A.C.I.,Circle-3, Kolkata, Kolkata V. The Peerless General Finance & Investment Co. Ltd., Kolkata

ITA 2764/KOL/2003

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2132 (ITAT-KOLKATA)
• Duration Of Justice: 15 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 14-11-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: S K TULSIYAN; PUJA SOMANI ACA
• Keywords: Retrospective amendment; Revised return; TDS; Set aside
• Section: 244A; 115JB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.2764/KOL/2003 ( / ASSESSMENT YEAR:1985-86) ACIT, CIRCLE-3, KOLKATA VS. THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. 3, ESPLANADE EAST, KOLKATA-69 ./ ./PAN/GIR NO.: AABFT 5240 Q (ASSESSEE) .. (REVENUE) ASSESSEEBY : SHRI RADHEY SHYAM, CIT DR RESPONDENT BY :SHRI S.K. TULSIYAN, ADVOCATE & PUJA SOMANI, ACA / DATE OF HEARING : 09/05/2019 /DATE OF PRONOUNCEMENT : 19/06/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTA INING TO ASSESSMENT YEAR 1985-86, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-IX, KOLKATA, WHICH IN TURN ARISES OUT OF A N ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 154 OF THE INCOME TAX AC T, 1961 (IN SHORT THE ACT) DATED,19/03/2012. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS F OLLOWS: 1. LD. CIT(A) HAD ERRED IN DIRECTING THE A.O. TO AL LOW INTEREST U/S 244A OF THE I.T. ACT, 1961 ON TAX PAID U/S 140A VIOLATING T HE PROVISIONS OF SECTION 244A OF THE I.T. ACT, 1961. THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 2 22 2 2. LD. CIT(A) HAD ERRED WITHOUT CONSIDERING THE PRO VISIONS OF SECTION 244A IN HOLDING THAT INTEREST PAYABLE WOULD BE GOVERNED BY PROVISION OF SECTION 244(1A). 3. THE LD. CIT(A) HAD ERRED IN ALLOWING INTEREST-ON -INTEREST GOING BEYOND THE PROVISION OF THE I.T. ACT. 3. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE FILED THE REVISED RETURN OF INCOME ON 9 TH MARCH,1988 DISCLOSING TOTAL INCOME OF RS.5,14,87,5 78/-. A FRESH ASSESSMENT ORDER U/S 143(3)/264/142(2A) OF THE INCOME TAX ACT 1961, WAS PASSED ON 22/ 09/1992 DETERMINING TOTAL INCOME OF RS.52,80,30,490 /-. SUBSEQUENTLY, AN APPEAL EFFECT WAS GIVEN TO THE ORDERS OF LEARNED CIT(A) AN D HON'BLE ITAT AND THEREUPON THE AO PASSED AN ORDER U/S 254/251 OFTHE ACT ON 24/ 10/1997 COMPUTING TOTAL INCOME AT LOSS OFRS.L,03,17,30,191/- AND THE TAX PA YABLE WAS FOUND TO BE NIL. THE TAX PAID BY THE ASSESSEE WAS GIVEN CREDIT BY THE AO IN HIS ORDER DATED 24/10/1997 AND ULTIMATELY NET AMOUNT OF RS.L,59,94,750/- WAS F OUND REFUNDABLE TO THE ASSESSEE WHICH WAS ADJUSTED AGAINST THE DEMAND RAISED FOR TH E ASSESSMENT YEAR 1994-95 ON 12/11/1997. 4. HOWEVER, IN THE ORDER PASSED ON DATED 24/10/1997 , UNDER SECTION 254/251 OF THE ACT, THE LEARNED AO FAILED TO GRANT INTEREST ON EXC ESS SELF-ASSESSMENT TAX OF RS.27,01,593/- PAID BY THE ASSESSEE FOR THE SUBJECT ASSESSMENT YEAR. AGGRIEVED, THE ASSESSEE FILED RECTIFICATION PETITION BEFORE TH E LEARNED AO TO GRANT INTEREST ON EXCESS SELF ASSESSMENT TAX OF RS.27,01,593/-. HOWEV ER, IN THE ORDER PASSED U/S 154 OF THE ACT, DATED 19/03/2002, THE LEARNED AO AG AIN FAILED TO GRANT INTEREST ON EXCESS SELF ASSESSMENT TAX OF RS.27,01,593/- WITHOU T ASSIGNING ANY REASONS THEREOF. 5. AGGRIEVED BY THE ORDER PASSED BY THE ASSESSING O FFICER UNDER SECTION 154 OF THE ACT, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE LD CIT(A). DURING THE APPELLATE PROCEEDINGS THE ASSESSEE MADE SUBMISSIONS BEFORE THE LD CIT(A) AND ALSO RELIED ON THE JUDGMENT OF THE HONBLE APEX COU RT IN THE CASE OF MODI INDUSTRIES LTD VS.CIT (1995) 216 ITR 759 WHEREIN I T WAS HELD AS FOLLOWS: THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 3 33 3 'SECTION 214 OF THE INCOME-TAX ACT, PROVIDES FOR PA YMENT OF INTEREST TO AN ASSESSEE ON THE EXCESS AMOUNT OF ADVANCE TAX PAID. AFTER ADJ USTMENT OF ADVANCE TAX AT THE TIME OF REGULAR ASSESSMENT, IF SOME BALANCE REMAINS TO THE CREDIT OF THE ASSESSEE, THAT BALANCE IS TREATED AS EXCESS AMOUNT OF ADVANCE TAX WHICH HAS TO BE REFUNDED WITH INTEREST UNDER SECTION 214.' FURTHER, THE ASSESSEE ALSO CITED A NUMBER OF DECISI ONS OF DIFFERENT HIGH COURTS WHEREIN IT HAS BEEN REPEATEDLY HELD THAT THE ASSESS EE IS ENTITLED TO INTEREST ON SELF- ASSESSMENT TAX. 6. THE LEARNED CIT(A) PERUSED THE FACTS AND THE SUB MISSIONS MADE BY THE ASSESSEE AND VIDE ORDER DATED 30/07/2003 DIRECTED THE LEARNE D AO TO ALLOW INTEREST UNDER SECTION 244(1A) OF THE ACT, ON THE EXCESS SELF- ASS ESSMENT TAX PAID. THE RELEVANT PORTION OF THE LD CIT(A)`S ORDER IS REPRODUCED BELO W: '11. ON CAREFUL CONSIDERATION OF THE SUBMISSION AND FACTS, IT REVEALS THAT THE ASSESSING OFFICER HAS NOT GRANTED INTEREST ON SELF- ASSESSMEN T TAX PAID AMOUNTING TO RS.27,01,593/- PAID ON 07-03- 1988 IN THE 154 ORDER, DATED 19/03/2 002. NO REASONS ARE ALSO GIVEN FOR NOT ALLOWING INTEREST. IN VIEW OF THE DECISIONS OF THE HIGH COURTS CITED BY THE ASSESSEE AND THE APEX COURT'S DECISION IN THE CASE OF MODI I NDUSTRIES LTD VS CIT (1995) 216 ITR 759, THE ASSESSING OFFICER IS DIRECTED TO ALLOW INT EREST UNDER SECTION 244(IA)/214(1A) ON SELF- ASSESSMENT TAX PAID. '. 7. AGGRIEVED BY THE ORDER OF THE LD CIT(A) IN DIRE CTING THE ASSESSING OFFICER TO ALLOW INTEREST ON SELF-ASSESSMENT TAX PAID, THE REV ENUE WENT IN APPEAL BEFORE THE HON`BLE ITAT, KOLKATA. 8. IN THE APPEAL BEFORE THE HON'BLE ITAT, KOLKATA, THE REVENUE CONTENDED THAT THE QUESTION OF GRANTING INTEREST ON SELF-ASSESSMENT TA X PAID, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IS NOT A MATTER TO BE COVERED U/S 154 OF THE ACT AND AS SUCH THE LEARNED CIT(A) HAS ERRED IN OBSERVI NG THAT THE AO HAS NOT GRANTED INTEREST ON SELF-ASSESSMENT TAX PAID AMOUNTING TO R S.27,01,593/- IN THE ORDER PASSED U/S 154 OF THE ACT DATED 19/03/2002. BEFORE THE HON'BLE ITAT, KOLKATA, THE ASSESSEE AGA IN REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) JUSTIFYING THE REASO NS AS TO WHY THE ASSESSEE IS LEGALLY ENTITLED TO INTEREST ON EXCESS SELF- ASSESS MENT TAX PAID BY IT AND INTEREST ON SUCH INTEREST. THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 4 44 4 HOWEVER, THE HON'BLE ITAT, KOLKATA DID NOT ADJUDICA TE THE PRESENT CASE OF THE ASSESSEE ON MERITS AND ALLOWED THE APPEAL OF REVENU E ON TECHNICALITIES OF SECTION 154 OF THE ACT. IN THE ORDER DATED 20/07/2004, THE HON'BLE TRIBUNAL, KOLKATA SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND HELD AS F OLLOWS: 'FOR THE REASONS GIVEN ABOVE, THE ORDER OF THE ID.C IT(A) DIRECTING THE AO TO GRANT INTEREST U/S 244(1A) ON SELF-ASSESSMENT TAX IN THE APPEAL ARISING OUT OF THE AO'S ORDER MADE U/S 154 OF THE ACT IS SET ASIDE AND VACA TED, MEANING THEREBY THAT THE CIT(A)'S DIRECTION TO GRANT INTEREST UNDER SECTION 214(1A) ON SELF- ASSESSMENT TAX PAID BY THE ASSESSEE IS CANCELLED. FURTHER WITH RESPECT TO THE ISSUE AS TO WHETHER INT EREST ON INTEREST IS ALLOWABLE IT WAS HELD AS FOLLOWS: 'WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE AS TO WHETHER INTEREST ON INTEREST IS ALLOWABLE IS NOT COVERED BY THE PROVISION OF SECTIO N 154 OF THE ACT AND CONSEQUENTLY, WE DO NOT LIKE TO ENTER INTO THE SAID QUESTION ON THE MERITS.' 9. AGGRIEVED WITH THE ORDER OF THE HON'BLE ITAT, TH E ASSESSEE FILED AN APPEAL BEFORE THE HON'BLE HIGH COURT OF CALCUTTA. THE QUES TIONS OFLAW RAISED BEFORE THE HON'BLE HIGH COURT WAS AS UNDER: 'WHETHER THE ASSESSEE IS ENTITLED TO CLAIM INTEREST ON EXCESS PAYMENT OF SELF-ASSESSMENT TAX AND INTEREST ON SUCH INTEREST' THE HON'BLE HIGH COURT VIDE ORDER DATED 15/02/2019 , DID NOT AGREE WITH THE ITAT ON THE ISSUES OF GRANT OF INTEREST AND INTEREST ON INTEREST ON EXCESS PAYMENT OF SELF- ASSESSMENT TAX, BEING A DEBATEABLE ISSUE. THE HIGH COURT REMANDED THE ENTIRE MATTER BACK TO THE HON'BLE ITAT DIRECTING THE ITAT TO TAKE A HOLISTIC VIEW OF THE ENTIRE MATTER, UPON HEARING THE PARTIES AND PASSING A REASONED ORDER. THE RELEVANT EXTRACTS OF THE JUDGMENT IS REPRODUCED BELOW: 'IN ORDER THAT THERE IS A COMPLETE RESOLUTION OF DI SPUTES BETWEEN THE PARTIES THE TRIBUNAL SHOULD NOT INSIST ON TECHNICALITIES AS TO WHETHER T HE ISSUE RAISED BY THE APPELLANT U/S 154 OF THE INCOME TAX ACT, 1961 WAS DEBATABLE OR NOT DE BATABLE AND THEREAFTER DECIDE WHETHER TO ENTERTAIN THE APPEAL OR NOT. IT IS NO DO UBT A TRICKY SITUATION WHERE BOTH DEBATABLE AND NON DEBATABLE ISSUES ARE INVOLVED. TH E TRIBUNAL SHOULD APPROACH THE PROBLEM HOLISTICALLY.' 10. NOW, IN VIEW OF THE HON'BLE HIGH COURT'S ORDER (SUPRA), THE MATTER CAME BACK BEFORE THIS TRIBUNAL. THE ISSUES BEFORE THE TRIBUNA L ARE AS FOLLOWS: THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 5 55 5 (A). WHETHER THE ASSESSEE IS ENTITLED TO INTEREST O N SELF- ASSESSMENT TAX, AND (B). WHETHER THE ASSESSEE IS ENTITLED TO TAKE INTER EST ON SUCH INTEREST WHICH REMAINED UNPAID 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ISSUE IS SQUARELY COVERED BY THE J UDGMENT OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A. NO. 1427/KOL/2017 FOR A.Y. 1990-91 ORDER DATED 28.09.2018, WHEREIN THE TRIBUNAL INTER ALIA OBSERVE D AS FOLLOWS: 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION I S WHETHER THE ASSESSEE IS ENTITLED TO CLAIM OF INTEREST ON THE OUTSTANDING REFUND, DUE TO THE A SSESSEE, WHICH INCLUDED INTEREST ON REFUND. THE CASE OF THE ASSESSEE IS THAT IT IS ENTITLED TO CLAI M OF INTEREST, ON THE INTEREST WHICH IS PART OF THE OUTSTANDING REFUND AS IT ALSO CONSTITUTE AMOUNT TO BE REFUNDED TO THE ASSESSEE AS ON 20/03/1993, ON WHICH DATE THE DEMAND RELEVANT TO TH E ASSESSMENT YEAR 1992-93, WAS SET OFF BY THE LD. ASSESSING OFFICER. FOR THIS PROPOSITION, TH E ASSESSEE RELIES ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF K. LAKSHMANYA & CO. V. COMMISSIONER OF INCOME TAX [2017] 399 ITR 657 (SC) AND ON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN DCIT VS. MS. PEERLESS GENERAL FINANCE & INV ESTMENT CO. LTD. ITA NO.50/KOL/2009, ORDER DT. 30/05/2017. HE SUBMITTED A PAPER BOOK RUN NING INTO 54 PAGES AS WELL AS WRITTEN SUBMISSIONS IN SUPPORT OF THESE CONTENTIONS. AT ANN EXURE-2, TO THE WRITTEN SUBMISSIONS, HE PROVIDED A REVISED COMPUTATION OF INTEREST U/S 244A OF THE ACT AND REFUND PAYABLE TO THE ASSESSEE AS PER THE LD. ASSESSING OFFICERS ORDER. 2.1. THE LD. D/R, ON THE OTHER HAND, RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THE LD. CIT(A) HAS RELIED ON THE DECISION OF THE HO NBLE APEX COURT IN THE CASE OF CIT VS. GUJARAT FLUORO CHEMICALS [2013] 358 ITR 291 AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. INDIAN FARMER FERTILIZ ER CO-OPERATIVE, [2015] 56 TAXMANN.COM 453 (DELHI) AND SUBMITTED THAT INTEREST ON UNPAID INTER EST CANNOT BE GRANTED U/S 244A OF THE ACT. IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE, POINTE D OUT THAT THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. GUJARAT FLUORO CHEMICA LS (SUPRA), WAS CONSIDERED BY THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OW N CASE FOR THE ASSESSMENT YEAR 2002-03, CITED ABOVE. HE FURTHER SUBMITTED THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS IN THE ASSESSEES OWN CASE IN THE COMMISSIONER OF INCOME-T AX, KOLKATA-I V. PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD [2015] 59 TAXMANN.COM 37 (CALC UTTA), ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE. 3. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONS IDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- THE HONBLE SUPREME COURT IN THE CASE OF K. LAKSHM ANYA & CO. V. COMMISSIONER OF INCOME TAX (SUPRA) HAS ANALYZED SECTION 244A OF THE ACT AN D HELD AS FOLLOWS:- 10. THE PRESENT CASE WOULD FALL OUTSIDE SUB-CLAUSES A A ND AA OF THIS PROVISION AND, THEREFORE, FALL WITHIN THE RESIDUARY CLAUSE, NAMELY SUB-CLAUSE (B) OF SECTION 244(A). THE MADRAS HIGH COURT IN NEEDLE INDUSTRIES PVT. LTD . CASE (SUPRA) CONCERNED ITSELF WITH THE POSITION PRIOR TO THE ADVENT OF SECTION 244A. IT FO UND THAT THE EXPRESSION 'REFUND OF ANY AMOUNT' USED BY SECTIONS 240 AND 244 WOULD INCLUDE NOT ONLY TAX AND PENALTY BUT INTEREST ALSO. IT WAS, THEREFORE, HELD THAT THE CLEAR INTENTION OF PARLIAM ENT IS THAT THE RIGHT TO INTEREST WILL COMPENSATE THE ASSESSEE FOR THE EXCESS PAYMENT DURING THE INTE RVENING PERIOD WHEN THE ASSESSEE DID NOT HAVE THE BENEFIT OF USE OF SUCH MONEY PAID IN WHATS OEVER CHARACTER. 11. THE COURT HELD THAT THE RESULT WOULD BE THAT THE AS SESSEE WOULD BE ENTITLED TO INTEREST ON REFUND ALSO. THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 6 66 6 12. THIS COURT IN SANDVIK ASIA LTD.'S CASE (SUPRA) SET OUT SEVERAL QUESTIONS OF LAW WHICH AROSE ON THE FACTS OF THAT CASE. WE ARE CONCERNED WITH QU ESTIONS C AND E WHICH READ AS FOLLOWS: '(C). WHETHER ON A PROPER INTERPRETATION OF THE VAR IOUS PROVISIONS OF THE ACT AN ASSESSEE WAS ENTITLED TO BE COMPENSATED FOR THE DELAY IN PAYING TO IT ANY 'AMOUNT' DUE TO IT EVEN IF SUCH 'AMOUNT' COMPRISED OF INTEREST, AS HAD BEEN HELD BY THE DELHI AND MADRAS HIGH COURTS AND HENCE THE IMPUGNED JUDGMENT WAS ERRONEOUS AND OUGHT TO BE REVERSED ? E. WHETHER THE HIGH COURT OUGHT TO HAVE HELD THAT S ECTIONS 240 AND 244 OF THE ACT REFER TO 'REFUND OF ANY AMOUNT', WHICH PHRASE CLEARLY INCLUD ES ANY AMOUNT (INCLUDING INTEREST) DUE BY THE INCOME TAX DEPARTMENT TO THE ASSESSEE, AND HENCE TH E APPELLANT WAS ENTITLED TO INTEREST ON THE DELAY IN THE PAYMENT OF AMOUNTS DUE FROM THE INCOME -TAX DEPARTMENT ?' 13. AFTER SETTING OUT THE RELEVANT STATUTORY PROVISIONS , WHICH AT THAT TIME COVERED SECTION 244 AND NOT SECTION 244(A), AND AFTER REFERRING TO A NU MBER OF DECISIONS, THE COURT ULTIMATELY REFERRED TO NEEDLE INDUSTRIES (P.) LTD.'S CASE (SUP RA) AND EXPRESSLY APPROVED THE SAME. IT CONCLUDED THE AFORESAID QUESTIONS IN FAVOUR OF THE ASSESSEE AS FOLLOWS: 'IN THE PRESENT APPEAL, THE RESPONDENTS HAVE ARGUED THAT THE COMPENSATION CLAIMED BY THE APPELLANT IS FOR DELAY BY THE REVENUE IN PAYING OF INTEREST, AND THIS DOES FALL WITHIN THE MEANING OF REFUND AS SET OUT IN SECTION 237 OF THE ACT. THE RELEVANT PROVISION IS SETION 240 OF THE ACT WHICH CLEARLY LAYS DOWN THAT WHAT IS RELEVANT IS WH ETHER ANY AMOUNT HAS BECOME DUE TO AN ASSESSEE, AND FURTHER THE PHRASE ANY AMOUNT WILL AL SO ENCOMPASS INTEREST. THIS VIEW HAS BEEN ACCEPTED BY VARIOUS HIGH COURTS SUCH AS THE DELHI, MADRAS, KERALA HIGH COURTS ETC.' 14. IN CIT V. H.E.G. LTD. [2010] 189 TAXMAN 335 (SC) , THIS COURT WAS SQUARELY CONFRONTED WITH THE MEANING OF THE EXPRESSION ' WHERE REFUND OF ANY AMOUNT BECOME DUE TO THE ASSESSEE' IN SECTION 244(A)(1). THIS QUESTION WAS ANSWERED AS FO LLOWS: '5.IN THE PRESENT CASE, AS STATED ABOVE, THERE ARE TWO COMPONENTS OF THE TAX PAID BY THE ASSESSEE FOR WHICH THE ASSESSEE WAS GRANTED REFUND, NAMELY T DS OF RS. 45,73,528 AND TAX PAID AFTER ORIGINAL ASSESSMENT OF RS. 1,71,00,320. THE DEPARTM ENT CONTENDS THAT THE WORDS 'ANY AMOUNT' WILL NOT INCLUDE THE INTEREST WHICH ACCRUED TO THE RESPONDENT FOR NOT REFUNDING RS. 45,73,528 FOR 57 MONTHS. WE SEE NO MERIT IN THIS ARGUMENT. THE IN TEREST COMPONENT WILL PARTAKE OF THE CHARACTER OF THE 'AMOUNT DUE' UNDER SECTION 244-A. IT BECOMES AN INTEGRAL PART OF R. 45,73,528 WHICH IS NOT PAID FOR 57 MONTHS AFTER THE SAID AMOU NT BECAME DUE AND PAYABLE. AS CAN BE SEEN FROM THE FACTS NARRATED ABOVE, THIS IS THE CASE OF SHORT PAYMENT BY THE DEPARTMENT AND IT IS IN THIS WAY THAT THE ASSESSEE CLAIMS INTEREST UNDER SE CTION 244-A OF THE INCOME TAX ACT. THEREFORE, ON BOTH THE AFORESTATED GROUNDS, WE ARE OF THE THE VIEW THAT THE ASSESSEE WAS ENTITLED TO INTEREST FOR 57 MONTHS ON RS. 45,73,5289. THE PRINCIPAL AMOU NT OF RS. 45,73,528 HAS BEEN PAID ON 31.12.1997 BUT NOT OF INTEREST WHICH, AS STATED ABO VE, PARTOOK THE CHARACTER OF 'AMOUNT DUE' UNDER SECTION 244-A.' 15. IN UNION OF INDIA V. TATA CHEMICALS LTD. [2014] 363 ITR 658/222 TAXMAN 225/43 TAXMANN.COM 240 (SC) , THIS COURT AFTER GOING INTO THE OBJECT FOR THE EN ACTMENT OF SECTION 244(A), HELD: 'INTEREST PAYMENT IS A STATUTORY OBLIGATION AND NON - DISCRETIONARY IN NATURE TO THE ASSESSEE. IN TUNE WITH THE AFORESAID GENERAL PRINCIPLE, SECTION 244A IS DRAFTED AND ENACTED. THE LANGUAGE EMPLOYED IN SECTION 244A OF THE ACT IS CLEAR AND PL AIN. IT GRANTS SUBSTANTIVE RIGHT OF INTEREST AND IS NOT PROCEDURAL. THE PRINCIPLES FOR GRANT OF INTE REST ARE THE SAME AS UNDER THE PROVISIONS OF SECTION 244 APPLICABLE TO ASSESSMENTS BEFORE 01.04. 1989, ALBEIT WITH CLARITY OF APPLICATION AS CONTAINED IN SECTION 244A. 31. THE DEPARTMENT HAS ALSO ISSUED A CIRCULAR CLARI FYING THE PURPOSE AND OBJECT OF INTRODUCING SECTION 244A OF THE ACT TO REPLACE SECTIONS 214, 24 3 AND 244 OF THE ACT. IT IS CLARIFIED THEREIN, THAT, SINCE THERE WAS SOME LACUNAE IN THE EARLIER P ROVISIONS WITH REGARD TO NON-PAYMENT OF INTEREST BY THE REVENUE TO THE ASSESSEE FOR THE MON EY REMAINING WITH THE GOVERNMENT, THE SAID SECTION IS INTRODUCED FOR PAYMENT OF INTEREST BY TH E DEPARTMENT FOR DELAY IN GRANT OF REFUNDS. A GENERAL RIGHT EXISTS IN THE STATE TO REFUND ANY TAX COLLECTED FOR ITS PURPOSE, AND A CORRESPONDING RIGHT EXISTS TO REFUND TO INDIVIDUALS ANY SUM PAID BY THEM AS TAXES WHICH ARE FOUND TO HAVE BEEN WRONGFULLY EXACTED OR ARE BELIEVED TO BE, FOR ANY R EASON, INEQUITABLE. THE STATUTORY OBLIGATION TO REFUND CARRIED WITH IT THE RIGHT TO INTEREST ALSO. THIS IS TRUE IN THE CASE OF ASSESSEE UNDER THE ACT.' 16. THE ABOVE EXTRACT WOULD CLEARLY SHOW THAT A CORRESP ONDING RIGHT EXISTS, TO REFUND TO INDIVIDUALS ANY SUM PAID BY THEM AS TAXES WHICH ARE FOUND TO HAVE BEEN WRONGFULLY EXASTED OR THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 7 77 7 BELIEVED TO BE, FOR ANY REASON, INEQUITABLE. THE ST ATUTORY OBLIGATION TO REFUND, BEING NON DISCRETIONARY, CARRIES WITH IT THE RIGHT TO INTERES T, ALSO MAKING IT CLEAR THAT THE RIGHT TO INTEREST IS PARASITICAL. THE RIGHT TO CLAIM REFUND IS AUTOMATIC ONCE THE STATUTORY PROVISIONS HAVE BEEN COMPLIED WITH. HOWEVER, MR. K.RADHAKRISHNAN, LEARNED SENIOR COUNSE L APPEARING FOR THE RESPONDENT-REVENUE, HAS STRONGLY RELIED UPON THE DECISION OF THIS COURT IN ANJUM M.H. GHASWALA'S CASE (SUPRA). IN THIS JUDGMENT, THIS COURT HELD THAT THE SETTLEMENT COMMISSION WAS INTRODUCED INTO THE INCOME- TAX ACT FOR THE PURPOSE OF QUICK SETTLEMENT OF CASE S BEFORE IT, SO THAT THE THE TAX DUE TO THE REVENUE GETS COLLECTED AT THE EARLIEST. THE OBJECT OF THIS EXERCISE IS NOT TO ASSIST TAX EVADERS. IN SO HOLDING, THIS COURT HELD THAT SECTION 245(D)(6) BEING PROCEDURAL IN NATURE, CANNOT BE USED TO LOCATE ANY POWER TO WAIVE INTEREST, IF IT IS NOT OT HERWISE WAIVED UNDER SOME OTHER SUBSTANTIVE PROVISION IN THE INCOME-TAX ACT. 17. ULTIMATELY, THIS COURT ARRIVED AT THE CONCLUSION TH AT THE COMMISSION CANNOT EITHER WAIVE OR REDUCE INTEREST WHICH IS STATUTORILY PAYABLE UNLESS THERE IS EXPRESS POWER TO DO SO IN THAT BEHALF. HOWEVER, WHILE SO SAYING, THE COURT WENT ON TO CLAR IFY THAT THE CIRCULARS ISSUED PURSUANT TO THE POWERS UNDER SECTION 119 OF THE ACT, WHICH EMPOWER THE AUTHORITIES UNDER THE ACT TO WAIVE OR REDUCE INTEREST, MAY BE AVAILED BY THE SETTLEMENT C OMMISSION TO WAIVE INTEREST. 18. WE ARE OF THE VIEW THAT THE EXPRESSION 'DUE' ONLY M EANS THAT A REFUND BECOMES DUE IF THERE IS AN ORDER UNDER THE ACT WHICH EITHER REDUCES OR WAIV ES TAX OR INTEREST. IT IS OF NO MATTER THAT THE INTEREST THAT IS WAIVED IS DISCRETIONARY IN NATURE, FOR THE MOMENT THAT DISCRETION IS EXERCISED, A CONCOMITANT RIGHT SPRINGS INTO BEING IN FAVOUR OF T HE ASSESSEE. WE ARE, THEREFORE OF VIEW THAT THE C.I.T. (APPEALS) AND THE ITAT WERE CORRECT IN THEIR VIEW AND THAT CONSEQUENTLY, THE HIGH COURT WAS INCORRECT IN ITS VIEW THAT SINCE A DISCRETIONAR Y POWER HAS BEEN EXERCISED, NO CONCOMITANT RIGHT WAS FOUND FOR REFUND OF INTEREST TO THE ASSES SEE. 19. THE APPEALS ARE ACCORDINGLY ALLOWED AND THE IMPUGNE D JUDGMENT IS SET ASIDE. 3.1. THIS BENCH OF THE TRIBUNAL IN THE ASSESSEES O WN CASE, IN ITA NO. 50/KOL/2009, FOR THE ASSESSMENT YEAR 2002-03, ORDER DT. 02/06/2017, HAD CONSIDERED A PLETHORA OF JUDGMENTS AND HELD AS FOLLOWS:- 6. WE FIND THAT THE CASE LAWS RELIED UPON HEREINA BOVE ARE VERY WELL FOUNDED AND SUPPORTS THE CASE OF THE ASSESSEE. WE FIND THAT THE IMPUGNE D DISPUTE BEFORE US IS SQUARELY ADDRESSED BY THE CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF UNION BANK OF INDIA VS ACIT REPORTED IN (2016) 72 TAXMANN.COM 348 (MUMBAI TRIB) DATED 11.8.2016 WHICH HAD DULY CONSIDERED THE AFORESAID DECISIONS AND HAD HELD AS UNDER:- 3.4 WE HAVE GONE THROUGH THE FACTS OF THIS CASE AND SU BMISSIONS MADE BY BOTH SIDES, PROVISIONS OF LAW AS WELL AS JUDGMENTS PLACED BEFOR E US. IT IS NOTED THAT THE ONLY ISSUE TO BE DECIDED BY US IS THAT WHILE GRANTING THE REFUND IN PURSUANCE TO THE APPEAL EFFECT ORDER, WHETHER THE AMOUNT OF REFUND GRANTED EARLIER SHOULD BE ADJUSTED FIRST AGAINST THE INTEREST COMPONENT OF THE EARLIER REFUND AND THEREAFTER THE BALANCE AMOUNT SHOULD BE ADJUSTED AGAINST THE PRINCIPAL COMPONENT OF TAX IN THE REFUN D GRANTED EARLIER ORDER OR VICE-VERSA AS HAS BEEN DONE BY THE AO. IT IS NOTED THAT THIS ISSU E IS NOT COMING FOR THE FIRST TIME BEFORE THE TRIBUNAL AS THE SAME HAS ARISEN FOR A.YS. 1988-89, 2001-02 & 2005-06. COPIES OF THE ORDERS WERE PLACED BEFORE US AND IT WAS CONTENDED B Y THE LD. COUNSEL THAT THE TRIBUNAL HAD ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSE E THEREFORE, BEFORE PROCEEDING FURTHER WE FIND IT APPROPRIATE TO FIRST REPRODUCE AND DISCUSS THE REASONING GIVEN BY THE TRIBUNAL IN EARLIER YEARS. THE RELEVANT PART OF ORDER DATED 23. 06.2014 IS REPRODUCED HEREUNDER FOR THE SAKE OF READY REFERENCE: 4.. 5. 6. .. 3.5 FROM THE PERUSAL OF THE ABOVE, IT IS NOTED BY US T HAT THE TRIBUNAL HAS RELIED UPON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANISATION (SUPRA), WHEREIN IT WAS INTER-ALIA HELD THAT IN A S ITUATION WHERE ONLY PART AMOUNT IS REFUNDED BY THE DEPARTMENT, THEN PAYMENT OF INTERES T ON THE BALANCE AMOUNT DUE FROM THE DEPARTMENT TO THE ASSESSEE, ON A PARTICULAR DATE, D OES NOT AMOUNT TO PAYMENT OF INTEREST ON INTEREST. THEIR LORDSHIPS, TAKING SUPPORT FROM THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT V. HEG LTD. [2010] 324 ITR 331/189 TAXMAN 335 , OBSERVED AS UNDER: THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 8 88 8 '14. MATTER WAS TAKEN BY THE REVENUE BEFORE THE SUP REME COURT IN THE CASE OF HEG LIMITED AND THE SLP WAS GRANTED AND CIVIL APPEAL WAS REGIST ERED. THE SUPREME COURT THEREUPON ANSWERED THE QUESTION AGAINST THE REVENUE IN THE FO LLOWING WORDS:- THEREFORE, THIS IS NOT A CASE WHERE THE ASSESSEE IS CLAIMING COMPOUND INTEREST OR INTEREST ON INTEREST AS IS SOUGHT TO BE MADE OUT IN THE CIVIL A PPEALS FILED BY THE DEPARTMENT. THE NEXT QUESTION WHICH WE ARE REQUIRED TO ANSWER I S - WHAT IS THE MEANING OF THE WORDS 'REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE' IN SECTION 244A? IN THE PRESENT CASE, AS STATED ABOVE, THERE ARE TWO COMPONENTS OF THE TA X PAID BY THE ASSESSEE FOR WHICH THE ASSESSEE WAS GRANTED REFUND, NAMELY TDS OF RS. 45,7 3,528 AND TAX PAID AFTER ORIGINAL ASSESSMENT OF RS. 1,71,00,320. THE DEPARTMENT CONTE NDS THAT THE WORDS 'ANY AMOUNT' WILL NOT INCLUDE THE INTEREST WHICH ACCRUED TO THE RESPO NDENT FOR NOT REFUNDING RS. 45,73,528 FOR 57 MONTHS. WE SEE NO MERIT IN THIS ARGUMENT. THE IN TEREST COMPONENT WILL PARTAKE OF THE CHARACTER OF THE 'AMOUNT DUE' UNDER SECTION 244A. I T BECOMES AN INTEGRAL PART OF RS. 45,73,528 WHICH IS NOT PAID FOR 57 MONTHS AFTER THE SAID AMOUNT BECAME DUE AND PAYABLE. AS CAN BE SEEN FROM THE FACTS NARRATED ABOVE, THIS IS THE CASE OF SHORT PAYMENT BY THE DEPARTMENT AND IT IS IN THIS WAY THAT THE ASSESSEE CLAIMS INTEREST UNDER SECTION 244A OF THE INCOME-TAX ACT. THEREFORE, ON BOTH THE AFORE-STATED GROUNDS, WE ARE OF THE VIEW THAT THE ASSESSEE WAS ENTITLED TO INTEREST FOR 57 MONTHS ON RS. 45,73,528/-. THE PRINCIPAL AMOUNT OF RS. 45,73,528 HAS BEEN PAID ON DECEMBER 31, 1997 BU T NET OF INTEREST WHICH, AS STATED ABOVE, PARTOOK OF THE CHARACTER OF 'AMOUNT DUE' UND ER SECTION 244A.' 15. A READING OF THE AFORESAID PASSAGE FROM THE DEC ISION OF THE SUPREME COURT IN HEG LIMITED (SUPRA) INDICATES THAT IT WOULD BE INCORREC T AND IMPROPER TO REGARD PAYMENT OF INTEREST WHEN PART PAYMENT IS MADE AS INTEREST ON I NTEREST. WHAT HAS BEEN ELUCIDATED AND CLARIFIED BY THE SUPREME COURT IS THAT WHEN REFUND ORDER IS ISSUED, THE SAME SHOULD INCLUDE THE INTEREST PAYABLE ON THE AMOUNT, WHICH IS REFUND ED. IF THE REFUND DOES NOT INCLUDE INTEREST DUE AND PAYABLE ON THE AMOUNT REFUNDED, TH E REVENUE WOULD BE LIABLE TO PAY INTEREST ON THE SHORTFALL. THIS DOES NOT AMOUNT TO PAYMENT OF INTEREST ON INTEREST. AN EXAMPLE WILL CLARIFY THE SITUATION AND HELP US TO U NDERSTAND WHAT IS DUE AND PAYABLE UNDER SECTION 244A OF THE ACT. SUPPOSE REVENUE IS LIABLE TO REFUND RS. 1 LAC TO AN ASSESSEE WITH EFFECT FROM 1ST APRIL, 2010, THE SAID AMOUNT IS REF UNDED ALONG WITH INTEREST DUE AND PAYABLE UNDER SECTION 244A ON 31ST MARCH, 2013, THEN NO FUR THER INTEREST IS PAYABLE. HOWEVER, IF ONLY RS. 1 LAC IS REFUNDED BY THE REVEN UE ON 31ST MARCH, 2013 AND THE INTEREST ACCRUED ON RS. 1 LAC UNDER SECTION 244A IS NOT REFU NDED, THE REVENUE WOULD BE LIABLE TO PAY INTEREST ON THE AMOUNT DUE AND PAYABLE BUT NOT REFUNDED. INTEREST WILL NOT BE DUE AND PAYABLE ON THE AMOUNT REFUNDED BUT ONLY ON THE AMOU NT WHICH REMAINS UNPAID, I.E, THE INTEREST ELEMENT, WHICH SHOULD HAVE BEEN REFUNDED B UT IS NOT PAID. IN ANOTHER SITUATION WHERE PART PAYMENT IS MADE, SECTION 244A WOULD BE S TILL APPLICABLE IN THE SAME MANNER. FOR EXAMPLE, IF RS. 60,000/- WAS PAID ON 31ST MARCH , 2013, REVENUE WOULD BE LIABLE TO PAY INTEREST ON RS. 1 LAC FROM 1ST APRIL, 2010 TILL 31S T MARCH, 2013 AND THEREAFTER ON RS. 40,000/-. FURTHER, INTEREST PAYABLE ON RS. 60,000/- , WHICH STANDS PAID, WILL BE QUANTIFIED ON 31ST MARCH, 2013 AND ON THIS AMOUNT, I.E., INTEREST AMOUNT QUANTIFIED, REVENUE WOULD BE LIABLE TO PAY INTEREST UNDER SECTION 244A TILL PAYM ENT IS MADE. . . . . . . . . . ' 3.6 THE FACTS OF THE CASE BEFORE US ARE SIMILAR IN THE SENSE THAT HERE ALSO ONLY PART AMOUNT WAS REFUNDED IN THE FIRST PHASE BY THE DEPARTMENT A ND WHEN THE BALANCE AMOUNT WAS PAID BY THE DEPARTMENT IN THE SECOND PHASE, THE ASSESSEE WAS ENTITLED FOR INTEREST ON THE BALANCE AMOUNT OF REFUND DUE. THUS, FROM THE AFORESAID OBSE RVATIONS OF HON'BLE DELHI HIGH COURT, WE CAN SAY THAT IT IS NOT A CASE OF PAYMENT OF INTE REST ON INTEREST. THUS, IN VIEW OF THESE FACTS AND AFORESAID JUDGMENTS, LD COUNSEL CONTENDED THAT LD. CIT (A) HAD WRONGLY APPLIED THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF GU JARAT FLUORO CHEMICALS (SUPRA), SINCE IT WAS NOT APPLICABLE ON THE FACTS OF THIS CASE. 3.7 FURTHER, IT WAS ALSO HELD BY HON'BLE HIGH COURT TH AT THE DEPARTMENT OUGHT TO FOLLOW THE SAME PROCEDURE AND RULES WHILE COLLECTING TAX AND W HILE ISSUED REFUNDS. WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 140A(1); EXPLANAT ION TO THE AFORESAID SECTION PROVIDES AS UNDER: 'EXPLANATION - WHERE THE AMOUNT PAID BY THE ASSESSE E UNDER THIS SUB-SECTION FALLS SHORT OF THE AGGREGATE OF THE TAX AND INTEREST AS AFORESAID, THE AMOUNT SO PAID SHALL FIRST BE ADJUSTED THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 9 99 9 TOWARDS THE INTEREST PAYABLE AS AFORESAID AND THE B ALANCE, IF ANY, SHALL BE ADJUSTED TOWARDS THE TAX PAYABLE.' 3.8 THUS, FROM THE PERUSAL OF THE ABOVE, IT IS CLEAR T HAT WHERE THE AMOUNT OF TAX DEMANDED IS PAID BY THE ASSESSEE THEN IT SHALL FIRST BE ADJU STED TOWARDS INTEREST PAYABLE AND BALANCE IF ANY WHATEVER TAX PAYABLE. NOW, IF WE GO THROUGH SEC TION 244A, WE FIND THAT NO SPECIFIC PROVISION HAS BEEN BROUGHT ON THE STATUTE WITH RESP ECT TO ADJUSTMENT OF REFUND ISSUED EARLIER FOR COMPUTING THE AMOUNT OF INTEREST PAYABL E BY THE REVENUE TO THE ASSESSEE ON THE AMOUNT OF REFUND DUE TO THE ASSESSEE. THUS, THE LAW IS SILENT ON THIS ISSUE. UNDER THESE CIRCUMSTANCES, FAIRNESS AND JUSTICE DEMANDS THAT SA ME PRINCIPLE SHOULD BE APPLIED WHILE GRANTING THE REFUND AS HAS BEEN APPLIED WHILE COLLE CTING AMOUNT OF TAX. THE REVENUE IS NOT EXPECTED TO FOLLOW DOUBLE STANDARDS WHILE DEALING W ITH THE TAX PAYERS. THE FUNDAMENTAL PRINCIPLE OF FISCAL LEGISLATION IN ANY CIVILIZED SO CIETY SHOULD BE THAT THE STATE SHOULD TREAT ITS CITIZENS (I.E. TAX PAYERS IN THIS CASE) WITH THE SA ME RESPECT, HONESTY AND FAIRNESS AS IT EXPECTS FROM ITS CITIZENS. IT IS FURTHER NOTED BY U S THAT HON'BLE DELHI HIGH COURT HAS ALREADY DECIDED THIS ISSUE IN CLEAR WORDS WHICH HAS BEEN FO LLOWED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE IN THE EARLIER YEARS. IT IS FURTHER NOTED BY U S THAT ASSESSEE IS NOT ASKING FOR PAYMENT FOR INTEREST ON INTEREST. IT IS SIMPLY REQUESTING FOR P ROPER METHOD OF ADJUSTMENT OF REFUND AND FOR FOLLOWING THE SAME METHOD WHICH WAS FOLLOWED BY THE DEPARTMENT WHILE MAKING COLLECTION OF TAXES. UNDER THESE CIRCUMSTANCES, WE FIND THAT JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF GUJARAT FLUORO CHEMICALS (SUPR A) IS NOT APPLICABLE ON THE FACTS OF THE CASE BEFORE US AND THUS LD. CIT (A) COMMITTED AN ER ROR IN NOT FOLLOWING THE DECISIONS OF THE TRIBUNAL OF EARLIER YEARS IN ASSESSEE'S OWN CASE AS WELL AS JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANISATION ( SUPRA). 3.9 BEFORE PARTING WITH, WE ARE REMINDED OF A RECENT J UDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA V. TATA CHEMICALS LTD. [2014] 363 ITR 658/822 TAXMAN 225/43 TAXMANN.COM 240 WHEREIN HON'BLE SUPREME COURT HAS DISCUSSED AT LEN GTH ABOUT MORAL AND LEGAL OBLIGATION OF THE DEPARTMENT TO REFUND THE AM OUNT OF TAX COLLECTED FROM THE TAX PAYERS WHICH WAS MORE THAN THE AMOUNT ACTUALLY DUE AS PER LAW, ALONG WITH INTEREST. SOME OF THE USEFUL OBSERVATIONS ARE REPRODUCED HEREUNDER FOR TH E SAKE OF BETTER CLARITY IN DECIDING THE ISSUE BEFORE US: '37. A 'TAX REFUND' IS A REFUND OF TAXES WHEN THE T AX LIABILITY IS LESS THAN THE TAX PAID. AS PER THE OLD SECTION AN ASSESSEE WAS ENTITLED FOR PAYMEN T OF INTEREST ON THE AMOUNT OF TAXES REFUNDED PURSUANT TO AN ORDER PASSED UNDER THE ACT, INCLUDING THE ORDER PASSED IN AN APPEAL. IN THE PRESENT FACT SCENARIO, THE DEDUCTOR/ ASSESSEE HAD PAID TAXES PURSUANT TO A SPECIAL ORDER PASSED BY THE ASSESSING OFFICER/INCOM E TAX OFFICER. IN THE APPEAL FILED AGAINST THE SAID ORDER THE ASSESSEE HAS SUCCEEDED AND A DIR ECTION IS ISSUED BY THE APPELLATE AUTHORITY TO REFUND THE TAX PAID. THE AMOUNT PAID B Y THE RESIDENT/DEDUCTOR WAS RETAINED BY THE GOVERNMENT TILL A DIRECTION WAS ISSUED BY THE A PPELLATE AUTHORITY TO REFUND THE SAME. WHEN THE SAID AMOUNT IS REFUNDED IT SHOULD CARRY IN TEREST IN THE MATTER OF COURSE. AS HELD BY THE COURTS WHILE AWARDING INTEREST, IT IS A KIND OF COMPENSATION OF USE AND RETENTION OF THE MONEY COLLECTED UNAUTHORIZEDLY BY THE DEPARTMEN T. WHEN THE COLLECTION IS ILLEGAL, THERE IS CORRESPONDING OBLIGATION ON THE REVENUE TO REFUN D SUCH AMOUNT WITH INTEREST IN AS MUCH AS THEY HAVE RETAINED AND ENJOYED THE MONEY DEPOSIT ED. EVEN THE DEPARTMENT HAS UNDERSTOOD THE OBJECT BEHIND INSERTION OF SECTION 2 44A, AS THAT, AN ASSESSEE IS ENTITLED TO PAYMENT OF INTEREST FOR MONEY REMAINING WITH THE GO VERNMENT WHICH WOULD BE REFUNDED. THERE IS NO REASON TO RESTRICT THE SAME TO AN ASSES SEE ONLY WITHOUT EXTENDING THE SIMILAR BENEFIT TO A RESIDENT/DEDUCTOR WHO HAS DEDUCTED TAX AT SOURCE AND DEPOSITED THE SAME BEFORE REMITTING THE AMOUNT PAYABLE TO A NON-RESIDE NT/FOREIGN COMPANY. 38. PROVIDING FOR PAYMENT OF INTEREST IN CASE OF RE FUND OF AMOUNTS PAID AS TAX OR DEEMED TAX OR ADVANCE TAX IS A METHOD NOW STATUTORILY ADOP TED BY FISCAL LEGISLATION TO ENSURE THAT THE AFORESAID AMOUNT OF TAX WHICH HAS BEEN DULY PAI D IN PRESCRIBED TIME AND PROVISIONS IN THAT BEHALF FORM PART OF THE RECOVERY MACHINERY PRO VIDED IN A TAXING STATUTE. REFUND DUE AND PAYABLE TO THE ASSESSEE IS DEBT-OWED AND PAYABL E BY THE REVENUE. THE GOVERNMENT, THERE BEING NO EXPRESS STATUTORY PROVISION FOR PAYM ENT OF INTEREST ON THE REFUND OF EXCESS AMOUNT/TAX COLLECTED BY THE REVENUE, CANNOT SHRUG O FF ITS APPARENT OBLIGATION TO REIMBURSE THE DEDUCTORS LAWFUL MONIES WITH THE ACCRUED INTERE ST FOR THE PERIOD OF UNDUE RETENTION OF SUCH MONIES. THE STATE HAVING RECEIVED THE MONEY WI THOUT RIGHT, AND HAVING RETAINED AND THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 USED IT, IS BOUND TO MAKE THE PARTY GOOD, JUST AS A N INDIVIDUAL WOULD BE UNDER LIKE CIRCUMSTANCES. THE OBLIGATION TO REFUND MONEY RECEI VED AND RETAINED WITHOUT RIGHT IMPLIES AND CARRIES WITH IT THE RIGHT TO INTEREST. WHENEVER MONEY HAS BEEN RECEIVED BY A PARTY WHICH EX AEQUO ET BONO OUGHT TO BE REFUNDED, THE RI GHT TO INTEREST FOLLOWS, AS A MATTER OF COURSE.' 3.10 IT IS NOTED FROM THE OBSERVATIONS OF THE HON'BLE S UPREME COURT THAT IT HAS BEEN OBSERVED THAT WHATEVER MONEY HAS BEEN RECEIVED BY T HE DEPARTMENT, IT OUGHT TO BE REFUNDED EX AEQUO ET BONO. IT IS A LATIN PHRASE WHICH MEANS 'WHAT IS JUST AND FAIR' OR 'ACCORDING TO EQUITY AND GOOD CONSCIENCE'. SOMETHING TO BE DECIDE D EX AEQUO ET BONO IS SOMETHING THAT IS TO BE DECIDED BY PRINCIPLES OF WHAT IS FAIR AND JUS T. A DECISION-MAKER WHO IS AUTHORIZED TO DECIDE EX AEQUO ET BONO IS NOT BOUND BY LEGAL RULES BUT MAY TAKE ACCOUNT OF WHAT IS JUST AND FAIR. THUS, IF WE DECIDE THE ISSUE BEFORE US EX AEQ UO ET BONO, THEN IT WOULD BE DECIDED BY THE PRINCIPLES OF WHAT IS FAIR AND JUST AND NOT NECESSA RILY AS PER STRICT RULE OF LAW. THUS, SINCE THE STATUTE ITSELF HAS ALREADY PRESCRIBED A PARTICU LAR METHOD OF ADJUSTMENT IN EXPLANATION TO SECTION 140A(1), THEN JUSTICE, FAIRNESS, EQUITY AND GOOD CONSCIENCE DEMANDS THAT SAME METHOD SHOULD BE FOLLOWED WHILE MAKING ADJUSTMENT F OR REFUND OF TAXES, ESPECIALLY WHEN NO CONTRARY PROVISION HAS BEEN PROVIDED. UNDER THESE C IRCUMSTANCES AND AFORESAID DISCUSSION, WE FIND THAT THE JUDICIAL PROPRIETY DEMANDS THAT OR DER OF THE TRIBUNAL OF EARLIER YEARS MUST BE FOLLOWED AND THEREFORE WE DIRECT THE AO TO RE-CO MPUTE THE AMOUNT OF INTEREST U/S. 244A BY FIRST ADJUSTING THE AMOUNT OF REFUND ALREADY GRA NTED TOWARDS THE INTEREST COMPONENT AND BALANCE LEFT IF ANY SHALL BE ADJUSTED TOWARDS THE T AX COMPONENT. THUS, WITH THESE DIRECTIONS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6.1. RESPECTFULLY FOLLOWING THE AFORESAID CO-ORDINA TE BENCH DECISION OF MUMBAI TRIBUNAL WHICH HAD DULY CONSIDERED THE VARIOUS DECISIONS ON THE IMPUGNED ISSUE, WE HOLD THAT THE ASSESSEE INDEED IS ENTITLED FOR INTEREST ON UNPAID INTEREST AND ACCORDINGLY DISMISS THE GROUNDS RAISED BY THE REVENUE IN THIS REGARD. 6.2. WE ALSO FIND THAT THE HONBLE CALCUTTA HIGH CO URT VIDE ITS ORDER DATED 16.1.2015 IN ASSESSEES OWN CASE FOR THE VERY SAME ASST YEAR I.E AY 2002-03 HAD UPHELD THE ORDER OF THE LD AO DATED 22.4.2008 GRANTING INTEREST U/S 244A OF THE ACT . THE SUBSEQUENT RECTIFICATION PROCEEDINGS AND THE CONSEQUENT APPELLATE ORDERS THE REON HAVE BEEN REVERSED BY THE HONBLE CALCUTTA HIGH COURT IN ASSESSEES OWN CASE. HENCE THE REVENUE SHOULD NOT HAVE ANY GRIEVANCE IN THE IMPUGNED APPEAL BEFORE US AS T HE LD CITA HAD ADDRESSED THE ENTIRE ISSUE IN THE SAME LINES IN WHICH THE HONBLE HIGH C OURT HAD ADDRESSED THE ISSUE. IN OUR CONSIDERED OPINION, IF AT ALL THE REVENUE IS AGGRIE VED AGAINST THE ORDER OF THE HONBLE CALCUTTA HIGH COURT DATED 16.1.2015 , THEY SHOULD H AVE PREFERRED SPECIAL LEAVE PETITION BEFORE THE HONBLE SUPREME COURT. WE FEEL THAT TH E REVENUE SHOULD NOT BE AGGRIEVED BY PREFERRING AN APPEAL BEFORE US AGAINST THE ORDER OF THE LD CITA DATED 30.9.2008. HENCE THE REVENUE APPEAL DESERVE TO BE DISMISSED ON THAT COUN T ALSO. 6.3. HENCE WE HOLD THAT THE GROUNDS RAISED BY THE R EVENUE VIDE GROUNDS 1 TO 4 DESERVE TO BE DISMISSED FOR MORE THAN REASON AS STATED ABOVE. 7. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DIRECTING THE LD AO TO EXCLUDE THE PROVISION FOR DI MUNITION IN VALUE OF INVESTMENTS AMOUNTING TO RS 29,81,59,433/- AND PROVISION FOR NO N-PERFORMING ASSETS AMOUNTING TO RS 19,57,60,485/- WHILE COMPUTING THE BOOK PROFITS U/S 115JB OF THE ACT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7.1. DURING THE COURSE OF HEARING, THE LD AR FAIRLY ADMITTED THAT THE ASSESSEE HAD CHALLENGED THE RETROSPECTIVE AMENDMENT IN THIS REGA RD BROUGHT IN SECTION 115JB OF THE ACT BY WAY OF A WRIT PETITION BEFORE THE HONBLE CALCUT TA HIGH COURT IN W.P. NO. 1069 OF 2010 AND THE SAME WAS DISMISSED BY THE HONBLE COURT VID E ITS ORDER DATED 3.5.2017. ACCORDINGLY, HE FAIRLY AGREED WITH THE DECISION OF THE LD AO IN THIS REGARD. HENCE THE GROUND NOS. 5 TO 7 RAISED BY THE REVENUE ARE ALLOWE D. THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. ITA NO.2764/KOL/2003 ASSESSMENT YEAR:1985-86 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 8. THE GROUND NOS. 8 & 9 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. 3.2. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THES E GROUNDS OF THE ASSESSEE. THE ASSESSEE HAS GIVEN A COMPUTATION OF REFUND IN THE ANNEXURE T O HIS WRITTEN SUBMISSIONS. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE SAME AND GRANT RE FUND OF THE AMOUNT, IN ACCORDANCE WITH LAW. NO OTHER GROUNDS WERE ARGUED BEFORE US. HENCE, THOU GH ADDITIONAL GROUNDS WERE TAKEN, WE DO NOT ADJUDICATE THE SAME. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) WE DIRECT THE A.O TO ALLOW INTEREST ON SELF ASSESSMENT TAX AND ALSO ALLOW INTEREST ON SUCH INTEREST. 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 19.06.2019 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 19/06/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-3, KOLKATA 2. THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LT D. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES