The ACIT, Circle-4, Ahmedabad V. Gujarat State Financial Services Ltd., Ahmedabad

ITA 1269/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0132 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 09-04-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revised return; Set aside
• Section: 143(3); 244A; 250; 264; 147; 263; 144; 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' [BEFORE SHRI MAHAVIR SINGH,JM & SHRI A N PAHUJA,AM] ITA NO.1269/AHD/2008 (ASSESSMENT YEAR:-2003-04) ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-4, FIRST FLOOR,NAVJIVAN TRUST BUILDING,OFF ASHRAM ROAD,AHMEDABAD V/S GUJARAT STATE FINANCIAL SERVICES LTD. KHANIJ BHAVAN, 132 FT RING ROAD, NEAR HELMET CROSS ROAD, VASTRAPUR, AHMEDABAD [PAN: AAACG 5581 B] [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI MAHESH KUMAR, DR ASSESSEE BY:- SHRI VIMAL DESAI, AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATE D 29-01-2008 OF THE LD. CIT(APPEALS)-VIII, AHMEDABAD , RAISES THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE AO TO GRANT INTEREST U/S 244A AS THE DELAY IN GRANT OF REFUND WAS ATTRIBUTABLE TO THE ASSESSEE . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 3.IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECT. VIDE APPLICATION DATED 12-07-2010 , THE DEPUTY CIT, CIRCLE-4, AHMEDABAD, REQUESTED TO SUBSTITUTE THE ABOVE STATED GROUND NO.1 WITH THE FOLLOWING GROUND : LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF TH E CASE IN DIRECTING THE AO TO ALLOW INTEREST TO THE ASSESSEE U/S 244A. 2 FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.26,04,98,980/- AND CLAIMING REFUND OF RS.1,31,27,635/- FILED ON 28-11-2003 BY THE ASSESSE E, A STATE ITA NO.1269/AHD/2008 FOR AY 2003-04 GUJARAT STATE FINANCIAL SERVICES LTD. 2 OWNED ENTERPRISES, PROVIDING FINANCIAL ASSISTANCE T O INDUSTRIAL UNITS, AFTER BEING PROCESSED ON 30-03-2004 U/S 143(1)(A) OF THE INCOME- TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT ] WAS TAKEN UP FOR SCRUTINY. ON PROCESSING, THE REFUND CLAIMED BY THE ASSESSEE WAS GRANTED VIDE INTIMATION DATED 30-03-2004. SUBSEQUEN TLY ON 29-03- 2005, THE ASSESSEE FILED A REVISED RETURN DECLARING INCOME OF RS.25,42,63,860/- AND CLAIMED FURTHER REFUND OF RS .22,95,212/-. WHILE COMPLETING ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 27- 12-2005, THE ASSESSING OFFICER[AO IN SHORT] MADE VA RIOUS ADDITIONS AND RAISED DEMAND. ON APPEAL, THE LD. CIT(A) DELETE D ALL THE ADDITIONS AND CONSEQUENTLY INCOME WAS DETERMINED AT RS.25,42,91,660/- VIDE ORDER DATED 28-8-2006. INT ER ALIA, THE AO GRANTED REFUND OF RS.1,97,77,380/- INCLUDING INTERE ST OF RS.4,26,736/-. U/S 244A OF THE ACT. HOWEVER, THE AO DID NOT GRANT INTEREST ON THE REFUND AMOUNT OF RS.22,81,190/- ON THE GROUND THAT THE REFUND WAS LESS THAN 10% OF THE ASSESSED TAX. 3. ON APPEAL, THE ASSESSEE CONTENDED THAT TOTAL REFUND DUE TO THEM WAS RS.1,54,08,824/- AND THE SAID REFUND WAS NOT LESS THAN 10% OF THE ASSESSED TAX OF RS.9,34,52,185/-. AS A P ART OF THE REFUND AMOUNTING TO RS.1,31,27,635/- WAS EARLIER GRANTED A ND BALANCE OF RS.22,81,190/- WAS GRANTED VIDE ORDER DATED 28-8-20 06, IT DID NOT MAKE THE REFUND DETERMINED TO BE LESS THAN ASSESSED TAX. THEREFORE, THE ASSESSEE WAS ENTITLED TO INTEREST U/ S. 244A OF THE ACT ON THE REFUND DUE OF RS.22,81,190/- UP TO THE DATE ON WHICH REFUND WAS GRANTED BY WAY OF ADJUSTMENT .INTER ALIA, THE A SSESSEE RELIED UPON THE DECISION OF ITAT MUMBAI IN THE CASE OF JAY BROS INVESTMENT & TRADING CO. PVT. LTD. VS. DCIT (MUM) R EPORTED IN 33 BCAJ 281 AND C.B.D.T.CIRCULAR NO.20D DATED 20-8-196 8. IN THE LIGHT OF THESE SUBMISSIONS, THE LD. CIT(A) CONCLUDED AS U NDER:- ITA NO.1269/AHD/2008 FOR AY 2003-04 GUJARAT STATE FINANCIAL SERVICES LTD. 3 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHOR IZED REPRESENTATIVE. I FIND FORCE IN THE SUBMISSION OF T HE AUTHORIZED REPRESENTATIVE. THE FINDING OF THE ASSESSING OFFICE R THAT THE REFUND IS LESS THAN 10% OF THE ASSESSED TAX IS NOT CORRECT, IN VIE W OF THE FACTS AND FIGURES DISCUSSED ABOVE. FURTHER THE APPELLANT IS ELIGIBLE FOR INTEREST ON REFUND UPTO THE DATE OF GRANTING OF REFUND. ACCORDINGLY, T HE ASSESSING OFFICER IS DIRECTED TO GRANT INTEREST U/S.244A ON THE BALANCE REFUND OF RS.22,81,190/- AND TO GRANT INTEREST IN RESPECT OF BOTH THE AMOUNT S RS.22,81,190/- AND RS.1,70,69,400/- UP TO THE DATE OF GRANT OF REFUND. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR CO NTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN IGNORING THE STATU TORY PROVISIONS OF SEC. 244A(2)OF THE ACT, ESPECIALLY WHEN REFUND CLAI MED AS PER RETURN FILED ON 28.11.2003 WAS GRANTED ALONG WITH INTERES T WHILE THE CLAIM FOR ADDITIONAL REFUND OF RS.22,81,190/- IN THE RE VISED RETURN WAS ENTIRELY DUE TO DELAY ON THE PART OF THE ASSESSEE . THUS, THE ASSESSEE WAS NOT ENTITLED TO INTEREST ON THE SAID REFUND OF RS. 22,81,190/- FOR THE PERIOD OF DELAY ATTRIBUTABLE TO THE ASSESSEE, THE LD. DR ADDED WHILE RELYING UPON DECISION IN THE CAS E OF POWER FINANCE CORPORATION LTD. VS. ACIT,28 SOT220(DELHI). ON THE OTHER HAND, THE LEARNED AR ON BEHALF OF THE ASSESSEE SUPP ORTED THE ORDER OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AT THE OUTSET, WE MAY HAVE A LOOK AT THE RELEVANT PROVISIONS OF SEC. 244A OF THE ACT, WHICH READ AS U NDER: 244A. INTEREST ON REFUNDS. (1) WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE A SSESSEE UNDER THIS ACT, HE SHALL, SUBJECT TO THE PROVISIONS OF THIS SE CTION, BE ENTITLED TO RECEIVE, IN ADDITION TO THE SAID AMOUNT, SIMPLE INT EREST THEREON CALCULATED IN THE FOLLOWING 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 TREAT ED AS PAID ITA NO.1269/AHD/2008 FOR AY 2003-04 GUJARAT STATE FINANCIAL SERVICES LTD. 4 UNDER SECTION 199, DURING THE FINANCIAL YEAR IMMEDI ATELY PRECEDING THE ASSESSMENT YEAR, SUCH INTEREST SHALL BE CALCULA TED AT THE RATE OF TWO-THIRD PER CENT. FOR EVERY MONTH OR PART OF A MO NTH COMPRISED IN THE PERIOD FROM THE 1ST DAY OF APRIL OF THE ASSESSM ENT YEAR TO THE DATE ON WHICH THE REFUND IS GRANTED: PROVIDED THAT NO INTEREST SHALL BE PAYABLE IF THE A MOUNT OF REFUND IS LESS THAN TEN PER CENT. OF THE TAX AS DET ERMINED UNDER SUB-SECTION (1) OF SECTION 143 OR ON REGULAR ASSESSMENT; (B) IN ANY OTHER CASE, SUCH INTEREST SHALL BE CALCU LATED AT THE RATE OF TWO-THIRD PER CENT FOR EVERY MONTH OR PART OF A MON TH COMPRISED IN THE PERIOD OR PERIODS FROM THE DATE 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 FROM WHICH TH E AMOUNT OF TAX OR PENALTY SPECIFIED IN THE NOTICE OF DEMAND ISSUED UNDER SECTION 156 IS PAID IN EXCESS OF SUCH DEMAND. (2) IF THE PROCEEDINGS RESULTING IN THE REFUND ARE DELAYED FOR REASONS ATTRIBUTABLE TO THE ASSESSEE, 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, AND WHERE ANY QUESTION ARISES AS TO THE PERIOD TO BE EXCLUDED, IT SHALL BE DECIDED BY THE CHIEF COMMISSI ONER OR COMMISSIONER WHOSE DECISION THEREON SHALL BE FINAL. (3) WHERE, AS A RESULT OF AN ORDER UNDER SUB-SECTIO N (3) OF SECTION 143 OR SECTION 144 OR SECTION 147 OR SECTION 154 OR SECTIO N 155 OR SECTION 250 OR SECTION 254 OR SECTION 260 OR SECTION 262 OR SECTIO N 263 OR SECTION 264 OR AN ORDER OF THE SETTLEMENT COMMISSION UNDER SUB-SEC TION (4) OF SECTION 245D, THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDE R SUB-SECTION (1) HAS BEEN INCREASED OR REDUCED, AS THE CASE MAY BE, THE INTEREST SHALL BE INCREASED OR REDUCED ACCORDINGLY, AND IN A CASE WHE RE THE INTEREST IS REDUCED, THE ASSESSING OFFICER SHALL SERVE ON THE A SSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM SPECIFYING THE AMOUNT OF THE EXCESS INTEREST PAID AND REQUIRING HIM TO PAY SUCH AMOUNT; AND SUCH NOTICE OF DEMAND SHALL BE DEEMED TO BE A NOTICE UNDER SECTION 156 AND THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. (4) THE PROVISIONS OF THIS SECTION SHALL APPLY IN R ESPECT OF ASSESSMENTS FOR THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF AP RIL, 1989, AND SUBSEQUENT ASSESSMENT YEARS: ITA NO.1269/AHD/2008 FOR AY 2003-04 GUJARAT STATE FINANCIAL SERVICES LTD. 5 5.1 UNDISPUTEDLY, IN TERMS OF PROVISIONS O F SEC. 244A(1)(A) OF THE ACT ,THE ASSESSEE IS ENTITLED, SUBJECT TO THE P ROVISIONS OF THIS SECTION, INTEREST UP TO DATE ON WHICH REFUND IS GR ANTED. IN TERMS OF PROVISIONS OF SEC. 244A(2) OF THE ACT IF THE PROCE EDINGS RESULTING IN THE REFUND ARE DELAYED FOR REASONS ATTRIBUTABLE TO THE ASSESSEE, WHETHER WHOLLY OR IN PART, THE PERIOD OF THE DELAY SO ATTRIBUTABLE TO HI M HAS TO BE EXCLUDED FROM THE PERIOD FOR WHICH INTEREST IS PAYABLE, AND WHERE ANY QUESTION ARISES AS TO THE PERIOD TO BE EXCLUDED, IT SHALL BE DECIDED BY THE C HIEF COMMISSIONER OR COMMISSIONER WHOSE DECISION THEREON SHALL BE FINAL. IN THE CASE OF POWER FINANCE CORPORATION LTD.(SUPRA), A CO-ORDINATE BENC H HELD THAT THE QUESTION OF EXCLUSION OF ANY PERIOD FOR THE PUR POSE OF GRANT OF INTEREST UNDER SECTION 244A(1) HAS NECESSARILY AND MANDATORILY TO BE DECIDED EITHER BY CHIEF CIT OR CIT. WE FIND THAT A SIMILAR APPROACH OF THE TRIBUNAL WAS UPHELD BY HONBLE KERALA HIGH COURT IN THE CASE OF KERALA STATE CIVIL SUPPLIES CORPN. LTD. V. JT. CIT [2006] 282 ITR 647 5.2 IN THE INSTANT CASE, A MERE GLANCE AT THE IMPUGNED ORDERS REVEALS THAT BOTH THE LD. CIT(A) AND THE AO HAVE TOTALLY IGNORED THE MANDATORY PROVISIONS OF CLAUSE (2) OF SEC. 244A OF THE ACT. THE PLEA NOW RA ISED BEFORE US ON BEHALF OF THE REVENUE IS THAT THE ASSESSEEE ITSELF CLAIMED REFU ND OF RS. 22,81,190/- ONLY IN THEIR REVISED RETURN FILED ON 29.3.2005 AND THUS, D ELAY WAS ATTRIBUTABLE TO THE ASSESSEE FOR THIS AMOUNT OF REFUND AND CONSEQUENTLY , THE ASSESSEE WOULD NOT BE ENTITLED TO ANY INTEREST ON THE SAID REFUND FOR TH E PERIOD OF DELAY ATTRIBUTABLE TO IT. SINCE THE IMPUGNED ORDERS ARE SILENT AS TO WHETHER OR NOT DELAY IN CLAIMING THE REFUND OF RS.22,81,190/- IS ATTRIBUTABLE TO THE ASS ESSEEE AND THE PERIOD OF DELAY CAN BE DETERMINED ONLY BY THE CONCERNED COMMISSIONE R OR CHIEF COMMISSIONER, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE TH E ORDER OF THE LD. CIT(A) TO ENABLE THE AO TO PROCEED IN ACCORDANCE WITH THE PR OVISIONS OF LAW. THEREFORE, THE ISSUE RAISED BEFORE US IN TERMS OF GROUND NO. 1 OF THE APPEAL IS RESTORED TO THE FILE OF THE AO FOR ADJUDICATING THE MATTER AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF RELEVANT PROVISIONS OF SEC. 244A(2) O F THE ACT, AFTER ALLOWING SUFFICIENT ITA NO.1269/AHD/2008 FOR AY 2003-04 GUJARAT STATE FINANCIAL SERVICES LTD. 6 OPPORTUNITY TO THE ASSESSEE.. WITH THESE OBSERVATI ONS, GROUND NO. 1 IS DISPOSED OF. 6. GROUND NOS.2 & 3 ,BEING MERE PRAYER, DO NOT REQ UIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED. 7. IN THE RESULT, APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 19 -08-2010 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 19-08-2010 COPY OF THE ORDER FORWARDED TO: 1. GUJARAT STATE FINANCIAL SERVICES LTD. KHANIJ BHA VAN, 132 FT RING ROAD, NR. HELMET CROSS ROAD, VASTRAPURA, AHMED ABAD 2. THE ACIT, CIRCLE-4, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-VIII, AHMEDABAD 5. DR, BENCH-B, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD