Vardhman Textiles Ltd, Ludhiana V. Pr.CIT-1, Ludhiana

ITA 103/CHANDI/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8530 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-06-2021
• Assessment Year: 2002-2003
• Appeal Filed On: 28-01-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA; ASHOK KHANNA CIT ITA NOS
• Assessee Lawyers: SUBHASH AGGARWAL; RISHIT DHINGRA
• Keywords: Question of law; Bad and doubtful debts; Condonation of delay; Revised return; Provision of bad debts; TDS
• Section: 244A; 143(1); 251; 43; 13; 22; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B, CHANDIGARH BEFORE: SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI R.L. NEGI, JUDICIAL MEMBER . / ITA NO.1264 /CHD/2019 / ASSESSMENT YEAR : 2002-03 M/S VARDHMAN TEXTILES LTD., (FORMERLY KNOWN AS M/S MAHAVIR SPINNING MILLS LTD.), VARDHMAN PREMISES, CHANDIGARH ROAD, LUHIANA. THE D.C.I.T. , RANGE-I, LUDHIANA. ./ PAN NO: AABCM4692E /APPELLANT /RESPONDENT . / ITA NO.1265 /CHD/2019 / ASSESSMENT YEAR : 2003-04 M/S VARDHMAN TEXTILE S LTD., (FORMERLY KNOWN AS M/S MAHAVIR SPINNING MILLS LTD.), VARDHMAN PREMISES, CHANDIGARH ROAD, LUHIANA. THE A.C.I.T. , CIRCLE-I, LUDHIANA. ./ PAN NO: AABCM4692E /APPELLANT /RESPONDENT . / ITA NO.1266 /CHD/2019 / ASSESSMENT YEAR : 2004-05 M/S VARDHMAN TEXTILES LTD., (FORMERLY KNOWN AS M/S MAHAVIR SPINNING MILLS LTD.), VARDHMAN PREMISES, THE J.C.I.T. , RANGE-I, LUDHIANA. ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 2 OF 28 CHANDIGARH ROAD, LUHIANA. ./ PAN NO: AABCM4692E /APPELLANT /RESPONDENT . / ITA NO.1267 /CHD/2019 / ASSESSMENT YEAR : 2005-06 M/S VARDHMAN TEXTILES LTD., (FORMERLY KNOWN AS M/S MAHAVIR SPINNING MILLS LTD.), VARDHMAN PREMISES, CHANDIGARH ROAD, LUHIANA. THE ADDL.CIT , RANGE-I, LUDHIANA. ./ PAN NO: AABCM4692E /APPELLANT /RESPONDENT & . / ITA NOS.103 TO 106/CHD/2020 / ASSESSMENT YEARS : 2002-03 TO 2005-06 M/S VARDHMAN TEXTILES LTD., (FORMERLY KNOWN AS M/S MAHAVIR SPINNING MILLS LTD.), VARDHMAN PREMISES, CHANDIGARH ROAD, LUHIANA. THE PR.CIT-I , LUDHIANA. ./ PAN NO: AABCM4692E /APPELLANT /RESPONDENT ! /ASSESSEE BY : S/SHRI SUBHASH AGGARWAL, ADV. & RISHIT DHINGRA, CA # ! / REVENUE BY : S/SHRI SANDEEP DAHIYA, CIT & ASHOK KHANNA, ADDL.CIT ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 3 OF 28 ! & /DATE OF HEARING : 30.06.2021 ! & /DATE OF PRONOUNCEMENT: 30.07. 2021 (HEARING THROUGH WEBEX) /ORDER PER BENCH : ALL THE PRESENT APPEALS HAVE BEEN PREFERRED BY THE SAME ASSESSEE. WHILE THE APPEALS IN ITA NOS.1264 TO 1267/CHD/2019 HAVE BEEN FILED AGAINST SEPARATE ORD ERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, LUDHIANA [IN SHORT THE LD.CIT(A)] DATED 26.07.2019, THE APPEALS IN ITA NOS.103 TO 106/CHD/2020 HAVE BEEN F ILED AGAINST THE ORDER OF THE LEARNED PRINCIPAL COMMISSI ONER OF INCOME TAX-I, LUDHIANA [IN SHORT THE LD. PR.CIT)] DATED 26.07.2019. BOTH THE TWO GROUPS OF APPEALS RELATE TO THE SAME ASSESSMENT YEARS I.E. 2002-03 TO 2005-06 AND THE ON LY ISSUE INVOLVED, IT WAS COMMON GROUND, RELATED TO ALLOWABI LITY OF INTEREST ON REFUND U/S 244A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT)AND THE PERIOD FOR WHICH INTEREST I S TO BE ALLOWED RESPECTIVELY IN THE TWO GROUPS OF APPEALS. ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 4 OF 28 2. BRIEFLY EXPLAINING THE BACKGROUND IN WHICH T HE ABOVE TWO SETS OF APPEALS AROSE, THE LD.COUNSEL FOR THE A SSESSEE POINTED OUT THAT THE LD.CIT(A), IN THE SECOND ROUND ON RESTORATION OF CERTAIN ISSUES BY THE ITAT, WHILE AD JUDICATING THE ISSUE RELATING TO THE TREATMENT OF INTEREST REC EIVED UNDER TUF SUBSIDY SCHEME, WHETHER CAPITAL OR REVENUE, HE LD THE SAME TO BE CAPITAL IN NATURE BUT WHILE HOLDING SO GAVE A DIRECTION THAT THE REFUND GENERATED ON ACCOUNT OF T HE CLAIM OF THE ASSESSEE BEING SO ALLOWED, WAS NOT ENTITLED TO ANY INTEREST THEREON SINCE THE DELAY IN THE GRANT OF RE FUND WAS ATTRIBUTABLE TO THE ASSESSEE AS IT HAD ORIGINALLY R ETURNED THE SAID INTEREST AS REVENUE IN NATURE AND HAD FOR THE FIRST TIME MADE THIS CLAIM ONLY IN APPEAL BEFORE THE ITAT. AGA INST THIS DIRECTION OF THE LD.CIT(A) THE ASSESSEE WENT IN APP EAL BEFORE THE ITAT WHO RESTORED THE ISSUE TO THE CIT(A) ON NO TING THAT WHILE GIVING THIS DIRECTION THE ASSESSEE HAD NOT BE EN HEARD AT ALL. ACCORDINGLY, IN PURSUANCE TO THIS DIRECTION THE LD.CIT(A) PASSED ORDER AFRESH AND HELD THEREIN THAT THE DELAY IN REFUND WAS ATTRIBUTABLE TO THE ASSESSEE BU T SINCE THE PROVISIONS OF THE ACT REQUIRED THE PERIOD OF DE LAY TO BE DETERMINED BY THE LD. PR.CIT, AS PER SECTION 244A O F THE ACT, HE DIRECTED THE AO TO REFER THE MATTER TO THE LD. P R.CIT. IN CONSEQUENCE TO THIS DIRECTION THE MATTER WAS REFERR ED TO THE ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 5 OF 28 LD. PR.CIT WHO IN TURN PASSED HIS ORDER FOR ALL THE FOUR YEARS DATED 26.07.2019. THE FIRST FOUR SET OF APPEA LS ACCORDINGLY, HAVE BEEN FILED AGAINST THE ORDER OF T HE LD.CIT(A) HOLDING THE DELAY IN REFUND TO BE ATTRIBU TABLE TO THE ASSESSEE AND DIRECTING THE AO TO REFER THE MATT ER TO THE PR.CIT, WHILE THE OTHER GROUP OF FOUR APPEALS ARE D IRECTED AGAINST THE ORDER OF THE LD. PR.CIT SO PASSED ON A REFERENCE MADE BY THE AO. AS IS EVIDENT, ALL OF THEM RELATE T O THE ISSUE OF INTEREST ON REFUND. AT THE OUTSET ITSELF, BOTH THE PARTIES CONCEDED THA T THE ORDER OF THE LD. PR.CIT WAS NOT APPEABLE BEFORE THE ITAT IN TERMS OF SECTION 253 OF THE ACT. IN VIEW OF THE SAM E, THE APPEALS IN ITA NOS.103 TO 106/CHD/2020 ARE DISMISSE D AS NON-MAINTAINABLE. 3. NOW TAKING UP THE APPEALS OF THE ASSESSEE IN ITA NOS.1264 TO 1267/CHD/2019, SINCE THE ISSUE WAS IDEN TICAL AND ARISING IN THE BACKDROP OF IDENTICAL SET OF FAC TS, THE LD.COUNSEL FOR THE ASSESSEE TOOK UP THE APPEAL IN I TA NO.1264/CHD/2019 AS THE LEAD CASE AND MADE HIS ARGUMENTS BASED ON THE SAID CASE. WE SHALL BE DEALI NG WITH THE APPEAL IN ITA NO.1264/CHD/2019 AND OUR DECISION ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 6 OF 28 RENDERED THEREIN WILL APPLY MUTATIS MUTANDIS TO TH E REST OF THE APPEALS ALSO. 4. THE GROUNDS OF APPEAL RAISED IN ITA NO.1264/CHD/ 2019 ARE AS UNDER: 1 THAT THE ORDER PASSED BY THE LD.CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN NOT ALLOWING INTEREST U/S 244A OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE ON THE AMOUNT OF REFUND IN RELATION TO INTEREST REIMBURSEMENT UNDER TUFS (TECHNOLOGY UPGRADATION FUND SCHEME). 3. THAT THE APPELLANT CRAVES TO ADD/ALTER/AMEND ANY GROUND OF APPEAL ON OR BEFORE THE DUE DATE OF HEARING OF APPEAL. 5. REITERATING THE FACTS RELATING TO THE BACKGROUND IN WHICH THE ISSUE OF INTEREST ON REFUND AROSE IN THE CASE OF THE ASSESSEE AS ABOVE, THE LD.COUNSEL FOR THE ASSES SEE VEHEMENTLY OPPOSED THE ORDER PASSED BY THE LD.CIT(A ) IN THE PRESENT CASE. THE ARGUMENT OF THE LD.COUNSEL FOR TH E ASSESSEE WAS THAT THE ASSESSEE WAS ENTITLED TO INTE REST ON REFUND AS PER THE PROVISIONS OF SECTION 244A(1) OF THE ACT AND THERE WAS NO DELAY ATTRIBUTABLE TO THE ASSESSEE AT ALL SO AS TO ATTRACT THE PROVISIONS OF SECTION 244A(2) OF THE ACT FOR REFERRING THE MATTER TO THE LD. PR.CIT BY THE AO AS DIRECTED BY THE LD.CIT(A) IN HIS ORDER. VIS--VIS HIS CONTE NTION THAT ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 7 OF 28 THE ASSESSEE WAS ENTITLED TO INTEREST ON THE REFUND FOR THE ENTIRE PERIOD OF DELAY AS PER THE PROVISIONS OF SEC TION 244A(1) OF THE ACT, HE POINTED OUT THAT THE LAW STI PULATES INTEREST ON REFUND OF SELF ASSESSMENT TAX PAID BY T HE ASSESSEE ALSO AS PER THE PROVISIONS OF SECTION 244A (1)(AA) OF THE ACT AND IN THE FACTS OF THE PRESENT CASE WHEREI N THE ASSESSEE HAD ORIGINALLY RETURNED THE INTEREST ON TU F SUBSIDY AS ITS INCOME AND PAID THE TAXES THEREON, WHICH WAS SUBSEQUENTLY ON A PLEA RAISED BEFORE THE ITAT, REST ORED TO THE LD.CIT(A) AND ALLOWED BY HIM AS BEING CAPITAL IN NATURE, THE REFUND AROSE TO THE ASSESSEE OF THE SEL F ASSESSMENT TAX PAID BY THE ASSESSEE ON THE SAME. HE CONTENDED THAT THE PROVISIONS OF LAW WERE SIMPLE AN D CLEAR AND THERE WAS NO AMBIGUITY IN THE SAME AT ALL AND R EQUIRED INTEREST TO BE PAID ON THE DELAY FOR THE ENTIRE PER IOD FROM THE PAYMENT OF TAXES TO THE GRANT OF REFUND. HE CON TENDED THAT THE PROVISIONS OF SECTION 244A(2) REQUIRING RE FERENCE BY THE AO TO THE PR.CIT WAS ONLY IN THE CIRCUMSTANCES WHERE THERE WAS A DELAY IN THE PROCEEDINGS RESULTING IN REFUND. HE STATED THAT MERELY MAKING A CLAIM AT A LATER S TAGE WAS NOT EQUIVALENT TO DELAY IN THE PROCEEDINGS OF REFUN D. THAT THERE WAS DIFFERENCE BETWEEN THE TWO PHRASES AND MA KING A CLAIM AT A LATER STAGE DID NOT TANTAMOUNT TO DELAY IN THE ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 8 OF 28 PROCEEDINGS OF REFUND. HE STATED THAT HIS CLAIM FOR INTEREST ON REFUND FOR THE ENTIRE PERIOD AS SPECIFIED IN SEC TION 244A(1) OF THE ACT WAS SUPPORTED BY VARIOUS JUDICIA L DECISIONS OF THE HON'BLE HIGH COURT AND EVEN HON'BL E SUPREME COURT. HE DREW OUR ATTENTION TO THE FOLLOWI NG DECISIONS IN THIS REGARD: 1. UNIVERSAL CABLES LTD. VS. CIT (2020) 420 ITR 111 (SC). 2. UOI VS. TATA CHEMICALS LTD. (2014) 363 ITR 658 (SC). 3. CITCIT VS. MELSTAR INFORMATION TECHNOLOGY LTD. (2019) 265 TAXMAN 50 (BOM). 4. PC.CIT VS. STATE BANK OF INDIA (2019) 261 TAXMAN 409 (BOM). 5. AJANTA MANUFACTURING LTD. VS. DCIT (2017) 391 ITR 33 (GUJ). 6. CIT VS. LARSEN & TOUBRO LTD. (2011) 330 ITR 340 (BOM). 7. CIT VS. SAHARA INDIA SAVING & INVESTMENT CORPN. LTD. (2013) 218 TAXMAN 363 (ALL). 8. CIT VS. SUJLEJ INDUSTRIES LTD. (2020) 325 ITR 331 (DEL). 6. HE FURTHER CONTENDED THAT THE DISTINCTION DRAWN BY THE LD.CIT(A) IN THE CASE OF TATA CHEMICAL LTD. AND AJA NTA MANUFACTURING LTD. WAS INCORRECT. THE LD.COUNSEL FO R THE ASSESSEE RAISED ANOTHER CONTENTION BEFORE US BEING THAT THE POWERS OF THE LD.CIT(A) ENUMERATED U/S 251 OF THE A CT DID ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 9 OF 28 NOT PERMIT RESTORATION OF ANY ISSUE TO THE AO AND, THEREFORE, THE RESTORATION OF THE ISSUE BY THE LD.CIT(A) IN TH E PRESENT CASE WAS AGAINST THE PROVISIONS OF LAW AND, FOR THI S REASON ALSO THE ORDER OF THE LD.CIT(A) NEEDED TO BE SET A SIDE. 7. THE LD. DR, ON THE OTHER HAND, VEHEMENTLY SUPPOR TED THE ORDER OF THE LD.CIT(A). HIS CONTENTIONS IN BRIE F WERE THAT SINCE THE ASSESSEE HAD ORIGINALLY RETURNED THE INTE REST ON TUF SUBSIDY AS ITS INCOME AND STAKED HIS CLAIM FOR THE SAME TO BE TREATED AS NON TAXABLE, BEING CAPITAL IN NATU RE, ONLY IN APPEAL BEFORE THE ITAT, THE DELAY IN REFUND WAS NOT ON ACCOUNT OF ANY FAULT OF THE DEPARTMENT BUT WAS SQUA RELY ATTRIBUTABLE TO THE ASSESSEE FOR MAKING A DELAYED C LAIM. HE, THEREFORE, CONTENDED THAT THE LD.CIT(A), THEREFORE, HAD RIGHTLY INVOKED THE PROVISIONS OF SECTION 244A(2) O F THE ACT BY DIRECTING THE AO TO REFER THE ISSUE TO THE LD. P R.CIT. IN THIS REGARD, HE REFERRED AND RELIED UPON THE FOLLOW ING DECISIONS: 1. PALA MARKETING CO-OP.SOCIETY LTD. VS CIT,KOTTAYAM (2017)79TAXMANN.COM438(KERALA) 2. HHA TANK TERMINAL (P) LTD. VS ACIT (2019) 112 TAXMANN.COM114 (KERALA). 8. HE FURTHER DISTINGUISHED THE DECISIONS RELIED UP ON BY THE LD.COUNSEL FOR THE ASSESSEE BEFORE US ON FACTS. THE LD. ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 10 OF 28 DR ALSO CONTENDED THAT SINCE THE LD.CIT(A) HAD DIR ECTED THE AO TO MAKE A REFERENCE TO THE PR.CIT FOR DETERMININ G THE PERIOD TO BE EXCLUDED FOR PAYMENT OF INTEREST, THE ASSESSEE OUGHT TO HAVE WAITED FOR THE DECISION OF THE LD.PR. CIT BEFORE FILING THE APPEAL AND THEREFORE THE PRESENT APPEALS WERE NOT MAINTAINABLE. 9. BOTH THE PARTIES FILED DETAILED SUBMISSIONS BEFO RE US IN WRITING AND ALSO COPIES OF VARIOUS JUDGMENTS ON WHI CH RELIANCE WAS PLACED. 10. WE HAVE CAREFULLY HEARD BOTH THE PARTIES AT LEN GTH, HAVE GONE THROUGH THE RELEVANT PROVISIONS OF LAW, O RDERS OF THE AUTHORITIES BELOW AND ALSO THE CASE LAWS REFERR ED TO BEFORE US. 11. THE ISSUE TO BE ADJUDICATED RELATES TO THE ENTI TLEMENT OF INTEREST ON REFUND, WHICH IS PROVIDED U/S 244A O F THE ACT. THE PECULIAR SET OF FACTS IN WHICH THE REFUND AROS E IN THE PRESENT CASE ARE ON ACCOUNT OF THE LD.CIT(A) ALLOW ING ASSESSEES CLAIM OF THE INTEREST ON TUF SUBSIDY BEI NG TREATED AS CAPITAL IN NATURE, WHICH ORIGINALLY THE ASSESSEE HAD TREATED AS REVENUE IN NATURE INCLUDING THE SAME IN ITS INCOME RETURNED FOR TAXATION AND HAD PAID TAXES ON THE ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 11 OF 28 SAME ALSO. THAT THE OCCASION FOR THE LD.CIT(A) TO A LLOW THIS CLAIM AROSE ON THE ASSESSEE RAISING ADDITIONAL GROU NDS BEFORE THE ITAT IN QUANTUM PROCEEDINGS WHICH WERE DULY ADMITTED BY THE ITAT AND THEREAFTER RESTORED TO THE LD.CIT(A) FOR ADJUDICATION WHO ALLOWED THE CLAIM O F THE ASSESSEE. THEREFORE, THE REFUND AROSE TO THE ASSESS EE ON ACCOUNT OF ACCEPTANCE OF A CLAIM OF NON-TAXABILITY OF A RECEIPT IN APPELLATE PROCEEDINGS, WHICH RECEIPT WAS ORIGINALLY RETURNED BY IT AS TAXABLE AND THE CLAIM WAS MADE FOR THE FIRST TIME ONLY BEFORE THE SECOND APPELLA TE AUTHORITY. 12. THE CONTENTION OF THE REVENUE IN CLEAR TERMS IS THAT SINCE THE ASSESSEE ITSELF DELAYED MAKING THE CLAIM OF TREATING THE INCOME AS NON-TAXABLE, THE DELAY IN RE FUND WAS ON ACCOUNT OF THIS DELAYED CLAIM MADE BY THE ASSESS EE AND, THEREFORE, IT WAS NOT ENTITLED TO INTEREST ON THE P ERIOD OF DELAY ATTRIBUTABLE TO IT. REFERENCE HAS BEEN MADE T O THE PROVISIONS OF SECTION 244A(2) OF THE ACT FOR THE SA ID PURPOSE. 13. THE CONTENTION OF THE ASSESSEE, ON THE OTHER HA ND IS THERE IS NO DELAY ATTRIBUTABLE TO THE ASSESSEE AT A LL AND THAT THE ONLY DELAY RECOGNIZED BY SECTION 244A(2) OF THE ACT RELATES TO DELAY IN PROCEEDINGS ATTRIBUTABLE TO THE ASSESSEE. ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 12 OF 28 THAT MAKING A DELAYED CLAIM DOES NOT TANTAMOUNT TO DELAYING PROCEEDINGS AND, THEREFORE, SECTION 244A(2 ) OF THE ACT IS NOT APPLICABLE. THAT THE ALLOWANCE OF THE CL AIM OF NON TAXABILITY OF A RECEIPT ONLY RECOGNISES THE POSITIO N OF LAW THAT THE ASSESSEE WAS NEVER REQUIRED TO PAY TAXES O N THESE RECEIPTS. AND HAVING PAID TAXES, THEREFORE, WAS ENT ITLED TO REFUND OF THE SURPLUS TAXES SO PAID AND INTEREST THEREON FOR THE PERIOD IT REMAINED WITH THE REVENUE DEPART MENT. 14. SINCE BOTH THE PARTIES HAVE ARGUED THE APPLICAB ILITY OF DIFFERENT SUBSECTIONS TO SECTION 244A, TO ADJUDICA TE THE ISSUE THEREFORE IT IS RELEVANT TO REPRODUCE THE REL EVANT PROVISIONS OF SECTION 244A : 244A. (1) WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE UNDER THIS ACT, HE SHALL, SUBJECT TO THE P ROVISIONS OF THIS SECTION, BE ENTITLED TO RECEIVE, IN ADDITION T O THE SAID AMOUNT, SIMPLE INTEREST THEREON CALCULATED IN THE F OLLOWING MANNER, NAMELY : (A) WHERE THE REFUND IS OUT OF ANY TAX COLLECTED AT SOURCE UNDER SECTION 206C OR PAID BY WAY OF ADVANCE TAX OR TREATED AS PAID UNDER SECTION 199, DURING THE FINAN CIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR, SUC H INTEREST SHALL BE CALCULATED AT THE RATE OF ONE-HAL F PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED I N THE PERIOD, (I) FROM THE 1ST DAY OF APRIL OF THE ASSESSMENT YEA R TO THE DATE ON WHICH THE REFUND IS GRANTED, IF THE RETURN OF INCOME HAS BEEN FURNISHED ON OR BEFORE THE DUE DATE SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139 ; OR ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 13 OF 28 (II) FROM THE DATE OF FURNISHING OF RETURN OF INCOM E TO THE DATE ON WHICH THE REFUND IS GRANTED, IN A CASE NOT COVERED UNDER SUB-CLAUSE (I); (AA) WHERE THE REFUND IS OUT OF ANY TAX PAID UNDER SECTION 140A, SUCH INTEREST SHALL BE CALCULATED AT THE RATE OF ONE-HALF PER CENT FOR EVERY MONTH OR PART OF A MONT H COMPRISED IN THE PERIOD, FROM THE DATE OF FURNISHIN G OF RETURN OF INCOME OR PAYMENT OF TAX, WHICHEVER IS LA TER, TO THE DATE ON WHICH THE REFUND IS GRANTED: PROVIDED THAT NO INTEREST UNDER CLAUSE (A) OR CLAUSE (AA) SHALL BE PAYABLE, IF THE AMOUNT OF REFUND IS L ESS THAN TEN PER CENT OF THE TAX AS DETERMINED UNDER SU B- SECTION (1) OF SECTION 143 OR ON REGULAR ASSESSMENT ; (B) IN ANY OTHER CASE, SUCH INTEREST SHALL BE CALC ULATED AT THE RATE OF ONE-HALF PER CENT FOR EVERY MONTH OR PA RT OF A MONTH COMPRISED IN THE PERIOD OR PERIODS FROM THE D ATE OR, AS THE CASE MAY BE, DATES OF PAYMENT OF THE TAX OR PENALTY TO THE DATE ON WHICH THE REFUND IS GRANTED. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'DATE OF PAYMENT OF TAX OR PENALTY' MEANS THE DATE ON AND FR OM WHICH THE AMOUNT OF TAX OR PENALTY SPECIFIED IN THE NOTIC E OF DEMAND ISSUED UNDER SECTION 156 IS PAID IN EXCESS OF SUCH DEMAND. ( 1A) .. [(1B) ..... (2) IF THE PROCEEDINGS RESULTING IN THE REFUND ARE DELAYED FOR REASONS ATTRIBUTABLE TO THE ASSESSEE [OR THE DEDUCT OR, AS THE CASE MAY BE,] WHETHER WHOLLY OR IN PART, THE PERIOD OF THE DELAY SO ATTRIBUTABLE TO HIM SHALL BE EXCLUDED FROM THE PERIOD FOR WHICH INTEREST IS PAYABLE UNDER SUB-SECTION (1) OR (1A) [OR (1B)], AND WHERE ANY QUESTION ARISES AS TO THE PERI OD TO BE EXCLUDED, IT SHALL BE DECIDED BY THE PRINCIPAL CHIE F COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER WHOSE DECISION THEREON SHALL BE FINAL. (3) .. (4) ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 14 OF 28 15. THE PROVISION FOR ENTITLEMENT TO INTEREST ON RE FUND IS LAID DOWN IN SUBSECTION (1), A BARE PERUSAL OF WHIC H REVEALS THAT ANY REFUND DUE TO AN ASSESSEE IS TO BE COMPENS ATED WITH INTEREST FOR THE ENTIRE PERIOD FOR WHICH THE S URPLUS AMOUNT REMAINS WITH THE STATE/GOVERNMENT. THE SECTI ON IS VERY CLEAR AND THERE IS NO AMBIGUITY IN THE SAME. A LL REFUNDS OF ADVANCE PAYMENTS OF TAXES IN THE FORM OF TDS, TC S AND ADVANCES TAXES PAID, ARE TO BE COMPENSATED FOR THE PERIOD FROM THE FIRST DAY OF ASSESSMENT YEAR TO THE GRANT OF REFUND. WHILE ALL SELF ASSESSMENT TAXES OR OTHER TAXES PAID ARE TO BE COMPENSATED FOR THE PERIODS FROM THE DATE OF FILING OF RETURN OF INCOME OR THE DATE OF PAYMENT OF TAXES WHICHEVER IS LATER, TO THE GRANT OF REFUND. THE ONLY CAVEAT OR EXCEPTIO N IS PROVIDED IN SUBSECTION (2),THAT WHERE ANY PROCEEDIN GS OF REFUND ARE DELAYED BY THE ASSESSEE, THIS PERIOD IS TO BE EXCLUDED FROM THE PERIOD FOR WHICH INTEREST IS TO B E PAID. FURTHER IT IS ONLY THE LD. PR.CIT WHO IS EMPOWERED TO DECIDE THE PERIOD OF DELAY. 16. THUS IT IS ABUNDANTLY CLEAR THAT INTEREST ON RE FUNDS GRANTED IS COMPENSATORY IN NATURE. THE HONBLE APEX COURT HAS CATEGORICALLY STATED SO IN THE CASE OF UNION OF INDIA VS ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 15 OF 28 TATA CHEMICALS LTD(2014) 43 TAXMANN.COM 240,AT PARA 37 OF ITS ORDER AS UNDER: 37.A TAX REFUND IS A REFUND OF TAXES WHEN THE TA X LIABILITY IS LESS THAN THE TAX PAID. AS PER THE OLD SECTION A N ASSESSEE WAS ENTITLED FOR PAYMENT OF INTEREST ON THE AMOUNT OF TAXES REFUNDED PURSUANT TO AN ORDER PASSED UNDER THE ACT, INCLUDING THE ORDER PASSED IN AN APPEAL. IN THE PRE SENT FACT SCENARIO, THE DEDUCTOR/ASSESSEE HAD PAID TAXES PURS UANT TO A SPECIAL ORDER PASSED BY THE ASSESSING OFFICER/INC OME TAX OFFICER. IN THE APPEAL FILED AGAINST THE SAID ORDER THE ASSESSEE HAS SUCCEEDED AND A DIRECTION IS ISSUED BY THE APPE LLATE AUTHORITY TO REFUND THE TAX PAID. THE AMOUNT PAID B Y THE RESIDENT/ DEDUCTOR WAS RETAINED BY THE GOVERNMENT T ILL A DIRECTION WAS ISSUED BY THE APPELLATE AUTHORITY TO REFUND THE SAME. WHEN THE SAID AMOUNT IS REFUNDED IT SHOULD CA RRY INTEREST IN THE MATTER OF COURSE. AS HELD BY THE CO URTS WHILE AWARDING INTEREST, IT IS A KIND OF COMPENSATION OF USE AND RETENTION OF THE MONEY COLLECTED UNAUTHORIZEDLY BY THE DEPARTMENT. WHEN THE COLLECTION IS ILLEGAL, THERE I S CORRESPONDING OBLIGATION ON THE REVENUE TO REFUND S UCH AMOUNT WITH INTEREST IN AS MUCH AS THEY HAVE RETAIN ED AND ENJOYED THE MONEY DEPOSITED. EVEN THE DEPARTMENT HA S UNDERSTOOD THE OBJECT BEHIND INSERTION OF SECTION 2 44A, AS THAT, AN ASSESSEE IS ENTITLED TO PAYMENT OF INTERES T FOR MONEY REMAINING WITH THE GOVERNMENT WHICH WOULD BE REFUND ED. THERE IS NO REASON TO RESTRICT THE SAME TO AN ASSES SEE ONLY WITHOUT EXTENDING THE SIMILAR BENEFIT TO A RESIDENT / DEDUCTOR WHO HAS DEDUCTED TAX AT SOURCE AND DEPOSITED THE SA ME BEFORE REMITTING THE AMOUNT PAYABLE TO A NON-RESIDE NT/ FOREIGN COMPANY. 17. HAVING SAID SO AND COMING TO THE FACTS OF THE P RESENT CASE, THE ISSUE IN DISPUTE IS WHETHER OR NOT THE AC T OF MAKING A CLAIM BELATEDLY BY THE ASSESSEE RESULTING IN REFUND TANTAMOUNTS TO DELAY IN PROCEEDINGS RESULTING IN R EFUND AS MENTIONED IN SECTION 244A(2) OF THE ACT FOR THE PUR POSE OF ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 16 OF 28 EXCLUDING THE AFORESAID PERIOD BY REFERRING THE MAT TER TO THE LD. PR.CIT. 18. IN OUR VIEW, IT IS NOT SO. ANY CLAIM OF THE ASS ESSEE ALLOWED AT ANY STAGE RESULTING IN REFUND WHETHER IN THE FIRST APPELLATE STAGE, THE SECOND APPELLATE STAGE OR EVEN BEFORE THE HON'BLE HIGH COURT OR HON'BLE SUPREME COURT, ON LY RECOGNISES THE POSITION THAT THE ASSESSEE WAS NEVER REQUIRED TO PAY TAXES ON THAT PORTION OF THE INCOME. THE ENT IRE PROCESS ENVISAGED UNDER LAW, OF ASSESSMENTS AND APP EALS IS A CONTINUOUS PROCESS OF ASSESSING TRUE AND CORRECT INCOME OF THE ASSESSEE, BEGINNING WITH THE ASSESSEE HIMSEL F DISCLOSING THE SAME IN HIS RETURN OF INCOME AND THE SAME THEREAFTER BEING SCRUTINIZED IN ASSESSMENT AND THER EAFTER ANY ADVERSE CONCLUSION DRAWN THEREON BEING CHALLENG ED BEFORE THE APPELLATE AUTHORITIES AND HIGHER JUDICIA L AUTHORITY. THE ENTIRE PROCESS, THEREFORE, OF ASSESS MENT AND APPEALS CULMINATES IN THE DETERMINATION OF TRUE AND CORRECT INCOME ON WHICH THE ASSESSEE WAS REQUIRED TO PAY IT S TAXES. ANY CLAIM ALLOWED TO THE ASSESSEE AT ANY STAGE WHET HER MADE FOR THE FIRST TIME OR WHETHER TAKEN UP IN APPE AL ONLY UNDERLINES THE POSITION THAT NO TAXES WERE REQUIRED TO BE PAID BY THE ASSESSEE ON THE SAID CLAIM AT ALL. THER EFORE, IN ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 17 OF 28 SUCH CIRCUMSTANCES, THE REFUND GENERATED ON ACCOUNT OF THE SAME, HAVING BEEN RETAINED BY THE STATE UNLAWFULLY IS ENTITLED TO BE COMPENSATED WITH INTEREST FOR THE EN TIRE PERIOD FOR WHICH IT IS SO RETAINED. 19. IT IS TO BE REMEMBERED THAT THE STATE IS ENTITL ED TO ONLY TAXES DUE ON THE CORRECT TAXABLE INCOMES AND IT IS THE DUTY OF THE DEPARTMENT TO DETERMINE THE TRUE AND CORRECT INCOME AND GUIDE THE ASSESSEE IN THE PROCESS. THEY ARE NOT AND CANNOT BE ENTITLED TO TAKE THE BENEFIT OF THE IGNOR ANCE OF THE ASSESSEE AND COLLECT UNDUE TAXES. THEREFORE ANY TAX ES MISTAKENLY PAID AND UNLAWFULLY RETAINED BY THE STAT E HAVE TO BE COMPENSATED WITH INTEREST ON REFUND. 20. THE SITUATION ENVISAGED IN SECTION 244A(2) OF T HE ACT IS THAT WHERE ANY PROCEEDINGS WHERE THE CLAIM OF THE A SSESSEE IS BEING ADJUDICATED OR DETERMINED, THE ASSESSEE RE SORTS TO METHODS WHICH DELAY THE PROCEEDINGS THEREBY INCREAS ING PERIOD FOR WHICH INTEREST IS TO BE GIVEN, IT IS SUC H PERIOD WHICH IS TO BE EXCLUDED FOR THE PURPOSE OF CALCULAT ING THE INTEREST. 21. THIS VIEW HAS BEEN UPHELD IN VARIOUS JUDICIAL D ECISIONS RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE BEFO RE US. ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 18 OF 28 22. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF A JANTA MANUFACTURING LTD.(SUPRA),WHILE DEALING WITH AN IDE NTICAL ISSUE WHEREIN THE ASSESSEE HAD RAISED A BELATED CLA IM BY REVISING ITS RETURN AND THE REVENUE HAD CONTENDED T HAT ON ACCOUNT OF THE BELATED CLAIM THE REFUND HAD BEEN DE LAYED AND THEREFORE THE ASSESSEE WAS NOT ENTITLED TO INTE REST FOR THE PERIOD OF SUCH DELAY, CATEGORICALLY HELD THAT M ERE RAISING A BELATED CLAIM CANNOT BE SAID TO BE REASONS FOR DE LAYING THE PROCEEDINGS ATTRIBUTABLE TO THE ASSESSEE. IT WENT O N TO HOLD THAT THE ALLOWANCE OF CLAIM BY THE APPELLATE COMMIS SIONER ONLY TANTAMOUNT TO ALLOWING A CLAIM IN LAW WHICH WA S ALLOWABLE BY THE ASSESSING OFFICER. THE HONBLE HIG H COURT HELD THAT IT IS ONLY WHERE THE ASSESSEE IS RESPONSI BLE FOR DELAYING THE ASSESSMENT OR APPELLATE PROCEEDINGS TH AT WOULD TANTAMOUNT TO DELAY IN PROCEEDINGS RESULTING IN REF UND. THE RELEVANT FINDINGS AT PARA 16-17 OF THE ORDER ARE AS UNDER; 16. WE WOULD ALSO EXAMINE THE ORDER OF THE COMMISS IONER ON MERITS. AS NOTED, ACCORDING TO THE COMMISSIONER THE ASSESSEE HAD RAISED A BELATED CLAIM DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS WHICH RESULTED INTO DELAY IN GRANTING OF REFUND AND THEREFORE, THE ASSESSEE WAS NOT ENTIT LED TO INTEREST FOR THE ENTIRE PERIOD FROM THE FIRST DATE OF ASSESSMENT YEAR TILL THE ORDER GIVING EFFECT TO THE APPELLATE ORDER WAS PASSED. WE CANNOT UPHOLD THE VIEW OF THE COMMISSION ER. FIRST AND FOREMOST REQUIREMENT OF SUB-SECTION (2) O F SECTION 244A IS THAT THE PROCEEDINGS RESULTING INTO REFUND SHOULD HAVE BEEN DELAYED FOR THE REASONS ATTRIBUTABLE TO T HE ASSESSEE, WHETHER WHOLLY OR IN PART. IF SUCH REQUIR EMENT IS ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 19 OF 28 SATISFIED, TO THE EXTENT OF THE PERIOD OF DELAY SO ATTRIBUTABLE TO THE ASSESSEE, HE WOULD BE DISENTITLED TO CLAIM INTE REST ON REFUND. THE ACT OF REVISING A RETURN OR RAISING A C LAIM DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS CANNOT BE SAID TO BE THE REASONS FOR DELAYING THE PROCEEDINGS WHICH C AN BE ATTRIBUTABLE TO THE ASSESSEE. MERE FACT THAT THE CL AIM CAME TO BE GRANTED BY THE APPELLATE COMMISSIONER, WOULD NOT CHANGE THIS POSITION. IN ESSENCE, WHAT THE COMMISSIONER (A PPEALS) DID WAS TO ALLOW A CLAIM WHICH IN LAW, IN HIS OPINI ON, WAS ALLOWABLE BY THE ASSESSING OFFICER. IN OTHER WORDS, BY PASSING ORDER IN APPEAL, HE MERELY RECOGNIZED A LEG AL POSITION WHEREBY, THE ASSESSEE WAS ENTITLED TO CLAIM CERTAIN BENEFITS OF REDUCED TAX. SURELY, THE FACT THAT THE ASSESSEE HAD FILED THE APPEAL WHICH ULTIMATELY CAME TO BE ALLOWED BY THE COMMISSIONER, CANNOT BE A REASON FOR DELAYING THE PROCEEDINGS WHICH CAN BE ATTRIBUTED TO THE ASSESSEE . 17. THE DEPARTMENT DOES NOT CONTEND THAT THE ASSESS EE HAD NEEDLESSLY OR FRIVOLOUSLY DELAYED THE ASSESSMENT PR OCEEDINGS AT THE ORIGINAL OR APPELLATE STAGE. IN ABSENCE OF A NY SUCH FOUNDATION, MERE FACT THAT THE ASSESSEE MADE A CLAI M DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS WHICH WAS ALLOWED AT THE APPELLATE STAGE WOULD NOT IPSO FACTO IMPLY T HAT THE ASSESSEE WAS RESPONSIBLE FOR CAUSING THE DELAY IN T HE PROCEEDINGS RESULTING INTO REFUND. WE MAY REFER THE DECISION OF THE KERALA HIGH COURT IN CASE OF COMMISSIONER OF INCOME- TAX V/S. SOUTH INDIAN BANK LTD., REPORTED IN (2012) 340 ITR (KER) IN WHICH THE ASSESSEE HAD RAISED A BELATED CL AIM FOR DEDUCTION WHICH WAS ALLOWED BY THE COMMISSIONER (AP PEALS). THE REVENUE, THEREFORE, CONTENDED THAT FOR SUCH DEL AY, INTEREST SHOULD BE DECLINED UNDER SECTION 244A OF T HE ACT. IN THE SAID CASE ALSO, THE ASSESSEE HAD NOT MADE ANY C LAIM FOR DEDUCTION OF PROVISION OF BAD DEBTS IN THE ORIGINAL RETURN. BUT BEFORE COMPLETION OF THE ASSESSMENT, THE ASSESSEE H AD MADE SUCH A CLAIM WHICH WAS REJECTED BY THE ASSESSING OF FICER. THE COMMISSIONER ALLOWED THE CLAIM AND REMANDED THE MATTER TO THE ASSESSING OFFICER. PURSUANT TO WHICH, THE ASSESSEE BECAME ENTITLED TO REFUND. REVENUE ARGUED THAT THE ASSESSEE WOULD NOT BE ENTITLED TO INTEREST IN VIEW OF SECTION 244A(2). IN THIS CONTEXT, THE COURT HELD IN PARA.6 AS UNDER : 6. SUB-SECTION (2) OF SECTION 244A PROVIDES THAT T HE ASSESSEE SHALL NOT BE ENTITLED TO INTEREST FOR THE PERIOD OF DELAY IN ISSUING THE PROCEEDINGS LEADING TO THE REFUND THAT IS ATTRIBUTABLE TO THE ASSESSEE. IN OTH ER ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 20 OF 28 WORDS, IF THE ISSUE OF THE REFUND ORDER IS DELAYED FOR ANY PERIOD ATTRIBUTABLE TO THE ASSESSEE, THEN THE ASSESSEE SHALL NOT BE ENTITLED TO INTEREST FOR SUCH PERIOD. THIS IS OF COURSE AN EXCEPTION TO CLAUSES ( A) AND (B) OF SECTION 244A(1) OF THE ACT. IN OTHER WORDS, IF THE ISSUE OF THE PROCEEDINGS, THAT IS, REFUND ORDER, IS DELAYED FOR ANY PERIOD ATTRIBUTABLE TO THE ASSESSEE , THEN THE ASSESSEE IS NOT ENTITLED TO INTEREST OF SU CH PERIOD. FURTHER, WHAT IS CLEAR FROM SUB-SECTION (2) IS THAT, IF THE OFFICER FEELS THAT DELAY IN REFUND FOR ANY PERIOD IS ATTRIBUTABLE TO THE ASSESSEE, THE MATTER SHOULD BE REFERRED TO THE COMMISSIONER OR CHIEF COMMISSION ER OR ANY OTHER NOTIFIED PERSON FOR DECIDING THE ISSUE AND ORDERING EXCLUSION OF SUCH PERIODS FOR THE PURPOSE OF GRANTING INTEREST TO THE ASSESSEE UNDER SECTION 244 A(1) OF THE ACT. IN THIS CASE, THERE WAS NO DECISION BY THE COMMISSIONER OR CHIEF COMMISSIONER ON THIS ISSUE AN D SO MUCH SO, WE DO NOT THINK THE ASSESSING OFFICER M ADE OUT THE CASE OF DELAY IN REFUND FOR ANY PERIOD ATTRIBUTABLE TO THE ASSESSEE DISENTITLING FOR INTER EST. SO MUCH SO, IN OUR VIEW, THE OFFICER HAS NO ESCAPE FRO M GRANTING INTEREST TO THE ASSESSEE IN TERMS OF SECTI ON 244A(1)(A) OF THE ACT. 18. UNDER THE CIRCUMSTANCES, IMPUGNED ORDERS DATED 18.2.2016 AND 16.3.2016 PASSED BY THE COMMISSIONER OF INCOME-TAX AND ASSESSING OFFICER RESPECTIVELY AND T HE DEMAND NOTICE DATED 16.3.2016 ARE QUASHED. PETITION S ARE DISPOSED OF ACCORDINGLY. 23. FOLLOWING THIS DECISION THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT-8 VS MELSTAR INFORMATION TECHNOL OGIES LTD. (SUPRA) HELD THERE WAS NO DELAY ATTRIBUTABLE T O THE ASSESSEE WHERE IN THE FACTS BEFORE IT THE CLAIM FOR AN EXPENDITURE WAS MADE FOR THE FIRST TIME BEFORE THE TRIBUNAL WHO IN TURN HAD REMANDED THE MATTER TO THE CIT(A) W HO HAD ALLOWED THE CLAIM RESULTING IN REFUND TO THE ASSESS EE. THE HONBLE HIGH COURT HELD THAT THERE WAS NOTHING TO S UGGEST ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 21 OF 28 THAT ANY OF THE PROCEEDINGS, BEFORE THE ITAT OR THE CIT(A) WERE IN ANY MANNER DELAYED BY THE ASSESSEE. THAT TH EREFORE SECTION 244A(2) WAS NOT APPLICABLE. THE RELEVANT FI NDINGS OF THE HONBLE HIGH COURT AT PARA 4-8 OF THE ORDER ARE AS UNDER: 4.THE FACTS ON RECORD WOULD SHOW THAT THE ASSESSEE HAD NOT CLAIMED CERTAIN EXPENDITURE BEFORE THE ASSESSING OF FICER BUT EVENTUALLY RAISED SUCH A CLAIM BEFORE THE TRIBUNAL. UPON WHICH, THE TRIBUNAL REMANDED THE PROCEEDINGS TO THE CIT(A). AS SUCH STAGE, THE ADDITIONAL BENEFIT CLAIMED BY TH E ASSESSEE WAS GRANTED. THIS RESULTED IN REFUND AND THE QUESTI ON OF PAYMENT OF INTEREST ON SUCH REFUND. 5. AS IS WELL KNOWN, IN CASE OF REFUNDS PAYABLE TO THE ASSESSEE, INTEREST IN TERMS OF SUB-SECTION (1) OF S ECTION 244A WOULD BE PAYABLE. SUB-SECTION (2) OF SECTION 244A, HOWEVER, PROVIDES THAT IF THE PROCEEDINGS RESULTING IN THE R EFUND ARE DELAYED FOR REASONS ATTRIBUTABLE TO THE ASSESSEE WH ETHER WHOLLY OR IN PART, THE PERIOD OF DELAY SO ATTRIBUTA BLE, WOULD BE EXCLUDED FROM THE PERIOD FOR WHICH INTEREST IS PAYA BLE UNDER SUB-SECTION (1) OF SECTION 244A OF THE ACT. 6. THE TRIBUNAL IN THE PRESENT CASE CAME TO THE CONCLU SION THAT THE DELAY CANNOT BE ATTRIBUTED TO THE ASSESSEE AND THEREFORE, DIRECTED PAYMENT OF INTEREST. 7. SUB-SECTION (2) OF SECTION 244A OF THE ACT REFERS T O THE PROCEEDINGS RESULTING IN THE REFUND WHICH ARE DELAY ED FOR THE REASONS ATTRIBUTABLE TO THE ASSESSEE. THERE IS NO A LLEGATION OR MATERIAL ON RECORD TO SUGGEST THAT ANY OF THE PROCE EDINGS HIT THE ASSESSEE'S APPEAL BEFORE THE TRIBUNAL OR REMAND ED THE PROCEEDINGS BEFORE THE CIT(A) WHETHER IN ANY MANNER DELAYED ON ACCOUNTS OF THE REASONS ATTRIBUTABLE TO THE ASSE SSEE. THE TRIBUNAL, WAS, THEREFORE CORRECT IN ALLOWING THE IN TEREST TO THE ASSESSEE. 8. WE MAY NOTICE THAT IN THE CASE OF AJANTA MANUFACTUR ING LTD VS. DEPUTY CIT (GUJ) [2017] 391 ITR 33 (GUJ) THE DI VISION BENCH OF GUJARAT HIGH COURT HAD OCCASION TO CONSIDE R A SIMILAR ISSUE. THE ASSESSEE HAD MADE A BELATED CLAI M DURING ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 22 OF 28 ASSESSMENT OF FILING REVISED RETURN. ACCORDING TO T HE REVENUE, THIS WOULD ENTITLE THE ASSESSEE FOR CLAIM OF INTERE ST TO THE EXTENT OF DELAY. PROVISIONS OF SUB-RULE (2) OF SECT ION 244A OF THE ACT WERE SOUGHT TO BE PRESSED IN SERVICE. THE C OURT MADE FOLLOWING OBSERVATIONS: '16. WE WOULD ALSO EXAMINE THE ORDER OF THE COMMISSIONER ON MERITS. AS NOTED, ACCORDING TO THE COMMISSIONER THE ASSESSEE HAD RAISED A BELATED CLAI M DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS WHI CH RESULTED INTO DELAY IN GRANTING OF REFUND AND THERE FORE, THE ASSESSEE WAS NOT ENTITLED TO INTEREST FOR THE E NTIRE PERIOD FROM THE FIRST DATE OF ASSESSMENT YEAR TILL THE ORDER GIVING EFFECT TO THE APPELLATE ORDER WAS PASS ED. WE CANNOT UPHOLD THE VIEW OF THE COMMISSIONER. FIRS T AND FOREMOST REQUIREMENT OF SUB-SECTION (2) OF SECT ION 244A IS THAT THE PROCEEDINGS RESULTING INTO REFUND SHOULD HAVE BEEN DELAYED FOR THE REASONS ATTRIBUTAB LE TO THE ASSESSEE, WHETHER WHOLLY OR IN PART. IF SUCH REQUIREMENT IS SATISFIED, TO THE EXTENT OF THE PERI OD OF DELAY SO ATTRIBUTABLE TO THE ASSESSEE, HE WOULD BE DISENTITLED TO CLAIM INTEREST ON REFUND. THE ACT OF REVISING A RETURN OR RAISING A CLAIM DURING THE COU RSE OF THE ASSESSMENT PROCEEDINGS CANNOT BE SAID TO BE THE REASONS FOR DELAYING THE PROCEEDINGS WHICH CAN BE ATTRIBUTABLE TO THE ASSESSEE. MERE FACT THAT THE CL AIM CAME TO BE GRANTED BY THE APPELLATE COMMISSIONER, WOULD NOT CHANGE THIS POSITION. IN ESSENCE, WHAT TH E COMMISSIONER (APPEALS) DID WAS TO ALLOW A CLAIM WHI CH IN LAW, IN HIS OPINION, WAS ALLOWABLE BY THE ASSESS ING OFFICER. IN OTHER WORDS, BY PASSING ORDER IN APPEAL , HE MERELY RECOGNIZED A LEGAL POSITION WHEREBY, THE ASSESSEE WAS ENTITLED TO CLAIM CERTAIN BENEFITS OF REDUCED TAX. SURELY, THE FACT THAT THE ASSESSEE HAD FILED THE APPEAL WHICH ULTIMATELY CAME TO BE ALLOWED BY T HE COMMISSIONER, CANNOT BE A REASON FOR DELAYING THE PROCEEDINGS WHICH CAN BE ATTRIBUTED TO THE ASSESSEE . 17. THE DEPARTMENT DOES NOT CONTEND THAT THE ASSESS EE HAD NEEDLESSLY OR FRIVOLOUSLY DELAYED THE ASSESSMEN T PROCEEDINGS AT THE ORIGINAL OR APPELLATE STAGE. IN ABSENCE OF ANY SUCH FOUNDATION, MERE FACT THAT THE ASSESSEE MADE A CLAIM DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS WHICH WAS ALLOWED AT THE APPELLATE STAGE WOULD NOT IPSO FACTO IMPLY THAT THE ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 23 OF 28 ASSESSEE WAS RESPONSIBLE FOR CAUSING THE DELAY IN T HE PROCEEDINGS RESULTING INTO REFUND. WE MAY REFER THE DECISION OF THE KERALA HIGH COURT IN CASE OF CIT VS. SOUTH INDIAN BANK LTD., REPORTED IN (2012) 340 ITR 574 (KER) IN WHICH THE ASSESSEE HAD RAISED A BELATED CLAIM FOR DEDUCTION WHICH WAS ALLOWED BY TH E COMMISSIONER (APPEALS). THE REVENUE, THEREFORE, CONTENDED THAT FOR SUCH DELAY, INTEREST SHOULD BE DECLINED UNDER SECTION 244A OF THE ACT. IN THE SAID CASE ALSO, THE ASSESSEE HAD NOT MADE ANY CLAIM FOR DEDUCTION OF PROVISION OF BAD DEBTS IN THE ORIGINAL RETURN. BUT BEFORE COMPLETION OF THE ASSESSMENT, TH E ASSESSEE HAD MADE SUCH A CLAIM WHICH WAS REJECTED BY THE ASSESSING OFFICER. THE COMMISSIONER ALLOWED THE CLAIM AND REMANDED THE MATTER TO THE ASSESSING OFFICER. PURSUANT TO WHICH, THE ASSESSEE BECAME ENTITLED TO REFUND. REVENUE ARGUED THAT THE ASSESSE E WOULD NOT BE ENTITLED TO INTEREST IN VIEW OF SECTIO N 244A(2). IN THIS CONTEXT, THE COURT HELD IN PARA. 6 AS UNDER (PAGE 578 OF 340 ITR): '6. SUB-SECTION (2) OF SECTION 244A PROVIDES THAT THE ASSESSEE SHALL NOT BE ENTITLED TO INTEREST FOR THE PERIOD OF DELAY IN ISSUING THE PROCEEDINGS LEADING TO THE REFUND THAT IS ATTRIBUTABLE TO THE ASSESSEE. IN OTHER WORDS, IF THE ISSUE OF THE REFUND ORDER IS DELAYED FOR ANY PERIOD ATTRIBUTABLE TO THE ASSESSEE, THEN THE ASSESSEE SHALL NOT BE ENTITLED TO INTEREST FOR SUCH PERIOD. THIS IS OF COURSE AN EXCEPTION TO CLAUSES (A) AND (B) OF SECTION 244A(1) OF THE ACT. IN OTHER WORDS, IF THE ISSUE OF THE PROCEEDINGS, THAT IS, REFUND ORDER, IS DELAYED FOR ANY PERIOD ATTRIBUTABLE TO THE ASSESSEE, THEN THE ASSESSEE IS NOT ENTITLED TO INTEREST OF SUCH PERIOD. FURTHER, WHAT IS CLEAR FROM SUB-SECTION (2) IS THAT, IF THE OFFICER FEELS THAT DELAY IN REFUND FOR ANY PERIOD IS ATTRIBUTABLE TO THE ASSESSEE, THE MATTER SHOULD BE REFERRED TO THE COMMISSIONER OR CHIEF COMMISSIONER OR ANY OTHER NOTIFIED PERSON FOR DECIDING THE ISSUE AND ORDERING EXCLUSION OF SUCH PERIODS FOR THE PURPOSE OF GRANTING INTEREST TO THE ASSESSEE UNDER SECTION 244A(1) OF THE ACT. IN THIS CASE, THERE WAS NO DECISION BY THE COMMISSIONER OR CHIEF COMMISSIONER ON THIS ISSUE AND SO MUCH SO, WE ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 24 OF 28 DO NOT THINK THE ASSESSING OFFICER MADE OUT THE CASE OF DELAY IN REFUND FOR ANY PERIOD ATTRIBUTABLE TO THE ASSESSEE DISENTITLING FOR INTEREST. SO MUCH SO, IN OUR VIEW, THE OFFICER HAS NO ESCAPE FROM GRANTING INTEREST TO THE ASSESSEE IN TERMS OF SECTION 244A(1)(A) OF THE ACT.' 9. IN THE RESULT, NO QUESTION OF LAW ARISES. THE AP PEAL IS DISMISSED. 24. IN THE CASE OF CHETAN N. SHAH VS. M.K. MOGHE COMMISSIONER OF INCOME TAX (2015) 53 TAXMANN.COM 18 , THE HONBLE BOMBAY HIGH COURT HELD THAT THERE IS NO PRO VISION FOR REJECTING THE CLAIM OF INTEREST ON ACCOUNT OF A MISTAKE BY THE ASSESSEE. THAT SUCH A PROPOSITION WOULD RENDER THE SECTION OTIOSE SINCE EXCESS TAXES PAID ORIGINATE ON ACCOUNT OF SOME MISTAKE EITHER ON FACT OR LAW ON THE PART O F THE ASSESSEE. THAT IT IS ONLY DELAY IN DISPOSAL OF PROC EEDINGS RESULTING IN REFUND ATTRIBUTABLE TO THE ASSESSEE WH ICH ARE NOT TO BE COMPENSATED WITH INTEREST. THE RELEVANT F INDINGS AT PARA 13 ARE AS UNDER: 13. THE ASSESSING OFFICER HAS BEEN GIVEN NO DISCRETION IN THE MATTER OF GRANTING INTEREST. THE AMOUNT OF INTEREST HAS TO BE PAID TO AN ASSESSEE IN TERMS OF SECTION 244A OF THE ACT. THE ONLY LIMITATION PROVIDED THEREIN UNDER SECTION 244A OF THE ACT IS UNDER SUB-SECTION 2 THEREOF WHICH MANDATES THAT WHERE ANY REFUND RESULTS TO AN ASSESSEE, WHILE COMPUTING THE INTEREST PAYABLE THEREON, THE DELAY WHICH IS ATTRIB UTABLE TO THE ASSESSEE, IN OBTAINING THE REFUND WOULD BE EXCL UDED. THE ACT ITSELF DOES NOT PROVIDE FOR REJECTING THE CLAIM FOR INTEREST ON ACCOUNT OF A MISTAKE COMMITTED BY AN ASSESSEE. I F SUCH A PROPOSITION IS TO BE ACCEPTED THEN ALL EXCESS AMOUN TS OF TAX PAID BY THE ASSESSEE ON ACCOUNT OF A MISTAKE WOULD STAND ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 25 OF 28 REJECTED RENDERING SECTION 244A OF THE ACT OTIOSE. SECTION 244A OF THE ACT PROVIDES FOR INTEREST ON REFUNDS IN RESPECT OF ANY AMOUNT WHICH HAS BEEN PAID IN EXCESS TO THAT OT HERWISE PAYABLE UNDER THE LAW. IN MOST CASES THE EXCESS AMO UNT PAID AS TAX WOULD ORIGINATE ON ACCOUNT OF SOME MISTAKE E ITHER ON FACT OR OF LAW ON THE PART OF THE ASSESSEE. ADVISED LY THE ACT DOES NOT EMPOWER THE AUTHORITIES TO REJECT A CLAIM FOR INTEREST ON ACCOUNT OF A MISTAKE COMMITTED BY THE ASSESSEE. 25. THE DELAYED CLAIM OF THE ASSESSEE THEREFORE CAN NOT BE SAID TO TANTAMOUNT TO DELAY IN PROCEEDINGS RESULTIN G IN REFUND ATTRIBUTABLE TO THE ASSESSEE. 26. THE CASE LAWS RELIED UPON BY THE LD.DR ARE DISTINGUISHABLE ON FACTS. IN THE CASE OF PALA MARKE TING CO- OP SOCIETY (SUPRA) THE RETURN OF INCOME ITSELF HAD BEEN FILED BELATEDLY AND HAD BEEN REJECTED BUT THEREAFTER ONLY WHEN THE MATTER WENT UP TO THE HONBLE HIGH COURT THE DELAY WAS CONDONED AND THE RETURN ACCEPTED. IN SUCH CIRCUMSTA NCES THE COURT HELD THAT THE CONDONATION OF DELAY WAS ON LY FOR THE PURPOSE OF ACCEPTING RETURN AND THAT OTHERWISE IT COULD NOT BE SAID THAT DELAY WAS NOT ATTRIBUTABLE TO THE ASSESSEE. THE HONBLE HIGH COURT IN THIS BACKDROP OF FACTS HE LD THAT LIABILITY TO PAY INTEREST ON REFUND ARISES FROM THE DATE WHEN THE CLAIM FOR REFUND IS MADE WITH ALL NECESSARY PAR TICULARS. THE SAME CANNOT BE EQUATED WITH A SITUATION WHERE T HERE IS ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 26 OF 28 NO DELAY IN FILING RETURN OF INCOME BUT IT IS ONLY A LEGITIMATE CLAIM WHICH IS CLAIMED AND ALLOWED IN APPELLATE PRO CEEDINGS. 27. IN THE CASE OF HHA TANK TERMINAL(P) (LTD) (SUPR A) THE ASSESSEE HAD ALREADY BEEN GRANTED REFUND ON PROCESS ING OF ITS RETURN U/S 143(1) OF THE ACT AND SUBSEQUENTLY I T HAD FILED A REVISED RETURN CLAIMING FURTHER REFUND. IN THIS BACKDROP OF FACTS THE HONBLE COURT HELD THAT THE L ATER REFUND COULD ONLY RELATE BACK TO THE FILING OF REVI SED RETURN. 28. IN VIEW OF THE ABOVE, WE HAVE NO HESITATION IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO INTEREST ON THE R EFUND GENERATED FOR THE ENTIRE PERIOD OF DELAY AS ENVISAG ED UNDER THE PROVISIONS OF SECTION 244A(1)(B) OF THE ACT THA T THERE WAS NO DELAY ATTRIBUTABLE TO THE ASSESSEE IN THE PROCEE DINGS RESULTING IN REFUND AND, THEREFORE, THE PROVISIONS OF SECTION 244A(2) OF THE ACT WERE NOT ATTRACTED IN THE PRESEN T CASE. THE ORDER OF THE LD.CIT(A) HOLDING SO IS HELD TO BE NOT IN ACCORDANCE WITH LAW. 29. AS FOR THE ARGUMENT OF THE ASSESSEE THAT THE LD .CIT(A) HAD NO POWER TO RESTORE THE MATTER TO THE AO, WE DO NOT FIND ANY MERIT IN THE SAME SINCE THE LD.CIT(A) HAS ONLY GIVEN A DIRECTION TO THE AO TO REFER THE MATTER TO THE LD.P R.CIT, ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 27 OF 28 WHICH SURELY DOES NOT TANTAMOUNT TO RESTORING THE I SSUE TO THE AO. THIS ARGUMENT OF THE LD.COUNSEL FOR THE ASS ESSEE IS THEREFORE DISMISSED. 30. THE CONTENTION OF THE LD.DR THAT SINCE THE LD.C IT(A) HAD NOT ADJUDICATED THE ISSUE, HAVING DIRECTED THE AO TO REFER THE MATTER TO THE LD.PR.CIT, NO APPEAL LAY AG AINST THIS ORDER, WE DO NOT FIND ANY MERIT IN THE SAME. THE LI MITED SCOPE OF THE POWER WITH THE LD.PR.CIT, AS PER SUB S ECTION (2) OF SECTION 244A, IS DETERMINATION OF PERIOD OF DELA Y ATTRIBUTABLE TO THE ASSESSEE. HE HAS NO POWER TO DE CIDE THE ENTITLEMENT OF GRANT OF REFUND. THE DIRECTION OF TH E LD.CIT(A) TO THE AO TO MAKE A REFERENCE IS ONLY TO THIS LIMI TED EXTENT, WHICH ARISES AND COULD HAVE ARISEN ONLY WHILE HOLDI NG THE ASSESSEE NOT ENTITLED TO GRANT OF INTEREST FOR THE ENTIRE PERIOD OF DELAY. IT IS THIS ORDER OF THE LD.CIT(A) WHICH HAS BEEN CHALLENGED BEFORE US. THE ARGUMENT OF THE LD.D R THEREFORE THAT THE ORDER OF THE LD.CIT(A) COULD NOT HAVE BEEN CHALLENGED IS CLEARLY DEVOID OF ANY MERITS AND IS T HUS DISMISSED. 31. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN I TA NOS.1264 TO 1267/CHD/2019 ARE ALLOWED AND THE APPEA LS OF ITA NOS.1264 TO 1267/CHD/2019 & ITA NOS.103 TO 106/CHD/2020 A.YS. 2002-03 TO 2005-06 PAGE 28 OF 28 THE ASSESSEE IN ITA NOS.103 TO 106/CHD/2020 ARE DIS MISSED AS NON-MAINTAINABLE. ORDER PRONOUNCED ON 30 TH JULY, 2021. SD/- SD/- (R.L. NEGI) (ANNAPURNA GUPTA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED: 30 TH JULY, 2021 * * (+! ,-.- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ( )/ THE CIT(A) 5. -01 2 , &2 , 34516 / DR, ITAT, CHANDIGARH 6. 157% / GUARD FILE (+ $ / BY ORDER, / ASSISTANT REGISTRAR