The DCIT, Circle-8, Ahmedabad V. Shah Alloys Ltd., Gandhinagar

ITA 2024/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63199 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Assessee Lawyers: ANIL R SHAH
• Section: 244A; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTAN T MEMBER I.T.A. NO.2024/AHD/2012 A.Y.2005-06 WITH C.O. NO.157/AHD/2012 THE D.C.I.T., CIRCLE-8 AHMEDABAD APPELLANT VS. SHAH ALLOYS LTD. BLOCK NO.2221/2222, SHAH INDL. ESTATE, SOLA-KALOL ROAD, SANTEJ, TAL.KALOL, DIST.-GANDHINAGAR-382 043 PAN-AADCS0474L RESPONDENT DEPARTMENT BY : SHRI T. SHANKAR, SR. D.R. ASSESSEE BY : SHRI ANIL R. SHAH, A.R. DATE OF HEARING : 10.12.2012 DATE OF PRONOUNCEMENT : 14.12.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THESE REVENUES APPEAL AND CROSS OBJECTION OF THE A SSESSEE HAVE BEEN FILED AGAINST THE ORDER OF LD. CIT(A), AHMEDABAD DATED 28 .06.2012. 2. BOTH THE APPEAL AS WELL AS THE CROSS OBJECTION W ERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. REVENUE IN ITS APPEAL IS AGGRIEVED BY THE ACTION OF LD. CIT(A) IN DIRECTING THE A.O. TO ALLOW INTEREST U/S 244A OF THE ACT TILL THE DATE OF ISSUE OF REFUND. 4. THE ISSUE IN HAND HAS BEEN DEALT BY THE A.O. AS UNDER:- 'THE ASSESSEE VIDE ITS APPLICATION DATED 07/11/2011 HAS STATED THAT THE CREDIT OF RS.1,30,00,OOO/- WAS NOT GIVEN AT THE TIM E OF PASSING ORDER U/S. 254 OF THE ACT DATED 04/10/2011 FOR THE A. Y. 2005-06. I.T.A. NO.2024/AHD/2012, A.Y.2005-06 WITH C.O. NO.157/AHD/2012 2 ON VERIFICATION OF RECORDS, IT IS NOTICED THAT THE PAYMENT OF RS.L,30,00,OOO/-WAS MADE BY THE ASSESSEE COMPANY IN TWO INSTALLMENTS FOR A. Y. 2005-06 (ONE OF RS.1,00,00,O OO/- AND THE OTHER IS OF RS.30,00,OOO/- VIDE CHALLAN DATED 30.03.2007 AND 31.03.2007 RESPECTIVELY). WHILE PASSING ORDER U/S. 254 OF THE ACT DATED 04.10.2011 FOR A. Y. 2005-06, THE CREDIT OF RS.1,00,00,000/-AN D RS.30,00,000/-WAS NOT GIVEN TO THE ASSESSEE AS BOTH THE PAYMENTS WERE SHOWN IN THE A. Y. 2006-07. THE MISTAKE IS APPARENT FROM RECORDS. HENC E, IT IS HEREBY RECTIFIED U/S. 154 OF THE ACT AND THE INCOME REMAIN S THE SAME AS PER THE ORDER U/S. 254 OF THE ACT DATED 04.10.2011.' 5. AGGRIEVED BY THIS ORDER ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) AND RELIED ON THE FOLLOWING SUBMISSIONS:- 'THE ABOVE APPEAL IS FIXED FOR HEARING ON 4-6-2012. IN THIS CONNECTION, OVER AND ABOVE THE GROUNDS OF APPEAL, WE RESPECTFUL LY SUBMIT AS FOLLOWS: 1. THE APPEAL IS DIRECTED AGAINST THE AO PASSING OR DER U/S. 154 DATED 3-2-12 REJECTING OUR CLAIM FOR GRANTING INTEREST U/ S. 244A ON REFUND OF RS, 1,30,00,OOO/- 2. THE FACTS OF OUR CASE ARE AS FOLLOWS. FOR A. Y. 05-06, THE TOTAL REFUND DUE TO BE RECEIVED BY US WAS RS.3,65,42,937/- AS PE R THE WORKING ENCLOSED (PAGE-3). OUT OF THIS, WE RECEIVED REFUND OF RS.2,35,42,937/- ALONG WITH INTEREST OF RS.29,20,681/- AGGREGATING T O RS.2,64,63,618/- ALONG WITH ORDER U/S. 254 DATED 4/10/11 GIVING EFFE CT TO ORDER OF HON. ITAT (PAGES 1 TO 2). 3. HOWEVER, SINCE THE REFUND ISSUED WAS SHORT BY R S.1,30,00,000/-WE MADE AN APPLICATION OF RECTIFICATION U/S. 154 DATED 7/11/11 (PAGES 4 TO 5). VIDE ORDER U/S. 154 DATED 3/2/12 (UNDER APPEAL) , THE AO DID ISSUE REFUND OF RS.1,30,00,000/- HOWEVER, HE DID NOT GIVE THE REFUND ALONG WITH THE INTEREST U/S.244A. THIS IS OUR MAIN GRIEVA NCE/GROUND BEFORE YOUR HONOUR IN SUBSTANCE. 4. WE STATE THAT BEFORE ISSUING REFUND OF RS.1,3 0,00,000/-, THE AO MADE AN INQUIRY WITH OUR BANKERS VIDE LETTER DATED 14/10/11 (PAGES 6 TO 8). OUR BANKER GAVE A SUITABLE REPLY VIDE LETTER DATED 14/10/11 ALONG WITH DETAILS OF ADVANCE TAX PAID BY US (PAGES 9 TO 12). THE AO ALSO SENT TWO LETTERS DATED 18/10/11 AND 4/1/12 RESPECTI VELY TO DIRECTOR OF INCOME-TAX (SYSTEMS), NEW DELHI FOR SEEKING THEIR C LARIFICATION, (PAGES 13 & 14) I.T.A. NO.2024/AHD/2012, A.Y.2005-06 WITH C.O. NO.157/AHD/2012 3 5. DESPITE OF MAKING ALL THE INQUIRIES AND HAVING B EEN SATISFIED HIMSELF THAT WE HAVE CORRECTLY PAID ADVANCE TAX IN TIME FOR THE CORRECT ASSESSMENT YEAR I.E. 05-06, HE DID NOT ISSUE THE RE FUND OF RS.1,30,00,000/- ALONG WITH INTEREST U/S.244A. 6. THIS BEING AN APPARENT MISTAKE, WE ALSO M ADE AN APPLICATION U/S. 154 VIDE LETTER DATED 7/2/12 (PAGES 15 TO 17) ALONG WITH WHICH, WE HAVE ALSO GIVEN WORKING OF INTEREST DUE TO BE RECEI VED BY US U/S.244A ON RS.1,30,00,000/- WHICH WORKED OUT TO RS.37,70,00 0/- TILL THAT DATE. 7. WE STATE THAT THIS IS A CLEAR CASE OF WITHHOLD ING REFUND/INTEREST ON REFUND AND SINCE THE AMOUNT OF RS.1,30,00,000/-REMA INED WITH THE DEPARTMENT FROM 3/12/07 TILL 3/2/12, INTEREST U/S.2 44A OUGHT TO HAVE BEEN GRANTED BY THE AO. WE ARE THEREFORE ELIGIBLE T O RECEIVE INTEREST OF RS.37,70,000/- TILL 3/2/12 AND INTEREST ON THE ABOV E INTEREST TILL THE DATE OF ISSUE OF THE REFUND ORDER. 8. IN SUPPORT OF OUR ABOVE CONTENTIONS, WE STR ONGLY RELY UPON THE FOLLOWING JUDGMENTS. A) WHEN REFUND OF TAX BECOMES DUE AS A RESUL T OF ORDER PASSED IN AN APPEAL OR OTHER PROCEEDINGS UNDER ACT, THIS REFU ND IS TO BE GIVEN ALONG WITH INTEREST, WHICH IS TO BE CALCULATED AS P ER SECTION 244A; IF THAT INTEREST IS PAID ALONG WITH EXCESS TAX, NO FURTHER PAYMENT IS TO BE MADE; IT IS ONLY WHEN EXCESS AMOUNT OF TAX IS REFUN DED BUT INTEREST IS NOT REFUNDED ALONG THEREWITH, THAT RETENTION OF INT EREST AMOUNT WOULD BE UNJUSTIFIED AND INTEREST ON INTEREST WOULD ALSO BECOME PAYABLE-MOTOR & GENERAL FINANCE LTD. V. CIT [2009] 185 TAXMAN 167 (DELHI). B) REVENUE IS LIABLE TO PAY INTEREST ON THE A MOUNT OF INTEREST WHICH IT SHOULD HAVE PAID TO THE ASSESSEE BUT HAS UNJUSTI FIABLY FAILED TO DO- CIT V. NARENDRA DOSHI [2002]254 ITR 606 (SC) C) THE ACT RECOGNIZES THE PRINCIPLE THAT A P ERSON SHOULD ONLY BE TAXED IN ACCORDANCE WITH LAW AND, HENCE, WHERE EXCE SS AMOUNTS OF TAX ARE COLLECTED FROM AN ASSESSEE OR ANY AMOUNT IS WRO NGFULLY WITHHELD FROM AN ASSESSEE WITHOUT AUTHORITY OF LAW, REVENUE MUST COMPENSATE. SANDVIK ASIA LTD. V. CIT [2006] 150 TAXMAN591 (SC). D) THE REVENUE CANNOT SAY THAT THEY CAN RECO VER INTEREST ON INTEREST BASED ON SECTIONS 156 AND 220 BUT THEY ARE NOT LIABLE TO PAY INTEREST ON INTEREST BECAUSE THE STATUTE DOES NOT P ROVIDE FOR SUCH PAYMENT . EQUALITY IS IN THE FABRIC OF THE CONSTITU TION. WHEN THE STATE ITSELF IS ENTITLED TO RECOVER INTEREST ON INTEREST ON INTEREST, THEN STATE IS ALSO LIABLE TO PAY INTEREST ON INTEREST. THUS, IN V IEW OF THE DELHI HIGH COURT DECISION IN CIT V. GOODYEAR INDIA LTD.[2002]2 49 ITR 527 AND THE SUPREME COURT DECISION IN CIT V. NARENDRA DOSHI [20 02] ITR 606 THE DEPARTMENT IS LIABLE TO PAY INTEREST ON INTEREST UN DER SECTIONS 214 AND I.T.A. NO.2024/AHD/2012, A.Y.2005-06 WITH C.O. NO.157/AHD/2012 4 244(1A) IF PAYMENT OF INTEREST IS DELAYED-MC, NALLY BHARAT ENGG. CO.LTD. VS CIT 2006 TAX LR 638 (CAL.) E) INTEREST CANNOT BE GRANTED TILL DATE OF DISPAT CH OF REFUND ORDER BUT IT HAS TO BE GRANTED TILL DATE WHEN ORDER REGARDING PA YMENT OF INTEREST HAS BEEN SIGNED-RAJASTAN STATE ELECTRICITY BOARD V. CIT [2006] 28] ITR 274 (RAJ.) F) FOR CALCULATING INTEREST UNDER SECTION 244A(1)(B ), RELEVANT DATE IS DATE OF PAYMENT OF TAX AND NOT DATE ON WHICH AMOUNT OF TAX COLLECTED IS CREDITED TO AMOUNT OF CENTRAL GOVERNMENT BY AGENT O F CENTRAL GOVERNMENT INCOME TAX COMMISSIONER LTU V. ASIAN PAINTS LTD. [2001] 201 TAXMAN 179 (MAG)/12 TAXMAN 484 (BOM) 9. IN THE LIGHT OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE REQUEST YOUR HONOUR TO ALLOW THE APPEAL AND DIRECT THE AO T O GRANT INTEREST U/S 244A TILL THE DATE OF ISSUE OF THE REFUND ORDER. AFTER TAKING INTO CONSIDERATION THESE SUBMISSIONS O F THE ASSESSEE, ASSESSEES APPEAL WAS ALLOWED BY LD. CIT(A). AGGRIEVED BY THI S NOW THE REVENUE IS IN APPEAL BEFORE US. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT THE A.O., WHILE WORKING OUT THE REFUND DUE TO THE ASSESSEE, D ID NOT GIVE CREDIT OF RS.1,30,00,000/-. ASSESSEE MOVED APPLICATION U/S 1 54 OF THE ACT IN THIS RESPECT AND THE A.O., AFTER VERIFICATION WITH THE BANKING A UTHORITIES, ALLOWED THE CREDIT OF TAX PAYMENT OF RS.1,30,00,000/- AND THE REFUND OF T HIS AMOUNT WAS GRANTED. HOWEVER, WHILE GRANTING THIS REFUND THE INTEREST U/ S 244A TILL THE DATE OF REFUND WAS NOT GRANTED. IN APPEAL LD. CIT(A) HAS DIRECTED TO GRANT THE INTEREST U/S 244A ON THE REFUND ISSUED TILL THE DATE OF ISSUE OF REFU ND ORDER. WE FIND NO INFIRMITY IN THE ORDER PASSED BY LD. CIT(A) DIRECTING THE A.O. T O GRANT INTEREST TILL THE DATE OF ISSUE OF REFUND ORDER. THEREFORE, THE ORDER PASSED BY HIM IS HEREBY UPHELD. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. I.T.A. NO.2024/AHD/2012, A.Y.2005-06 WITH C.O. NO.157/AHD/2012 5 C.O. NO.157/AHD/2012 8. THE C.O. FILED BY THE ASSESSEE IS IN SUPPORT OF LD. CIT(A)S ORDER. IN VIEW OF OUR DECISION IN REVENUES APPEAL, THE C.O. HAS BECO ME INFRUCTUOUS AND THEREFORE THE SAME IS DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, REVENUES APPEAL AS WELL AS THE C .O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14.12.2012 SD/- SD/- (A.MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD