M/s Solan District Truck Operators Transport Co-op Society Ltd., Solan V. DCIT, Parwanoo

ITA 279/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6714 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 1999-2000
• Appeal Filed On: 10-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Condonation of delay
• Section: 244A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NOS. 277 TO 279/CHD/2017 ASSESSMENT YEARS: 1996-97, 1998-99 & 1999-2000 M/S SOLAN DISTRICT TRUCK OPERATORS VS. THE DCIT, C IRCLE, TRANSPORT CO-OP SOCIETY LTD., SOLAN TEHSIL ARKI, DISTRICT SOLAN H.P. PAN NO. AAATT2010M APPELLANT BY : SHRI VISHAL MOHAN RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 17.08.2017 DATE OF PRONOUNCEMENT : 10.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE SAME ASSESSEE FOR DIFFERENT ASSESSMENT YEARS AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS CIT(A)], FARIDABAD DATED 5.10.2016 2. IT IS NOTICED THAT THE ABOVE APPEALS ARE BARRED BY LIMITATION FOR A PERIOD OF 18 TO 23 DAYS. SEPARATE APPLICATIONS FOR CONDONATION OF DELAY HAVE BEEN FILED. IN VIEW OF THE SUBMISSIONS MADE IN THE APPLICATIONS AND CONSIDERING THE SHORTNESS OF THE PERIOD OF DELAY, T HE DELAY IN FILING THE PRESENT APPEALS IS HEREBY CONDONED. 2 3. AT THE OUTSET, THE REPRESENTATIVES OF THE PARTIE S HAVE SUBMITTED THAT THE FACTS AS WELL AS ISSUE INVOLVED IN THESE APPEAL S ARE IDENTICAL TO THAT OF THE CASE OF M/S AMBUJA DARLA KASHLOG MANGOO TRANSPO RT COOPERATIVE SOCIETY LTD, SOLAN (ITA NOS. 280 TO 283/CHD/2017). IT IS SEEN THAT THE SAID APPEALS HAVE COME UP FOR HEARING BEFORE THE COORDIN ATE BENCH OF THE TRIBUNAL ON 17.8.2017 (WHEREIN ONE OF US - JUDICIAL MEMBER BEING PARTY TO THAT ORDER ALSO). THE COORDINATE BENCH OF THE TRIBU NAL AFTER DELIBERATING ON THE FACTS AND CIRCUMSTANCES, AS ALSO THE JUDICIA L PRONOUNCEMENTS, HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PART OF THE ORDER OF THE TRIBUNAL DATED 30.10.2017 IS REPRODUCED HER EIN UNDER:- 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE A LSO GONE THROUGH THE RECORD. FOR PROPERLY ADJUDICATING THE I SSUE UNDER CONSIDERATION, FIRSTLY, WE MAY REFER TO THE FINDING S ARRIVED AT BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. G UJARAT FLLURO CHEMICALS (2014) 1 SCC 126 (SC). THE HON'BLE SUPRE ME COURT WHILE THROWING LIGHT ON THE CORE ISSUE IN SANDVIK ASIA LTD. VS. CIT (SUPRA) OBSERVED AS UNDER :- 6. IN OUR CONSIDERED VIEW, THE AFORESAID JUDGMENT HAS BEEN MISQUOTED AND MISINTERPRETED BY THE ASSESSEES AND ALSO BY THE REVENUE. THEY ARE OF THE VIEW THAT IN SANDVIK CASE (SUPRA) THIS COURT HAD DIRECTED THE REVENUE TO PAY INTEREST ON THE STATUTORY INTEREST I N CASE OF DELAY IN THE PAYMENT. IN OTHER WORDS, THE INTERPRETATION PLACED IS THAT THE REVENUE IS OBLIGE D TO PAY AN INTEREST ON INTEREST IN THE EVENT OF ITS FAI LURE TO REFUND THE INTEREST PAYABLE WITHIN THE STATUTORY PE RIOD. 7. AS WE HAVE ALREADY NOTICED, IN SANDVIK CASE (SUP RA) THIS COURT WAS CONSIDERING THE ISSUE WHETHER AN ASSESSEE WHO IS MADE TO WAIT FOR REFUND OF INTEREST FOR DECADES BE COMPENSATED FOR THE GREAT PREJUDICE CAUS ED TO IT DUE TO THE DELAY IN ITS PAYMENT AFTER THE LAP SE OF STATUTORY PERIOD. IN THE FACTS OF THAT CASE, THIS C OURT HAD COME TO THE CONCLUSION THAT THERE WAS AN INORDINATE DELAY ON THE PART OF THE REVENUE IN REFUNDING CERTAIN AMOUNT WHICH INCLUDED THE STATUTO RY 3 INTEREST AND THEREFORE, DIRECTED THE REVENUE TO PAY COMPENSATION FOR THE SAME NOT AN INTEREST ON INTERE ST. 8. FURTHER IT IS BROUGHT TO OUR NOTICE THAT THE LEGISLATURE BY THE ACT NO. 4 OF 1988 (W.E.F. 01.04. 1989) HAS INSERTED SECTION 244A TO THE ACT WHICH PROVIDES FOR INTEREST ON REFUNDS UNDER VARIOUS CONTINGENCIES. WE CLARIFY THAT IT IS ONLY THAT INTEREST PROVIDED FOR UNDER THE STATUTE WHICH MAY BE CLAIMED BY AN ASSESSEE FRO M THE REVENUE AND NO OTHER INTEREST ON SUCH STATUTORY INTEREST. 9. A PERUSAL OF THE AFORESAID OBSERVATION OF THE HO N'BLE SUPREME COURT, IN OUR VIEW, REVEALS THAT WHERE THE REVENUE FAILS TO PAY INTEREST ON THE STATUTORY INTEREST AND THE ASSESSEE IS MADE TO WAIT FOR REFUND OF INTEREST FOR DECADES MEA NING THEREBY WHERE THERE IS AN INORDINATE OR EXCESSIVE DELAY, TH E COURT WAS JUSTIFIED TO DIRECT THE REVENUE TO PAY COMPENSATION FOR THE SAME. THE INTEREST AWARDED IN SANDVIK ASIA LTD. VS . CIT (SUPRA) CASE WAS IN THE SHAPE OF COMPENSATION AND N OT INTEREST ON INTEREST. IN THE CONCLUDING PARA, THE HON'BLE S UPREME CURT HAS FURTHER OBSERVED THAT THE PROVISIONS OF SECTION 244A OF THE ACT PROVIDES FOR INTEREST ON REFUNDS UNDER VARIOUS CONTINGENCIES. THE HON'BLE SUPREME COURT CLARIFIED THAT IT IS ONLY THAT INTEREST PROVIDED FOR UNDER THE STATUTE W HICH MAY BE CLAIMED BY AN ASSESSEE FROM THE REVENUE, AND NO OTH ER INTEREST ON SUCH STATUTORY INTEREST. 10. AT THIS STAGE, WE DEEM IT APPROPRIATE TO REPROD UCED THE RELEVANT PROVISIONS OF SECTION 244 A OF THE ACT . 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 THEREO N CALCULATED IN THE FOLLOWING MANNER, NAMELY : (A) . 11. NOW WHAT HAS BEEN HELD BY LARGER BENCH (THREE J UDGES BENCH) OF THEE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT FLLURO CHEMICALS (2014) 1 SCC 126 (SC) IS THAT THE ASSESSEE IS ENTITLED TO INTEREST ON THE REFUND OF A NY AMOUNT WHICH BECOMES DUE TO ASSESSEE UNDER THE STATUTE. WE FIND THAT ANOTHER LARGER BENCH (THREE JUDGES BENCH) OF THE HON'BLE SU PREME COURT 4 IN THE CASE OF CIT VS. H.E.G. LTD (SUPRA) HAS ANS WERED THE QUESTION WHAT IS THE MEANING OF THE WORDS REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE IN SECTION 244A? 12. THE HON'BLE SUPREME COURT HELD THAT THE INTERES T COMPONENT WILL PARTAKE THE CHARACTER OF AMOUNT DUE U/S 244A. IT BECOMES INTEGRAL PART OF THE AMOUNT DUE WHICH BE COMES DUE AND PAYABLE AND THAT IT CANNOT BE SAID TO BE A CASE OF CLAIMING INTEREST ON INTEREST. THE RELEVANT PART OF THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. H.E.G. LTD IS REPRODUCED AS UNDER:- 4. IN INCOME-TAX MATTERS, IT IS WELL SETTLED THAT IF THE QUESTION IS NOT PROPERLY FRAMED, THEN, AT TIMES, CONFUSION ARISES RESULTING IN WRONG ANSWERS. THE PRESENT BATCH OF CIVIL APPEALS IS AN ILLUSTRATION O F THE PROPOSITION MENTIONED HEREINABOVE. 5. IN THE SYNOPSIS TO THE CIVIL APPEAL ARISING OUT OF S. L. P. (C) NO. 18045/ 2009, THE QUESTION RAISED BY T HE DEPARTMENT IS WHETHER THE ASSESSEE WAS ENTITLED TO CLAIM INTEREST ON INTEREST UNDER THE PROVISIONS OF SECTION 244A OF THE INCOME-TAX ACT, 1961. IN OUR VIEW, ON FACTS, THE QUESTION FRAMED WAS TOTALLY ERRONEOUS. 6. ANNEXURE P-1 IS INCOME-TAX COMPUTATION IN CIVIL APPEAL ARISING FROM S.L.P.(C) NO.18045/2009. ONGOING THROUGH THE COMPUTATION, WE FIND THAT DURIN G THE ASSESSMENT YEAR 1993-94, THE AMOUNT PAID BY THE ASSESSEE TOWARDS TDS WAS RS. 45,73,528. THE TAX PAI D AFTER ORIGINAL ASSESSMENT WAS RS. 1,71,00,320. THE TOTAL OF TDS AMOUNTING TO RS. 45,73,528 PLUS TAX PA ID AFTER ORIGINAL ASSESSMENT OF RS. 1,71,00,320 STOOD AT RS. 2,16,73,848. IN OTHER WORDS, THE TOTAL TAX PAID HAD TWO COMPONENTS, VIZ., TDS + TAX PAID AFTER ORIGINAL ASSESSMENT. THE RESPONDENT WAS ENTITLED TO THE REFU ND OF RS.2,16,73,848 (CONSISTING OF RS. 1,71,00,320 AN D RS. 45,73,528 WHICH PAYMENT WAS MADE AFTER 57 MONTHS AND WHICH IS THE ONLY ITEM IN DISPUTE). 7. THE ASSESSEE CLAIMED STATUTORY INTEREST FOR DELA YED REFUND OF RS.45,73,528 FOR 57 MONTHS BETWEEN APRIL 1, 1993 AND DECEMBER 31, 1997 IN TERMS OF SECTION 244A OF THE INCOME-TAX ACT. 8. THEREFORE, THIS IS NOT A CASE WHERE THE ASSESSEE IS CLAIMING COMPOUND INTEREST OR INTEREST ON INTEREST AS 5 IS SOUGHT TO BE MADE OUT IN THE CIVIL APPEALS FILED BY THE DEPARTMENT. 9. THE NEXT QUESTION WHICH WE ARE REQUIRED TO ANSWE R IS - WHAT IS THE MEANING OF THE WORDS ' REFUND OF A NY AMOUNT BECOMES DUE TO THE ASSESSEE' IN SECTION 244A ? IN THE PRESENT CASE, AS STATED ABOVE, THERE ARE T WO COMPONENTS OF THE TAX PAID BY THE ASSESSEE FOR WHIC H THE ASSESSEE WAS GRANTED REFUND, NAMELY TDS OF RS. 45,73,528 AND TAX PAID AFTER ORIGINAL ASSESSMENT OF RS. 1,71,00,320. THE DEPARTMENT CONTENDS THAT THE WORDS 'ANY AMOUNT' WILL NOT INCLUDE THE INTEREST WHICH ACCRUED TO THE RESPONDENT FOR NOT REFUNDING R S. 45,73,528 FOR 57 MONTHS. WE SEE NO MERIT IN THIS ARGUMENT. THE INTEREST COMPONENT WILL PARTAKE OF TH E CHARACTER OF THE AMOUNT DUE' UNDER SECTION 244A. I T BECOMES AN INTEGRAL PART OF RS.45,73,528 WHICH IS N OT 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-TA X ACT. THEREFORE, ON BOTH THE AFORE-STATED GROUNDS, W E ARE OF THE VIEW THAT THE ASSESSEE WAS ENTITLED TO INTEREST FOR 57 MONTHS ON RS. 45,73,528. THE PRINCI PAL AMOUNT OF RS. 45,73,528 HAS BEEN PAID ON DECEMBER 31, 1997 BUT NET OF INTEREST WHICH, AS STATED ABOVE , PARTOOK OF THE CHARACTER OF ' AMOUNT DUE' UNDER SECTION 244A. 13. AT THIS STAGE, THE LD. AR OF THE ASSESSEE HAS AGAIN BROUGHT OUR ATTENTION TO THE RELEVANT WORDING IN SE CTION 244A OF THE ACT AND HAS POINTED OUT THAT THE LEGISLATURE HA S NOT USED THE WORDS REFUND OF EXCESS TAX PAID OR THE PRINCIPLE AMOUNT OF TAX PAID; THE WORDS USED BY THE LEGISLATURE ARE A NY AMOUNT. THE LD. COUNSEL FOR THE ASSESSEE HAS, THEREFORE, ST RESSED THAT THE MEANING OF THE WORDS ANY AMOUNT NOT ONLY INCL UDES WITHIN ITS SCOPE AND AMBIT, THE PRINCIPLE AMOUNT DUE BUT A LSO THE INTEREST ELEMENT WHICH REMAINS UNPAID ON THE DATE O F ISSUE OF REFUND. THE LD. COUNSEL, WHILE RELYING UPON THE D ECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. H.E.G . LTD (SUPRA), HAS SUBMITTED THAT WHEN THE REVENUE DOES N OT PAY FULL AMOUNT OF REFUND BUT PART AMOUNT IS PAID, THE BALAN CE OUTSTANDING UNPAID AMOUNT HAS BOTH THE COMPONENTS I .E. THE TAX AMOUNT AS WELL AS INTEREST, WHICH FURTHER BECOMES D UE TO THE 6 ASSESSEE UPON WHICH THE ASSESSEE IS ENTITLED TO INT EREST AS PER SECTION 244A OF THE ACT. THE LD. COUNSEL HAS FURTHE R SUBMITTED THAT THIS TYPE OF CONTINGENCY ARISES ONLY WHEN THE INTEREST IS NOT REFUNDED ALONG WITH TAX REFUND, OUT OF TOTAL REFUND ABLE DUE TO THE ASSESSEE AND THAT THE OUTSTANDING AMOUNT THUS P ARTAKES THE CHARACTER OF THE REMAINING AMOUNT DUE UPON WHICH TH E SIMPLE INTEREST IS PAYABLE AS PER THE PROVISIONS OF SECTIO N 244 A OF THE ACT. HE HAS FURTHER SUBMITTED THAT THERE IS NO OTH ER PROVISION UNDER THE ACT UNDER WHICH ASSESSING OFFICER CAN BE LIABLE TO PAY INTEREST WHEN PART PAYMENT IS MADE AND THE REMAININ G AMOUNT ON ACCOUNT OF INTEREST ACCRUED IS NOT PAID. THE ASS ESSING OFFICER, IN SUCH CIRCUMSTANCES, MAY DELAY THE PAYME NT OF INTEREST COMPONENT U/S 244A FOR UNLIMITED PERIOD WI TH IMPUNITY AND WITHOUT ANY SANCTION, WHICH WOULD AMOUNT TO GRA NTING PREMIUM TO A NON-COMPLIANCE OF LAW. HE HAS FURTHER SUBMITTED THAT EVEN OTHERWISE IN THE CASE OF ASSESSEE THE IN TEREST COMPONENT WAS WITHHELD FOR A LONG PERIOD AND, HENCE , EVEN IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS. GUJARAT FLLURO CHEMICALS (2014) 1 SCC 126 (SC), THE ASSESSEE IS ENTITLED TO COMPENSATION ON T HE DELAYED INTEREST AMOUNT. 14. WE FIND FORCE IN THE ABOVE SUBMISSIONS OF THE L D. AR OF THE ASSESSEE. THE LARGER BENCH OF THE HON'BLE SUPR EME COURT IN THE CASE OF CIT VS. H.E.G. LTD. (SUPRA) HAS DEFIN ED THE TERM REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE AND HAS HELD THAT ON THE DATE OF PAYMENT OF THE REFUND ALON G WITH INTEREST, THE WITHHELD OR THE UNPAID AMOUNT ON THE SAID DATE BECOMES AMOUNT DUE TO THE ASSESSEE UPON WHICH THE A SSESSEE IS ENTITLED TO INTEREST U/S 244A OF THE ACT FROM THE D ATE OF WITHHOLDING TILL THE DATE OF PAYMENT. THE HON'BLE S UPREME COURT IN THE CASE OF CIT VS. GUJARAT FLLURO CHEMIC ALS (2014) 1 SCC 126 (SC) HAS ALSO HELD THAT IN CASE OF INORD INATE DELAY IN THE PAYMENT OF INTEREST, THE REVENUE CAN BE DIRECTED TO PAY COMPENSATION FOR THE SAME BY WAY OF INTEREST. 15. IN THE CASE IN HAND ALSO, THERE IS AN INORDINAT E DELAY OF MORE THAN 10 YEARS IN PAYMENT OF BALANCE AMOUNT TO THE ASSESSEE, HENCE, IN THE LIGHT OF THE DECISION OF TH E HON'BLE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT FLLUR O CHEMICALS (2014) 1 SCC 126 (SC), THE ASSESSEE IS O THERWISE ENTITLED FOR THE COMPENSATION FROM THE REVENUE FOR INORDINATE DELAY IN THE PAYMENT OF INTEREST. WE ACCORDINGLY D IRECT THE REVENUE TO PAY COMPENSATION IN THE SHAPE OF SIMPLE INTEREST ON THE AMOUNT DUE AT THE RATE AT WHICH THE ASSESSEE OT HERWISE WOULD HAVE BEEN ENTITLED TO, ON THE DELAYED PAYMENT OF EXCESS 7 TAX PAID. IN VIEW OF THIS, THESE APPEALS OF THE AS SESSEE ARE TREATED AS ALLOWED. 16. IN THE RESULT, BOTH THE APPEALS PREFERRED BY TH E ASSESSEE ARE ALLOWED. 4. SINCE THE FACTS AS WELL AS ISSUE INVOLVED IN THE SE APPEALS ARE IDENTICAL TO THAT OF THE CASE OF M/S AMBUJA DARLA K ASHLOG MANGOO TRANSPORT COOPERATIVE SOCIETY LTD, SOLAN (ITA NOS. 280 TO 283/CHD/2017), THEREFORE, FOLLOWING THE DECISION RENDERED IN THE A BOVE CASE, ALL THESE APPEALS OF THE ASSESSEES STANDS ALLOWED ON THE SAME TERMS AND THE REVENUE IS DIRECTED TO PAY COMPENSATION IN THE SHAPE OF SIM PLE INTEREST ON THE AMOUNT DUE AT THE RATE AT WHICH THE ASSESSEES HEREI N OTHERWISE WOULD HAVE BEEN ENTITLED TO, ON THE DELAYED PAYMENT OF EXCESS TAX PAID. 6. IN THE RESULT, THE APPEALS PREFERRED BY THE ASSE SSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON __________ __ ( B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : OCT, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR