M/s. S V Ghatalia & Associates LLP, Kolkata V. ACIT, Circle-54, Kolkata, Kolkata

ITA 2078/KOL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1535 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 12-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: DEBABRATA GHOSH
• Section: 43B; 244A; 234B; 263; 154

Judgement Text

1 ITA NO.2078/KOL/2014 M/S. S.V.GJHATALIA & ASSOCIATES LLP., AY 2011-12 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NO. 2078/KOL/2014 ASSESSMENT YEAR: 2011-12 M/S. S.V. GHATALIA & ASSOCIATES LLP (A LIMITED LIABILITY PARTNERSHIP WITH LLP IDENTITY NO.AAB-4293) SUCCESSOR TO M/S. S.V. GHATALIA & ASSOCIATES EFFECTIVE FROM 1 ST APRIL, 2013) (PAN: ACHFS9181P) VS. ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-54, KOLKATA APPELLANT RESPONDENT DATE OF HEARING 21.06.2017 DATE OF PRONOUNCEMENT 13.09.2017 FOR THE APPELLANT SHRI DEBABRATA GHOSH, FCA FOR THE RESPONDENT SHRI SAURABH KUMAR, ADDL. CIT, S R. DR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-XXXVI, KOLKATA DATED 19.09.2014 FOR AY 2011-12. 2. THE FIRST GROUND OF APPEAL OF THE ASSESSEE IS AG AINST THE ACTION OF LD. CIT(A) IN UPHOLDING THE DISALLOWANCE OF A SUM OF RS.50,39,695 /- BEING THE PROVISION MADE FOR LEAVE ENCASHMENT IN THE CURRENT ASSESSMENT YEAR ON THE BA SIS OF ACTUARIAL VALUATION. 3. AT THE OUTSET ITSELF, THE LD. COUNSEL BROUGHT TO OUR NOTICE THAT THE SIMILAR ISSUE HAD COME UP BEFORE THIS TRIBUNAL IN M/S. S. R. BATLIBOI & CO. VS. DCIT, ITA NO. 1598/KOL/2011 FOR AY 2007-08 WHEREIN THE TRIBUNAL V IDE PARA 4 HAS HELD AS UNDER: 2 ITA NO.2078/KOL/2014 M/S. S.V.GJHATALIA & ASSOCIATES LLP., AY 2011-12 4. AFTER HEARING RIVAL SUBMISSIONS AND GOING THROU GH THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ORDER OF THE TRIBUNAL CITED SUPRA, WE FIND THAT THE ISSUE IS DEALT BY THE COORDINATE BENCH OF THIS TRIBUNAL AS UNDER: 3. AT THE OUTSET, LD. SENIOR COUNSEL FOR THE ASSES SEE SUBMITTED THAT IN ALL THESE THREE APPEALS, THE ISSUE RELATES TO ALLOWABILITY OF PROVI SION FOR LEAVE ENCASHMENT IN TERMS OF SUB-SECTION (F) OF SECTION 43B OF THE INCOME TAX AC T. THE ASSESSEE HAD ADVANCED ITS CLAIM RELYING ON THE DECISION OF THE HONBLE KOLKAT A HIGH COURT IN THE CASE OF M/S. EXIDE INDUSTRIES LTD. REPORTED IN 292 ITR 470. HOWE VER, THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CLAIM OBSERVING THAT DEPARTME NT HAS PREFERRED A SPECIAL LEAVE PETITION BEFORE THE HONBLE SUPREME COURT AND STAY OF THE ORDER OF THE HONBLE KOLKATA HIGH COURT WAS GRANTED BY THE HONBLE APEX COURT. L D. SENIOR COUNSEL SUBMITTED THAT UNDER IDENTICAL CIRCUMSTANCES, TRIBUNAL HAS RESTORE D THE MATTER TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE IN ACCORDANCE WITH THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF DCIT, CIRCLE-8, KOLKATA VS.- M/S. ERNS T & YOUNG PVT. LTD. IN ITA NO. 1787/KOL./2008. HE, THEREFORE, SUBMITTED THAT THE M ATTER MAY BE RESTORED BACK TO THE FILE OF ASSESSING OFFICER. 4. LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT RAIS E ANY OBJECTION. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. WE FIND THAT TRIBUNAL ON IDENTICAL ISS UE IN ITA NO. 1787/KOL./2008 IN THE CASE OF M/S. ERNST & YOUNG PVT. LTD. HAS OBSERVED A T PARA 12 IN PAGE 6 AS UNDER :- 12. GROUND NO. 5 OF THE REVENUES APPEAL IS AGAINS T THE RELIEF ALLOWED BY THE CIT(A.) IN RESPECT OF PROVISION FOR LEAVE ENCASHMEN T WHICH WAS DELETED BY THE CIT(A.) FOLLOWING THE DECISION OF THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF M/S. EXIDE INDUSTRIES LTD. (SUPRA). IT WAS POINT ED OUT BY THE LD. DR THAT THE HONBLE APEX COURT INSLP (CIVIL) 22889 OF 2008 HAS STAYED THE OPERATION OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS P OINT AND RESTORE THE MATTER BACK TO THE FILE OF THE AO WITH THE DIRECTION THAT HE WI LL READJUDICATE THIS ISSUE AS PER DECISION OF THE HONBLE APEX COURT IN THE CASE OF M /S. EXIDE INDUSTRIES LTD. (SUPRA). RESPECTFULLY FOLLOWING THE SAME WE SET ASIDE THE OR DERS OF AUTHORITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSIN G OFFICER FOR ADJUDICATION AS PER THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF M /S. EXIDE INDUSTRIES LTD.(SUPRA). IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE MATTER BACK TO THE FILE OF AS SESSING OFFICER FOR ADJUDICATION AS PER THE DECISIO N OF HONBLE APEX COURT IN THE CASE OF M/S. EXIDE IND USTRIES LTD. (SUPRA). THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 4. IN VIEW OF THE AFORESAID DECISION OF THE COORDIN ATE BENCH ON A SIMILAR ISSUE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE M ATTER BACK TO THE FILE OF THE AO FOR ADJUDICATION IN ACCORDANCE WITH THE DECISION OF HON BLE APEX COURT IN THE CASE OF M/S. 3 ITA NO.2078/KOL/2014 M/S. S.V.GJHATALIA & ASSOCIATES LLP., AY 2011-12 EXIDE INDUSTRIES LTD., SUPRA. THUS, THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. THE SECOND GROUND OF APPEAL OF ASSESSEE IS AGAIN ST THE ACTION OF THE LD. CIT(A) IN NOT DIRECTING THAT THE AO TO CORRECTLY COMPUTE THE AMOUNT OF INTEREST ALLOWABLE U/S. 244A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT). ACCORDING TO LD. AR, AS PER THE PROVISION OF SECTION 244A OF THE ACT, WHERE PRE-PAID TAXES ARE DETERMINED TO BE IN EXCESS OF TAX PAYABLE, INTEREST HAS TO BE PAID FROM 1 ST DAY OF APRIL OF ASSESSMENT YEAR TO THE DATE ON WHICH THE REFUND IS ACTUALLY GRANTED. ACCO RDING TO THE LD. AR, REFUND IN THE INSTANT CASE WAS GRANTED VIDE DD NO. 166322 DATED 09.04.201 3 WHICH IS PLACED AT PAGE 13 OF THE PAPER BOOK. THEREFORE, ACCORDING TO THE LD. AR, IN TEREST SHOULD HAVE BEEN COMPUTED AND ALLOWED FOR 25 MONTHS I.E. FROM 01.04.2011 TO 09.04 .2013. HOWEVER, THE AO HAS ALLOWED INTEREST FOR 24 MONTHS ONLY I.E. UP TO THE DATE OF PASSING OF THE ORDER. THE LD. AR FURTHER SUBMITTED THAT UP TO 01.04.1989 INTEREST ON THE REF UND WAS PERMISSIBLE AS PRESCRIBED U/S. 243 OF THE ACT, WHEREIN ALMOST SIMILAR EXPRESSION W AS USED BY THE PARLIAMENT. ACCORDING TO HIM, SECTION 244A OF THE ACT COMES INTO EFFECT F ROM 01.04.1989, WHEREAS SECTION 243 OF THE ACT IS AVAILABLE UP TO OR PRIOR TO 01.04.1989. THE WORDS, ACCORDING TO LD. AR, TO THE DATE OF THE ORDER GRANTING THE REFUND IN SECTION 243 OF THE ACT WAS CLARIFIED BY THE CB DT IN CIRCULAR NO. 20-D(XXII-22) OF 1968, DATED 20.08. 1968 AS UNDER: UNDER THE TERMS OF SECTION 243, INTEREST IS PAYAB LE BY THE GOVERNMENT WHERE THE REFUND IS NOT GRANTED WITHIN THREE MONTHS FROM THE DATE ON WH ICH THE TOTAL INCOME IS DETERMINED AND THE INTEREST WHERE PAYABLE IS TO BE CALCULATED AT THE S PECIFIED RATE, FROM THE DATE IMMEDIATELY FOLLOWING THE EXPIRY OF THE THREE MONTHS AFORESAID TO THE DATE OF THE ORDER GRANTING THE REFUND. FROM THIS, IT IS CLEAR THAT THE DATE OF THE ORDER G RANTING THE REFUND IS THE DATE OF THE REFUND VOUCHER ITSELF THE VIEW STATED TO HAVE BEEN TAKEN B Y SOME INCOME TAX OFFICERS, THAT THE DATE OF THE ASSESSMENT ORDER IS TO BE TAKEN AS THE DATE OF ORDER THE GRANTING THE REFUND IS NOT CORRECT. THUS, IN CASES WHERE INTEREST IS PAYABLE B Y THE CENTRAL GOVERNMENT TO ASSESSEE UNDER SECTION 243 OF THE ACT, SUCH INTEREST IS TO BE CALC ULATED UP TO THE DATE OF ISSUE OF THE REFUND VOUCHER. 6. IN THE AFORESAID BACKGROUND, ACCORDING TO THE LD . AR, THE AO SHOULD HAVE BEEN DIRECTED BY THE LD. CIT(A) TO GRANT INTEREST ON THE AMOUNT REFUNDED FROM 01.04.2011 TO 09.04.2013 I.E. 25 MONTHS @ 0.5% PER MONTH AS AGAIN ST 24 MONTHS GRANTED BY THE AO IN THE ASSESSMENT ORDER, WHICH HE HAD NOT GIVEN, THEREFORE , THE ASSESSEE IS IN APPEAL. 4 ITA NO.2078/KOL/2014 M/S. S.V.GJHATALIA & ASSOCIATES LLP., AY 2011-12 7. ON THE OTHER HAND, THE LD. DR POINTED OUT THAT B EFORE THE LD. CIT(A), THE ASSESSEE HAD STATED THAT IT HAS PREFERRED AN APPLICATION U/S . 154 BEFORE THE AO FOR CORRECT ALLOWANCE OF INTEREST U/S. 244A OF THE ACT. TAKING NOTE OF T HIS FACT OF ASSESSEES 154 APPLICATION, AND SINCE THE AO HAS NOT DISPOSED OFF THE 154 APPLICATI ON, ACCORDING TO THE LD. CIT(A), THIS GROUND OF APPEAL WAS PREMATURE AND, THEREFORE, HE D ISMISSED IT AND FURTHER DIRECTED THE AO TO DISPOSE OF THE 154 APPLICATION IMMEDIATELY. THER EFORE, ACCORDING TO THE LD. DR THE ASSESSEE SHOULD NOT HAVE ANY GRIEVANCE ON THIS GROU ND. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ISSUE IS IN RESPECT TO INTEREST ON REFUN D AND THE ISSUE IS NO LONGER RES INTEGRA. THE HONBLE BOMBAY HIGH COURT, NAGPUR BENCH IN SUNFLAG IRON & STEEL CO. LTD. VS. CBDT (2016) 387 ITR 674 (BOM.) AFTER TAKING NOTE OF THE DECISION OF HONBLE SUPREME COURT IN CIT VS. GUJARAT FLUORO CHEMICALS (2013) 358 ITR 291 (SC) AND CIT VS. H.E.G LTD. (2010) 324 ITR 331 (SC), UNION OF INDIA VS. TATA CHEMICALS LTD. (2014) 363 ITR 658 (SC) AND OTHER CASES, HAS OBSERVED AS UNDER: 19. IT COULD THUS CLEARLY BE SEEN THAT THE HON'BLE APEX COURT IN UNEQUIVOCAL TERMS HELD THAT THE EXPRESSION 'OTHER PROCEEDINGS UNDER THE ACT' US ED IN SECTION 240 OF THE ACT IS WIDE ENOUGH TO INCLUDE ANY ORDER PASSED IN PROCEEDINGS OTHER TH AN THE APPEALS UNDER THE ACT. THEIR LORDSHIPS FURTHER HOLD THAT THE OTHER PROCEEDINGS U NDER THE ACT WOULD INCLUDE ORDERS PASSED UNDER SECTION 154, ORDERS PASSED BY THE HIGH COURT OR SUPREME COURT UNDER SECTION 260 OR ORDERS PASSED BY THE COMMISSIONER IN REVISION APPLI CATIONS UNDER SECTION 263 OR IN AN APPLICATION UNDER SECTION 273A OF THE ACT. 20. IT HAS FURTHER BEEN OBSERVED THAT THE TAX REFUN D IS A REFUND OF TAXES WHEN THE TAX LIABILITY IS LESS THAN THE TAX PAID. IT HAS FURTHER BEEN HELD TH AT THE PAYMENT OF INTEREST IS A KIND OF COMPENSATION OF USE AND RETENTION OF MONEY COLLECTE D UNAUTHORIZEDLY BY THE DEPARTMENT. IT HAS FURTHER BEEN HELD THAT WHEN THE COLLECTION IS I LLEGAL, THERE IS CORRESPONDING OBLIGATION ON THE REVENUE TO REFUND SAID AMOUNT WITH INTEREST, IN ASMUCH AS THEY HAVE ENJOYED THE MONEY DEPOSITED.. 9. IN THE LIGHT OF THE AFORESAID OBSERVATION OF THE HONBLE BOMBAY HIGH COURT, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MA TTER BACK TO THE FILE OF THE AO TO COMPUTE THE INTEREST ON REFUND IN ACCORDANCE TO LA W. THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5 ITA NO.2078/KOL/2014 M/S. S.V.GJHATALIA & ASSOCIATES LLP., AY 2011-12 10. GROUND NO. 3 IS AGAINST THE ACTION OF THE LD. C IT(A) IN DISMISSING THE GROUND AGAINST THE ACTION OF THE AO IN CHARGING INTEREST OF RS.5,3 5,432/- U/S. 234B OF THE ACT. THE AO CHARGED INTEREST U/S. 234D OF THE ACT TO THE TUNE O F RS.5,35,432/-. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO HAS D ISMISSED THE SAME WITHOUT ASSIGNING ANY REASON WHICH ACTION OF THE LD. CIT(A) IS PER SE ARBITRARY AND UNCONSTITUTIONAL. ACCORDING TO THE LD. AR, INTEREST U/S. 234D OF THE ACT IS CHARGEABLE ONLY IF REFUND IS GRANTED TO THE ASSESSEE UNDER SUB-SECTION(1) OF SEC TION 143 OF THE ACT AND (A) NO REFUND IS DUE TO REGULAR ASSESSMENT OR (B) THE AMOUNT REFUNDE D IN SUB-SECTION (1) OF SECTION 143 OF THE ACT EXCEEDS THE AMOUNT REFUNDABLE ON REGULAR ASSESS MENT. ACCORDING TO THE LD. AR, REFUND OF RS.3,55,83,840/- INCLUDING INTEREST U/S. 244A OF THE ACT WAS GRANTED AS PER INTIMATION U/S. 143(1) OF THE ACT DATED 23.03.2013 VIDE DD NO. 166322 DATED 09.04.2013. FURTHER, A SUM OF RS.69,26,848/- HAS BEEN DETERMINE D AS PAYABLE IN THE ASSESSMENT ORDER, THEREFORE, ACCORDING TO LD. DR INTEREST U/S. 234D O F THE ACT SHOULD HAVE BEEN CHARGED AS UNDER: ON RS.69,26,848/- FROM 9.4.2013 TO 28.2.2014 I.E. 11 MONTHS @ 0.5% PM RS.3,80,977/-. ACCORDING TO LD. AR, THE ASSESSEE MOVED A 154 PETIT ION BEFORE THE AO TO CORRECT THE COMPUTATION OF INTEREST. HOWEVER, THE AMOUNT DETER MINED AS PAYABLE HAS BEEN REDUCED FROM 69,26,848/- TO RS.30,06,848/-. SO ACCORDING TO THE LD. AR, INTEREST U/S. 234D OF THE ACT EVEN IN 154 ORDER HAS BEEN WRONGLY AND EXCESSIV ELY CHARGED. ACCORDING TO THE LD. AR, THE AO WHILE PASSING ORDER U/S. 154 OF THE ACT DATE D 01.09.2014 CHARGED INTEREST U/S. 234D OF THE ACT AMOUNTING TO RS.2,43,686/- AS AGAINST RS .1,65,377/- WHICH IS COMPUTED AS UNDER: ON RS.30,06,848/- FROM 9.4.2013 TO 28.2.2014 I.E. 11 MONTHS @ 0.5% PM RS.1,65,377/- ACCORDING TO THE LD. AR, NO CALCULATION HAS BEEN ME NTIONED IN THE ASSESSMENT ORDER AS TO HOW THIS AMOUNT OF RS.5,35,432/- OR RS.2,43,686/- H AS BEEN ARRIVED AT. THEREFORE, IT WAS SUBMITTED BY THE LD. AR THAT THE AO MAY BE DIRECTED TO COMPUTE AND CHARGE INTEREST U/S. 234D OF THE ACT IN ACCORDANCE TO LAW. WE NOTE THAT THE LD. CIT(A) HAS REPRODUCED THE SUBMISSION OF THE LD. AR, HOWEVER, HAS NOT GIVEN AN Y REASON TO DISMISS THE GROUND OF 6 ITA NO.2078/KOL/2014 M/S. S.V.GJHATALIA & ASSOCIATES LLP., AY 2011-12 APPEAL. IN SUCH A SCENARIO, WE ARE INCLINED TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO TO CONSIDE R THE COMPUTATION OF THE ASSESSEE AND TO DISPOSE OF THIS ISSUE IN ACCORDANCE TO LAW AFRESH A FTER GIVING OPPORTUNITY TO THE ASSESSEE. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALSO ALLOW ED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13.09.2017 SD/- SD/- (J. SUDHAKAR REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13TH `SEPTEMBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. S.V. GHATALIA & ASSOCIATES LLP (A LIMITED LIABILITY PARTNERSHIP WITH LLP IDENTITY NO.AAB-4293) SUCCESSO R TO M/S. S.V. GHATALIA & ASSOCIATES EFFECTIVE FROM 1 ST APRIL, 2013), 22, CAMAC STREET, KOLKATA-700 016. 2 RESPONDENT ACIT, CIRCLE-54, KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY