DCIT, CHENNAI V. M/s Wheels India Ltd., CHENNAI

ITA 1504/CHNY/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0768 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-02-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 14-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Question of law
• Section: 244A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NO.1504/MDS/2010 ASSESSMENT YEAR : 1999-2000 THE DY. CIT LARGE TAX PAYER UNIT CHENNAI VS M/S WHEELS INDIA LTD. PADI CHENNAI 600 050 [PAN AAACW 0315 K] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE DATE OF HEARING : 14-02-2013 DATE OF PRONOUNCEMENT : 15-02-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVE NUE AGAINST THE ORDER OF THE CIT(A), LARGE TAX PAYER UNIT, CHENNAI, DATED 28 .6.2010, BY TAKING THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO GRANT INTEREST UNDER SECTION 244A HOLDING THAT THE ASSESSEE WOULD BE ENTITLED TO INTE REST ON 'ANY AMOUNT' DUE TO IT INCLUDING THE INTEREST. I.T.A.NO.1504/10 :- 2 -: 2.1. IT IS SUBMITTED THAT IN THE DECISION OF THE S UPREME COURT IN THE CASE OF M/S. SANDVIK ASIA LTD VS CIT ( 280 ITR 643), THE APEX COURT ONLY AS A MATTER OF COMPENSATION ON ACCOUNT OF INORDINATE DELAY IN THAT CASE ( OF 17 YEARS) GRANTED INTEREST ON INTEREST AN D IT CANNOT BE CONSIDERED THAT INTEREST ON INTEREST IS ALLOWABLE IN A ROUTINE MANNER WHEN SEC. 244A SPEAKS OF SIMPLE INTEREST ONLY. 2.2. HAVING REGARD TO THE DECISION OF THE DELHI HIG H COURT IN THE CASE OF M/S. MOTOR AND GENERAL FINANCE LTD. VS. CIT ( 216 TAXATION 294) (2010), THE LEARNED CIT (A) OUGHT TO HAVE DISMISSED THE ASSESSEE'S CLAIM OF INT EREST U/S.244A. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF . HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND TH AT OF THE ASSESSING OFFICER RESTORED. 2. THE DR SUBMITTED THAT THE SOLE ISSUE IN THIS A PPEAL OF THE REVENUE IS THAT THE CIT(A) ERRED IN DIRECTING THE A SSESSING OFFICER TO GRANT INTEREST U/S 244A HOLDING THAT THE ASSESSEE WOULD BE ENTITLED TO INTEREST ON ANY AMOUNT DUE TO IT INCLUDING THE IN TEREST. 3. THE CIT(A) HAS DECIDED THE ISSUE BY OBSERVING AS UN DER: 8. THE LAST GROUND IN THE ABOVE APPEAL RELATES T O GRANTING OF INTEREST UNDER SECTION 244 A. THE APPELLANT SUBMITT ED THAT THE AO HAS NOT GRANTED INTEREST ON. 'ANY AMOUNT' DUE IN CLUDING THE INTEREST DUE AND CONSEQUENTLY INTEREST HAS BEEN GRANTED AT RS.8,44,762/ INSTEAD OF RS.17,57,552/. THE WOR KING FOR THE INTEREST AS COMPUTED BY THE APPELLANT HAS ALSO BEEN SUBMITTED BEFORE ME. THE APPELLANT RELIED ON THE DECISION OF SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD VS CIT (280 I TR 643) IN SUPPORT OF ITS CONTENTION. 8.1 I HAVE CAREFULLY CONSIDERED THE FACTS PERTAINI NG TO THIS CASE AND THE SUBMISSIONS MADE BY THE ID. AR. I AM O F THE CONSIDERED OPINION THAT THE DECISION OF SUPREME COU RT REFERRED SUPRA IS DIRECTLY APPLICABLE TO THIS CASE. THE APPELLANT IS ENTITLED TO INTEREST ON 'ANY AMOUNT' INCLUDING THE INTEREST I.T.A.NO.1504/10 :- 3 -: DUE TO IT. RESPECTFULLY FOLLOWING THE SAID DECISION, I DIRECT THE AO TO ALLOW INTEREST ON 'ANY AMOUNT' INCLUDING INTE REST WHICH IS DUE TO THE APPELLANT FOR THIS PURPOSE THE WORKIN G GIVEN BY THE APPELLANT MAY BE TAKEN INTO CONSIDERATION BY TH E AO. THE APPELLANT IS REQUESTED TO FILE A COPY OF THE SAID W ORKING WITH THE AO. THIS GROUND OF APPEAL IS ALLOWED. 4. AT THE TIME OF HEARING, THE DR FILED A COPY OF THE ORDER OF THE HON'BLE MADRAS HIGH COURT IN ASSESSEES OWN CA SE FOR ASSESSMENT YEARS 1990-91 AND 1998-99 PASSED IN TAX CASE (APPEA L) NOS. 76 AND 77 OF 2008, ORDER DATED 27.4.2011 AND SUBMITTED THA T THE ISSUE HAS BEEN DECIDED BY THE HON'BLE HIGH COURT IN FAVOUR OF THE REVENUE. 5. THE A.R ALSO AGREED WITH THE SUBMISSION OF THE DR. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND TH AT THE HON'BLE MADRAS HIGH COURT IN ASSESSMENT YEARS 1990- 91 AND 1998-99, WAS CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT TH E REVENUE SHOULD PAY INTEREST ON INTEREST, WHERE THERE IS NO INORDINATE DELAY IN PAYMENT OF REFUND? 7. WHILE DECIDING THE SAID QUESTION, THE HON'BLE HIGH COURT HAS HELD AS UNDER: 7. ACCORDING TO THE ASSESSEE, AS PER SECTION 244A OF THE ACT, HE IS ENTITLED TO INTEREST CALCULATED AT VARYING RATE OF INTEREST FROM 1 ST DAY OF APRIL OF THE ASSESSMENT OR THE DATE OF PAYMENT OF TAX TO THE DATE ON WHICH THE REFUND IS GRANTED. I.T.A.NO.1504/10 :- 4 -: IT IS HIS CONTENTION THAT ONCE A REFUND IS QUANTIFIED AS DUE TO HIM, HE IS ENTITLED TO INTEREST UNDER SECTION 244A ON THE REFUND AMOUNT DUE, IRRESPECTIVE OF WHETHER THE REFU ND CONSISTS OF PRINCIPAL OR INTEREST. 8. IN THE PRESENT CASE, THE ASSESSEE SEEKS INTE REST ON THE AMOUNT OF INTEREST ON THE GROUND OF INORDINATE DELAY ON THE PART OF THE DEPARTMENT. THE FINDING OF THE AUTHORITIES B ELOW IS THAT IN THE ORDER PASSED UNDER SECTION 154 OF THE ACT, THE AMOUNT REFUNDABLE HAD BEEN DETERMINED AND NO AMOUNT OF INT EREST HAVE BEEN WITHHELD AND THE QUESTION OF REFUNDING OF INTEREST ON INTEREST DOES NOT ARISE AS THERE WAS NO DELAY ON THE AMOUNT REFUNDABLE. THE TRIBUNAL FOR REVERSING THE D ECISION OF THE AUTHORITIES HAD RELIED ON THE DECISION OF THE SUPREME COURT IN SANDVIK ASIA LTD., CASE. 9. IN THE AFORESAID CASE, THE SUPREME COURT, WH ILE GRANTING SUCH INTEREST, OBSERVED AS FOLLOWS :- '46. IN THE INSTANT CASE, THE APPELLANTS MON EY HAD BEEN UNJUSTIFIABLY WITHHELD BY THE DEPARTMENT F OR 17 YEARS WITHOUT ANY RHYME OR REASON. THE INTEREST WAS PAID ONLY AT THE INSTANCE AND THE INTERVENTION OF THIS C OURT IN CIVIL APPEAL NO. 1887 OF 1992 DATED 30-4-1997. INTEREST ON DELAYED PAYMENT OF REFUND WAS NOT PAID TO THE APPELLANT ON 27-3-1981 AND 30-4-1986 DUE TO THE ERRONEOUS VIEW THAT HAD BEEN TAKEN BY THE OFFICIAL S OF THE RESPONDENTS. INTEREST ON REFUND WAS GRANTED TO THE APPELLANT AFTER A SUBSTANTIAL LAPSE OF TIME END HEN CE IT SHOULD BE ENTITLED TO COMPENSATION FOR THIS PERIOD OF DELAY. THE HIGH COURT HAVE FAILED TO APPRECIATE THA T WHILE CHARGING INTEREST FROM THE ASSESSES, THE DEPARTMENT FIRST ADJUSTS THE AMOUNT PAID TOWARDS INTEREST SO THAT TH E PRINCIPLE AMOUNT OF TAX PAYABLE REMAINS OUTSTANDING AND THEY ARE ENTITLED TO CHARGE INTEREST TILL THE ENTIR E OUTSTANDING IS PAID. BUT WHEN IT COMES TO GRANTING OF INTEREST ON REFUND OF TAXES, THE REFUNDS ARE FIRST ADJUSTED TOWARDS THE TAXES AND THEN THE BALANCE TOWARDS INTE REST. HENCE AS PER THE STAND THAT THE DEPARTMENT TAKES TH EY ARE LIABLE TO PAY INTEREST ONLY UP TO THE DATE OF R EFUND OF TAX WHILE THEY TAKE THE BENEFIT OF ASSESSES' FUNDS BY DELAYING THE PAYMENT OF INTEREST ON REFUNDS WITHOUT INCURRING ANY FURTHER LIABILITY TO PAY INTEREST. TH IS STAND TAKEN BY THE RESPONDENTS IS DISCRIMINATORY IN NATUR E AND THEREBY CAUSING GREAT PREJUDICE TO LAKHS AND. LAKHS OF ASSESSES. VERY LARGE NUMBER OF ASSESSES ARE ADVERSE LY AFFECTED INASMUCH AS THE INCOME TAX DEPARTMENT CAN NOW SIMPLY REFUSE TO PAY TO THE ASSESSES AMOUNTS OF INTEREST LAWFULLY AND ADMITTEDLY DUE TO THEM AS HAS I.T.A.NO.1504/10 :- 5 -: HAPPENED IN THE INSTANT CASE. IT IS A CASE OF THE A PPELLANT AS SET OUT ABOVE IN THE INSTANT CASE FOR ASSESSMENT YEAR 1978-79, IT HAS BEEN DEPRIVED OF AN AMOUNT OF RS .4 0 LAKHS FOR NO FAULT OF ITS OWN AND EXCLUSIVELY BECAU SE OF THE ADMITTEDLY UNLAWFUL ACTIONS OF THE INCOME TAX DEPARTMENT FOR PERIODS RANGING UP TO 17 YEARS WITHO UT ANY COMPENSATION WHATSOEVER FROM THE DEPARTMENT. SUCH ACTIONS AND CONSEQUENCES, IN OUR OPINION, SERI OUSLY AFFECTED THE ADMINISTRATION OF JUSTICE AND THE RULE OF LAW. 10. FROM THE AFORESAID OBSERVATION, IT IS APPARENT THAT THE SUPREME COURT HAD PROCEEDED TO GRANT INTEREST BECAU SE OF THE INORDINATE DELAY OF ABOUT 17-YEARS IN DEPRIVING THE ASSESSEE FOR NO FAULT OF HIM. MOREOVER, THE AFORESAID DECISION O F THE SUPREME COURT WAS PASSED ON THE PECULIAR FACTS AND CIRCUMST ANCES OF THAT CASE. IN THE PRESENT CASE, THE AMOUNT OF REFUN D HAD BEEN PAID ON DIFFERENT DATES BETWEEN THE PERIOD FROM 12. 01.1991 AND 26.12.1996, AFTER PASSING THE ASSESSMENT ORDER AND THERE IS NO INORDINATE DELAY ON THE PART OF THE REVENUE IN REFU NDING THE AMOUNT. MOREOVER, IN THE ORDER PASSED UNDER SECTIO N 154 OF THE ACT, THE AMOUNT REFUNDABLE HAD BEEN DETERMINED ONLY VIDE ORDER DATED 4.2.2003 AND, THEREFORE NO AMOUNT OF INTEREST APPEARS TO HAVE BEEN WITH HELD. ONLY IF THERE IS ANY DELAY IN ASSESSMENT AND REFUND OF' THE AMOUNT, THE QUESTION OF PAYMENT OF INTEREST WOULD ARISE AND NOT OTHERWISE. THEREFORE, AS RIGHT LY SUBMITTED BY THE REVENUE, SINCE THE REFUND AMOUNT OF INTERES T HAD BEEN PAID WITHOUT ANY DELAY, THE QUESTION OF PAYING INTEREST ON SUCH INTEREST DOES NOT ARISE. 11. A SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI HIGH COURT IN THE LATEST DECISION REPORTED IN (2010 ) 320 ITR DB (DELHI) (MOTOR AND GENERAL FINANCE LTD. V. COMMISSIONER OF INCOME TAX), WHEREUNDER THE DELHI HIGH COURT DISTINGUISHING THE DECISION OF THE SUPREME COURT IN SANDVIK ASIA'S CASE, HELD THAT PAYMENT OF INTEREST ON INTEREST DOES NOT ARISE. 12. FOR THE REASONS STATED ABOVE, THE SUBSTANTIAL QUESTION OF LAW RAISED IN THE APPEAL TO THE EFFECT THAT WHETHER THE INTEREST CLAIMED ON INTEREST WHEN THERE IS NO INORDINATE DELAY, IS ANSWERED IN AFFIRMATIVE AND IN FAVOUR OF THE REVENUE. ACCORDINGLY, THE APPEALS ARE ALLOWED. THERE WOULD BE NO ORDER AS TO COSTS. I.T.A.NO.1504/10 :- 6 -: 8. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE H ON'BLE MADRAS HIGH COURT IN ASSESSEES OWN CASE IN EARLIE R YEARS, WE SET ASIDE THE ORDER OF THE CIT(A) AND CONFIRM THE ORDER OF THE ASSESSING OFFICER THAT PAYMENT OF INTEREST ON INTEREST DOES N OT ARISE IN THE CASE OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 15 TH OF FEBRUARY, 2013, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 15 TH FEBRUARY, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR