DOUBLEDOT FINANCE LTD, MUMBAI V. DCIT RG 4(1), MUMBAI

ITA 155/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3507 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 244A; 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JM AND SHRI N.K. BIL LAIYA, AM ./I.T.A. NO. 155/MUM/2011 ( / ASSESSMENT YEAR : 2006-07 M/S. DOUBLEDOT FINANCE LTD., 1 ST FLOOR, KANTA TERRACE, 533, KALBADEVI ROAD, MUMBAI-400 002 THE DCIT, RANGE 4(1), AAYAKAR BHAVAN, MUMBAI-400 020 ./ !' ./PAN/GIR NO. : AABCD 5429J ( # /APPELLANT ) .. ( $%# / RESPONDENT ) # & / APPELLANT BY : ` SHRI DHARMESH SHAH $%# ' & /RESPONDENT BY : SHRI JAVED AKHTAR ' ( / DATE OF HEARING :04.06.2013 )* ' ( / DATE OF PRONOUNCEMENT : 12.6.2013 +, / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-31, MUMBAI DT.19.10.2010 PERTAINING TO A.Y. 2006-07. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX ERRED IN HO LDING THAT INTEREST U/S. 244A IS NOT ADMISSIBLE TO THE AP PELLANT AS THE REFUND AROSE OUT OF A TAX PAYMENT OF RS. 47,36, 000/- MADE BY THE APPELLANT ON 18.3.2008 AFTER 15 MONTH S FROM THE DATE OF FILING OF THE RETURN FOR THE A.Y. 2006- 07 SUCH ITA NO.155/M/2011 2 PAYMENT BEING NEITHER AN ADVANCE TAX PAYMENT NOR A SELF ASSESSMENT TAX PAYMENT WITHIN THE PROVISIONS OF SEC . 140A. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. COMMISSIONER OF INCOME TAX ERRED IN TAKING INTO ACCOUNT THE DECISIONS GIVEN IN VARIOUS FORUMS ALLOW ING PAYMENT OF INTEREST ON REFUNDS ARISING NOT ONLY OUT OF ADVANCE TAX/TDS BUT ALSO OUT OF ANY TAX PAYMENT MAD E TO THE DEPARTMENT IN WHATEVER MANNER WITHIN THE MEANIN G OF SEC. 244A(1) CLAUSE (B). 3. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE A SSESSEE IS THAT THE AO OUGHT TO HAVE ALLOWED INTEREST U/S. 244A OF THE ACT ON THE REFUND OUT OF TAX PAYMENT OF RS. 47,36,000/-. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT FO R THE YEAR UNDER CONSIDERATION, RETURN OF INCOME WAS FILED ON 30.11. 2006 IN WHICH THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAI D SELF ASSESSMENT TAX OF RS. 47,36,000/- ON 18.3.2008 WHICH WAS ABOUT 15 MO NTHS AFTER THE DATE OF FILING OF RETURN. VIDE APPLICATION DT. 3.4.200 9, THE ASSESSEE ASKED FOR THE CREDIT OF THE SELF ASSESSMENT TAX PAID. ACCORD INGLY AN ORDER U/S. 154 WAS PASSED ON 24.6.2009 DETERMINING A REFUND OF RS. 45,01,234/-. THIS REFUND AROSE CONSEQUENT TO ORDER GIVING EFFECT TO R ELIEF ALLOWED BY THE LD. CIT(A) FOR ASSESSMENT YEAR 2001-02 AND 2004-05 WHIC H RESULTED IN REVISED SET OFF OF LOSSES ETC. HOWEVER, WHILE GIVI NG THE APPEAL EFFECT AND ALLOWING THE REFUND OF RS. 45,01,234/-, THE AO DID NOT ALLOW INTEREST U/S. 244A OF THE ACT. 4.1. THE ASSESSEE ONCE AGAIN FILED APPLICATION U/S. 154 OF THE ACT REQUESTING FOR PAYMENT OF INTEREST U/S. 244A. THE REQUEST OF THE ASSESSEE WAS DECLINED BY THE AO WHO WAS OF THE FIRM BELIEF T HAT INTEREST OF REFUND WOULD BE ALLOWED OUT OF ANY TAX PAID U/S. 115WJ OR COLLECTED U/S. 206C OR PAID BY WAY OF ADVANCE TAX OR TREATED AS PAID U/ S. 199 OF THE ACT. THE AO CONCLUDED THAT NOWHERE IN THE SECTION I.E. 244(1 ), IT IS STATED THAT THE ITA NO.155/M/2011 3 INTEREST WOULD BE PAYABLE ON SELF ASSESSMENT PAID U /S. 140A OF THE ACT. EVEN OTHERWISE, THE AO OBSERVED THAT SELF ASSESSMEN T HAS TO BE MADE BEFORE FILING OF RETURN WHEREAS THE ASSESSEE HAS PA ID SELF ASSESSMENT TAX AFTER 15 MONTHS OF FILING OF ITS RETURN. ON THESE OBSERVATIONS, THE AO REJECTED THE CLAIM OF INTEREST OF THE ASSESSEE. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. THE LD. CIT(A) OBSERVED THAT FOR THE YEAR UNDER CONSIDERATION, THE RETURN WAS FILED ON 30.11.2006 W HEREAS THE SO CALLED SELF ASSESSMENT TAX WAS PAID ON 18.3.2008 I.E. AFTE R 15 MONTHS. THEREFORE, THE PAYMENT MADE BY THE ASSESSEE CANNOT BE TREATED AS SELF ASSESSMENT TAX. THE LD. CIT(A) FURTHER OBSERVED T HAT EVEN OTHERWISE SUCH PAYMENT WAS ALSO NOT MADE AS A RESULT OF ANY O RDER OF THE AO. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE EXPL AINED THE PAYMENT OF TAX AS UNDER: TAX DEDUCTED AT SOURCE RS. 14,43,446/- SECURITY TRANSACTION TAX RS. 14,26,297/- ADVANCE TAX - 16.3.2006 RS. 23,05,215/- SELF ASSESSMENT TAX 28.4.2006 RS. 10,61,716/- 18.8.2006 RS. 36,895/- 18.3.2008 RS. 47,36,000/- THE TOTAL OF ALL THE ABOVE PAYMENTS WORKED OUT TO RS.1,10,09,569/- 2.THE COMPOSITION OF THE PAYMENT MADE ON 18.3.2008 RS. 47,36,000/- TAX - RS. 37,75,402/- ITA NO.155/M/2011 4 SURCHARGE - RS. 3,77,540/- EDUCATION CESS - RS. 83,058/- INT-U/S. 234 - RS. 5,00,000/- ---------------------- TOTAL RS.47,36,000/- ============= 7. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSES SEE IS ENTITLED FOR INTEREST. TO SUBSTANTIATE HIS CLAIM, THE ASSESSEE R ELIED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V S CHOLAMANDALAM INVESTMENT & FINANCE CO. LTD. 294 ITR 438. THE AS SESSEE FURTHER RELIED UPON THE DECISION OF THE HONBLE KARNATAKA HIGH CO URT IN THE CASE OF CIT VS VIJAYA BANK 338 ITR 489. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE LOWER AUTHORITIES AND THE JUDICIAL DECISIONS RELIED UPON BY THE ASSESSEE. HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS CHOLAMANDALAM INVESTMENT & FINANCE CO. LTD. (SUPRA) HAS HELD AS UNDER: IT IS ALSO TRITE LAW THAT WHEREVER THE ASSESSEE IS ENTITLED TO REFUND, THERE IS A STATUTORY LIABILITY ON THE REVENUE TO P AY THE INTEREST ON SUCH REFUND ON GENERAL PRINCIPLES TO PAY THE INTER EST ON SUMS WRONGFULLY RETAINED. WE ARE ALSO STRENGTHENED BY THE DECISION OF THE APE X COURT FOR THE ABOVE VIEW TAKEN IN SANDVIK ASIA LTD. V. CIT [2006] 280 ITR 643, WHEREIN IT IS HELD AS FOLLOWS (HEADNOTE) : IN VIEW OF THE EXPRESS PROVISIONS OF THE INCOME-TA X ACT, 1961, AN ASSESSEE IS ENTITLED TO COMPENSATION BY W AY OF INTEREST ITA NO.155/M/2011 5 FOR THE DELAY IN THE PAYMENT OF AMOUNTS LAWFULLY D UE TO THE ASSESSEE WHICH ARE WITH HELD WRONGLY AND CONTRARY T O LAW. THE GOVERNMENT IS LIABLE TO PAY INTEREST, AT THE RA TE APPLICABLE TO THE EXCESS AMOUNT REFUNDED TO THE ASSESSEE, . . . FINDING NO SUBSTANTIAL QUESTION OF LAW THAT ARISES FOR OUR CONSIDERATION, THE APPEAL IS DISMISSED. 10. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS VIJAYA BANK (SUPRA) ON THE ISSUE OF INTEREST U/S. 244A AND THE DATE FROM WHICH IT HAS TO BE PAID AS HELD AS UNDER: THE LEARNED COUNSEL FOR THE REVENUE SUBMITTED THAT IF THE CASE DOES NOT FALL UNDER ANY OF THESE CLAUSES, THEN THERE IS NO LIABILITY TO PAY INTEREST AT ALL. IF AT ALL TAX IS TO BE PAID, IT IS FROM THE DATE OF THE DETERMINATION OF THE TA X LIABILITY, I.E., THE PASSING OF THE ASSESSMENT ORDER, ON WHICH DATE, THE TAX PAID IS ADJUSTED TOWARDS THE TAX LIABILITY. TH IS PROBLEM DID CONFRONT THE DEPARTMENT. THEREFORE, THEY HAVE ISSUED A CIRCULAR NO. 549, DATED OCTOBER 31, 1989. AFTER RE FERRING TO THE SALIENT FEATURES OF THE SAID SECTION IN DETAIL AT PARAGRAPH 11.3, IT IS STATED AS UNDER (SEE [1990] 182 ITR (ST. ) 1, 48) : 'THESE PROVISIONS, APART FROM BEING COMPLICATED, LEFT CERTAIN GAPS FOR WHICH INTEREST WAS NOT PAID BY THE DEPARTMENT TO THE ASSESSEE FOR MON EY REMAINING WITH THE GOVERNMENT. TO REMOVE THIS INEQUITY, AS ALSO TO SIMPLIFY THE PROVISIONS IN TH IS REGARD, THE AMENDING ACT, 1987, HAS INSERTED A NEW SECTION 244A IN THE INCOME-TAX ACT, APPLICABLE FRO M THE ASSESSMENT YEAR 1989-90 AND ONWARDS WHICH CONTAINS ALL THE PROVISIONS FOR PAYMENT OF INTERES T BY THE DEPARTMENT FOR DELAY IN THE GRANT OF REFUNDS. THE RATE OF INTEREST HAS BEEN INCREASED FROM THE EARLI ER 15 PER CENT. PER ANNUM TO 1.5 PER CENT. PER MONTH OR P ART OF A MONTH COMPRISED IN THE PERIOD OF DELAY IN THE GRANT OF REFUND. THE AMENDING ACT, 1987, HAS ALSO AMENDED SECTIONS 214, 243 AND 244 TO PROVIDE THAT THE PROVISIONS OF THESE SECTIONS SHALL NOT APPLY TO THE ITA NO.155/M/2011 6 ASSESSMENT YEAR 1989-90 OR ANY SUBSEQUENT ASSESSMENT YEARS.' THEREFORE, THE OBJECT BEHIND THE INSERTION OF SECTI ON 244A, AS UNDERSTOOD BY THE DEPARTMENT, IS THAT AN ASSESSEE I S ENTITLED TO PAYMENT OF INTEREST FOR MONEY REMAINING WITH THE G OVERNMENT WHICH WOULD BE ORDERED TO BE REFUNDED. THEREFORE, IF THAT IS THE OBJECT BEHIND THE INSERTION OF SECTION 244A, THE C ONTENTION OF THE REVENUE THAT IF THE CASE DOES NOT FALL UNDER EITHE R OF THE CLAUSES IN SECTION 244A, NO INTEREST IS PAYABLE, IS WITHOUT AN