Sandvik Asia Ltd., Pune V. DCIT Cir.-8, Pune

ITA 1420/PUN/2005

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2273 (ITAT-PUNE)
• Duration Of Justice: 10 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-08-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 08-06-2005
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: J D MISTRI
• Keywords: Right to appeal
• Section: 246; 144; 154; 143(3); 244A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . . , , ' , $ % BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 1420/PN/2005 $' ' / ASSESSMENT YEAR : 1997-98 SANDVIK ASIA LIMITED, MUMBAI PUNE ROAD, PUNE 411012 PAN : AACCS6638K ....... / APPELLANT / V/S. COMMISSIONER OF INCOME TAX (OSD), PUNE / RESPONDENT ASSESSEE BY : SHRI J.D. MISTRI REVENUE BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 13-10-2015 / DATE OF PRONOUNCEMENT : 21 -10-2015 / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (OSD), PUNE DATED 24-03-2005 FOR THE ASSESSMENT YEAR 1997-98. 2. IN APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: AGGRIEVED BY THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (OSD), PUNE [HEREINAFTER REFERRED TO AS 'THE LEARNE D CIT(A)'], UNDER SECTION 250 OF THE INCOME-TAX ACT, 1961 ('ACT') AND BASED O N THE FACTS AND CIRCUMSTANCES OF THE CASE, SANDVIK ASIA LIMITED [HER EINAFTER REFERRED TO AS 'THE APPELLANT'] RESPECTFULLY SUBMITS THAT THE L EARNED CIT(A) ERRED IN 2 ITA NO. 1420/PN/2005, A.Y. 1997-98 DISPOSING THE APPEAL OF THE APPELLANT, ON THE FOLLO WING GROUNDS, WHICH ARE INDEPENDENT OF AND WITHOUT PREJUDICE TO ONE ANO THER. 1. ORDER PASSED BY THE ASSESSING OFFICER NOT BEING AN APPEAL-ABLE ORDER. THE LEARNED CIT(A) HAS ERRED IN LAW IN OBSERVING TH AT THE ORDER GIVING EFFECT PASSED BY THE ASSESSING OFFICER, INCORRECTLY COMPUTING INTEREST UNDER SECTION 244A, IS NOT AN APPEAL-ABLE ORDER AND THUS DISMISSING GROUND NUMBERS (2) TO (6) OF THE IMPUGNED APPEAL. T HE APPELLANT PRAYS THAT THE ORDER GIVING EFFECT PASSED BY THE ASSESSIN G OFFICER BE CONSIDERED AS AN APPEAL-ABLE ORDER AND GROUND NUMBE RS (2) TO (6) BE DISPOSED-OFF BY THE HON'BLE INCOME TAX APPELLATE TR IBUNAL ON THEIR MERITS. 2. EXCESS INTEREST COLLECTED UNDER SECTION 220(2 ) THE LEARNED CIT(A) HAS ERRED IN EFFECTIVELY CONFIRM ING THE ORDER OF THE ASSESSING OFFICER WHEREIN EXCESS INTEREST CHARGED U NDER SECTION 220(2) AMOUNTING TO RS 1,408,646 (RS66,253 CHARGED VIDE HI S ORDER DATED 21 MARCH 2000 PLUS RS 1,396,095 CHARGED VIDE HIS ORDER DATED 13 MAY 2001) HAS NOT BEEN REVERSED. THE APPELLANT PRAYS TH AT THE EXCESS INTEREST OF RS 1,408,646 BE REFUNDED TO THE APPELLA NT. 3. INTEREST RECEIVED UNDER SECTION 244A WITHDRAW