DCIT, CHENNAI V. M/s. Indian Overseas Bank, CHENNAI

ITA 1906/CHNY/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0887 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-01-2013
• Assessment Year: 1991-1992
• Appeal Filed On: 21-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOBADDL
• Keywords: Question of law
• Section: 244A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE N.S. SAINI, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. ASSESSMENT YEAR 1250/MDS/2008 1997 - 98 1252/MDS/2008 2000 - 01 391/MDS/2009 1989 - 90 1906/MDS/2009 1991 - 92 1907/MDS/2009 1992 - 93 1908/MDS/2009 1996 - 97 1909/MDS/2009 2004 - 05 246/MDS/2010 1990 - 91 DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT, 1775, J.N.INNER RING ROAD, ANNA NAGAR WESTERN EXTN. CHENNAI-600 101. (APPELLANT ) VS. M/S. INDIAN OVERSEAS BANK 763, MOUNT ROAD,, CHENNAI-600 002. PAN:AAACI1223J (RESPONDENT) APPELLANT BY : MR. SHAJI P.JACOB, ADD L. CIT RESPONDENT BY : MR. C.NARESH, CA DATE OF HEARING : 24 TH JANUARY, 2013 DATE OF PRONOUNCEMENT : 31 ST JANUARY, 2013 O R D E R PER VIKAS AWASTHY, JM : THE SET OF EIGHT APPEALS I.E. ITA NOS.1250/MDS/2008 , 1252/MDS/2008, 391/MDS/2009, 1906 TO 1909/MDS/2009 AND 246/MDS/2010 RELEVANT TO THE ASSESSMENT YEARS 1997- 98, ITA NOS.1250 & 1252/MDS/2008 ITA NO.391/MDS/2009, 1906 TO 1909/MDS/2009 ITA NO.246/MDS/2010 2 2000-01, 1989-90, 1991-92, 1992-93, 1996-97, 2004-0 5 AND 1990-91 RESPECTIVELY HAVE BEEN FILED BY THE REVENU E IMPUGNING ORDER OF THE CIT(A) LTU, CHENNAI FOR THE RESPECTIVE ASSESSMENT YEARS. 2. IN ALL THESE APPEALS, THE COMMON ISSUE FOR ADJUDICATION IS WITH REGARD TO INTEREST ON INTEREST ON REFUND DUE TO THE ASSESSEE. THE ASSESSEE HAD FILED APPEAL BEFORE THE CIT(A) INTER-ALIA ASSAILING THE ORDER OF DCIT ON THE GROUND THAT WHILE GRANTING INTEREST UNDER SECTION 244A LESS AMOUNT WAS GRANTED TO THE ASSESSEE. THE ASSESSEE HA D SUBMITTED DETAILED CALCULATION OF THE INTEREST FOR THE RESPECTIVE ASSESSMENT YEARS. THE CONTENTION OF THE ASSESSEE I S THAT THE ASSESSEE IS ENTITLED TO INTEREST ON INTEREST DUE IN ACCORDANCE WITH THE JUDGEMENT OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF SANDVIK ASIA LTD. REPORTED AS 280 ITR 6 43(SC). THE CIT(A) WHILE ALLOWING THIS GROUND OF APPEAL OF THE ASSESSEE DIRECTED THE ASSESSING OFFICER TO ALLOW IN TEREST ON ANY INTEREST WHICH IS DUE TO THE ASSESSEE. 3. MR. SHAJI P.JACOB APPEARING ON BEHALF OF THE REV ENUE SUBMITTED THAT THE DISPUTE IS WITH REGARD TO METHOD OF ITA NOS.1250 & 1252/MDS/2008 ITA NO.391/MDS/2009, 1906 TO 1909/MDS/2009 ITA NO.246/MDS/2010 3 COMPUTATION OF INTEREST UNDER SECTION 244A WHICH I S PAYABLE TO THE ASSESSEE ON THE REFUND AMOUNT. THE DR SUBMI TTED THAT THE ASSESSEE IS ENTITLED TO INTEREST UNDER SEC TION 244A ON THE EXCESS ADVANCE TAX PAID FROM THE FIRST DAY OF A SSESSMENT YEAR ONWARDS TILL ACTUAL REFUND AND ON TAXES OTHER WISE PAID FROM THE DATE OF PAYMENT TILL THE DATE OF ACTUAL RE FUND. HE SUBMITTED THAT INTEREST UNDER SECTION 244A BECOMES DUE TO THE ASSESSEE WHEN ASSESSING OFFICER PASSES ORDER QUANTIFYING THE REFUND OF EXCESS AMOUNT PAID ALONG WITH INTEREST AND IF THERE IS ANY DEFAULT IN PAYMENT OF SUCH INTEREST THE ASSESSEE IS ENTITLED FOR FURTHER INTEREST UNDE R SECTION 244A ON SUCH AMOUNT. THE LEARNED DR RELIED ON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT REPORTED AS 320 ITR 88 WHEREIN IT WAS HELD THAT INTEREST UNDER SECT ION 244A BEING A STATUTORY CLAIM BECOME DUE TO THE ASSESSEE WHEN THE CONCERNED AUTHORITY PASSES THE ORDER. TO FURTHER S UPPORT HIS CONTENTIONS, HE RELIED ON THE JUDGEMENT OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. WHEELS IND IA LTD. IN TAX CASE APPEAL NOS.76 & 77 OF 2008 DATED 27.4.2011 . ITA NOS.1250 & 1252/MDS/2008 ITA NO.391/MDS/2009, 1906 TO 1909/MDS/2009 ITA NO.246/MDS/2010 4 4. ON THE OTHER HAND, SHRI NARESH APPEARING ON BEH ALF OF THE ASSESSEE CONTENDED THAT THE ASSESSEE IS ENTITLE D FOR INTEREST ON THE UNPAID INTEREST AMOUNT. THE LEARNE D A.R. CONTENDED THAT THE AMOUNT PAID TO THE ASSESSEE SH OULD BE FIRST ADJUSTED TOWARDS INTEREST AND EXCESS THEREOF SHOULD BE ADJUSTED TOWARDS REFUND OF ADVANCE TAX PAID IF ANY. IN ORDER TO SUPPORT HIS CONTENTION, THE A.R. RELIED ON THE ORDE R OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF SANDVIK ASIA LTD. VS. CIT REPORTED IN 280 ITR 643 (SC). THE A.R. ALSO RELIED ON THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NOS.213 TO 215/MDS/2010 IN THE CASE OF DCIT VS. BHARAT OVERSEAS BANK LTD. DECIDED ON 30.10.2012. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AND THE JUDGEMENTS/ORDERS RELIED ON BY BOTH SIDES. THE HONBLE MADRAS HIGH COURT IN THE CASE OF M/S. WHEELS INDIA LTD. (SUPRA) RELYING ON THE JUDGEMENT OF THE HONBLE SU PREME COURT OF INDIA IN THE CASE OF SANDVIK ASIA LTD. HA S HELD AS UNDER:- ITA NOS.1250 & 1252/MDS/2008 ITA NO.391/MDS/2009, 1906 TO 1909/MDS/2009 ITA NO.246/MDS/2010 5 . 9. IN THE AFORESAID CASE.. THE SUPREME COURT, WHILE G RANTING SUCH INTEREST OBSERVED AS FOLLOWS : - '46 ' IN THE INSTANT CASE, THE APPELLANTS MONEY HAD BEEN UNJUSTIFIABLY WITHHELD BY THE DEPARTMENT FOR 17 YEARS WITHOUT ANY RHYME OR REASON. THE INTEREST WAS PAID ONLY AT THE INSTANCE AND THE INTERVENTION OF THIS COURT IN CIVIL APPEAL NO. 1887 OF 1992 DATED 30-4-1991. INTEREST ON DELAYED PAYMENT OF REFUND WAS NOT P A ID TO THE APPELLANT ON 27-3-19 8 1 AND 30-4- 1986 DUE TO THE ERRONEOUS VIEW THAT HAD BEEN TAKEN BY THE OFFICIALS OF THE RESPONDENTS. INTEREST O N REFUND WAS GRANTED TO THE APPELLANT AFTER A S U BSTANTIA L LAPSE OF TIME END HENCE IT SHOULD BE ENTITLED TO COMPENS A TION FOR THIS PERIOD OF DELAY. THE HIGH COURT HAS FAILED TO , APPRECIATE THAT WHILE CHARGING INTEREST FROM THE ASSESS E S, THE DEPARTMENT FIRST ADJUSTS THE AMOUNT; PAID TOWARDS INTEREST SO THAT THE PRINCIPLE AMOUNT OF TAX PAYABLE REMAINS OUTSTANDING AND THEY ARE ENTITLED TO CHARGE INT E REST TILL THE ENTIRE OUTSTANDING IS PAID. BUT WHEN IT CO M ES TO GRANTING OF INTEREST ON REFUND OF TAXES, THE REFUND S ARE FIRST ADJUSTED TOWARDS THE TAXES AND THEN THE . BALANCE TOWARDS INTEREST. HENCE AS PER THE STAND THAT THE DEPARTMENT TAKES THEY ARE LIABLE TO PAY INTEREST ONLY UP TO THE DATE OF REFUND OF TAX WHILE THEY TAKE THE BENEFIT OF ASSESSES' FUNDS BY DELAYING THE PAYMENT OF INTEREST O N REFUNDS WITHOUT INCURRING ANY FURTHER LIABILITY T O PAY INTEREST. THIS STAND TAKEN BY THE RESPONDENTS IS DISCRIMINATORY IN NATURE AND THEREBY CAUSING G R E AT PREJUDICE TO LAKHS AND . LAKHS OF ASSESSES. VE R Y LARGE NUMBER OF ASSESSES ARE ADVERSELY AFFECTED INASMUCH A S THE INCOME TAX DEPARTMENT CAN NOW SIMPLY REFUSE TO P A Y TO THE ASSESSES AMOUNTS OF INTEREST LAWFULLY AND ADMITTE D LY DUE TO THEM AS HAS HAPPENED IN THE INSTANT CASE. IT I S A CASE OF THE APPELLANT AS SET OUT ABOVE IN THE INSTANT CASE FOR ASSESSMENT YEAR 1978-79, IT HAS BEEN DEPRIVED OF AN AMOUNT OF ` 40 LAK HS FOR NO FAULT OF ITS OWN AND EX C LUSIVELY BECAUSE OF THE ADMITTEDLY UNLAWFUL ACTIONS OF T HE INCOME TAX DEPARTMENT FOR PERIODS RANGING UP TO 17 Y E ARS WITHOUT ANY COMPENSATION WHATSOEVER FROM THE DEPARTMENT. SUCH ACTIONS AND CONSEQUENCES' IN OUR OPINION, SE R IOUSLY AFFECTED THE ADMINISTRATION OF JUSTICE AND THE RUL E OF LAW. 10. FROM TH AT AFORESAID OBSERVATION, IT IS APPARENT THAT THE SUPREME COURT HAD PROCEEDED TO GRANT INTEREST BECAUSE OF THE INORDINATE DELAY ITA NOS.1250 & 1252/MDS/2008 ITA NO.391/MDS/2009, 1906 TO 1909/MDS/2009 ITA NO.246/MDS/2010 6 OF ABOUT 17 - YEARS IN DEPRIVING THE ASSESSEE FOR NO FAULT OF HIM. MOREOVER, THE AFORESAID DECISION OF THE SUPREME COURT WAS PASSED ON THE PECULIAR FACTS AT~ CIRCUMSTANCES OF THAT CASE. IN THE PRESENT CASE , THE AMOUNT OF REFUND HAD BEEN PAID ON DIFFERENT DATES BETWEEN TH E PERIOD FROM 12.01.1991 TO 26.12.1996, AFTER PASSING T H E ASSES S MENT ORDER AND THERE IS NO INORDINATE DELAY ON THE PART OF THE REVEN U E IN REFUNDING THE AMOUNT . . MOREOVER IN THE ORDER PASSED UNDER SECT I ON 154 OF THE ACT, THE AMOUNT REFUNDABLE HAVE BEEN DETERMIN E D ONLY V I DE O RDER DATED 4.2.2003 AND , THEREFORE, NO AMOUNT OF INTEREST APPEA R S TO HAVE BEEN WITH HELD. ONLY IF THERE IS ANY DELAY IN ASSESSM E NT AND REFUND OF THE AMOUNT, THE QUESTION OF PAYMENT OF INTEREST WO U LD ARIS E AND NOT OTHERWISE. THEREFORE, AS RIG H TLY SUBMITTE D BY THE REVEN UE , S I NCE T H E REFUND AMOUNT O F INTEREST 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 88 (DE1HI) (MOTOR AND GENERAL FINANCE LTD. VS. COMMISSIONER OF INCOME TAX), WHERE UNDER THE DELHI HIGH COURT D ISTINGUISHING THE DECISION OF THE SUPREME COURT IN SANDVIK ASIAS 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 APPEA L S ARE AL L OWED. THERE WOULD BE NO ORDER AS TO COSTS. 6. IT IS AN UNDISPUTED FACT THAT THERE HAS BEEN DEL AY IN MAKING REFUND TO THE ASSESSEE BY THE DEPARTMENT. AS SUCH THE ASSESSEE IS ENTITLED TO INTEREST ON DELAYED PAY MENT OF REFUND AS PROVIDED UNDER SECTION 244A. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF SANDVIK ASIA LTD. (SUPRA) HAD GRANTED INTEREST ON INTEREST FOR THE REASON THAT ITA NOS.1250 & 1252/MDS/2008 ITA NO.391/MDS/2009, 1906 TO 1909/MDS/2009 ITA NO.246/MDS/2010 7 ONLY REFUND OF EXCESS TAX WAS GIVEN TO THE ASSESSEE BUT INTEREST ON REFUND WAS WITHHELD BY THE DEPARTMENT F OR AN INORDINATE PERIOD OF 12 TO 17 YEARS. THE HONBLE SU PREME COURT OF INDIA HELD THAT THE ASSESSEE WAS ENTITLED TO INTEREST ON THE AMOUNTS OF INTEREST PAID UNDER SECTION 214 A ND/OR SECTION 244. 7. IN THE PRESENT CASE, BOTH THE SIDES HAVE NOT BRO UGHT ON RECORD THE PERIOD FOR WHICH THE INTEREST WAS UNPAID . IN CASE INTEREST IS PAID ALONG WITH THE EXCESS TAX, NO FURT HER PAYMENT IS TO BE MADE. I IS ONLY IN CASE WHERE EXCESS AMOUN T OF TAX IS REFUNDED WITHOUT INTEREST, THE AMOUNT OF INTEREST R ETAINED WOULD BE LIABLE FOR INTEREST I.E. INTEREST ON INTER EST WOULD ALSO BECOME PAYABLE. THE WITHHOLDING OF INTEREST WITHOUT ANY JUSTIFIABLE REASON IN AN ARBITRARY MANNER WILL ENTI TLE THE ASSESSEE TO CLAIM INTEREST ON INTEREST. AS REGARDS THE METHOD OF CALCULATION OF INTEREST IS CONCERNED, WE HOLD TH AT THE ASSESSEE IS ENTITLED TO INTEREST TO BE CALCULATED I N ACCORDANCE WITH THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD(SUPRA). WE, THEREFORE, REM IT THE CASE BACK TO THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF ITA NOS.1250 & 1252/MDS/2008 ITA NO.391/MDS/2009, 1906 TO 1909/MDS/2009 ITA NO.246/MDS/2010 8 CALCULATION OF INTEREST ON INTEREST, IF ANY ARISIN G OUT OF DELAY IN PAYMENT OF INTEREST IN ACCORDANCE WITH THE METHOD A S SET OUT BY THE HONBLE APEX COURT IN THE CASE OF SANDVIK AS IA LTD. (SUPRA). 8. THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, TH E 31 ST DAY OF JANUARY, 2013 AT CHENNAI. SD/- SD/- ( N.S. SAINI ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 31 ST JANUARY, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.