DCIT, CHENNAI V. M/s. Tube Investments of India Ltd., CHENNAI

ITA 2221/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7862 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 19-01-2017
• Assessment Year: 1998-1999
• Appeal Filed On: 25-07-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH JT
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 244A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, CHENNAI , !' . ' $ %, & %' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NOS.2221 & 2222/MDS/2016 & ) '*) / ASSESSMENT YEARS : 1998-99 & 1999-2000 DY. COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT-2, CHENNAI 600 101. (,-/ APPELLANT ) VS. TUBE INVESTMENTS OF INDIA LTD., DARE HOUSE, 234, N.S.C BOSE ROAD, CHENNAI 600 001. [PAN: AAACT 1249H ] (./,-/ RESPONDENT) ,- 0 1 / APPELLANT BY : SHRI A.V. SREEKANTH, JT. CIT ./,- 0 1 /RESPONDENT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE ' 0 2 /DATE OF HEARING : 19.01.2017 3* 0 2 /DATE OF PRONOUNCEMENT : 31.01.2017 / O R D E R PER SANJAY ARORA, AM : THIS IS A SET OF TWO APPEALS BY THE ASSESSEE ARISIN G OUT OF A COMMON ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-17, CHE NNAI DATED 30.03.2016, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING TH E ORDER BY THE ASSESSING OFFICER (AO) GIVING APPEAL EFFECT TO THE TRIBUNALS ORDER U/S. 254(1) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR AS SESSMENT YEARS (AYS) 1998- 99 & 1999-2000 DATED 31.12.2012 AND 19.07.2013 RESP ECTIVELY. 2 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. 2. THE ONLY ISSUE ARISING IN THESE APPEALS IS THE M ANNER IN WHICH THE INTEREST U/S. 244A OF THE ACT IS TO BE RECKONED WHERE THE EN TIRE SUM OF TAX AND INTEREST (U/S. 244A) THEREON (UP TO THE DATE OF GRANT OF REF UND) IS NOT PAID IN FULL, BUT IS GRANTED IN PART (ALSO REFER PARAA 3). FOR EXAMPLE, WHAT IS THE INTEREST (U/S. 244A) COMPONENT IN THE REFUND OF . 60 (SAY), GRANTED OUT OF A TOTAL REFUND OF . 120 (SAY) COMPRISING TAX (OF . 100) AND INTEREST THEREON (UP TO THE DATE OF THE REFUND) AT . 20. WHILE THE REVENUE APPROPRIATES, I.E., AS CLAI MED, THE ENTIRE OF IT AGAINST TAX, DEFERRING THE RECEIPT OF THE INTE REST COMPONENT TO THE LAST PAYMENT OF . 20, THE ASSESSEES SEEKS ITS APPROPRIATION AGAINST ENTIRE INTEREST DUE ( . 20), SO THAT THE TAX REFUNDED IS FOR THE BALANC E . 40 (60 - 20). IT, IN SO CONTENDING, DRAWS SUPPORT FROM THE PROVISION OF SECTION 140A, WHICH CLEARLY PROVIDES THAT THE PAYMENT THERE-UNDER SHALL BE ADJU STED FIRST AGAINST INTEREST (AS U/SS. 234A, 234B, 234C, ETC.,) DUE (UP TO THE DATE OF PAYMENT), AND ONLY THE BALANCE, IF ANY, AGAINST THE PAYMENT OF TAX LIABILI TY. SUPPORT IS ALSO DRAWN BEFORE US FROM THE COMMERCIAL PRACTICE WHERE A PART PAYMEN T OF A COMPOSITE DEBT, I.E., PRINCIPAL AND INTEREST, IS FIRST ADJUSTED AGAINST INTEREST AND O NLY THE BALANCE AGAINST THE PRINCIPAL. RELIANCE IS ALSO PLACED ON T HE DECISION BY THE TRIBUNAL DATED 25.11.2016 IN THE CASE OF CIT (DY.) V. WHEELS INDIA LTD . (ITA NOS. 2335 TO 2337/MDS/2016/COPY ON RECORD). THE TRIBUNAL IN T HE SAID ORDER HAS BASED ITS DECISION ON THE PRINCIPLE THAT IF EXCESS TAX REMAIN S TO BE REFUNDED BY THE DEPARTMENT, THE SAME IS TO BE SUBJECT TO INTEREST U /S. 244A AND, FURTHER, THAT APPROPRIATING A PART REFUND FIRSTLY AGAINST INTERES T DOES NOT AMOUNT TO ALLOWING INTEREST ON INTEREST, WHICH STANDS SINCE SETTLED AS NOT PERMISSIBLE BY THE HONBLE APEX COURT IN CIT V. GUJARAT FLOURO CHEMICALS [2013] 358 ITR 291 (SC), ALSO RELIED UPON BY THE REVENUE BEFORE US. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, INCLUDING THE ORDER BY THE TRIBUNAL SUPRA. WE HAVE ALSO CAREF ULLY GONE THROUGH THE ORDER 3 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. BY THE APEX COURT IN GUJARAT FLOURO CHEMICALS (SUPRA), COPY ON WHICH WAS ALSO ADDUCED BY THE LD. DEPARTMENTAL REPRESENTATIVE (DR) DURING HEARING. THOUGH THE ISSUE IS THE MANNER OF ADJUSTMENT OF A PART REFUND/S COMPRISING TAX AND INTEREST, THE SAME CLEARLY IMPACTS THE INTE REST FINALLY ALLOWABLE TO THE ASSESSEE U/S. 244A, AS WE SHALL DEMONSTRATE WITH A SET OF FIGURES AS UNDER AND, THUS, THE ISSUE ARISING IS TO BE CONSTRUED AS THE MANNER IN WHICH THE INTEREST U/S. 244A IS TO BE COMPUTED ON THE GRANT OF A REFUND TO THE ASSESSEE : (AMOUNT IN . ) PARTICULARS AMOUNT OF REFUND TAX INTEREST U/S. 244A REMARKS REFUND DUE 120 100 20 INTEREST UP TO THE DATE OF REFUND (OF TAX) OPTION A - ASSESSEE REFUND GRANTED (A) (60) (40) (20) OPTION A (BY THE ASSESSEE) BALANCE OUTSTANDING 60 60 0 REFUND DUE LESS GRANTED INTEREST U/S. 244A 3.6 -- 3.6 FOR 12 MONTHS @ 0.5 PER CENT (SAY) P.M. AMOUNT REFUNDABLE 63.6 60 3.6 (BAL. DUE + INTEREST) OPTION B REVENUE REFUND GRANTED (B) (60) (60) 0 OPTION B (BY THE REVENUE) BALANCE OUTSTANDING 60 40 20 REFUND DUE LESS GRANTED INTEREST U/S. 244A 2.4 -- 2.4 FOR 12 MONTHS @ 0.5 PER CENT (SAY) P.M. AMOUNT REFUNDABLE 62.4 40 22.4 (BAL. DUE + INTERES T) (*) (FIGURES IN BRACKETS REPRESENT NEGATIVE FIGURES , LIABLE TO BE DEDUCTED) BOTH THE PARTIES JUSTIFY THEIR RESPECTIVE STAND ON THE BASIS THAT THE INTEREST U/S. 244A IS BEING GRANTED ONLY ON THE TAX REFUND D UE, AND IS THEREFORE IN TERMS OF S. 244A. CLEARLY, ONE OF THE TWO IS, OR PERHAPS BOTH ARE, NOT IN TERMS OF S. 244A AND, THUS, INCORRECT. THE APEX COURT IN GUJARAT FLOURO CHEMICALS (SUPRA) 4 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. HAS CLARIFIED THAT THE ASSESSEE IS ENTITLED TO INTE REST STRICTLY IN TERMS OF THE PROVISION. WE MAY REPRODUCE THE RELEVANT PART OF T HE SECTION AS UNDER: INTEREST ON REFUNDS. 244A. (1) WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE UNDER THIS ACT, HE SHALL, SUBJECT TO THE PROVISIONS OF THIS SECTION , BE ENTITLED TO RECEIVE, IN ADDITION TO THE SAID AMOUNT, SIMPLE INTEREST THEREON CALCULATED IN THE FOLLOWING MANNER, NAMELY: ( A ) WHERE THE REFUND IS OUT OF ANY TAX COLLECTED AT S OURCE UNDER SECTION 206C OR PAID BY WAY OF ADVANCE TAX OR TREATED AS PAID UNDER SECTION 199, DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR, SUCH INTEREST SHALL BE CALCULATED AT THE RATE OF ONE PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1ST DAY OF APRIL O F THE ASSESSMENT YEAR TO THE DATE ON WHICH THE REFUND IS GRANTED : PROVIDED THAT NO INTEREST SHALL BE PAYABLE IF THE AMOUNT OF REFUND IS LESS THAN TEN PER CENT OF THE TAX AS DETERMINED UNDER SUB-SEC TION (1) OF SECTION 143 OR ON REGULAR ASSESSMENT; ( B ) IN ANY OTHER CASE, SUCH INTEREST SHALL BE CALCULA TED AT THE RATE OF ONE PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PER IOD OR PERIODS FROM THE DATE OR, AS THE CASE MAY BE, DATES OF PAYMENT OF TH E TAX OR PENALTY TO THE DATE ON WHICH THE REFUND IS GRANTED . EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, DATE OF PAYMENT OF TAX OR PENALTY MEANS THE DATE ON AND FROM WHICH THE AMOUNT OF TAX OR PEN ALTY SPECIFIED IN THE NOTICE OF DEMAND ISSUED UNDER SECTION 156 IS PAID IN EXCESS OF SUCH DEMAND. (2) (4) [EMPHASIS, OURS] THE SAME CLEARLY POSTULATES REFUND OF TAX AND INTER EST THEREON, I.E., UP TO THE DATE OF GRANT OF REFUND (OF TAX). IT IS THEREFORE NOT OPEN FOR THE REVENUE TO REFUND EITHER TAX ALONE (AS WHERE THE REFUND IN O UR EXAMPLE, IS FOR .100/-) OR INTEREST ALONE (AS WHERE THE REFUND IS FOR . 20/- ONLY), I.E., TO ANY EXTENT, AND, AS SUCH, DISPROPORTIONATELY. THE REASON IS SIMPLE. THE INTEREST IS TO BE ALLOWED ON A SIMPLE INTEREST BASIS AND, FURTHER, GRANTED AT THE TIME OF GRANT OF THE TAX REFUND, IN ADDITION THERETO, I.E., TOGETHER WITH TA X, CALCULATED UP TO THE DATE OF GRANT OF ITS REFUND. THAT IS, BECOMES PAYABLE ONLY AT THE TIME OF GRANT OF THE REFUND OF THE PRINCIPAL. THE REVENUE BEING SO OBLIGED IS IN LAW NOT COMPETEN T TO GRANT REFUND OF TAX WITHOUT COMMENSURATE INTEREST T HEREON . IT IS IN FACT ONLY BECAUSE THE INTEREST IS TO BE ALLOWED UP TO DATE, T HAT THE REFUND AMOUNT, WHERE LESS THAN THE AGGREGATE OF TAX (PRINCIPAL) AND INTE REST, SO CALCULATED, IS 5 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. CONSIDERED A PART REFUND, NECESSITATING APPORTIONIN G THE REFUND AMOUNT, WHICH THOUGH HAS TO BE IN CONFORMITY WITH THE PROVISION. APPROPRIATING IT AGAINST TAX, WHICH IS NOT TO BE REFUNDED IN ISOLATION, IS THUS C LEARLY INCORRECT. IT IS EQUALLY INCORRECT TO CONSIDER THE INTEREST AS DUE FOR PAYME NT, EXCEPT WHERE COMPRISED IN A REFUND AMOUNT THAT AGREES WITH THE PRINCIPAL AMOU NT BEING REFUNDED, AND WHICH IS THE FLAW THAT IMBUES THE ASSESSEES WORKIN G. APPROPRIATING THE REFUND AMOUNT BY ADJUSTING IT PREFERENTIALLY EITHER AGAINS T TAX OR INTEREST IS NOT IN TERMS OF AND, THUS, IN VIOLATION OF S. 244A. THE WORKING BY BOTH THE ASSESSEE AND THE REVENUE IS CLEARLY INCONSISTENT WITH THE PROVISION; WHILE ONE (ASSESSEE) SEEKS TO MAXIMIZE INTEREST U/S. 244A, THE OTHER (REVENUE) SE EKS TO MINIMIZE IT. AN APPROPRIATION FOLLOWING THE PROPORTIONATE PRINCI PLE, I.E., IN THE SAME RATIO AS THE TOTAL INTEREST (ON THE TOTAL TAX REFUN D DUE) BEARS TO THE SAID TAX, WOULD THUS SATISFY THE REQUIREMENT OF THE PROVISION. GOIN G BY OUR EXAMPLE, A COMPOSITE REFUND OF . 60 IMPLIES A TAX REFUND OF . 50 AND INTEREST THEREON UP TO DATE, AT . 10. THE BALANCE INTEREST OF . 10, I.E., ON THE BALANCE REFUND OF . 50, SHALL BE GRANTED ALONG WITH THE REFUND OF THE S AID TAX. THAT IS, THE BALANCE TAX REFUNDABLE OF . 50 SHALL CONTINUE TO CARRY INTEREST AT THE PRESCR IBED RATE ON SIMPLE INTEREST BASIS, WHILE THAT REFUNDED STAND S GRANTED ALONG WITH FULL INTEREST THEREON. THIS ONLY IS IN CONSONANCE WITH S . 244A, WHICH CONTEMPLATES GRANT OF THE TWO TOGETHER. THIS, IT MAY BE APPRECIA TED, WOULD ALSO RENDER, I.E., IN TERMS OF THE PROVISION, NUGATORY, THE ADVERSE IMPAC T OF THE DELAYED PAYMENT OF TAX, SAVING THE ASSESSEE THE PREJUDICE THAT MAY OTH ERWISE BE CAUSED TO IT, I.E., BY APPROPRIATING REFUND PREFERENTIALLY AGAINST TAX. TH E ASSESSEE SIMILARLY CANNOT CLAIM INTEREST WHICH IS TO BE ALLOWED ON SIMPLE INTEREST BASIS, AND ONLY ALONG WITH THE REFUND OF TAX (PRINCIPAL), PREFERENTIALLY. THE CALCULATION OF EITHER SIDE CAUSES PREJUDICE TO THE OTHER. WE MAY NOT DISCUSS T HIS FURTHER INASMUCH WE HAVE SHOWN THAT THE CALCULATION OF EITHER IS INCONSISTEN T WITH S. 244A, CAUSING ALLOWANCE OF INTEREST THERE-UNDER AT EITHER A LOWER OR A HIGHER AMOUNT THAN THAT 6 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. AS PER THE PROVISION. THE LD. AR WOULD, ON OUR SO O BSERVING DURING HEARING, WOULD SUBMIT THAT THE PROPORTIONATE METHOD BEING AD VOCATED PREJUDICES THE ASSESSEE. WE ARE UNABLE TO SEE HOW, AS THE ASSESSEE IS BEING ALLOWED INTEREST U/S. 244A, AT ALL TIMES, ON THE TAX BEING REFUNDED, AT S IMPLE INTEREST, UP TO THE DATE OF GRANT OF TAX REFUND, I.E., AS PROVIDED BY S. 244A. THE PREJUDICE CANNOT BE NOTIONAL, AND HAS ONLY TO BE PER THE PROVISION, I.E ., WITH REFERENCE TO THAT STATUTORILY ALLOWABLE. A REFUND OF . 