IBM India liable to pay interest for delay in filing ITR

IBM India liable to pay interest for delay in filing ITR on incremental income pursuant to APA - ITAT

IN THE INCOME TAX APPELLATE TRIBUNAL

The Relevant Text of the Order as follows : 13.5. Ld.Counsel relied on following decisions: Decision of Hon’ble Gujarat High Court in Rainbow Industries (P.) Ltd. (supra), relied on by Ld.Counsel is in respect of demand for interest on short payment of advance tax deleted by Tribunal. In reference before Hon’ble Court at the instance of Revenue, it was held that,

“This Tribunal as a matter of fact had found that the advance tax liability was determined by the assessee therein on the basis of its method of valuing closing stock which it had followed even for the earlier assessment years. Therefore, in the absence of the Revenue pointing out that the figures adopted for computing the income was incorrect, the levy of interest could not be sustained.”

13.6. Reliance was also placed on decision of Hon’ble Bombay High Court in Prime Securities (supra) wherein, default was committed by assessee in payment of advance tax at the time when it was paid. On these facts, Hon’ble Court held that, at the time of making payment of Advance tax, it was not possible to anticipate events and make payment of advance tax on that basis.

13.7. In the present case, it is the case of the Revenue that there is default on part of the assessee in paying Advance tax on account of incremental income received during the year under consideration, pursuant to APA dated 29/12/2016. In our view, these decisions therefore do not recue assessee.

13.8. We refer to decision of Hon’ble Bombay High Court in case of E.Merk (India) Ltd vs CIT reported in (2017) 79 taxman.com21, wherein this decision has been dealt with as under:

“(i) Moreover, both of the above decisions of Gujarat High Court completely ignore sub-section (4) of Section 215 of the Act, which provides for reduction or waiver of the interest payable by the assessee under Section 215 of the Act. Therefore, both the above decisions of the Gujarat High Court most respectfully in our view were rendered sub-silentio. It is this sub-section (4) of Section 215 which inter alia takes into account the circumstances beyond the control of the assessee for having paid less advance tax than that finally determined to be payable.

The argument of hardship, bona fide conduct etc. would be appropriately considered when applying sub-section (4) of Section 215 of the Act while considering waiver/reduction of interest payable under Section 215 of the Act. These arguments of hardship etc. cannot be subject of consideration while interpreting a fiscal legislation. There is no place for any equity while interpreting a fiscal legislation.

The Apex Court in CST v. Modi Sugar Mills, AIR 1961 (SC) 1047 has observed that "In interpreting a taxing statute, equitable consideration are entirely out of place." Therefore, the submission of the applicant assessee that non-payment of advance tax was on account of circumstances beyond the control of the assessee and for a reasonable cause, would not warrant deletion of interest payable on account of short payment/non-payment of the advance tax while considering the Sub-section (1) of Section 215 of the Act. The considerations may have been different if we were considering an application of waiver under Sec 215(4) of the Act. (j) In the above view the applicant assessee is liable to pay the interest under Section 215 of the Act as held by the Tribunal.”

13.9. In our view, facts considered by Hon’ble Bombay High Court in case of E-Merk(India) Ltd vs CIT (supra) is identical to the fats of the case. Respectfully following the decision of Hon’ble Bombay High Court in case of E.Merk(India) Pvt.Ltd(supra), and in particular decision of Hon’ble Supreme Court in case of CIT vs. Anjum.M.H.Ghaswala(supra), we do not find any merit in submissions of Ld.Counsel. We thus hold that assessee is liable to pay interest under section 234B of the Act, on incremental income pursuant to APA. Accordingly, we dismiss this ground of assessee. In the result appeal filed by assessee stands partly allowed. Order pronounced in open court on 31/7/2020 Read Order Tags:  Judgement, Appellant Tribunal, Income Tax

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