HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A No. 72 OF 2003 02-09-2014 BETWEEN Commissioner of Income Tax – II, Hyderabad …Appellant And M/s. U.B. Electronic Instruments Ltd., Hyderabad …..Respondent HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A Nos. 72 OF 2003
JUDGMENT: (per the Hon'ble Sri Justice L. Narasimha Reddy)
This appeal under Section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) is by the Revenue, feeling aggrieved by the order dated 19-08-2002 passed by the Hyderabad Bench ‘B’ of the Income Tax Appellate Tribunal (for short, ‘the Tribunal’) in I.T.A No. 702/Hyd/2000.
The respondent is a dealer in electronic medical equipment and it was filing returns year after year. It has also borrowed loans from the Andhra Pradesh State Financial Corporation and from other lending agencies. It is stated to have informed the lenders to waive interest since it is incurring losses year after year. On that basis, it did not effect any deduction of tax at source (TDS). For the assessments for various years, no objection was taken for non-inclusion of the TDS in the returns. The assessing officer sought to levy interest under Section 201 (1A) of the Act in respect of the past assessments. The consequential orders passed by the assessing officer were challenged before the Commissioner (Appeals) and the appeals were dismissed on 25-08-2000. Thereupon, the respondent filed I.T.A Nos.702 to 704/Hyd/2000 before the Tribunal. Through a common order dated 19-08-2002, the Tribunal took the view that four years period is ‘reasonable period’ in the context of levying interest under Section 201 (1A) and that in the instant case, the interest is sought to be levied under Section 201 (1A) for the assessment year 1989 i.e., ten years after the year of assessment.
The learned Senior Counsel for the appellant does not seriously dispute this legal position. However, an attempt is made to sustain the order of the assessing authority by taking recourse to the subsequent amendment to Section 201 of the Act. For that purpose, a miscellaneous petition being ITTAMP No. 472 of 2014 is filed.
We are of the view that the interpretation placed upon the amended provision vis-à-vis the past transactions would have its own serious implications on other matters. Such an exercise can be undertaken only when (a) the facts of the case permit and (b) the tax impact is phenomenal. On both counts, the case of the Revenue is very weak. The tax impact is almost in the range of limits stipulated under Section 268A. Further, the referable assessment year is 1989-90. Unsettling the things at this length of time would have its own serious implications.
We, therefore, dismiss the appeal.
The miscellaneous petitions filed in this appeal shall also stand disposed of. There shall be no order as to costs.
L. NARASIMHA REDDY, J CHALLA KODANDA RAM, J 02-09-2014 ks