100 (SAY), GOING BY OUR EXAMPLE, WOULD NOT IMPLY A TAX REFUND ONLY, AS CONSIDERED BY THE R EVENUE, BUT OF TAX AT . 83.33 (I.E., . 100 X 100/120) AND INTEREST THEREON AT . 16.67 (I.E., . 100 X 20/120). THE PREJUDICE IS TO BE WITH REFERENCE TO THE STATUTORY PROVISION ALLOWING INTEREST AND NOT IN A PRECONCEIVED MANNER, OR WITH REFERENCE ANOTHER PROVISION OF ACT, AS FOR EXAMPLE S. 140A. SECTION 1 40A CARRIES, BY WAY OF EXPLANATION THERETO, A CLEAR MANDATE FOR PREFERENTIAL ADJUSTME NT OF INTEREST, WHICH HAS TO BE THEREFORE RESPECTED, AS IS THAT OF S. 244A, ALLOWING INTEREST ALONG WITH THE AMOUNT OF REFUND OF TAX, I.E., UP TO DATE, OBLITERATING ANY SCOPE FOR PREJUDICE. THE ASSESSEES CLAIM THAT IT IS NOT BEING ALLOWED, BY ADOPTING ITS METHOD, INTEREST ON INTEREST, IS ALSO MISSING THE POINT. EV EN ASSUMING IT AS NOT SO, THE INTEREST CANNOT EXCEED THAT AS PROVIDED BY S. 244A. THE INTEREST OBLIGATION ON THE REVENUE, IT IS TO BE NOTED, FOR THE DELAYED REF UND OF TAX, IS SIMPLE INTEREST AT THE PRESCRIBED RATE, WHICH ONLY A PROPORTIONATE WOR KING WITH UP TO DATE INTEREST, ENSURES. ANY INTEREST IN EXCESS OF THE SA ME IS IN EXCESS OF THE OBLIGATION CAST BY LAW AND, THUS, WITHOUT ITS SANCTION. HOW, FOR EXAMPLE, COULD THE ASSESSEE CLAIM BEING PAID INTEREST AT . 20, WHICH ADMITTEDLY IS ON TAX OF . 100, ON THE TAX REFUND OF . 40 ? WHILE THE FIRST TAX REFUND IS GRANTED ALONG WITH INTEREST AT 50%, THE SECOND CARRIES INTEREST AT 6% THEREOF! THE TWO SHOULD BEAR A LINEAR CORRELATION, ALLOWING DIFFERENCE ONLY FOR THE TIME FACTOR. THE CORRECT INTEREST U/S. 244A, GOING BY THE FIGURES OF THE EXAMPLE, WOULD BE AN INTEREST OF . 20 FOR THE 7 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. FIRST PERIOD AND ANOTHER . 3 (I.E., ON . 50 @ 6%) FOR THE LATTER, I.E., AT A TOTAL OF .23/-, AS AGAINST . 23.60 CLAIMED BY THE ASSESSEE AND . 22.40 BY THE REVENUE. WE MAY REPRODUCE OUR CALCULATION BELOW, RE FERRING TO IT AS OPTION C : (AMOUNT IN . ) PARTICULARS AMOUNT OF REFUND TAX INTEREST U/S. 244A REMARKS REFUND DUE 120 100 20 INTEREST UP TO THE DATE OF REFUND REFUND GRANTED (60) (50) (10) AS PER S. 244A PRINCIPAL TOGETHER WITH INTEREST TO DATE BALANCE DUE FOR REFUND 60 50 10 REFUND DUE LESS GRANTED INTEREST U/S. 244A 3 -- 3 INTEREST ON THE BALANCE TAX (PRINCIPAL) DUE FOR REFUND, @ 0.5% P.M. AMOUNT REFUNDABLE 63 50 13 TAX REFUND ALONG WITH INTEREST THEREON TO DATE THE DIFFERENCE IN INTEREST, IT SHALL BE READILY SE EN, IS ONLY ON ACCOUNT OF WORKING INTEREST ON THE TAX REFUNDED ON SIMPLE INTE REST BASIS, SATISFYING FURTHER THE CONDITION OF REFUND OF TAX ALONG WITH THE INTER EST THEREON TO DATE. IT IS THE NON-OBSERVANCE OF THIS CLEAR MANDATE OF S. 244A THA T CAUSES THE DISTORTION IN THE INTEREST FIGURE. IN FACT, TO THE EXTENT THE AMOUNT OF TAX IS CONSIDE RED AS INTEREST, THE ASSESSEE IS ONLY, THROUGH WRONG APPROPRIATION, SEEKING INTEREST ON INTEREST . THE ASSESSEES ALLUDING TO THE COMMERCIAL PRINCIP LES OR PRACTICES IS, AGAIN, OUT OF CONTEXT. THE MODE AND MANNER OF WORKING INTE REST IN A COMMERCIAL TRANSACTION WOULD BE GOVERNED BY THE TERMS OF THE R ELEVANT CONTRACT, WHILE OF STATUTORY INTEREST, AS U/S. 244A, IS TO BE PER THE PROVISION, AS CLARIFIED AGAIN BY THE APEX COURT IN GUJARAT FLOURO CHEMICALS (SUPRA). 8 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. WE MAY NEXT ADVERT TO THE ORDER BY THE TRIBUNAL IN WHEELS INDIA LTD . (SUPRA), RELIED UPON BY THE ASSESSEE. THE DECISION, THE RATIO DECIDENDI OF WHICH ONLY HAS PRECEDENCE VALUE, IS PREMISED ON, AS AFORE -STATED, TWO PRINCIPLES/ CONSIDERATIONS, I.E., (I) NO INTEREST BEING ADMISSI BLE ON INTEREST; AND (II) AS LONG AS TAX REMAINS UNPAID, IT SHALL BE SUBJECT TO INTER EST. THERE IS, HOWEVER, ANOTHER ASPECT TO THE MATTER, ON WHICH WE OBSERVE NO FINDIN G/DISCUSSION BY THE TRIBUNAL, SO THAT IT IS NOT BE A PART OF ITS RATIO . THAT IS, INASMUCH AS THE TAX REFUND IS TO BE GRANTED ALONG WITH INTEREST TO DATE, THE SAME (INTE REST) IS PAYABLE ONLY THEREAT, AND CANNOT BE PAID EARLIER (OR, FOR THAT MATTER, LA TER) EXCEPT BY CONTRADICTING THE CLEAR TERMS OF THE PROVISION, WHICH WE HAVE SHOWN A S BEING SATISFIED, IN CASE OF A PARTIAL REFUND, I.E., LOWER IN AMOUNT THAN THE AG GREGATE OF TAX BEING REFUNDED AND INTEREST TO DATE (OF THE REFUND) THEREON, BY WO RKING THE ELEMENTS OF THE TOTAL REFUND, TO BE MADE COMPOSITELY, ON A PRO-RATA BASIS . EVEN AS WE THEREFORE AGREE WITH THE TWO PRINCIPLES AFORESAID, EMANATING FROM T HE SECTION ITSELF, WE CANNOT DISREGARD THE THIRD, ALSO EXPLICIT IN ITS LANGUAGE . THE REASON IS SIMPLE; IT COULD BE ONLY ON THE PERIL OF VIOLATING THE PROVISION. TH ERE IS NO ESTOPPLE AGAINST LAW . WE HAVE ALREADY CLARIFIED THAT INTEREST, TO THE EXT ENT APPROPRIATED IN EXCESS, SO THAT IT IS IN FACT ONLY TAX, SHORT ADJUSTED TO THAT EXTENT, AMOUNTS TO IN EFFECT GRANTING INTEREST ON INTEREST . GOING BY OUR EXAMPLE, THE BALANCE TAX REFUND DUE ON WHICH THEREFORE INTEREST U/S. 244A IS EXIGIBLE , IS . 50 AND NOT . 60; THE DIFFERENCE OF . 10 BEING INTEREST ACCRUED (ON THE UNPAID TAX REFU ND OF . 50), WHICH WILL BE BECOME PAYABLE ONLY ON ITS REFUND ( . 50), I.E., AT . 13, AS PART OF REFUND . 63, GRANTED A YEAR HENCE. THE ASSESSEE IS THUS CLEARLY CLAIMING INTEREST ON INTEREST, I.E., AT . 0.60 IN OUR EXAMPLE, ON THE ACCRUED INTEREST OF . 10 (FOR ONE YEAR) . INTEREST, IN TERMS OF THE PROVISION, IS TO BE ALL OWED ON SIMPLE INTEREST BASIS AND, TWO, ALONG WITH TAX BEING REFUN DED. THE ASSESSEES MANNER OF APPROPRIATION OF INTEREST, THUS, VIOLATES THE ADMIT TEDLY UN-VIOLABLE PRINCIPLE, MADE EXPLICIT IN THE PROVISION AND, FURTHER, SETTLE D BY THE APEX COURT IN GUJARAT 9 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. FLOURO CHEMICALS (SUPRA), I.E., OF NO INTEREST BEING ALLOWABLE ON IN TEREST, WHICH BEING STATUTORY INTEREST IS TO BE ALLOWED STRICTLY IN TERMS OF THE STATUTE. WE NEXT CONSIDER THE DECISION IN CIT V. H.E.G. LTD. [2010] 324 ITR 331 (SC) (185 TAXMAN 325) RELIED UPON BY THE LD. CIT(A) IN ACCEPTING THE ASSESSEES CASE. IN THE FACTS OF THAT CASE THE REVE NUE ALLOWED REFUND OF TDS OF .47.53 CR. AFTER 57 MONTHS WITHOUT ANY INTEREST THE REON U/S. 244A(1). THAT WHAT STOOD REFUNDED WAS ONLY TAX, WITHOUT ANY INTER EST, WAS ADMITTED AND NOT IN DISPUTE. IT WAS UNDER THESE CIRCUMSTANCES THAT THE HON'BLE APEX COURT HELD THAT REFUND OF INTEREST, DUE AND PAYABLE TO THE ASSESSEE, SHALL ATTRACT INTEREST U/S. 244A, AND THAT THE WORDS ANY AMOUNT IN S. 244A(1) DOES NOT RESTRICT ITS APPLICATION ONLY TO TAX, AND THAT IT WOULD NOT BE I NTEREST ON INTEREST OR PAYMENT OF INTEREST AT A COMPOUND RATE. WE ARE UNABLE TO SE E AS TO HOW THE SAID DECISION SUPPORTS THE ASSESSEES CASE OF PREFERENTIAL ADJUST MENT OF INTEREST, WHICH THE LD. CIT(A) ALLOWS, THOUGH CLEARLY REPUDIATES THE REVENU ES CLAIM OF APPROPRIATING REFUND AGAINST TAX, AS WAS IN FACT THE ADMITTED POS ITION IN THE SAID CASE. WE HAVE ALREADY CLARIFIED IN ABUNDANT DETAIL THAT THE APPRO PRIATION ADOPTED BY BOTH THE PARTIES IS NOT IN TERMS OF S. 244A, EACH CAUSING TH US PREJUDICE, I.E., WITH REFERENCE TO THE PROVISION, TO THE OTHER. THE DECIS ION IN FACT CLEARLY SUPPORTS THE PROPORTIONATE ADJUSTMENT ADVOCATED BY US WHICH AC CORDS WITH S. 244A IN-AS- MUCH AS THERE IS IN THAT CASE NO INTEREST DUE AND PAYABLE AT ANY STAGE WHICH REMAINS UNPAID; EACH REFUND BEARING THE PROPORTIONATE LOAD OF INTER EST TO DATE . IT IS ONLY WHEN INTEREST IS GRANTED ALONG WITH THE TAX REFUND WHICH PRINCIPLE IS COMPROMISED WHEN INTEREST DUE IS NOT PROPORTIONATEL Y ADJUSTED, THAT INTEREST BECOMES PAYABLE ON AMOUNT/S NOT REFUNDED, WHICH IS TO BE CONSIDERED AS THE PRINCIPAL AMOUNT CARRYING INTEREST, AND WHICH IS THE RATIO OF THE SAID DECISION . WE MAY STATE THIS FIGURATIVELY BY REQUIRING THE TAX REFUND (IN OUR EXAMPLE) TO BE CONSIDERED AS GRANTED IN TWO PARTS OF . 50 EACH; WHILE ONE IS PAID ALONG WITH 10 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. INTEREST TO DATE OF .10, THE OTHER, A YEAR HENCE, OF . 13, AS DEPICTED HERE- UNDER: (AMOUNT IN . ) PARTICULARS AMOUNT OF REFUND TAX-1 TAX-2 INTEREST U/S. 244A REMARKS TAX REFUND DUE 100 50 50 REFUND GRANTED (AT TIME T 1 ) (50) (50) -- (10) AS PER S. 244A PRINCIPAL WITH INTEREST TO DATE BALANCE DUE 50 -- 50 REFUND DUE LESS GRANTED REFUND GRANTED (AT TIME T 2 , A YEAR HENCE) (50) -- (50) (13) AS PER S. 244A PRINCIPAL WITH INTEREST TO DATE AMOUNT REFUNDED 100 50 50 23 TAX REFUND ALONG WITH INTEREST THEREON TO DATE THE SAID DECISION WOULD THEREFORE BE OF NO ASSISTAN CE TO THE ASSESSEE IN RELATION TO ITS CLAIM. DECISION 4. THE VARIOUS AMOUNTS PAID BY AND REFUNDED TO THE ASSESSEE WOULD THEREFORE REQUIRE BEING ADJUSTED AS UNDER: (I) EACH PAYMENT, OTHER THAN OF TDS, TCS AND ADVANCE-TA X, IS TO BE ADJUSTED FIRST AGAINST INTEREST DUE TO DATE, AND ON LY THE BALANCE AGAINST TAX ( EXPLANATION TO S. 140A); (II) EACH REFUND OF TAX, IN-AS-MUCH AS IT IS COMPENSATOR Y, SHALL BE SUBJECT TO INTEREST U/S. 244A FOR THE PERIOD UP TO THE DATE OF ITS GRANT; (III) EACH REFUND IS TO BEAR PRINCIPAL AND INTEREST U/S. 244A THEREON TO DATE (OF GRANT OF REFUND), I.E., PROPORTIONATELY, AND TH ERE CAN BE NO MISMATCH BETWEEN THE TWO. THE COMPONENT OF EACH CAN BE DETERMINED BY CONSIDERING THE REFUND AMOUNT AS A GR OSS AMOUNT COMPRISING THE TWO CONSTITUENTS IN THE SAME RATIO ( SEE OPTION C). FURTHER, IN VIEW OF THE DECISION BY THE APEX COURT IN H.E.G. LTD. (SUPRA), RELIED UPON BY THE LD. CIT(A), REFUND (WITHDRAWAL) OF INTE REST U/SS. 234A, 234B, 234C, ETC., BEING IN CONSEQUENCE TO A TAX DEFAULT, PARTAK ES THE CHARACTER OF TAX AND, 11 ITA NOS.2221 & 2222 /MDS/2016 (AYS 1998-99 & 1999-00) DY. CIT V. TUBE INVESTMENTS OF INDIA LTD. THEREFORE, SHALL ALSO CARRY COMPENSATORY INTEREST U /S. 244A, TO BE ALLOWED ON THE SAME BASIS AND IN THE SAME MANNER AS ON THE REFUND OF TAX PROPER. BEFORE PARTING WITH OUR ORDER, WE CANT HELP WONDE RING AS TO WHY, THE LAW BEING CLEAR, DOES THE REVENUE NOT GRANT REFUNDS FOR YEARS, OR GRANTS PART REFUNDS WHICH SHOULD BE EXCEPTIONAL, AS IN A CASE OF WRON G CALCULATION, WHICH IS AGAIN UNDERTAKEN THROUGH COMPUTERIZED SOFTWARE - REQUIRIN G SUCH ADJUSTMENTS. HOWEVER, ONCE SO GRANTED, AS IN THE INSTANT CASE, A PPROPRIATION BECOMES IMPERATIVE, FOR WHICH THE DEPARTMENT SHOULD ITSELF PROVIDE REQUISITE GUIDELINES. WE DECIDE ACCORDINGLY, AND BOTH PARTIES SUCCEED PA RTLY. 5. IN THE RESULT, BOTH THE REVENUES APPEALS ARE DI SPOSED OF ON THE AFORE-SAID TERMS. ORDER PRONOUNCED ON JANUARY 31, 2017 AT CHENNAI . SD/- SD/- ( . ' $ % ) ( ) (G. PAVAN KUMAR) (SANJAY ARORA) & /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, 4 /DATED, JANUARY 31 ST , 2017 EDN. 5 0 .&267 87*2 /COPY TO: 1. ,- /APPELLANT 2. ./,- /RESPONDENT 3. $ 92 ( )/CIT(A) 4. $ 92 /CIT 5. 7':; .&2& /DR 6. ;<) = /GF