The DCIT, Circle-1(1), Baroda V. M/s. Alembic Limited, Baroda

ITA 1531/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9371 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2002-2003
• Appeal Filed On: 14-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S SANDHU
• Assessee Lawyers: S N SOPARKAR
• Keywords: TDS
• Section: 244A; 234B; 143(1); 2; 11

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, D - BENCH,AHMEDABAD . BEFORE : SHRI T.K.SHARMA, JUDICIAL MEMBER , AND SHRI N.S.SAINI, ACCOU NTANT MEMBER. ITA NO. 1531/AHD/2009 (ASSESSMENT YEAR 2002 - 03) THE DCIT, CIRCLE 1(1), BARODA. VERSUS ALEMBIC LIMITED, ALEMB ICROAD, GORWA,BARODA PAN AABCA 7950 P (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI B.S.SANDHU, DR FOR THE RESPONDENT SHRI S.N.SOPARKAR, AR ORDER SHRI T.K.SHARMA, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DT.9.2.2009 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) I, BARODA PERTAINING TO THE ORDER PASSED BY THE ASSESSING OFFICER U/S.154 OF THE INCOME - TAX ACT,1961 FOR THE ASSESSMENT YEAR 2002 - 03, RAISING THE FOLLOWING GROUNDS OF APPEAL. ON THE FACT S AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING THE AO TO GRANT INTEREST U /S .244A ON RS.2,87,09,3321 - BEING REFUND ARISING OUT MAT CREDIT AVAILED PERTAINED TO EARLIER YEAR WITHOUT APPRECIATING THE FACT THAT AS PER PROVISO TO SUB - SECTION (2) OF SECTION 11 5JAA THAT NO INTEREST SHALL BE PAYABLE ON THE TX CREDIT ALLOWED UNDER SUB SECTION (1) OF SECTION 115JAA. 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE IS A LISTED COMPANY ENGAGED IN THE MANUFACTURE AND MARKETING OF PHARMACE UTICALS PRODUCTS ETC. THE ASSESSEE VIDE APPLICATIONS DT.15.6.2006 AND 2.1.2007 HAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT WHILE PASSING THE CONSEQUENTIAL EFFECT TO THE ITATS ORDER DT.17.4.2006 THE FOLLOWING MISTAKES HAVE OCCURRED WHICH ARE APPARENT FROM THE RECORD (1) THE INTEREST U/S.244A HAS BEEN CALCULATED AND ALLOWED UPTO THE MONTH OF APRIL,2006, HOWEVER, THE REFUND HAS BEEN ISSUED ON 25.5.2006.THEREFORE, INTEREST OF ONE MONTH HAD NOT BEEN ALLOWED U/S.244A. 2 (2) WHILE PASSING THE CONSE QUENTIAL EFFECT TO THE ITATS ORDER DATED 17.4.2006, THE CREDIT OF BROUGHT FORWARD TAX CREDIT U/S.115JAA HAS NOT BEEN ALLOWED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JAA. IN THE IMPUGNED ORDER DT.8.1.2007 PASSED U/S.154 OF THE ACT, THE ASSESSING OF FICER DETERMINED THE REFUND OF RS.2,87,09,332 AND IT WAS DULY GRANTED TO THE ASSESSEE. HOWEVER, THE ASSESSEES CLAIM OF INTEREST U/S.244A WAS REJECTED ON THE GROUND THAT INTEREST WAS NOT PAYABLE IN RESPECT OF MAT PAID EARLIER, BY OBSERVING IN HIS ORDER AS UNDER: AGGRIEVED BY THIS ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING INTEREST ON SUCH REFUND, THE ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) RELYING ON THE DECISIONS OF THE TRIBUNAL, PUNE BENCH IN THE CASE OF PUDUMJEE PAPER MILLS LTD . V. ACIT (118 TTJ 280) HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING INTEREST ON RS.2,87,09,332 I.E., THE REFUND DETERMINED AS PAYABLE AND DIRECTED THE ASSESSING OFFICER TO ALLOW INTEREST THEREON. AGGRIEVED BY THIS ORDER, THE REVENUE I S IN APPEAL HERE BEFORE THE TRIBUNAL. THE RELEVANT PORTION OF HIS ORDER IS REPRODUCED AS UNDER : 5.2 THE FACTS OF THE IN STANT CASE ARE IDENTICAL TO THE FACTS BEFORE THE TRIBUNAL IN THE CASE OF PUDUMJEE PAPER MILLS LTD. FOLLOWING THE RATIONALE - OF THE SAI D DECISION IT IS HELD THAT AS PER THE PROVISIONS OF SECTION 244A, THERE WAS NO PROHIBITION OR BAN ON PAYMENT OF INTEREST ON THE REFUND DETERMINED AS PAYABLE TO THE ASSESSEE. THE REDUCTION IN THE TAX PAYABLE BY THE ASSESSEE MAY HAVE OCCURRED ON ACCOUNT OF S ET OFF OF THE MAT CREDIT AVAILABLE TO IT. HOWEVER, THE PROHIBITION CONTAINED IN THE PROVISO BELOW SECTION 1I5JAA STATES THAT NO INTEREST SHALL BE PAYABLE ON THE TAX CREDIT ALLOWED UNDER SUBSECTION (1). THE EFFECT OF THIS PROHIBITION IS THAT NO INTEREST WOU LD BE PAYABLE IN RESPECT OF THE REFUND DETERMINED AFTER ALLOWING SET OFF OF THE SAID TAX CREDIT IN RESPECT OF THE PERIOD PRIOR 3 TO THE ASSESSMENT YEAR IN WHICH THE CREDIT IS AVAILED. IN THE INSTANT CASE THE MAT CREDIT AVAILED PERTAINS TO THE AY 1998 - 99 (RS . 7,11,969/ - ), AY 99 - 2000 (RS 2, 50,15,004/ - ) AND AY 2000 - 01 (RS. 29,82,359/ - ). THE AO HAS THUS RIGHTLY NOT GRANTED INTEREST FOR THE PERIOD PRIOR TO AY 2002 - 03. HOWEVER, PLAIN READING OF SECTION 244A REVEALS THAT ONCE REFUND IS DETERMINED AS PAYABLE (EITHER BY WAY OF SETTING OFF MAT CREDIT OR OTHERWISE) THE ASSESSEE WOULD BE ENTITLED TO RECEIVE INTEREST ON THE REFUND DETERMINED. THIS IS THE VIEW OF THE ITAT, PUNE BENCH ALSO IN THE ABOVE MENTIONED CASE. ACCORDINGLY, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN DENYING INTEREST ON RS 2,87,09,332/ - , I.E. THE REFUND DETERMINED AS PAYABLE. THE AO IS DIRECTED TO ALLOW INTEREST THEREON. 3. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE T HAT THE ISSUE IN CONTROVERSY IS SQUARELY COVERED BY THE DECISION OF THE ITAT, PUNE BENCH IN THE CASE OF PUDUMJEE PULP & PAPER MILLS LTD V. ACIT [(2008) 118 TTJ (PUNE) 280] , WHEREIN IT IS HELD AFTER DETERMINATION OF THE CURRENT INCOME, THE ASSESSEE IS R EQUIRED TO WORK OUT THE TAX PAYABLE ON THE CURRENT INCOME. THIS IS THE STAGE WHEN THE ASSESSEE HAS TO TAKE INTO ACCOUNT THE TAX CREDIT AVAILABLE UNDER S. 115JAA SO, THE TAX PAYABLE BY A COMPANY WHO IS ENTITLED TO TAX CREDIT AND SET OFF OF MAT WOULD BE TAX PAYABLE ON THE CURRENT INCOME LESS THE SET OFF OF CREDIT AVAILABLE TO THE ASSESSEE. UPTO THIS STAGE WHEN TAX PAYABLE IS TO BE DETERMINED AFTER THE COMPLETION OF ASSESSMENT AND CREDIT OF THE MAT HAS TO BE GRANTED THEN AS PER THE PROVISO TO S. 115JAA(2)) THE ASSESSEE SHALL NOT BE ALLOWED INTEREST ON THE SAID TAX CREDIT I.E. MAT. THEREAFTER, THE NORMAL PROCEDURE FOR COMPUTATION OF TAX OR REFUND COMES INTO PLAY THAT IS AFTER THE ADJUSTMENT OF ADVANCE TAX OR TDS AMOUNT. THE RESULT IS THAT THE ASSESSEE IS ENTITLE D TO SET OFF OF MAT CREDIT AT THE STAGE AT WHICH THE TAX HAS BECOME PAYABLE. SO, THE QUESTION OF NON - PAYMENT OF INTEREST TO THE ASSESSEE ON THE MAT CREDIT WOULD ARISE ONLY UPTO THIS STAGE AND NOT THEREAFTER. (PARA 6) ONCE THE ABOVE COMPUTATION OF TAX PAYAB LE HAS REACHED AT THAT STAGE; THEREAFTER THE ADJUSTMENT OF PREPAID TAX COMES INTO PLAY. IF THE PREPAID TAX OR TDS IS EXCESSIVE THEN THE BALANCE IS TO BE REFUNDED TO THE ASSESSEE AND ON THE SAID REFUND INTEREST UNDER S. 244A IS TO BE ALLOWED. FOR THAT PURPO SE THE PROVISIONS OF S. 244A COME INTO OPERATION WHICH PRESCRIBE THAT WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE THEN HE SHALL BE ENTITLED TO RECEIVE, IN ADDITION TO THE REFUND AMOUNT, SIMPLE INTEREST THEREOF. AS PER THE DEFINITION OF 'ASSESSED TAX' IN EXPLN. 1 BELOW S. 234B IT MEANS THE TAX ON THE TOTAL INCOME DETERMINED UNDER S. 143(1) OR WHERE A REGULAR ASSESSMENT IS MADE, THE TAX ON THE TOTAL INCOME DETERMINED UNDER SUCH REGULAR ASSESSMENT AS REDUCED BY THE AMOUNT OF ANY TAX DEDUCTED, ANY TA X RELIEF GRANTED AND 'ANY TAX CREDIT ALLOWED TO 4 BE SET OFF IN ACCORDANCE WITH THE PROVISIONS OF S. 115JAA' I.E. CL. (V) OF EXPLN. 1 TO S. 234B(1). AS PER THIS EXPLANATION THE ASSESSED TAX IS TO BE ARRIVED AT AFTER THE SET OFF OF MAT SO IT IS VERY MUCH CLEA R THAT AT THE TIME OF SUCH SET OFF THE PROVISO TO S. 115JAA(2) COMES INTO PLAY AND THE ASSESSEE SHOULD NOT BE GRANTED ANY INTEREST ON THE MAT AMOUNT. THIS INTERPRETATION AUTOMATICALLY FLOWS FROM THE READING OF THE APPLICABLE PROVISIONS. UPTO THE STAGE OF T AX PAYABLE, THE AO HAS RIGHTLY COMPUTED THE AMOUNT; HOWEVER, WHEN HE HAS PROCEEDED TO CALCULATE THE INTEREST UNDER S. 244A ON THE REFUND SO CALCULATED HE HAS WRONGLY REDUCED THE MAT CREDIT WHICH HAD ALREADY BEEN REDUCED BY HIM WHILE CALCULATING THE AMOUNT OF 'ASSESSED TAX'. THE AO HAS REDUCED THE SAID AMOUNT TWICE AND SUCH DOUBLE REDUCTION IS NOT AS PER THE INTENTION OF THE STATUTE. INTEREST UNDER S. 244A IS TO BE COMPUTED ON THE AMOUNT OF REFUND SO COMPUTED. SIMILAR VIEW HAS ALSO BEEN TAKEN BY THE ITAT, CHENNAI BENCH - D IN THE CASE OF M/S.HYUNDAI MOTOR INDIA LTD V. DCIT (2009 TIOL - 215 - ITAT - MAD) (COPY PLACED ON RECORD) BY FOLLOWING THE DECISION OF HONBLE APEX COURT IN THE CASE OF SANDVIK ASIA LTD V. CIT(280 ITR 643). IN VIEW OF THIS, WE UPHOLD THE IMPUGNE D ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 21.8.09 SD/ - SD/ - ( N.S.SAINI) ACCOUNTANT MEMBER. (T.K.SHARMA) JUDICIAL MEMBER DATE: 21.8.09 (H.K.PADHEE) SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. THE DR, AH MEDABAD 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, DEPUTY.REGISTRAR.