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Judgment
PER MANISH AGARWAL, AM :
The present appeal is filed by the assessee against the order dated 21.11.2019 of Ld. Commissioner of Income Tax (A), Delhi-9 [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-9/10556/2017-18 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 23.12.2017 passed u/s 143(3) of the Act pertaining to Assessment Year 2015-16.
There is a delay of 875 days in filing this appeal. An application requesting condonation of delay was filed wherein it is stated that due to lockdown and the COVID-19 pandemic, the assessee could not file the appeal within time. The Hon’ble Supreme Court in Suo Motu Writ Petition (Civil) No.3 of 2020 dated 08.03.2021 condoned the delay in the filling the appeal due to Covid-19 Pandemic for the period from 15.03.2020 to 28.02.2022. It is, therefore, submitted that if the COVID period is excluded, the remaining delay is of 159 days only. It is further stated in the petition that delay in filing of appeal before the ld. CIT(A) was unintentional and bonafide on the part of the assessee and occurred solely due to the fact that the assessee was pre-occupied in long arbitration process and thus, the CEO could not focus on pending appellate proceedings. Hence, it was prayed that the delay in filing the appeal be condoned and the appeal may please be decided on merits.
Ld. Sr. DR for the Revenue has no objection in this regard.
We have heard the Sr. DR. It is seen that the total period of delay is of 875 days which includes 716 days falling under the covid-19 period thus, in terms of Suo Motto writ petition (Civil) No. 3/2020 dt. 08.03.2022, the Hon’ble Supreme Court directed that the period from 15.03.2020 till 28.02.2022 is to be excluded for the purpose of limitations under any general or special laws in respect of all judicial or quasi-judicial proceedings. Thus, after excluding this period of 716 days delay, the remaining delay is of 159 days. The delay in our considered opinion in filing the appeal is a result of negligence on the part of the CEO of the assessee for which assessee should not be punished. It must be remembered that in every case of delay, there can be some lapse of the litigant concerned, that alone is not enough to turn down the plea of assessee and to shut the doors against him. When the explanation does not smack of mala fide or it is not put-forth as a part of dilatory strategy, the Courts must give utmost consideration to such litigant and its right of hearing of the appeal on merit ought not to be shut. Considering the overall facts and circumstances of the case and in the larger interest of justice, delay in filling of the appeal is condoned and appeal filed by the assessee is taken for adjudication on merits.
None appeared on behalf of the assessee at the time of hearing. Therefore, the appeal is being decided on the basis of material available on record and after hearing Ld. Sr. DR.
Brief facts of the case are that assessee company e-filed its return of income on 31.09.2015, declaring total income at INR 48,99,267/-. The case was selected for scrutiny and notice u/s 143(2) dated 11.04.2016 was issued followed by the notices issued u/s 142(1) of the Act from time to time. In response submissions were filed alongwith necessary details as required. Thereafter, the AO assessed the income at INR 1,69,75,896/- vide assessment order dated 23.12.2017 passed u/s 143(3) of the Act.
Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 21.11.2019, dismissed the appeal of the assessee.
Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:-
1.“Because on the facts and circumstances of the case, the Ld.AO as well as the CIT(A) erred in interpretation of 56(2) (viib). The share has to be issued on a round figure only and therefore making the addition due to hyper technical ground of difference in decimals is not in compliance of 56(2)(viib).
2.Because on the facts and circumstances of the case, the Ld. AO has erred in levying the interest u/s 234B as all the income of the assessee are from the government department and are subject to TDS.
3.Because on the facts and circumstances of the case, the impugned order is arbitrary, illegal and therefore bad in laws.
4.The assessee carves the leave of the Hon'ble bench to add/alter/modify and delete any other grounds of law at the time of hearing.”
In Ground of appeal No.1, the assessee has challenged the addition of Rs. 1,11,273/- made u/s 56(2)(viib) of the Act.
On the other hand, Ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and requested for the confirmation of the same.
Heard the contention of Ld. Sr. DR for the Revenue and perused the material available on record. From the perusal of the report of the Chartered Accountant, it could be seen that the fair market value of shares under Rule 11UA was worked out at INR 109.66 and the Auditor has certified the value at INR 110/- per share for having face value of INR 10/- each, copy of such report is available at page 54 of the Paper Book. It was the claim of the assessee that shares could not be issued in fraction value, therefore, assessee has asked the premium in round figure of INR 100/- per share.
Merely for the reason there was a difference of INR 0.34 per share due to rounding off in the value of premium, AO had made the addition. Shares cannot be issued for fraction value and should be issued in the round off, therefore, the auditor while worked out, fair market value has certified the value per share in the nearest approximation of INR 110/- as against INR 109.66 computed as per intrinsic value method. Under these facts and circumstances, we find that the AO and Ld. CIT(A) are not correct in making the addition for this fraction value of INR 1,11,273/- (0.34 x 327273) which is hereby, deleted. Accordingly, Ground of appeal No.1 raised by the assessee is allowed.
Ground of appeal No. 2 raised by the assessee is with respect to the levy of interest u/s 234B of the Act.
It is the claim of the assessee that in first appellate proceedings before Ld. CIT(A), assessee has not raised this ground of appeal and since it is a legal ground, requires no fresh verification, the same is admitted.
It is seen that in the case of assessee for AY 2013-14, the Co-ordinate Bench of the Tribunal in ITA No. 206/Del/2019 dated 22.11.2019, under identical circumstances, remitted back to the file of AO for verification of the fact whether the entire receipts was liable for TDS as all the payments were received by the assessee from Govt. Departments and if so, no question of payment of advance tax would arise and Revenue could not charge interest u/s 234B of the Act. The relevant observations of the Co-ordinate Bench in Para 8 are reproduced as under:-
8.“We have heard the rival submissions and perused the material available on record. The assessee has claimed that whole of its income is subjected to TDS, therefore, the payer who was obliged to deduct tax at source and therefore, the assessee was not liable to pay tax and to what extent and require to tax deduct at source as per provisions of the Act, the assessee was not required to pay advance tax. In such circumstances, the assessee was entitled to claim the credit of TDS deducted by the payer. If the legitimate tax has not been deducted by the payee, then the payee would be treated as the assessee in default according to section 201 and the payee/assessee would not be permitted tax credit under the proviso in section 209(1)(d). The ld. Counsel has placed reliance on the decision in the case of DIT(IT) Vs. G.E. Packaged Power Ink, wherein it was held that where the assessee were non-resident companies, entire tax was to be deducted at source of payments made by payer to it then there was no question of payment of advance tax by the assessee, therefore, Revenue could not charge any interest u/s.234B from the assessee. We are therefore of the opinion that the interest u/s.234B/C is not chargeable, if the entire income of the assessee was subjected to TDS. However, this issue has not been examined by the AO as to whether payer was to deduct TDS or assessee’s income was subjected to TDS. Therefore, we deem it fit to remit back this issue to the file of the AO to verify where the entire income of the assessee was liable to TDS on the payments made from the payer, if so then there was no question of payment of advance tax by the assessee and the Revenue could not charge the interest u/s.234B of the Act. In view of this, additional ground is set-aside for limited purpose to the file of the AO.”
Though the facts appeared to be identical in the year under appeal however, in the instant case, it is seen that in addition to the income declared by the assessee in the return of income filed, the AO further made addition/disallowance of 1,19,65,356/- u/s 40(a)(ia) of the Act towards non-payment of TDS made on the payments towards the expenses claimed in P&L Account therefore, this additional income is subjected to advance tax. Under these circumstances and by respectfully following the judgement of Co-ordinate Bench of Tribunal in assessee’s own case, we direct the AO to verify whether all the receipts declared are subjected to TDS and if so, to the extent of the income declared in the P & L Account, no interest u/s 234B of the Act should be charged. However, on the disallowance made to the total income of INR 1,19,65,356/- being 30% of INR 3,98,84,520/-, assessee is liable to pay the advance tax. Accordingly, the AO is directed to charge interest u/s 234B of the Act on the amount disallowed in the assessment order passed u/s 143(3) of the Act. With these directions, Ground of appeal No.2 raised by the assessee is partly allowed for statistical purposes.
In the result, the appeal of the assessee is partly allowed.