DCIT, Circle - 8, Kolkata, Kolkata V. M/s. ITC Limited, Kolkata

ITA 1525/KOL/2011

• Counselvise Citation: 152523514 RSA 2011
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2012
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 09-11-2011
• Court: TRIBUNAL
• Department Lawyers: L K S DEHIYA
• Assessee Lawyers: R K MITRA
• Section: 244A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 1525/KOL/2011 %& '(/ ASSESSMENT YEAR : 2004-05 (*+ / APPELLANT ) D.C.I.T., CIRCLE-8, KOLKATA VS (,-*+/ RESPONDENT ) M/S. I. T. C. LIMITED, KOLKATA. (PAN:AAACI 5950 L) *+ . / '/ FOR THE APPELLANT: SHRI L. K. S. DEHIYA ,-*+ . / '/ FOR THE RESPONDENT: SHRI R. K. MITRA 0%1 . !# /DATE OF HEARING : 12.03.2012. 2' . !# /DATE OF PRONOUNCEMENT : 12.03.2012. '3 / ORDER . .. . ! ! ! !. .. . , '# PER SHRI C.D.RAO, AM THIS APPEAL BY THE REVENUE IS ARISIN G OUT OF THE ORDER OF CIT(A)-VIII, KOLKATA IN APPEAL NO.18/CIT(A)-VIII/KOL/10-11 DATED 02.08.2011. 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST ORDER OF THE CIT(A) IN ALLOWING THE INTEREST ON INTEREST ON REFUND GRANTED U/S 244A OF THE ACT. FOR THIS THE REVENUE HAS RAISED THE FOLLOWING GROUND:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW FURTHER IN TEREST ON INTEREST OF RS.53,36,580/- ALREADY GRANTED U/S 244A WHICH WAS NEVER RETAINED B Y THE DEPARTMENT FOR ANY OF THE PERIOD FOR WHICH REFUND WAS GRANTED ON ACCOUNT OF R ECTIFICATIONS, APPEAL EFFECTS, ETC. AND FOR THAT THE PRINCIPLES LAID DOWN IN THE CASE O F CIT VS. H.E.G. LTD. (2010) 324 ITR 331 (SC) ARE NOT APPLICABLE IN THE INSTANT CASE IN RELATION TO ASSESSMENT YEAR 2004-05. 2 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE REVENUE HAS PREFERRED THIS APPEAL ON THE ISSUE OF GRANTING INTEREST ON INTEREST ON THE REFUND DUE TO ASSESSEE. THE AO VIDE HIS ORDER DATED 30.04.2010 WHILE CALCULATING THE INTEREST U/S 244A OF THE ACT COMPUTED THE REFUND OF RS.2,56,30,988/- AS AGAINST THE REFUND ACTUALLY ALL OWABLE UNDER LAW TO RS.2,90,81,306/- WHICH IS AS UNDER :- AMOUNT REFUNDABLE AS AT 28.02.07 21,34,63,176---- -----[A] ADD: INTEREST U/S 244A 53,36,580 REFUNDABLE 21,87,99,756---------[B] LESS: REFUND ISSUED ON 20.07.2007 19,31,68,768 REFUNDABALE 2,56,30,988 ADD: INTEREST U/S 244A 34,50,048 ----------[C] NET REFUNDABLE 2,90,81,036 THE ASSESSEES CONTENTION BEFORE AO AS WELL AS CIT( A) THAT THE AO CALCULATED THE INTEREST ON AFORESAID REFUND EXCLUDING INTEREST U/S 244A OF THE ACT AMOUNTING TO RS.53,36,580/- WHICH IS NOW ALLOWED BY CIT(A). THE CIT(A) RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS- H.E.G . LTD. REPORTED IN 324 ITR 331 (SC) WHEREIN HONBLE SUPREME COURT HAS INTERPRETED THE WORDS REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE AS APPEARING IN SECTION 244A OF THE ACT. THE ISSUE WAS WHETHER ANY AMOUNT INCLUDES INTEREST WHIC H ACCRUES TO ASSESSEE FOR NOT REFUNDING THE PRINCIPAL AMOUNT. THE HONBLE SUPREME COURT HELD THAT SUCH INTEREST AMOUNT WOULD PARTAKE THE CHARACTER OF THE AMOUNT DU E AND WOULD BECOME INTEGRAL PART OF THE REFUND AND HENCE INTEREST U/S 244A IS P AID INCLUDING SUCH INTEREST. THE ASSESSEE BEFORE US ALSO RELIED ON THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. VS CIT REPORTED IN 280 ITR 643 WH EREIN DEALING WITH THE ISSUE OF INTEREST ON INTEREST HAS HELD AS UNDER :- THE HIGH COURT HAS FAILED TO APPRECIATE THAT WHILE CHARGING INTEREST FROM THE ASSESSEES, THE DEPARTMENT FIRST ADJUSTS THE AMOUNT PAID TOWARDS INTEREST SO THAT THE PRINCIPLE AMOUNT OF TAX PAYABLE REMAIN OUTSTANDING AND THEY ARE ENTITLED TO CHARGE INTEREST TILL THE ENTIRE OUTSTANDING IS PAID. BUT W HEN IT COMES TO GRANTING OF INTEREST ON REFUND OF TAXES, THE REFUNDS ARE FIRST ADJUSTED TOW ARDS THE TAXES AND THEN THE BALANCE TOWARDS INTEREST. HENCE AS PER THE STAND THAT THE D EPARTMENT TAKES THEY ARE LIABLE TO PAY INTEREST ONLY UP TO THE DATE OF REFUND OF TAX W HILE THEY TAKE THE BENEFIT OF ASSESSEES FUNDS BY DELAYING THE PAYMENT OF INTEREST ON REFUND S WITHOUT INCURRING ANY FURTHER LIABILITY TO PAY INTEREST. THIS STAND TAKEN BY THE RESPONDENTS IS DISCRIMINATORY IN NATURE AND THEREBY CAUSING GREAT PREJUDICE TO THE L AKHS AND LAKHS OF ASSESSEES. 3 4. WE FIND THAT AS HELD BY THE HONBLE SUPREME COUR T INTEREST INCLUDED IN REFUNDS ARE PART OF THE AMOUNT DUE AS CONTEMPLATED IN SECTI ON 244A OF THE ACT AND HENCE ASSESSEE CAN CLAIM INTEREST ON THE INTEREST COMPONE NT AS WELL. FURTHER THE ACTION OF THE DEPARTMENT WHEN IT COMES TO GRANTING OF INTEREST ON REFUND OF TAXES, THE REFUNDS ARE FIRST ADJUSTED TOWARDS INTEREST INSTEAD OF TAXES AN D THEN THE BALANCE TOWARDS TAXES SO THAT THEY CAN ENJOY THE ASSESSES FUND WITHOUT INCUR RING ANY FURTHER LIABILITY TO PAY INTEREST IS ALWAYS DISCRIMINATORY. WE FIND NO INFIR MITY IN THE ORDER OF CIT(A) AND HENCE WE CONFIRM THE SAME. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- , ,, , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 12.03.2012. R.G.(P.S.) '3 . ,4 5'4'6- COPY OF THE ORDER FORWARDED TO: 1. M/S. I.T.C. LIMITED, 37, J.L.NEHRU ROAD, KOLKATA-70 0071. 2 D.C.I.T., CIRCLE-8, KOLKATA. 3. THE C.I.T. 4. CIT(A)-XVIII, KOLKATA. 5. THE CIT(DR), KOLKATA BENCHES, KOLKATA -4 ,/ TRUE COPY, '3%0/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES