The Dy. CIT., Circle-1(1), Baroda V. Gujarat State Fertilizers & Chemicals Ltd., Baroda

ITA 2459/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8015 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1997-1998
• Appeal Filed On: 05-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Section: 244A; 234B

Judgement Text

ITA NO. 2459/AHD/2014 DCIT VS. GUJARAT STATE FERTILIZERS & CHEMICALS LTD A.Y. 1997-98 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] I.T.A. NO.2459/AHD/2014 ASSESSMENT YEAR : 1997-98 THE DCIT .....APPELLANT CIRCLE-1(1), BARODA VS. GUJARAT STATE FERTILIZERS & CHEMICALS LTD .RESPONDENT PO FERTILIZER NAGAR, DIST. BARODA 391 750 [PAN : AAACG 7996 C] APPEARANCES BY: SONIA KUMAR FOR THE APPELLANT SANJAY R SHAH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 04.12.2017 DATE OF PRONOUNCING THE ORDER : 13.12.2017 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE APPELLANT ASSESSING O FFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 4 TH JUNE 2014, PASSED BY THE CIT(A)-I, BARODA, IN THE MATTER OF APPEAL EFFECT ORDER PASSED BY THE ASSESSI NG OFFICER, FOR THE ASSESSMENT YEAR 1997-98. 2. GRIEVANCE OF THE APPELLANT IS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN DIRECTING THE AO TO ALLOW THE INTEREST U/S 244A OF THE ACT ON REFUND OF INTEREST U/S 234B OF THE ACT WITHO UT APPRECIATING THE FACT THAT AS PER THE PROVISIONS OF SECTION 244A OF THE A CT, THE ASSESSEE IS NOT ENTITLED FOR INTEREST ON REFUND OF ANY INTEREST AS ALSO HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT FLUORO CHEMICALS 358 ITR 291 (SC) [2013]. 3. THE RELEVANT MATERIAL FACTS, AS DISCERNABLE FRO M MATERIAL ON RECORD, ARE AS FOLLOWS. WHILE GIVING EFFECT TO THE CIT(A)S ORDER , THE ASSESSING OFFICER REFUNDED INTEREST, PAID BY THE ASSESSEE UNDER SECTION 234B, OF RS.8,62,74,168/-. HOWEVER, HE ITA NO. 2459/AHD/2014 DCIT VS. GUJARAT STATE FERTILIZERS & CHEMICALS LTD A.Y. 1997-98 PAGE 2 OF 3 DID NOT PAY INTEREST UNDER SECTION 244A IN RESPECT OF THE SAME, NOR DID HE PROVIDE ANY REASONS FOR DECLINING INTEREST UNDER SECTION 244A. WHEN ASSESSEE CARRIED THIS ISSUE IN APPEAL BEFORE THE CIT(A), HE UPHELD THE GRIEVANCE O F THE ASSESSEE AND OBSERVED AS FOLLOWS:- 7.1 ABOVE SUBMISSION OF AR OF THE APPELLANT IS FOU ND TO BE TENABLE. THE HON'BLE ITAT AHMEDABAD IN THE CASE OF AC-IT VS ALEMBIC GLAS S INDUSTRIES LTD., 111 ITD 320 HAS MAINLY HELD THAT SECTION 244A GRANTS INTERE ST ONLY ON THAT AMOUNT OF REFUND, I.E. OUT OF THE PAYMENTS OF TAX OR PENALTY, MADE BY THE ASSESSEE OR COLLECTED FROM HIM. AS PER THE HON'BLE ITAT IN THE INSTANT CASE, THE ASSESSEE HAD MADE PAYMENT OF INTEREST U/S 234B WHICH WAS TO BE REFUNDED AS THE SAME WAS FOUND TO BE NOT CHARGEABLE. AS PER THE HON'BLE ITAT THEREFORE, THE CONDITION, THAT REFUND WAS OUT OF AMOUNT PAID OR COLLECTED FRO M THE ASSESSEE WAS SATISFIED FOR GRANTING THE INTEREST. AS PER THE HON'BLE ITAT, AHMEDABAD A LITERAL MEANING GIVEN TO THE EXPRESSION 'TAX OR PENALTY' FOUND IN C LAUSE (B) OF THE LATER PART OF SECTION 244A(1) WOULD CREATE AN ANOMALOUS SITUATION RESULTING IN EXCLUSION OF THE CONCEPT OF THE INTEREST. THEREFORE, IN THE CONTEXT OF SECTION 244A(1)(B), THE EXPRESSION TAX' WOULD INCLUDE INTEREST ALSO AND TH E DEFINITION OF TAX IN SECTION 2(43) MEANING 'INCOME- TAX' MAY NOT BE APPLICABLE I N THE CONTEXT OF SECTION 244A(1). AS PER THE HON'BLE ITAT CONSEQUENTLY, THE INTEREST PAID IN PURSUANCE OF AN ORDER UNDER SECTION 234B HAS TO BE REGARDED AS F ORMING PART OF TAX OR AN ADJUNCT TO INCOME-TAX. AS PER THE HON'BLE ITAT, THE RESULT WAS THAT THE ASSESSEE WOULD BE ENTITLED TO INTEREST ON THE REFUND OF INTE REST PAID LENDER SECTION 234B ALSO. AGAIN, THE HON'BLE HIGH COURT OF GUJARAT IN T HE CASE OF CIT VS GUJARAT STATE WAREHOUSING CORPORATION (SUPRA) HAS HELD THAT THE A SSESSEE IS ENTITLED TO INTEREST U/S 244(1A) IN RESPECT OF INTEREST PAYMENT S U/S 215, 217 AND 220(2) OF THE IT ACT. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF MODIPON LTD. VS CIT 142 TAXMAN, 92 HAS ALSO HELD THAT THE ASSESSEE IS E NTITLED TO INTEREST U/S 244(1A) IN RESPECT OF INTEREST PAYMENTS U/S 220(2) OF THE I T ACT. 7.2 IN VIEW OF ABOVE DECISION AND ALSO(IN VIEW OF ABOVE DECISIONS OF HON'BLE COURTS, IT IS HELD THAT THE APPELLANT IS ENTITLED T O INTEREST U/S 244A OF THE IT ACT ON THE AMOUNT OF INTEREST OF RS. 8,62,74,168/- AS PAID BY IT U/S 234B OF THE IT ACT. IN VIEW OF THIS THE AO IS DIRECTED TO GRANT INTEREST T O THE APPELLANT ON AMOUNT OF RS.8,62,74,168/- U/S 244A OF THE IT ACT FROM THE DA TE OF PAYMENT TILL THE DATE OF ISSUE OF REFUND. 4. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. WE FIND THAT SHORT GRIEVANCE OF THE REVENUE, AS EVIDENT FROM THE GROUND OF APPEAL REPRODUCED BY US EARLIER, IS THAT IN THE LIGHT OF H ONBLE SUPREME COURTS JUDGMENT IN THE CASE OF CIT VS. GUJARAT FLUORO CHEMICALS [(2013) 35 8 ITR 291 (SC)], INTEREST UNDER SECTION 244A CANNOT BE GRANTED IN RESPECT OF INTERE ST REFUNDED WHICH WAS WRONGLY CHARGED UNDER SECTION 234B EARLIER. HOWEVER, ON A PERUSAL OF THE SAID ORDER, WE FIND ITA NO. 2459/AHD/2014 DCIT VS. GUJARAT STATE FERTILIZERS & CHEMICALS LTD A.Y. 1997-98 PAGE 3 OF 3 THAT HONBLE SUPREME COURT WAS DEALING WITH INTERES T ON DELAYED PAYMENT OF INTEREST BY THE ASSESSING OFFICER. SUCH AN INTEREST ON INTERES T WAS HELD TO COMPENSATION FOR GREAT PREJUDICE CAUSED TO THE ASSESSEE, WHEN PAYMENT WAS INORDINATELY DELAYED BY DECADES, AND NOT A MATTER OF COURSE IN COMPUTATION OF STATUT ORY INTEREST PAYABLE BY THE ASSESSING OFFICER. INTEREST REFUNDED BY THE ASSESSING OFFICE R, ON ACCOUNT OF INCORRECT LEVY EARLIER, IS CERTAINLY NOT THE SAME THING AS A STATUTORY INTE REST ON REFUND BY THE ASSESSING OFFICER. THE RELIANCE PLACED ON THIS DECISION IS THUS WHOLLY MISPLACED AND IS REJECTED. NO OTHER ISSUE WAS RAISED IN APPEAL, OR EVEN OTHERWISE, BEFO RE US. WE, THEREFORE, DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF DECEMBER, 2017. SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 13 TH DAY OF DECEMBER, 2017 **BT* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF TAKING DICTATION: .. .3 PAGE MANUSCRIPTS OF HONBLE AM ARE ATTACHED ...11.12.2017.. 2. DATE OF TYPING & DRAFT ORDER PLACED BEFORE THE DI CTATING MEMBER: ... 11.12.2017.................... ..... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S.: ..13.12.2017...... 4. DT. ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT: ... . 13.12.20 17. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: . ...... 13.12.2017................ 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: ..... 7. THE DT. ON WHICH THE FILE GOES TO THE ASTT. REGISTR AR FOR SIGNATURE ON THE ORDER: .................. ....... 8. DATE OF DESPATCH OF THE ORDER: ................. ........