M/s Delhi International Airport Private Limited , Bangalore V. Joint Commissioner of Income Tax(OSD) Central Circle-2(2), Bangalore

ITA 127/BANG/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8959 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 22-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Assessee Lawyers: SUNIL JAIN
• Keywords: Rectification of order; Revised return; TDS
• Section: 154; 143(3); 244A; 5(2); 115JB; 191; 43; 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “B”, BANGALORE Before Shri George George K, JM & Ms.Padmavathy S, AM ITA No.127/Bang/2022 : Asst.Year 2016-2017 M/s.Delhi International Airport Limited (formerly known as Delhi International Airport Private Ltd.) No.25/1, Skip House, Museum Road Bengaluru – 560 025. PAN : AACCD3570F. v. The Joint Commissioner of Income-tax, Central Circle 2(2) Bangalore. (Appellant) (Respondent) Appellant by : Sri.Sunil Jain, CA Respondent by : Sri.Priyadarshi Mishra, Addl.CIT -DR Date of Hearing : 02.06.2022 Date of Pronouncement : 09.06.2022 O R D E R Per George George K, JM : This appeal at the instance of the assessee is directed against CIT(A)’s order dated 23.11.2021. The relevant assessment year is 2016-2017. 2. The grounds raised read as follows:- “Short grant of interest U/s 244A by Rs.33,38,380/-. 1. On the facts and circumstance of the case and in law the Learned CIT(A) has erred in dismissing the appeal of appellant by holding that the grounds of appeal filed before him are not arising out of order dated July 31, 2020 passed U/s 154 of the IT Act, 1961. 2. On the facts and circumstance of the case and in law the Learned CIT(A) has erred in upholding the action of Assessing Officer for non-grant of interest U/s 244A of RS.33,38,380/- on tax refund amount in the rectification order dated July 31, 2020 passed U/s 154 of the IT Act, 1961. ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 2 3. The CIT(A) erred in making the following irrelevant, incorrect and / or immaterial observations in the order passed U/s 250: (1) The appellant has tried to link the rectification application dated April 05, 2018 with the rectification order dated July 31, 2020; (2) The rectification application dated April 05, 2018 appears to not have been disposed off by the Assessing Officer; and (3) The ground raised by the appellant are not arising out of the order dated July 31, 2020 as passed by the AO U/s 154, so the same cannot be adjudicated. 4. The CIT(A) failed to appreciate that: (1) The tax refund determined in the assessment order dated March 28, 2018 was actually granted to the appellant only on July 27,2020 i.e. after the delay of 29 Months; and (2) The Assessing Officer had passed rectification order dated July 31, 2020 U/s 154 pursuant to the rectification application dated April 05, 2018 and application dated July 29,2020 of the Appellant; 5. The appellant therefore prays that the Assessing Officer be directed to allow interest of Rs.33,38,3801- for delay in grant of tax refund amount in accordance with the provisions of section 244A of the Income tax Act, 1961. 6. The Appellant craves, leave to add, alter and/or amend all or any of the foregoing grounds of appeal.” 3. The brief facts of the case are as follows: The assessee is engaged in maintaining and operating the Delhi Airport. For assessment year 2016-2017, the assessee filed its return of income on 12.11.2016 declaring income of Rs. Nil (after set off of brought forward losses of Rs.570,72,18,138/-) under normal provisions and Book Profit of Rs.595,97,08,234/- u/s 115JB of the Act. The tax payable on income computed u/s. 115JB were worked out at Rs.127,93,98,538/- (including interest U/s 234C of Rs.75,01,446) as against the amount of prepaid taxes of ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 3 Rs.128,66,76,042/- comprising of TDS of Rs.108,66,76,042/- and advance tax of Rs.20,00,00,000/- and accordingly a tax refund of Rs.72,77,500/- was claimed in the return of income. (refer factual Paper Book Page 1-3). Subsequently, the assessee filed revised return of income on February 8, 2018 declaring therein income of Rs.Nil (after set off of brought forward losses of Rs.570,72,18,138/-) under normal provisions and Book Profit of Rs.595,97,08,234/- as per section 115JB of IT Act. The amount of tax payable on income computed u/s. 115JB were worked out at Rs.127,70,61,709/- (including interest U/s 234C of Rs.51,64,617/-) as against the amount of prepaid taxes of Rs.134,43,75,586/- comprising of TDS of Rs.114,43,75,586/- and advance tax of Rs.20,00,00,000/- and accordingly a tax refund of Rs.6,73,13,880/- was claimed in the return of income. (refer factual Paper Book Page 4-22) . 4. The assessment under section 143(3) of the Income Tax Act, 1961 was completed vide order dated 28.03.2018 assessing therein total income at RS.Nil (after set off of brought forward losses of Rs.575,10,66,522/-) and Book Profit at Rs.616,72,39,808/- and determining therein tax refund amount of Rs.291,90,560. In the assessment order passed, the tax liability on Book Profit was computed at Rs.131,00,20,411/- as against the correct amount of tax liability of Rs.131,61,87,651/- (Rs.616,72,39,808 X 21.341 percentage) resulting in short computation of tax liability by Rs.61,67,240/- and thus the correct amount of tax refundable was Rs.2,30,23,320/- as against the tax refund amount of ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 4 Rs.2,91,90,560/- determined in the assessment order. Therefore, the assessee filed rectification application dated 05.04.2018 with reference to short computation of tax liability of Rs.61,67,240/- and requesting to grant the correct amount of tax refund of Rs.2,30,23,320/- as against the tax refund amount of Rs.2,91,90,560/- determined in the assessment order. Pursuant to rectification application, the income tax refund amount of Rs.2,91,90,560/- was granted and the same has been credited in the assessee company's bank account on 27.07.2020 as against the correct amount of Tax refundable of Rs.2,30,23,320/-. (refer factual Paper Book Page 50-51) . The excess amount of tax refund of Rs.61,67,240/- granted wrongly was immediately deposited by the assessee company on the very next day i.e. on 28.07.2020 in Central Govt. account. (refer Factual Paper Book Page 52). Considering the above, an order dated 31.07.2020 under section 154 of the Income tax Act, 1961 has been passed by the Joint Commissioner of Income tax (OSD), Central Circle 2(2), Bangalore rectifying the above mistake in short computation of tax liability and granting the credit for tax paid of Rs.61,67,240/- on 28.07.2020. However, in this rectification order nor while granting the tax refund amount on 28.07.2020, no interest U/s 244A has been allowed for delay in grant of tax refund for the period from 28.03.2018 (date of completion of assessment order determining the tax refund amount) and the actual date of grant of tax refund amount of Rs.2,30,23,320/- on 27.07.2020 (i.e. for a delayed period of 29 months in granting the tax refund amount which was determined in the assessment order dated 28.03.2018) ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 5 5. Against non-grant of interest for delayed period of 29 months in granting the tax refund amount of Rs.2,30,23,320/- which was determined in the assessment order dated 28.03.2018, the assessee has filed an appeal before the Commissioner of Income Tax (Appeals)-11, Bangalore. The CIT(A) dismissed the appeal of the assessee. The relevant finding of the CIT(A) reads as follows:- "4.3 The submissions of the appellant and the AO have duly been considered. Here the most important point to be looked into is whether the grounds of appeal are arising out of the order under Section 154 of the Act passed by the AO on 31.07.2020 or not. A perusal of the documents available on record shows that the order which is appealed against in the appeal under consideration was passed by the AO after receiving a no objection of the appellant for reducing the excess refund of Rs 61,67,240/- allowed to it. No other issue was under consideration in this rectification proceedings. During appellate proceedings, vide hearing notice dt. 11.10.2021 the appellant was asked to furnish copy of the rectification application filed before AO for claiming interest under Section 244A of the Act. In response to the same the appellant has filed copy of the rectification application dt. 05.04.2018. It was this rectification application dt.05.04.2018, vide which the appellant had raised the issue of interest under Section 244A of the Act and now the appellant has tried to link this rectification application dt. 05.04.2018 with the rectification order dt. 31.07.2020. However, the said rectification application was never under consideration with the AO while passing this order dt. 31.07.2020. The purpose of this rectification order passed by the AO was to withdraw the excess refund given to the appellant and he has done so after obtaining 'no objection' of the appellant. As regards the rectification application dt. 05.04.2018, the same appears to not have been disposed off by the AO. The appellant also does not appear to have challenged this inaction on the party of the AO in not disposing of its rectification application within the prescribed time limit of six months. It is also not the case of the appellant that the interest under Section 244A had earlier been allowed to it but withdrawn vide rectification order dt. 31.07.2020. 4.4 Since the grounds of appeal raised by the appellant are not arising out of the order dt. 31.07.2020 as passed by the ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 6 AO under Section 154 of the Act, so the same cannot be adjudicated here. Considering above the grounds of appeal of the appellant are dismissed." 6. Aggrieved by the order of the CIT(A), the assessee has filed this appeal before the Tribunal claiming that interest u/s 244A of the I.T.Act for the delayed period refund of 29 months. The learned AR has filed two sets of paper book. One set comprising of 193 pages enclosing therein the case laws relied on, the CBDT Instructions. The other set comprising of factual paper book enclosing therein the acknowledgement for filing of the original return, revised return, copy of the assessment orders, rectification applications, challan for remittance / payment of excess refund of Rs.61,67,240, etc. The learned AR reiterated the submissions made before the Income Tax Authorities. The learned AR has submitted a brief written submission, which reads as follows:- “2.1. The facts leading to issue involved in the grounds of appeal relating to non- grant of interest on tax refund amount of Rs.2,30,23,3201- for delayed period of 29 months in granting the tax refund amount which was determined in the assessment order dated March 28 th 2018 but was actually granted on July 27th 2020 are tabulated below: Sr Particulars Particulars 1 FPB No Amount (Rs.) Page No 1 Assessment Year 2016-17 2 Date of filing Original Return of income Nov. 25, 2016 1 3 Income as per normal provision after set off of NIL 2-3 B/F Losses 4 Tax payable thereon NIL 3 5 Income as per section 115JB 595,97,08,234 3 6 Tax payable on income as per section 115JB 127,93,98,538 3 including interest u/s. 234C of Rs.75,01,446 ,446/- 7 Prepaid taxes ( comprising of T D of 128,66,76,042 3 Rs.1 08,66,76,042/- and advance tof Rs.20,00,00,000/- ) ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 7 8 Tax Refund claimed in the Original return of 72,77,500 1 & 3 income 9 Date of filing Revised return of income Feb 8, 2018 4 10 Income as per normal provisions after Set off of NIL 5-6 B/F Losses 11 Tax payable thereon NIL 6 12 Income as per section 115JB 595,97,08,234 6 13 Tax payable on income as per section 115JB 127,70,61,709 6 including interest u/s. 234C of RS.51 ,64,617/- 14 Prepaid taxes ( comprising of TDS o f 134,43,75,586 6 Rs.114,43,75,586/- and advance tax o Rs.20,00,00,000/- ) 15 Tax Refund claimed in the Revised return of 6,73,13,880 6 income 16 Date of completion of assessment u/s. 143(3) March 28 th 2018 23 17 Income under normal provisions in t h Nil 40 assessment order 18 Tax payable thereon Nil 40 19 Book Profit u/s. 115JB as per assessment order 616,72,39,808 40 - 41 21 Tax Payable on Book Profit as per assessment 131,00,20,411 41 order 22 Correct amount of tax payable on income u/s. 131,61,87,651 44 - 45 115JB 23 Short computation of tax liability 61,67,240 44 - 45 24 Tax Refund amount determined in t h 291,90,560 41 assessment order dated March 28 th 2018 25 Correct amount of tax refund 2,30,23,320 44 - 45 26 Date of filing application u/s. 154 for granting April 05, 2018 44 Tax refund amount of Rs. 2,30,23,320/- 27 Actual date of grant of Tax refund amount July 27th 2020 50 - 51 28 Amount of Tax refund granted 291,90,560 51 29 Tax Refund amount excess granted by Rs. 61,67,240 30 Excess tax refund amount deposited on July July 28 th 2020 52 28 th 2020 31 Date of passing rectification order July 31 st 2020 55 - 56 32 Non grant of interest with respect to delayed For a period of 23 - 43 grant of tax refund amount from March 28 th 29 months 55 - 56 2018 to July 27th 2020 33 Interest amount on tax refund for delayed 33,38,380 period of 29 months 2.3. The issue whether the assessee would be entitled to interest for delay in grant of tax refund amount determined in the assessment order dated March 28th 2018 but was actually granted on July 27th 2020 has been examined by the Hon'ble Supreme Court, Jurisdictional High Court and various High Courts and ITAT in the judicial precedent relied upon as under: ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 8 SN Particulars FBP Page Para No Page Nos No. I Where excess amounts of tax are collected from an assessee or any amount is wrongfully withheld from an assessee without authority of law, ..• must compensate assessee by paying such amount 1. Supreme Court in the case of Sandvik Asia Ltd Vs CIT 1 - 45 15,24, 35,37 to (280 ITR 643) 27 to 30, 39,42 to 36,38 to 44 41 II When refund is of any advance tax (including TOS), interest is payable for the period starting from the first day of the assessment year to the date of grant SN Particulars FBP Page Para No Page Nos No. of refund and no interest is payable for the period for which the proceedings resulting in the refund are delayed for the reasons attributable to the assessee (wholly or partly). The rate of entitlement to interest on excta determined by the statutory provisions of 2. Supreme Court decision in Tata Chemicals Ltd. (43 46 -65 39 65 taxmann.com 240) III Even when refund determined was less than 10 per cent of gross tax, assessee would be entitled to under section 244A on amount of refund for delay 3. Mumbai IT AT in the case of Rajashekhar Swaminathan 66-74 3.9 74 Iyer v. Deputy Commissioner of Income-tax, Mumbai [2016] 73 taxmann.com 228 160 ITD 638 (Mumbai) IV Where assessee's claim for refund of excess tax collected was withheld and r e b y department after a huge delay, assessee would be entitled to compensation by way of interest for such delay 4. Hon'ble Supreme Court in Nima Specific Family Trust 75-76 9-11 & 75 -76 v. Assistant Commissioner of Income-tax, Circle 5(2) 13 2019] 104 taxmann.com 56 (SC) 5. Bombay High Court in V. N. Parekh Securities (P.) Ltd. 77 - 81 7,8 & 9 79 -80 v. S. K. Gupta [2022] 137 taxmann.com 277 (Bombay) 6. Bombay High Court in CIT vs. Melstar Information 82 -86 7 84 Technologies Ltd [2019] 106 tax ma 1 4 (Bombay) ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 9 7. Delhi High Court in Agilent Technologies India (P.) Ltd. 87 -90 9 to 11 89 v. Assistant Commissioner of Income Tax, Circle 1 (2), New Delhi [2021] 123 taxmann.com 299 (Delhi) 8. Gujarat High Court in Ajanta Manufacturing Ltd. v. 91 -104 16 & 17 102 & Deputy Commissioner of Income- tax [ 2 7 2 103 taxmann.com 148 (Gujarat) 9. Gauhati High Court in the case of Jwala Prasad 105 - 111 Held 106 Sikaria v. CIT [1989] 175 ITR 535 10. Mumbai ITAT in Kotak Mahindra Bank Ltd. v. Assistant 112 - 129 4.6.1 & 128 & Commissioner of Income-tax [2022] 134 taxmann.com 4.8 129 147 (Mumbai - Trib.) SN Particulars FBP Page Para No Page Nos No. V Interest under section 244A to be allowed when assessee is not at fault and on the amount of tax refund due 11. Delhi High Court in the case of Own Motion Vs CIT(352 130 -172 16,18,26 154,155, ITR 273) 27,33,34 158,159, 49,50 & 168,169, 57 171,172 12. Himachal Pradesh High Court in PCIT Vs. Ambuja 173 - 179 12 179 Daria Kashlog Mangoo Transport Co- (114 taxmann.com 527) 13. Bombay High Court in the case of PCIT- 29 vs Kumagai 180 -190 8 189 Skanska HCC ITOCHU Group (102 416) 14. Circular No.20-D (XXIl-22) dated Auqust 20, 1968 191 191 15. CBDT Instruction No. 7/2013, dated 15- 7-2013 192-193 192-193 2.4. In accordance with the settled legal position as stated above, the Appellant would be entitled to the amount of interest on the tax refund amount as per workings given below. Particulars Tax refund Interest Total Tax refund amount 2,30,23,320 2,30,23,320 Add: Interest U/s 244A: Tax refund determined upon completion of assessment on March 28, 2was granted to the appellant company on July 27,2020 March 2018 to July 2020 - 29 Months 33,38,380 33,38,380 Short grant of interest 33,38,380 33,38,380 2.5 In view of the aforesaid settled legal position in law, the appellant therefore prays your Honour to direct the Assessing Officer to allow interest u/s. 244A of Rs.33,38,3801- for the delay period for which appellant is not at fault in terms of CBDT Instruction No. 7/2013, dated 15-7-2013. In view of the above submissions, the Appellant prays that its appeal be allowed.” ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 10 7. The learned Departmental Representative was duly heard. 8. We have heard rival submissions and perused the material on record. The admitted facts are that the assessment u/s 143(3) of the I.T.Act was completed vide order dated 28.03.2018 assessing therein total income at Rs.Nil and determining by mistake tax refundable amount of Rs.2,91,90,560 instead of Rs.2,30,23,320. The assessee filed rectification application dated 5 th April, 2018 with reference to short computation of tax liability by Rs.61,67,240 (2,91,90,560 – 2,30,23,320). The assessee in the said rectification application, submitted that the correct refund of Rs.2,30,23,320 along with interest u/s 244A of the I.T.Act till the date of issue of tax refund amount may be granted. Pursuant to the rectification application, income-tax refund amount of Rs.2,91,90,560 was granted and the same was credited in the assessee’s bank account on 27.07.2020 as against the correct amount of tax refund of Rs.2,30,23,320. The excess amount of tax refund of Rs.61,67,240 granted wrongly was immediately deposited by the assessee-company on the very next day, i.e., on 28.07.2020 in the Central Government account. Considering the above, the order dated 31.07.2020 u/s 154 of the I.T.Act was passed by the JCIT (OSD) rectifying the above mistake in short computation of tax liability and granting credit for tax paid of Rs.61,67,240. However, in the said rectification order, while granting the tax refund on 27.07.2020, no interest u/s 244A of the I.T.Act has been allowed for delay in granting tax refund for the period ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 11 from 28.03.2018 (the date of completion of assessment order determining the tax refund amount) and the actual date of grant of tax refund amount of Rs.2,30,23,320 on 27.07.2020 (i.e., the delay for a period of 29 months in granting tax refund amount which was determined in the assessment order dated 28.03.2018). 9. Interest u/s 244A of the I.T.Act shall be granted to the assessee on delayed refund subject to the provision of said section. In other words, the A.O. while granting refund u/s 237 of the I.T.Act, ought to have calculated interest u/s 244A of the I.T.Act for the delayed refund, unless the delay is caused by the assessee’s fault. The CBDT in its Instruction No.7/2013 dated 15 th July, 2013, has endorsed the observation of the Hon’ble Delhi High Court in case of own motion v. UOI & Others in WP(C) 2659/2012 dated 14.03.2013, wherein, the Hon’ble High Court had held that the assessee cannot be denied interest on refund unless the delay is caused by the assessee’s fault. Further, the Hon’ble High Court held that even in cases where the assessee is rightly denied interest on refund, the A.O. has to provide a written explanation for the denial. When the refund was finally given on 27.07.2020, the A.O. ought to have calculated interest u/s 244A of the I.T.Act while granting refund (For the delayed refund by 29 months). The rectification order dated 31.07.2020 having failed to calculate interest u/s 244A of the I.T.Act (which is automatic unless delay is attributable to assessee’s fault), the first appellate authority was within his jurisdiction to have entertained the claim of interest on ITA No.127/Bang/2022. M/s.Delhi International Airport Limited. 12 delayed refund u/s 244A of the I.T.Act, which was repeatedly requested by the assessee vide its letters dated 05.04.2018, 01.05.2018, 25.05.2018, 02.08.2018, 08.06.2020, 29.10.2020 and 28.02.2022. In the interest of justice and equity, we restore the issue to the files of the A.O. The A.O. is directed to take a decision in accordance with law and grant interest u/s 244A of the I.T.Act with reference to the delayed refund amount (refund credited to assessee’s bank account on 27.07.2020). The A.O. shall afford a reasonable opportunity of being heard to the assessee before a decision is taken in the matter. The A.O. shall pass an order as expeditiously as possible, at any rate within a period of six months from the date of receipt of this order. It is ordered accordingly. 10. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on this 09 th day of June, 2022. Sd/- (Padmavathy S) Sd/- (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER Bangalore; Dated : 09 th June, 2022. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-11, Bangalore. 4. The Pr.CIT (Central), Bangalore. 5. The DR, ITAT, Bengaluru. 6. Guard File. Asst.Registrar/ITAT, Bangalore