TRAVANCORE ELECTRO CHEMICAL INDUSTRIES LTD. VS COMMISSIONER OF INCOME-TAX
1999 P T D 3040
[229 I T R 272]
[Kerala High Court (India)]
Before V. V. Kamat and P.A. Mohammed, JJ
TRAVANCORE ELECTRO CHEMICAL INDUSTRIES LTD.
Versus
COMMISSIONER OF INCOME-TAX
I.T.Rs. Nos. 121 and 122 of 1989, decided on 21/06/1996.
(a) Income-tax---
---Depreciation---Extra shift allowance---Electrical sub-station in factory Entitied to extra shift depreciation allowance---Indian Income Tax Rules, 1962, Appendix 1, Part 1.
(b) Income-tax---
----Appeal to Appellate Assistant Commissioner---Advance tax---Interest-- Powers of A.A.C. co-extensive with those of I.T.O.---Levy of interest questioned on ground that delay in collection of cheque for advance tax not attributable to assessee---A.A.C. has powers to entertain, alongwith other grounds of appeal---Indian Income Tax Act, 1961, Ss.215 & 246.
For the assessment year 1975-76, the assessee paid advance tax of Rs.26,29,820 by cheque on December 10, 1974. The cheque was honoured on presentation on December 24, 1974. The Income-tax Officer, therefore, levied interest under section 215 of the Income Tax Act, 1961. The assessee appealed contending that the delay was not due to its fault. The Appellate Assistant Commissioner accepted the contention and cancelled the interest. The Revenue appealed to the Tribunal contending that no appeal lay against the levy of interest under section 215. The Appellate Tribunal accepted the contention on the ground that it was not open to the assessee to raise the question of leviability of interest alongwith other grounds in the appeal. On a reference:
Held that the Appellate Assistant Commissioner had pointed out that in a case where the facility for acceptance of the cheque is available, when an assessee had made payment by cheque which was honoured on presentation the date of acceptance of the cheque is the material date of payment, and that, on the facts, the delay could not be attributed to the assessee. In the absence of any statutory provision, the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. The Appellate Assistant Commissioner had acted in accordance with law.
Jute Corporation of India Ltd. v. CIT (1991) 187 ITR 688 (SC) rel.
Held also, that the assessee was entitled to extra shift depreciation allowance in respect of the electrical sub-station in its factory.
Travancore Electro Chemical Industries Ltd. v. CIT (1997) 224 ITS 273 (Ker.) fol.
C. Kochunni Nair, M.A. Firoz and Dale P. Kurien for the Assessee.
P.K.R. Menon and N.R.K. Nair for the Commissioner.
JUDGMENT
P. A. MOHAMMED, J.---The questions of law referred to us for decision in the above income-tax references are the following:
"(1) Whether, the assessee is entitled to extra shift allowance in respect of electrical sub-station in the factory?
(2) Whether, the Tribunal was right in law in holding that the Appellate Assistant Commissioner had no jurisdiction to admit the ground raised by the assessee before him relating to the levy of interest under section 215 of the Income-tax Act especially in the light of thefact that a number of other questions is involved in the appeal?"
The above two questions were referred to us at the instance of the assessee. The assessment years in question are 1972-73 and 1975-76.
The short facts leading to the making of the above references can b< stated thus: The assessee is a public limited company known as "The Travancore Electro Chemical Industries Limited, Chingavanam". For the assessment years 1972-73 and 1975-76 assessments were reopened by the Income-tax Officer under section 147(b) of the Income-tax Act on the basis of the information subsequently received from the audit party, that extra shift allowance had been wrongly granted in respect of the electrical machinery. Notwithstanding the objections raised by the assessed, the Income-tax Officer template the reassessment and withdrew the relief granted by way of extra shift allowance in respect of electrical sub-stations and machinery installed in the factory of the assessed. As against the above orders, the assessee filed appeals before the Appellate Assistant Commissioner who originally accepted the claim of the assessed that extra shift allowance was admissible. The Income-tax Appellate 'tribunal, at the instance of the Revenue., remanded the ratter to the Appellate Assistant Commissioner who later inspected the assessed' s factory alongwith the Income-tax Officer for personal verification. After the inspection, the Appellate Assistant Commissioner came to the conclusion that the electrical sub-station formed an integral part of the plant and machinery used for the manufacture of calcium carbide and that tactility was not merely a source of power but raw material consumed for manufacture of the ultimate product. In that view of the matter, the Appellate Assistant Commissioner accepted the claim of the assessee that the electrical machinery was entitled to extra shift allowance. As against the above order, the Department has filed appeals before the Appellate Tribunal which later passed a common order of the above assessment years 1972-73 and 1975-76. The. Tribunal held that the electrical sub-station was a separate unit answering the description in Entry fit of the depreciation schedule and, therefore, it could not be treated as an integral part of the calcium carbide plant and was not eligible for extra shift allowance. In view of the above order, the assessee filed an application for reference before this Court as O.P. No.1228 of 1982 for the assessment years 1973-74 and 1974-75 and this Court by judgment, dated January 28, 1985, directed the Tribunal to state a case and refer the question of law. It is in pursuance of that order that the first question referred to above comes up for decision before us.
For the assessment year 1975-76, the assessee paid advance tax of Rs.26,29,820 on December 24, 1974, and Rs.96,250 on January 7, 1975, totalling Rs.27,26,070 in addition to the advance tax of Rs.13,16,430 paid as per demand. After deducting these payments, the Income-tax Officer found the amount to be payable at Rs.2,29,356. For the aforesaid amount the Income-tax Officer imposed interest under section 215 from April 1, 1975 to December 31, 1977, at a sum of Rs.70,600. As against this imposition of in term, the assessed filed an appeal, alongwith other grounds of objection to the assessment. The case of the assessee is that a cheque for Rs.26,29,820 drawn on a bank at Kottayam was handed over to the Department on December 10, 1974, but it was honoured on presentation only on December 24, 1974. In other words, the contention raised by the assessee was that the delay was not due to the fault of the assessee and this explanation was accepted by the Appellate Assistant Commissioner and he came to the conclusion that the delay should not be attributed to the assessee. Consequently, the penal interest levied by the officer was cancelled. The Revenue filed an appeal and contended that no appeal would lie against the levy of interest under section 215. The Appellate Tribunal accepted the contention on the ground that it was not open to the assessee to raise the question of leviability of interest alongwith other grounds in the appeal. It is in the abovesaid background that the second question happened to be referred to this Court for decision.
We heard learned counsel for the assessee and also senior standing counsel for the Revenue.
At the time of hearing, counsel on both sides uniformly submitted that a Division Bench of this Court in I.T.R. Nos.593 and 594 of 1985 in Travancore Electro Chemical Industries Ltd. v. CIT (1997) 224 ITR 273, had answered the question similar to the first question referred in this case in favour of the assessee. It is appropriate to extract the operative portion of the judgment in the above case (page 281):
"We, therefore, hold that the electrical sub-station attached to the Travancore Electro Chemical Industries Ltd., is part of its main plant and machinery and it cannot be treated as an item coming under item (iv) of Entry III of Part I of Appendix I disentitling the assessee to claim extra shift allowance. 'Me question referred is, therefore, answered in the affirmative, in favour of the assessee and against the Revenue."
It is pertinent to note that the above decision was rendered in the case of the same assessee for the assessment years 1972-73, 1973-74 and 1974-75. The above decision squarely covers the dispute governing the first question referred to us for decision. In view of the above decision of the Division Bench, we feel it unnecessary to go further into this question. We, therefore, answer the first question referred to us in the affirmative and in favour of the assessee and against the Revenue.
As pointed out above, the Income-tax Officer levied interest under section 215 stating that the advance tax was paid only on December 24, 1974, and hence penal interest was leviable. The contention urged by the assessee was that the cheque was handed over on December 10, 1974, and it was honoured after presentation at a bank at Kottayam and the delay was not on the part of the assessee. The Appellate Assistant Commissioner has pointed out that in a case where the facility for acceptance of the cheque is available when an assessee has made payment by cheque which was honoured on presentation, the date of acceptance of the cheque is the material date of payment. That being the position, the delay could not be attributed to the assessee. In view of the clear facts set out hereinbefore, the Appellate Assistant Commissioner found that the delay in payment of the amount is not on the part of the assessee and in that situation we feel it unnecessary to direct the Tribunal to decide that question once again. When the facts are absolutely clear there is no room to have a different view at all in the circumstances of the case.
Learned counsel for the assessee has brought to our notice the decision of the Supreme Court in Jute Corporation of India Ltd. v. CIT (199.1) 187 ITR 688, wherein it has been held that (headnote): "An appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer". In view of the above decision, we can only say that the Appellate Assistant Commissioner has acted in accordance with law.
In the result, the second question referred to us is answered in the negative and in favour of the assessee and against the Revenue.
A copy of this judgment under the seal of this Court and the signature of the Registrar will be sent to the Income-tax Appellate Tribunal, Cochin Bench.
M.B.A./3085/FC Reference answered