Y SUBSTANCE. CLAUSES (A) AND (B) SPECIFICALLY REFER TO THE INSTA NCES WHERE INTEREST IS PAID UNDER THE ACT. IT IS NOT EXHAUSTI VE. IT IS POSSIBLE, IN A GIVEN CASE, THAT AFTER THE EXPIRY OF THE FINANCI AL YEAR, THE ASSESSEE MAY PAY TAX EITHER ALONG WITH THE SELF-AS SESSMENT RETURN OR EVEN BEFORE THE RETURN IS FILED. IF ULTIMATELY T HE SAID PAYMENT IS FOUND TO BE IN EXCESS AND THE DEPARTMENT CHOOSES T O REFUND THE SAID AMOUNT, THEN THE QUESTION WOULD BE, FROM WHAT DATE INTEREST IS PAYABLE SINCE INTEREST IS PAYABLE ON SUCH REFUND S UNDER SECTION 244A. IN THE ABSENCE OF AN EXPRESS PROVISO AS CONTA INED IN CLAUSE (A), IT CANNOT BE SAID THAT THE INTEREST IS PAYABL E FROM THE 1ST DAY OF APRIL OF THE ASSESSMENT YEAR. AT THE SAME TIME, AS THE SAID PAYMENT OF TAX WAS NOT MADE IN PURSUANCE OF A NOTI CE OF DEMAND ISSUED UNDER SECTION 156, EXPLANATION TO CLAUSE (B) OF SECTION 244A HAS NO APPLICATION. IN SUCH CASES, AS THE OPENING WORDS OF CLAUSE (B) SPECIFICALLY REFERRED TO 'AS IN ANY OTHER CASE ', THE INTEREST IS PAYABLE FROM THE DATES OF PAYMENT OF THE TAX. AS C LAUSE (B) EXPRESSLY PROVIDES IN ANY OTHER CASE THE PAYMENT OF TAX SUBSEQUENT TO THE FIRST DAY OF APRIL OF THE ASSESSMENT YEAR, E ITHER BEFORE OR ALONG WITH FILING OF THE RETURN WOULD SQUARELY FAL L UNDER CLAUSE (B) AND, THEREFORE, WHEN THE SAID AMOUNT IS ORDERED TO BE REFUNDED THE INTEREST IS TO BE CALCULATED FROM THE DATE OF SUCH PAYMENT OF TAX. HAVING REGARD TO THE SCHEME OF SECTION 244A AND TH E CIRCULAR ISSUED BY THE BOARD WHICH SHOWS HOW THE DEPARTMENT HAS UNDERSTOOD THE SECTION COUPLED WITH THE FACT THAT THE PRINCIPLE UNDERLYING THE SAID SECTION IS THAT, ANY EXCESS PAY MENT OF TAX PAID BY THE ASSESSEE IS NOT ONLY TO BE REFUNDED BUT IT H AS TO BE REFUNDED WITH INTEREST, IF THE CASE OF THE ASSESSEE DOES NOT FALL UNDER CLAUSE (A) OR THE EXPLANATION TO CLAUSE (B), THE EXCESS T AX PAID SHALL BE REFUNDED WITH INTEREST FROM THE DATE OF PAYMENT OF SUCH TAX. ITA NO.155/M/2011 7 11. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE JUDICIAL DECISIONS, RESPECTFULLY FOLLOWING THESE DECISIONS, WE DIRECT THE AO TO ALLOW INTEREST U/S. 244A FROM THE DATE OF THE PAYME NT OF TAX. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.6.2013 . +, ' * - .+/ 12.6.2013 * ' 0 SD/- SD/- (VIJAY PAL RAO ) ( N.K. BILLAIYA ) + /JUDICIAL MEMBER + / ACCOUNTANT MEMBER MUMBAI; .+ DATED 12/06/2013 . . ./ RJ , SR. PS +, +, +, +, ' '' ' $(1 $(1 $(1 $(1 21( 21( 21( 21( / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $ %# / THE RESPONDENT. 3. 3 ( ) / THE CIT(A)- 4. 3 / CIT 5. 140 $( , , / DR, ITAT, MUMBAI 6. 0 5 / GUARD FILE. +, +, +, +, / BY ORDER, %1( $( //TRUE COPY// 6 66 6 / 7 7 7 7 ! ! ! ! (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI