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2007 (5) TMI 259 - AT - Income TaxOrder passed by AO u/s 154/254 - Charging interest u/s 234B - upto which date interest u/s 234B can be admitted - deduction u/s 80-O - convertible foreign exchange - mistake apparent from records - notice u/s 154 - HELD THAT - We are of the opinion that charging of interest u/s 234B is not debatable as after the order passed by ITAT determining the deduction u/s 80-O on net basis the Assessing Officer worked out the interest u/s 234B and charged the same up to the date of the assessment order and vide ITNS 150 created a demand and issued notice to the assessee for payment of interest u/s 234B and the same was also paid by the assessee. It further means that up to the creation of demand of interest u/s 234B by the Assessing Officer and the payment of the same by the assessee in response to ITNS 150 the assessee was not aggrieved and so there was no question of there being any dispute in the mind of the assessee with respect to charging of interest u/s 234B of the Act after the order of the ITAT on account of the issue of deduction claimed by the assessee u/s 80-O on gross basis and allowed by the ITAT on net basis. We find that the argument raised for the first time by the assessee i.e. since the claim of deduction u/s 80-O was debatable the interest u/s 234B could not be levied against the assessee u/s 234B is not relevant and is meaningless keeping in view the facts and circumstances because from a bare reading of provisions of section 234B as well as the decision of Apex Court in the cases of Anjum M.H. Ghaswala and Modi Industries Ltd. 2001 (10) TMI 4 - SUPREME COURT it is evident that the Assessing Officer is duty bound to charge the interest u/s 234B of the Act as per the order of ITAT up to the date of the order of assessment passed by the Assessing Officer and not up to the date of the order passed by the Assessing Officer and after the date of the order of passed by the ITAT. Hence now it cannot be said that in the instant case the charging of interest u/s 234B was debatable irrespective of the deduction claimed by the assessee u/s 80-O of the Act. Accordingly all the arguments put forth by the assessee regarding the debatable issue raised before us have no merits and are rejected. Assessee has not been able to establish before us that it is not liable to pay any interest u/s 234B of the Act after the order passed by the ITAT and hence the other argument of the learned AR for the assessee that it has not received any notice issued by the Assessing Officer u/s 154 of the Act has no merits because in the instant case the assessee has sent a reply to the notice issued u/s 154 of the Act and the Assessing Officer after considering the reply of the assessee has passed the impugned order u/s 254/154 of the Act and accordingly this plea of the assessee being devoid of any merit is hereby rejected. Assessing Officer has charged interest u/s 234B of the Act up to the date of the order passed by him in consequence of the order of ITAT by passing an order u/s 254/154 of the Act. This is certainly against the decision of the Apex Court in the case of Modi Industries Ltd. 1995 (9) TMI 324 - SUPREME COURT as well as Full Bench in the case of Carona Sahu Co. Ltd. 1983 (10) TMI 44 - BOMBAY HIGH COURT approved by the Apex Courtland hence the order passed by the Assessing Officer u/s 254/154 of the Act charging interest u/s 234B of the Act up to the date of the order passed by him in consequence of the order of the ITAT is against the provisions of Law and hence the same cannot be upheld and consequently the same has been wrongly been upheld by the CIT(A) and accordingly the order of the CIT(A) in this regard is set-aside to this extent. Thus the grounds of appeal taken by the assessee stands disposed of accordingly. In the result the instant appeals filed by the assessee are partly allowed.
Issues Involved:
1. Mistake apparent from record in the order passed under section 254/143(3) of the Act. 2. Charging of interest under section 234B under section 154 of the Act. 3. Jurisdiction of the Assessing Officer to take recourse to rectification proceedings after the order of the ITAT. Issue-wise Detailed Analysis: 1. Mistake Apparent from Record: The assessee contended that there was no mistake apparent from the record in the original assessment order passed under section 254/143(3) of the Income-tax Act, 1961. The Assessing Officer, however, identified a mistake in the charging of interest under section 234B, which was initially charged up to the date of the original assessment order (31-3-2000) rather than up to the date of reassessment (30-11-2004). The ITAT concluded that the Assessing Officer correctly identified this as a mistake apparent from the record, justifying rectification under section 154. 2. Charging of Interest under Section 234B: The assessee argued that interest under section 234B could not be charged under section 154 as there was no direction in the original order for charging such interest. The ITAT referenced the case of Anjum M.H. Ghaswala, where the Supreme Court held that levying interest under sections 234A, 234B, and 234C is mandatory. The ITAT found that the Assessing Officer was duty-bound to charge interest under section 234B up to the date of the assessment order, not up to the date of the order passed in consequence of the ITAT's decision. This was in line with the Supreme Court's decision in Modi Industries Ltd., which clarified that "regular assessment" refers to the first assessment made under section 143 or 144, and not to any subsequent modifications. 3. Jurisdiction for Rectification: The assessee claimed that the order against which the rectification was passed had merged with the ITAT's order, thus the Assessing Officer had no jurisdiction to undertake rectification proceedings. The ITAT held that section 234B(4) allows for the adjustment of interest in accordance with orders under sections 154, 250, 254, etc., and the Assessing Officer was within his rights to issue a notice under section 154 to correct the interest calculation mistake. The ITAT emphasized that the charging of interest under section 234B was not debatable and was mandatory after the ITAT's order determining the deduction under section 80-O on a net basis. Conclusion: The ITAT concluded that the Assessing Officer correctly identified and rectified the mistake in the interest calculation under section 234B. The rectification was justified, and the interest was to be charged up to the date of the original assessment order, not the reassessment. The appeal was partly allowed, setting aside the CIT(A)'s order to the extent it upheld the incorrect charging of interest. The ITAT's decision aligns with the mandatory nature of interest under section 234B as established by the Supreme Court.
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