D.C.I.T Cir - 6,kolkata, Kolkata V. M/s United Bank of India, Kolkata

ITA 1709/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4610 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 20-06-2016
• Assessment Year: 1991-1992
• Appeal Filed On: 31-05-2013
• Court: TRIBUNAL
• Department Lawyers: S M DAS
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Section: 244A; 154

Judgement Text

ITA NO.1709/KOL/2013 M/S. UNITED BANK OF INDIA A.Y. 1991-92 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI P.M.JAGTAP, AM & SRI N.V.VA SUDEVAN, JM ] I.T.A NO. 1709/KOL/2013 ASSESSMENT YEAR : 1991-9 2 D.C.I.T., CIRCLE-6, -VS.- M/S. UNITED BA NK OF INDIA KOLKATA KOLKATA [PAN : AAACU 5624 P] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S.M.DAS, JC IT.SR.DR FOR THE RESPONDENT : SHRI SOUMITRA CHOWD HURY, ADVOCATE. DATE OF HEARING : 17.08.2016. DATE OF PRONOUNCEMENT : 02.09.2016. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 21.1.2013 OF CIT(A)- VI, KOLKATA, RELATING TO AY 1991-92. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE RE ADS THUS: 1.WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, LD. CIT(A) ERRED IN LAW IN HOLDING THAT INTEREST U/S 244A BE ALLOWED ON INTER EST CALCULATED ON REFUND. 2.FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) ERRED IN ALLOWING INTEREST ON INTEREST OR COMPOUNDING OF INTEREST. 3.THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELET E OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. THE ASSESSING IS A COMPANY CARRYING ON THE BUSI NESS OF BANKING. PURSUANT TO AN ORDER PASSED BY THE ITAT A BENCH KOLKATA IN ITA N O.1821/KOL/2008 DATED 7.1.2009 FOR AY 89-90, THE REFUND OF TAX DEDUCTED A T SOURCE(TDS) IN AY 1991-92 HAD TO BE COMPUTED BY THE ASSESSING OFFICER (AO). BY AN ORDER DATED 31.3.2009, THE AO COMPUTED THE REFUND OF TDS, TAXES COLLECTED AND INTEREST PAYABLE THEREON AS FOLLOWS: ITA NO.1709/KOL/2013 M/S. UNITED BANK OF INDIA A.Y. 1991-92 2 CONSEQUENT UPON THE ORDER OF THE LD. ITAT A BENC H IN ITA NO.1821/KOL/2008 DT. 07/01/09. PASSED FOR A/Y-89-90 THE TOTAL INCOME FOR THE CURRE NT YEAR IS RECOMPUTED AS FOLLOWS : TOTAL INCOME AS PER ORDER U/S 251 DT. 10/07/2002 RS.16,50,80,800/- LESS B/F BUSINESS LOSS 1988-89 RS. 2,76,03,634 /- RS.13,74,77,166/- LESS: ABSORBED DEPN. RS. 5,63,63,291/- TOTAL INCOME RS. 8,11,13,875/- CALCULATION OF TAX TAX @ 40% RS. 3.24,45,550/- S/C @ 15% RS. 48,66,833/- RS. 3,73,12,383/- ADD INTT. U/S 201(A) RS. 7,74,874/- RS. 3,80,87,257/- LESS TDS (-) RS. 8,08,69,716/- REFUNDABLE RS. 4,27,82,459/- ADD: INTEREST U/S 244A FROM 01/04/1991 TO 31/03/1992 @ 1.5% APRIL TO SEPT.= 9 MONTHS @ 1% OCT TO MARCH = 6 MONTHS RS. 64,17,369/- RS. 4,91,99,828/- LESS ISSUED AS COLLECTION OF DEMAND OF 1988-89 ON 3 0.03.92 RS. 4,51,91,816/- REFUNDABLE RS. 40,08,012/- ADD : COLLECTED AS ADJUSTMENT OF REFUND OF VARIOUS YEARS AS PER ORDER DT.24/09/1998 RS. 9,98 ,08,757/- REFUNDABLE RS.10,38,16,769/- ADD : INTEREST U/S 244A(3) OCT98 TO AUG02 OCT98 TO MAY,01 @ 1% - 32% JUNE01 TO MAY02 @ 0.75%- 9% JUNE02 TO AUG02 @0.66% - 1.98% 42.98% ON RS.9,98,08,757.00 RS. 4,28,97,804/- RS.14,67,14,573/- LESS: REFUND ISSUED ON 16/08/2002 RS. 1,80,34, 020/- REFUNDABLE RS.12,86,80,553/- ADD : INTT.U/S 244A(3) SEPT.03 SEPT02 TO AUG03 0.66 7.26 SEPT.03 0.50 RS. 63,45,720/- 7.76% ON RS.8,17,74,737/- RS.13,50,26,273/- LESS : REFUND ISSUED 30/09/03 VIDE R/V 062388 RS. 9,92,29,951/- REFUNDABLE RS. 3,57,96,322/- ( THE BALANCE REFUND SINCE CONSISTS OF INTEREST ONL Y NO FURTHER INTEREST HAS BEEN ALLOWED.) ITA NO.1709/KOL/2013 M/S. UNITED BANK OF INDIA A.Y. 1991-92 3 4. AS CAN BE SEEN FROM THE ABOVE COMPUTATION OF RE FUND, THE INTEREST ON REFUND OF ANY AMOUNT WHICH WAS REQUIRED TO BE GIVEN IN TERMS OF S EC.244A OF THE INCOME TAX ACT, 1961 (ACT), WAS CALCULATED AT RS. 5,56,60,893/-BY T HE AO IN THE AFORESAID ORDER DATED 31.3.2009. (RS.5,56,60,893 IS THE SUM TOTAL OF THE THREE INTEREST FIGURE OF RS.64,17,369 + RS.4,28,97,804 + RS.63,45,720 SHOWN IN BOLD LETTERS IN THE COMPUTATION GIVEN IN THE EARLIER PARAGRAPH). 5. BY AN ORDER DATED 15.9.2009 PASSED U/S.154 OF T HE ACT, THE AO REDUCED THE INTEREST WHICH HE HAD CALCULATED AS INTEREST U/S. 244A OF TH E ACT AMOUNTING TO RS. 5,56,60,893/- IN THE ORDER DATED 31.3.2009 TO RS. 5 ,36,62,849/-. THE DIFFERENCE IN THE INTEREST GRANTED U/S.244A OF THE ACT AROSE DUE TO T HE FOLLOWING REASONS: (A) IN THE SAID ORDER DATED 15.09.2009, THE AO CA LCULATED INTEREST FOR THE PERIOD APRIL '91 TO SEPT '91 @1% (ALTHOUGH ACCORDING TO THE ASS ESSEE FOR THE SAID PERIOD THE INTEREST RATE WAS 1.5% U/S. 244A OF THE ACT) THEREB Y REDUCING INTEREST TO THE EXTENT OF RS. 2,83,474/-. (B) THE AO CALCULATED INTEREST U/S 244A OF THE ACT ON TDS REFUNDABLE TO THE ASSESSEE BY KEEPING INTEREST PART REFUNDABLE TO THE ASSESSEE SEPARATELY WHENEVER REFUND WAS ISSUED BY THE DEPARTMENT. THE A.O. ADJUSTED ENTIRE AMOUNT OF REFUND WHENEVER ISSUED, WITH THE PRINCIPAL AMOUNT I.E. TDS, KEEPING INTEREST AMOUNT REMAINING UNPAID ALTHOUGH HE HAS ASCERTAINED THE SAME ON THE SAME DA TE. ACCORDING TO THE ASSESSEE UNPAID INTEREST IF NOT PAID, SHOULD ATTRACT INTERES T FOR THE DELAYED PERIOD OF PAYMENT AT PRESCRIBED RATE, WHICH HAD NOT BEEN GIVEN BY THE AS SESSING OFFICER IN THE ORDER DATED 15.9.2009. 6. BEFORE CIT(A), THE ASSESSEE POINTED OUT THAT IN THE ORDER U/S. 154 THE A. O. HAS WRONGLY CALCULATED INTEREST U/S.244A OF THE ACT AND THAT NO INTEREST ON INTEREST WAS CALCULATED IN THE ORDER DATED 31.3.2009. THE ASSES SEE FURTHER SUBMITTED THAT THE CALCULATION OF INTEREST AS DONE BY THE AO IN THE OR DER DATED 31.3.2009 WAS AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SANDVIK ASIA LTD. VS. C.I. T REPORTED IN 280 ITR 643(SC) AND HON 'BLE I. T.A. T , KOLKATA BENCH IN THE CASE OF ITA NO.1709/KOL/2013 M/S. UNITED BANK OF INDIA A.Y. 1991-92 4 JCIT (OSD) VS. M/S. ITC HOTELS LTD. (MERGED WITH IT C LTD) RELATING TO ASSESSMENT YEARS 1996-97 TO 1998-99 IN I.T APPEAL NO. : 243 TO 245/K/2012 DATED 29 TH JUNE, 2012. THE ASSESSEE ALSO POINTED OUT THAT IN ASSESSE S OWN CASE CIT (APPEALS) HAS DECIDED IN FAVOUR OF THE ASSESSEE BANK ON SIMILAR I SSUES IN RELATION TO A. Y 1997-98 VIDE ORDER DATED 4.03.2010 AND A. Y 2003- 04 VIDE O RDER DATED 25.03.2010. THE ASSESSEE ALSO CONTENDED THAT THE A.O. HAS CHANGED T HE METHOD OF CALCULATION OF INTEREST U/S. 244A OF THE ACT AND DOING SO IN A PRO CEEDING U/S.154 OF THE ACT IS NOT PERMISSIBLE AS THE ISSUE WAS DEBATABLE AND RELIED O N THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF T S BALARAM VS. VOLKAR T BROTHERS REPORTED IN 82 ITR 50 (SC). 7. THE CIT(A) CANCELLED THE ORDER OF THE AO U/S.15 4 OF THE ACT FOR THE REASON THAT THE ISSUE WAS DEBATABLE AND THEREFORE JURISDICTION U/S. 154 OF THE ACT OUGHT NOT TO HAVE BEEN INVOKED BY THE AO. THE CIT(A) ALSO HELD THAT THE CALCULATION OF INTEREST DONE BY THE AO IN THE ORDER DATED 31.3.2009 WAS AS PER T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. (SUP RA) WHEREIN IT WAS HELD THAT THE GOVERNMENT IS LIABLE TO PAY INTEREST, AT THE RATE A PPLICABLE TO THE EXCESS AMOUNT REFUNDED TO THE ASSESSEE ON THE INTEREST AMOUNT WHI CH BECOMES DUE U/S.214(1). ONCE THE INTEREST BECOMES DUE, IT TAKES THE SAME COLOUR AS THE EXCESS AMOUNT OF TAX WHICH IS REFUNDABLE ON REGULAR ASSESSMENT. INTEREST IS PAYAB LE ON THE AMOUNT TO BE REFUNDED U/S. 244(1) WITHIN THREE MONTHS FROM THE DECISION O F THE APPELLATE OR OTHER AUTHORITY SPECIFIED IN SECTION 240. THE EXPRESSION 'AMOUNT' I N THE EARLIER PERIOD OF SECTION 244(1A) REFERS NOT ONLY TO THE TAX BUT AL SO TO THE INTEREST; IT IS A NEUTRAL EXPRESSION AND IT CANNOT BE LIMITED TO THE TAX PAID IN PURSUANT OF THE ORDER OF ASSESSMENT. THEREFORE, FOLLOWING THE DECISION OF SUPREME COURT, ORDER PASS ED BY THE A.O. U/S.154 WAS HELD BY THE CIT(A) TO BE UNJUSTIFIED. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE IS IN APPEAL BEFORE THE TRIBUNAL. WE HAVE HEARD THE RIVAL SUBMISSIONS. TO APPRECIATE THE STAND TAKEN BY THE ASSESSEE, THE METHOD OF CALCULATION OF INTEREST AS DONE BY TH E AO IN THE ORDER DATED 31.3.2009 ITA NO.1709/KOL/2013 M/S. UNITED BANK OF INDIA A.Y. 1991-92 5 HAS TO BE SEEN. FIRSTLY THE RATE OF INTEREST U/S.2 44A OF THE ACT APPLICABLE FOR THE PERIOD APRIL, 1991 TO SEPTEMBER, 1991 WAS 1.5% AND NOT 1% AS WAS ADOPTED BY THE AO IN THE ORDER U/S.154 OF THE ACT. WITH REGARD TO THE M ETHOD OF CALCULATION OF INTEREST, IT CAN BE SEEN FROM THE COMPUTATION OF INTEREST BY THE AO IN THE ORDER DATED 31.3.2009 THAT THE AO HAS NOT GRANTED INTEREST ON INTEREST, A S HAS BEEN ASSUMED BY THE AO WHILE PASSING THE ORDER DATED 15.9.2009. 9. AN ANALYSIS OF THE ORDER DATED 31.3.2009 WILL S HOW THAT THE 1 ST REFUND AS PER THE AFORESAID ORDER WAS GRANTED IN ARIL, 1992. THIS RE FUND WAS BY WAY OF ADJUSTMENT OF DEMAND FOR AY 1988-89 AGAINST THE AMOUNT REFUNDABLE IN AY 1991-91. IN APRIL, 1992 THE AMOUNT COLLECTED BY WAY OF TDS FOUND REFUN DABLE WAS RS.4,27,82,459/-. ON THIS SUM INTEREST AT 244A OF THE ACT WAS GRANTED FOR THE PERIOD FROM 1.4.1991 TO 31.3.1992 OF A SUM OF RS.64,17,369. THIS INTEREST WAS CALCULATED ONLY ON THE TAX PAID AND THERE WAS NO INTEREST PAYABLE AND THEREFORE IT CANNOT BE SAID THAT AT THIS POINT OF REFUND, INTEREST ON INTEREST WAS PAID BY THE ASSESS EE. THE AMOUNT REFUNDABLE THUS CAME TO RS.4,91,99,828/-. A SUM OF RS.4,51,91.816 WAS ADJUSTED FROM THIS SUM REFUNDABLE TOWARDS DEMAND OF TAXES OF THE ASSESSEE FOR AY 1988-89. THUS THE SUM OF RS.40,08,012 WAS ONLY REFUNDABLE TO THE ASSESSEE . 10. THEREAFTER THE 2 ND REFUND WAS ISSUED IN AUGUST, 2002 RS.1,80,34,020/- . AT THIS POINT OF TIME INTEREST ON REFUND HAD TO BE CALCULAT ED. IN SEPTEMBER, 1998 THE ASSESSEE BECAME ENTITLED TO A REFUND OF RS.9,98,08,757/- WHI CH WAS OF TAXES PAID AND NOT ANY INTEREST. THIS WAS ADDED TO THE REFUND ALREADY DUE OF RS.40,08,012 RESULTING IN A FIGURE OF RS.10,38,16,769/- REFUNDABLE IN SEPTEMBER , 2002. AT THIS POINT OF AT THIS OINT OF TIME THE INTEREST U/S.244A OF THE ACT WAS C ALCULATED FROM OCTOBER, 1998 TILL AUGUST, 2002 ON ONLY RS.9,98,08,757/- WHICH WAS REF UND OF TAXES. IT CANNOT BE SAID THAT AT THIS POINT OF TIME ALSO INTEREST ON INTERES T WAS PAID BY THE REVENUE. AFTER THIS INTEREST CALCULATION THE AMOUNT REFUNDABLE WAS RS.1 4,67,14,573/-. AFTER REDUCING THE REFUND OF RS.1,80,34,020 REFUNDED THE SUM STILL REF UNDABLE WAS RS.12,86,80,553/-. ITA NO.1709/KOL/2013 M/S. UNITED BANK OF INDIA A.Y. 1991-92 6 11. THE 3 RD REFUND WAS ISSUED IN SEPTEMBER, 2003 OF RS.9,92,29 ,951/-. AT THIS JUNCTURE INTEREST U/S.244A WAS CALCULATED ON RS.8,1 7,74,737/- WHICH WAS ARRIVED AT IN THE FOLLOWING MANNER: AMOUNT REFUNDABLE IN SEPTEMBER, 2003: RS.12,86, 80,553 ADD: INTEREST ON RS.8,17,74,737 RS. 63,45, 720 RS.13,50,26,273 THIS SUM OF RS.8,17,74,737 ON WHICH INTEREST WAS CA LCULATED WAS ARRIVED AT AS FOLLOWS: FROM THE FIGURE OF RS.14,67,14,573 WHICH WAS REFUND ABLE AS ON 16.8.2002, THE FOLLOWING SUMS WERE REDUCED: (A) A SUM OF RS.40,08,012 WHICH WAS INTEREST REFUNDABL E WHEN THE 1 ST REFUND WAS ISSUED. (B) A SUM OF RS.4,28,97,804 WHICH WAS INTEREST ALLOWED U/S.244A OF THE ACT WHEN THE 2 ND REFUND WAS ALLOWED IN AUGUST, 2008. (C) A SUM OF RS.1,80,34,020 WHICH WAS REFUNDED ON 16.8. 2002 . THE RESULTANT FIGURE WAS RS.8,17,74,737/-. FROM T HIS CALCULATION OF INTEREST U/S.244A OF THE ACT ALSO IT CANNOT BE SAID THAT THE AO ALLOW ED INTEREST ON INTEREST U/S.244A OF THE ACT WHILE PASSING ORDER DATED 31.3.2009. 12. THEREFORE IT IS CLEAR FROM THE CALCULATIONS TH AT THE AO WHILE PASSING THE ORDER DATED 31.3.2009 HAS NOT ALLOWED ANY INTEREST ON INT EREST AS HAS BEEN ASSUMED BY THE AO WHILE PASSING THE ORDER U/S.154 OF THE ACT. FAC TUALLY, THE ORDER OF THE CIT(A) IS CORRECT AND THEREFORE THE ORDER U/S.154 OF THE ACT WAS RIGHTLY CANCELLED BY THE CIT(A). WE ARE THEREFORE OF THE VIEW THAT THE CIT(A) WAS FU LLY JUSTIFIED IN CANCELLING THE ORDER U/S.154 OF THE ACT ON THE GROUND THAT THE ORDER OF THE AO DID NOT SUFFER FROM ANY ERROR APPARENT ON THE FACE OF THE RECORD AND EVEN OTHERWI SE THE ISSUE WAS HIGHLY DEBATABLE ITA NO.1709/KOL/2013 M/S. UNITED BANK OF INDIA A.Y. 1991-92 7 AND THEREFORE JURISDICTION U/S.154 OF THE ACT, COUL D NOT HAVE BEEN INVOKED BY THE AO. WE THEREFORE DISMISS THE APPEAL OF THE REVENUE. 13. IN THE RESULT, THE APPEAL BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 02.09.2016. SD/- SD/- [P.M.JAGTAP] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S UNITED BANK OF INDIA, 10, OLD COURT HOUSE STR EET, KOLKATA-700001. 2. D.C.I.T., CIRCLE-2, KOLKATA. 3. CIT(A)-VI, KOLKATA 4. C.I.T.-II, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGIS TRAR, ITAT, KOLKATA BENCHES