N TWICE THE LEARNED CIT(A) HAS ERRED IN EFFECTIVELY CONFIRM ING THE ORDER OF THE ASSESSING OFFICER WHEREIN INTEREST GRANTED TO THE A PPELLANT UNDER SECTION 244A OF RS 723,209 HAS BEEN WITHDRAWN, WHERE SUCH I NTEREST HAD BEEN ALREADY WITHDRAWN EARLIER VIDE AN ORDER UNDER SECTI ON 143(3). THE APPELLANT PRAYS THAT INTEREST OF RS 723,209 OUGHT N OT TO BE WITHDRAWN AND THE APPELLANT BE GRANTED REFUND OF RS 723,209. 4. SHORT GRANT OF INTEREST UNDER SECTION 244A THE LEARNED CIT(A) HAS ERRED IN EFFECTIVELY CONFIRM ING THE ORDER OF THE ASSESSING OFFICER WHEREIN INTEREST UNDER SECTION 24 4A AMOUNTING TO RS 2,414,502 (TO BE REVISED TO RS. 2,006,516 AFTER CON SIDERING REFUND OF RS 407,987 GRANTED IN AUGUST 2003) HAS BEEN SHORT GRAN TED TO THE APPELLANT. THE APPELLANT PRAYS THAT INTEREST OF RS 2,414,502 BE GRANTED TO THE APPELLANT. 5. INTEREST UNDER SECTION 244A THE LEARNED CIT(A) HAS ERRED IN EFFECTIVELY CONFIRM ING THE ORDER OF THE ASSESSING OFFICER NOT GRANTING INTEREST UNDER SECTI ON 244A ON REFUND OF RS 2,131,855 (COMPRISING INTEREST OF RS 1,408,646 A ND RS 723,209 DISCUSSED IN GROUND NO. 2 AND 3 ABOVE). THE APPELLA NT PRAYS THAT INTEREST UNDER SECTION 244A BE GRANTED ON REFUND OF RS 2,131,855. 6. INTEREST UNDER SECTION 244A ON THE DELAYED IN TEREST THE LEARNED CIT(A) HAS ERRED IN EFFECTIVELY CONFIRM ING THE ORDER OF THE ASSESSING OFFICER NOT GRANTING INTEREST ON THE DELA Y IN GRANTING THE ADDITIONAL AMOUNT OF INTEREST OF RS 2,414,502 {DISC USSED IN GROUND NO. 4 ABOVE). THE APPELLANT PRAYS THAT INTEREST UNDER SEC TION 244A BE GRANTED ON REFUND OF RS 2,414,502. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMI T, AMEND OR DELETE ONE OR MORE OF THE ABOVE GROUNDS OF APPEAL AT ANY TIME BEFORE, OR AT THE TIME OF, HEARING OF THE APPEAL, SO AS TO ENABLE THE HON' BLE TRIBUNAL TO DECIDE THIS APPEAL ACCORDING TO LAW. 3 ITA NO. 1420/PN/2005, A.Y. 1997-98 3. SHRI J.D. MISTRI APPEARING ON BEHALF OF THE ASSESSEE SUBMIT TED, THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT CONSEQUENT TO ORDER GIVING EFFECT PASSED BY THE AS SESSING OFFICER RESULTING IN PAYMENT OF INTEREST U/S. 244A OF THE INCOME T AX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) IS NOT AN APPEALAB LE ORDER. THE LD. AR PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY HIGH C OURT IN THE CASE OF CALTEX OIL REFINING (INDIA) LTD. VS. CIT REPORTED AS 202 ITR 375 (BOM), WHEREIN THE HON'BLE HIGH COURT WHILE DEALING WITH THE PROVISIONS OF SECTION 214 HAS HELD THAT IT IS AN APPEALABLE ORDER. THE LD. AR SUBMITTED THAT THE PROVISIONS OF SECTION 244A AND THE PROVISIONS OF SECTION 214 OF THE ACT, BOTH RELATE TO THE PAYMENT OF INTEREST TO THE ASSESSEE. THE LD. AR FURTHER POINTED OUT THAT THE DECISIO N OF HON'BLE BOMBAY HIGH COURT HAS BEEN FOLLOWED IN THE CASES OF GODFRE Y PHILIPS INDIA LTD. VS. CIT REPORTED AS 206 ITR 23, PHALTON SUGAR WORKS LIMITED VS. CIT REPORTED AS 215 ITR 582 AND PHALTON SUGAR WOR KS LIMITED VS. COMMISSIONER OF INCOME TAX REPORTED AS 216 ITR 479 AND VARIOUS OTHER DECISIONS. 4. ON THE OTHER HAND SHRI DHEERAJ KUMAR JAIN REPRESENT ING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE CO MMISSIONER OF INCOME TAX (APPEALS). 5. BOTH SIDES HEARD. IN APPEAL, THE ASSESSEE HAS PRIMAR ILY CHALLENGED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPE ALS) IN HOLDING THAT INTEREST U/S. 244A ARISING OUT OF ORDER GIVING EFFECT BY THE ASSESSING OFFICER IS CONSEQUENTIAL, THEREFORE, IT IS NOT AN APP EALABLE ORDER. THE OTHER GROUNDS RAISED IN THE APPEAL OF THE AS SESSEE ARE EITHER IN SUPPORT OR CONSEQUENTIAL. 4 ITA NO. 1420/PN/2005, A.Y. 1997-98 6. WE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR OF THE ASSES SEE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CALTEX OIL REFININ G (INDIA) LTD. VS. CIT (SUPRA) WHILE DEALING WITH THE ISSUE WHETHER ORDER RELATING TO INTEREST U/S 214 OF THE ACT IS APPEALABLE HAS HELD: WE HAVE CAREFULLY CONSIDERED ALL THESE SUBMISSIONS . CLAUSE (C) OF SECTION 246 IS IN TWO PARTS. THE FIRST PART DEALS W ITH AN ORDER AGAINST AN ASSESSEE WHERE THE ASSESSEE DENIES HIS LIABILITY TO BE ASSESSED UNDER THE ACT. THE SECOND PART DEALS WITH ANY ORDER OF AS SESSMENT UNDER SUB- SECTION (3) OF SECTION 143 OR SECTION 144. IN THE S ECOND CASE, HOWEVER, THERE IS A FURTHER RESTRICTION THAT AN APPEAL AGAIN ST SUCH ORDER LIES ONLY WHERE THE ASSESSEE OBJECTS (1) TO THE AMOUNT OF INC OME ASSESSED, OR (II) TO THE AMOUNT OF TAX DETERMINED, OR (III) TO THE AM OUNT OF LOSS COMPUTED, OR (IV) TO THE STATUS UNDER WHICH HE IS ASSESSED. T HE FIRST PART OF THIS CLAUSE DEALS WITH DENIAL OF LIABILITY. THE DECISION OF THE SUPREME COURT REFERRED TO BY LEARNED COUNSEL IN CENTRAL PROVINCES MANGANESE ORE'S CASE [1986] 160 ITR 961, ALSO DEALS WITH A CASE WHE RE INTEREST WAS LEVIED ON THE ASSESSEE AND THE ASSESSEE WAS AGGRIEV ED BY THE LEVY OF INTEREST ON HIM. THE CONTROVERSY THERE WAS WHETHER AN APPEAL WILL LIE IN A CASE WHERE THE ASSESSEE DENIES HIS TOTAL LIABILIT Y OR IT WILL ALSO LIE IN A CASE WHERE HE DOES NOT DENY HIS TOTAL LIABILITY TO BE ASSESSED TO INTEREST BUT IS AGGRIEVED BY THE QUANTUM OF THE INTEREST LEV IED. WE DO NOT PROPOSE TO GO INTO THIS ASPECT OF THE MATTER AT LENGTH BECA USE, IN OUR OPINION, THE INTEREST UNDER SECTION 214 DOES NOT FALL UNDER THE HEADING ' LIABILITY '' OF THE ASSESSEE. IT IS IN EFFECT THE LIABILITY OF THE GOVERNMENT TO PAY INTEREST TO THE ASSESSEE ON THE EXCESS AMOUNT OF ADVANCE TAX PAID BY HIM. COUNSEL FOR THE ASSESSEE, HOWEVER, PLACED BEFORE US ANOTHER DECISION OF THE SUPREME COURT IN CIT V. WESMAN ENGG. CO. P. LTD . [1991] 188 ITR 327, WHERE ALSO A SIMILAR EXPRESSION USED IN SECTIO N 195(2) OF THE ACT CAME UP FOR INTERPRETATION AND THE SUPREME COURT HE LD THAT DENIAL OF THE LIABILITY WILL ALSO INCLUDE DENIAL OF PARTIAL LIABI LITY OR DISPUTE IN REGARD TO THE QUANTUM. IN OUR OPINION, THE CONTROVERSY REGARD ING INTEREST UNDER SECTION 214 IS NOT COVERED BY THE FIRST PART OF CLA USE (C). IT MAY, HOWEVER, FALL IN THE SECOND PART WHICH PROVIDES FOR AN APPEA L AGAINST AN ORDER OF ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OF THE ACT. THE ONLY GROUND UNDER WHICH SUCH AN OBJECTION MAY FALL IS 'O BJECTION TO THE AMOUNT OF TAX DETERMINED '. NOW, HERE AGAIN THE QUE STION ARISES WHETHER INTEREST UNDER SECTION 214 IS A PART OF ASSESSMENT AND EVEN IF IT BE SO, CAN IT BE SAID TO BE TAX DETERMINED IN THE YEAR OF ASSESSMENT FOR THE 5 ITA NO. 1420/PN/2005, A.Y. 1997-98 PURPOSE OF APPEAL UNDER CLAUSE (C) OF SECTION 246. SO FAR AS THE FIRST PART IS CONCERNED, WE DO NOT FIND MUCH DIFFICULTY IN VIE W OF THE DECISION OF THE SUPREME COURT IN M. CHOCKALINGAM AND M. MEYYAPPAN V . CIT [1963] 48 ITR (SC) 34. IN THIS CASE THE POWER OF RECTIFICATIO N WAS THE SUBJECT-MATTER OF SCRUTINY BY THE SUPREME COURT. BY AN ORDER OF RE CTIFICATION PENAL INTEREST UNDER SECTION 18A OF THE OLD ACT WAS ENHAN CED. NO OPPORTUNITY OF HEARING AS CONTEMPLATED BY SECTION 35 OF THE SAI D ACT WAS GIVEN TO THE ASSESSEE BEFORE MAKING THE RECTIFICATION AND ENHANC ING THE AMOUNT OF INTEREST. IT MAY BE OBSERVED THAT THE PROVISO TO SE CTION 35 OF THE 1922 ACT PROVIDED FOR A HEARING TO BE GIVEN TO THE ASSESSEE WHEN THE EFFECT OF RECTIFICATION WOULD BE THE ENHANCEMENT OF THE 'ASSE SSMENT '. WHAT WAS SOUGHT TO BE ARGUED ON BEHALF OF THE REVENUE WAS TH AT THE ADDITION OF PENAL INTEREST WAS NOT ENHANCEMENT OF ASSESSMENT AS STATED IN THE SAID PROVISO. REPELLING THIS CONTENTION THE SUPREME COUR T SAID (AT PAGE 41): 'WE DO NOT SEE WHAT ELSE IT COULD BE. THE WORD 'ASS ESSMENT' IS USED IN THE PROVISO NOT AS AN EQUIVALENT OF THE TAX CALCULA TED AT THE RATE GIVEN IN THE FINANCE ACT BUT THE TOTAL AMOUNT WHICH THE ASSE SSEE IS REQUIRED TO PAY. THE PROVISO APPLIES WHENEVER THE EFFECT OF THE ORDER IS TO TOUCH THE POCKET OF THE ASSESSEE AND IN OUR OPINION THIS WAS SUCH A CASE '. IN VIEW OF THIS DECISION, THERE IS NO SCOPE FOR DOU BT THAT AN ASSESSMENT UNDER SECTION 143(3) WOULD INCLUDE NOT O NLY DETERMINATION OF THE AMOUNT OF TAX CALCULATED AT THE RATE PRESCRIBED UNDER THE FINANCE ACT BUT ALSO INTEREST OR ANY OTHER THING WHICH HAS THE EFFECT OF REDUCING OR ENHANCING THE TOTAL AMOUNT PAYABLE BY THE ASSESSEE UNDER SUCH AN ASSESSMENT. THE HONBLE HIGH COURT FURTHER AFTER CONSIDERING THE ISSUE , WHETHER THE EXPRESSION TAX USED IN CLAUSE (C) OF SECTION 246 WOULD INCLUDE INTEREST, FINALLY CONCLUDED: IN THE LIGHT OF THE FOREGOING DISCUSSION, WE ARE O F THE OPINION THAT INTEREST UNDER SECTION 214 IS A PART OF ASSESSMENT AND IS DEEMED TO BE TAX FOR THE PURPOSES OF THIS ACT INCLUDING CLAUSE ( C) OF SECTION 246. AN APPEAL BY AN ASSESSEE AGGRIEVED BY AN ORDER OF ASSE SSMENT MADE UNDER SECTION 143(3) OR SECTION 144 OF THE ACT, EITHER OR IGINAL OR IN CONSEQUENCE OF AN APPELLATE ORDER WITH A VIEW TO GIVING EFFECT TO THE DIRECTIONS CONTAINED THEREIN, OBJECTING TO THE AMOUNT OF INTER EST PAYABLE BY THE GOVERNMENT UNDER SECTION 214 OF THE ACT TO THE ASSE SSEE AS DETERMINED BY THE INCOME-TAX OFFICER, IS, THEREFORE, MAINTAINA BLE UNDER CLAUSE (C) OF SECTION 246 OF THE ACT. 6 ITA NO. 1420/PN/2005, A.Y. 1997-98 7. IN THE RECENT DECISION, THE HON'BLE CALCUTTA HIGH COU RT IN THE CASE OF CIT VS. BISWANATH PASARI REPORTED AS 364 ITR 4 04 (CAL) HAS HELD THAT THE APPEAL IS MAINTAINABLE AGAINST AN ORDER REFU SING TO GRANT INTEREST U/S. 244 (IA) OF THE ACT. THE RELEVANT EXTRAC T OF THE FINDINGS OF THE HON'BLE HIGH COURT ARE AS UNDER: 9. AGGRIEVED BY THE ORDER OMITTING TO GRANT INTERE ST THE ASSESSEE PREFERRED AN APPEAL WHICH WAS DISMISSED BY AN ORDER DATED 29TH MARCH, 1996 BY THE CIT [APPEAL] HOLDING THAT : 'AN APPEAL FOR CLAIMING INTEREST U/S. 244[1A] OF TH E ACT IS NOT ENTERTAINABLE IN A CASE WHERE THE ORDER GIVING THE APPEAL EFFECT ITSELF IS NOT BEING CHALLENGED ON ANY GROUND. HOWEV ER, IT IS NOTED THAT THE REFUND HAS NOT ARISEN AS A RESULT OF GIVIN G OF APPEAL EFFECT. THE REFUND RESULTS BECAUSE OF ADJUSTMENT OF CERTAIN EARLIER REFUNDS IN EARLIER YEARS. IN SUCH CIRCUMSTANCES, IN MY OPINION, THE GROUND OF APPEAL IS NOT ACCEPTABLE.' 10. IT IS AGAINST THIS ORDER DATED 29TH MARCH, 1996 THAT AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED TR IBUNAL WHICH RESULTED IN THE IMPUGNED ORDER DIRECTING THE ASSESSING OFFIC ER TO ALLOW INTEREST IN ACCORDANCE WITH LAW. 11. WE ARE UNABLE TO SEE HOW CAN IT BE SAID THAT TH E APPEAL PREFERRED BY THE ASSESSEE WHICH WAS DISMISSED BY THE ORDER DA TED 29TH MARCH, 1996 WAS NOT AN APPEAL AGAINST AN ORDER PASSED UNDE R SECTION 143(3) OF THE ACT. THE ASSESSING OFFICER COULD NOT HAVE EXERC ISED JURISDICTION EXCEPT UNDER SECTION 143(3) OF THE ACT. REFERENCE I N THIS REGARD MAY BE MADE TO THE JUDGMENT IN THE CASE OF KOOKA SIDHWA & CO. VS CIT REPORTED IN [1964] 54 ITR 54 (CAL), WHEREIN THE FOLLOWING VI EW WAS TAKEN (PAGE 62): 'IN MY JUDGMENT, THE FORMS OF THE ORDERS PASSED UND ER SECTION 23(3) OF THE INCOME-TAX ACT, 1922, ARE NOT EXHAUSTI VE. THE EFFECT OR SUBSTANCE OF THE ORDER SHOULD BE LOOKED INTO TO DECIDE WHETHER AN APPEAL LIES. THE ORDER PASSED BY THE INCOME-TAX OFFICER REVISING THE ASSESSMENT, MADE ORGINALLY UNDER THE D IRECTION OF THE APPELLATE TRIBUNAL, WOULD PARTAKE THE CHARACTER OF A FRESH ASSESSMENT ORDER AND WOULD BE NO LESS AN ORDER AS M ADE UNDER SECTION 23(3) OF THE ACT WITHIN THE ORDINARY ACCEPTATION OF THE TERM FROM WHICH AN APPEAL WOULD LIE TO THE APPE LLATE ASSISTANT COMMISSIONER. A RIGHT OF APPEAL IS A CREAT URE OF THE STATUTE CONFERRED ON THE ASSESSEE BY SECTION 30(I) OF THE ACT. THE SAID RIGHT, WHICH IS SUBSTANTIVE, CANNOT BE TAKEN A WAY UNLESS IT IS EXPRESSLY PROVIDED.' 7 ITA NO. 1420/PN/2005, A.Y. 1997-98 12. THE ORDER PASSED BY THE CIT [APPEAL] HAD VIRTUA LLY SET ASIDE THE EARLIER ORDER OF ASSESSMENT. THEREFORE, A FRESH ASS ESSMENT WAS REQUIRED TO BE MADE WHICH THE ASSESSING OFFICER DID AND DIRE CTED REFUND BUT OMITTED TO PASS AN ORDER DIRECTING PAYMENT OF INTER EST. THEREFORE, IT WAS AN ORDER PASSED UNDER SECTION 143[3] OF THE ACT. IT CANNOT BE DISPUTED THAT AN APPEAL AGAINST AN ORDER PASSED UNDER SECTIO N 143[3] IS PERMISSIBLE. IT IS ALTOGETHER A DIFFERENT MATTER TH AT THE ENTITLEMENT TO INTEREST ARISES OUT OF SECTION 244[1A] OF THE ACT. A CIVIL COURT MAY PASS OR REFUSE TO PASS AN ORDER FOR PAYMENT OF PENDENTE LITE INTEREST UNDER SECTION 34 OF THE CODE OF CIVIL PROCEDURE. BUT IT C ANNOT BE CONTENDED THAT THE DECREE IS ONE PASSED UNDER SECTION 34 OF THE CO DE OF CIVIL PROCEDURE. WE ARE AS SUCH OF THE OPINION THAT THE LEARNED CIT FELL INTO A GRIEVOUS ERROR IN PROCEEDING ON THE BASIS THAT IT WAS AN APP EAL AGAINST AN ORDER REFUSING TO GRANT INTEREST UNDERSECTION 244 [1A] OF THE ACT. THE APPEAL WAS AN APPEAL AGAINST THE ORDER OF ASSESSMENT UNDER SECTION 143[3] OF THE ACT IN WHICH THE ASSESSING OFFICER OMITTED TO G RANT INTEREST WHICH HE SHOULD HAVE DONE UNDER SECTION 244[1A] OF THE ACT. THEREFORE, THE QUESTION WHICH HAS BEEN POSED ON BEHALF OF THE REVE NUE DOES NOT, IN OUR OPINION, ARISE IN THE FACTS AND CIRCUMSTANCES OF TH E CASE. 13. IN ANY EVENT, THE VIEWS TAKEN BY THE MADRAS HIG H COURT AND THE BOMBAY HIGH COURT ARE, ACCORDING TO US, LOGICAL AND REASONABLE. IN THE CASE OF CIT VS. T. V. SUNDARAM IYENGAR & SONS LTD., THE MADRAS HIGH COURT ANSWERED THE QUESTION AS FOLLOWS PAGE 53 4 OF 236 ITR): 'THEREFORE, WE ARE OF THE VIEW THAT THE INTEREST ON THE REFUND IS REALLY A PART OF THE REFUND AND INTEREST AND REFUND ARE NOT TWO DIFFERENT THINGS. WHEN THE INCOME-TAX OFFICER HAS P ASSED THE ORDER UNDER SECTION 154 OF THE ACT WITHOUT GRANTING INTER EST DUE TO THE ASSESSEE UNDER SECTION 244[1A] OF THE ACT, HE HAS R EDUCED THE REFUND DUE TO THE ASSESSEE. WE ARE NOT ABLE TO ACCE PT THE VIEW OF THE KARNATAKA HIGH COURT THAT CLAUSE [F] OF SUB-SEC TION [1] OF SECTION 246 SHOULD BE LIMITED ONLY TO THE CASE WH ERE THE REFUND WAS GRANTED EARLIER BUT WAS REDUCED BY AN OR DER PASSED UNDER SECTION 154 OF THE ACT. SINCE WE ARE OF THE V IEW THAT THE INTEREST FORMS PART OF THE REFUND AND WHERE THE INT EREST IS NOT GRANTED IN AN ORDER PASSED UNDER SECTION 154 OF THE ACT, THE ORDER IN SUBSTANCE AND EFFECT MEANT THAT THE INCOME -TAX OFFICER HAS PASSED AN ORDER UNDER SECTION 154 OF THE ACT RE DUCING THE REFUND. THE DECISION OF THE MADHYA PRADESH HIGH COU RT ALSO PROCEEDS ON THE BASIS THAT AN ORDER NOT GRANTING RE FUND IS REFERABLE TO SECTION 237 OF THE ACT AND SINCE THE I NTEREST FORMS PART OF THE REFUND THE ORDER REFUSING TO GRANT INTE REST IS RELATABLE TO SECTION 237 OF THE ACT AND IT IS APPEALABLE. THI RDLY, WHERE THERE IS A TOTAL DENIAL BY THE REVENUE TO GRANT INT EREST ON THE REFUND DUE, ON THE BASIS OF THE DECISION OF THE AND HRA PRADESH HIGH COURT, AN APPEAL PROVISIONS SHOULD BE CONSTRUE D IN A REASONABLE MANNER AND VIEWED IN ANY MANNER, WE ARE OF THE VIEW THAT THE ORDER OF THE INCOME-TAX OFFICER REFUSING T O GRANT INTEREST DUE TO THE ASSESSEE IS AN APPEALABLE ORDER UNDER SE CTION 246 OF THE ACT.' 8 ITA NO. 1420/PN/2005, A.Y. 1997-98 14. WE ARE IN AGREEMENT WITH THE VIEWS OF THE MADRA S HIGH COURT WHICH ALSO TOOK INTO CONSIDERATION THE JUDGMENT OF THE BOMBAY HIGH COURT. 8. THUS, IN THE LIGHT OF THE JUDGMENTS DISCUSSED ABOVE, IT IS HELD THAT THE ORDER RESULTING IN PAYMENT OF INTEREST U/S 2 44A OF THE ACT IS APPEALABLE. WE ARE OF THE CONSIDERED VIEW THAT THE COMMISS IONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT ADJUDICATING THE A PPEAL OF THE ASSESSEE ON MERITS. WE DEEM IT APPROPRIATE TO REMIT THE FILE BACK TO THE COMMISSIONER OF INCOME TAX (APPEALS) WITH A DIRECTION TO DE CIDE THE ISSUES RAISED BY THE ASSESSEE IN FIRST APPEAL ON MERITS, IN ACCORDANCE WITH LAW. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 21 ST DAY OF OCTOBER, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) ' / ACCOUNTANT MEMBER $% ' / JUDICIAL MEMBER / PUNE; & / DATED : 21 ST OCTOBER, 2015 RK + ,$.' /' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(OSD), PUNE 4. ' / THE CIT-V, PUNE 5. ! %%, , , , 0 , / DR, ITAT, A BENCH, PUNE. 6. 2 / GUARD FILE. / ! % // TRU COPY// / BY ORDER, // TRUE COPY // % , / PRIVATE SECRETARY, , , / ITAT, PUNE