act. The appellant, a company engaged in manufacturing and selling petrochemical products, contended that interest u/s 234B was wrongly charged due to an addition made for Provision for bad and doubtful debts based on a retrospective amendment. The Assessing Officer rejected the plea for deletion of interest, which was upheld by CIT(A) stating that there is no provision preventing the levy of interest u/s 234B on additions made due to retrospective amendments. Issue 2: Legal precedents and arguments The appellant cited various legal precedents to support their argument that interest u/s 234B should not be charged in situations involving subsequent amendments in law. The appellant's argument was supported by legal cases such as Emami Ltd. v. CIT, CIT v. Revathi Equipment Ltd., Trinity Forge v. ACIT, and others. The Departmental Representative (DR) supported the lower authorities' orders without presenting new arguments. Issue 3: Tribunal's decision The Tribunal considered the appellant's argument that interest u/s 234B should not be charged when additions are based on subsequent amendments in law. The Tribunal agreed with the appellant's position, citing that the appellant could not have foreseen the subsequent amendment made by Finance Act No. 2 of 2009 to Sec. 115JB of the Act. The Tribunal referred to legal precedents and concluded that interest u/s 234B is not chargeable in such situations. The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer not to levy interest u/s 234B concerning the addition related to Provision for bad and doubtful debt while computing tax liability u/s 115JB of the Act. Issue 4: Rectification under Sec. 154 of the Act The CIT(A) and the DR argued that the issue raised by the appellant was not a mistake under Sec. 154 of the Act and was a debatable issue. However, the Tribunal found no merit in this argument, noting that the Assessing Officer had rectified other aspects of the appellant's application under Sec. 154, which included rectification related to interest u/s 234D and tax credit. The Tribunal concluded that the Assessing Officer's inconsistency in rectifying other aspects undermined the argument against rectifying the order concerning interest charged u/s 234B. Consequently, the Tribunal allowed the appeal for the Assessment Year 2003-04, and the decision was applied mutatis mutandis to the Assessment Year 2004-05. In conclusion, the Tribunal allowed the appeals of the assessee, setting aside the levy of interest u/s 234B of the Act concerning additions made due to retrospective amendments in law.
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