Torrent Pharmaceuticals Ltd., Ahmedabad V. The ACIT, (OSD),Circle-8, Ahmedabad

ITA 3052/AHD/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8355 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-06-2017
• Assessment Year: 1995-1996
• Appeal Filed On: 23-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUDIT NAGAPL SR DR
• Keywords: Rectification of order
• Section: 244A; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.3052/AHD/2013 ( / ASSESSMENT YEAR : 1995-96) TORRENT PHARMACEUTICALS LTD. TORRENT HOUSE NR. DINESH HALL ASRHAM ROAD, AHMEDABAD / VS. THE ACIT (OSD) CIRCLE-8 AHMEDABAD # ./ ./ PAN/GIR NO. : AAACT 5456 A ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI S.N. SOPARKAR AND SHRI PARIN SHAH, ARS '#& )( / RESPONDENT BY : SHRI MUDIT NAGAPL, SR.DR *+ ), / DATE OF HEARING 10/10/2017 -./0 ), / DATE OF PRONOUNCEMENT 16 /10 /2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XIV, AHMEDABAD [CIT(A) IN SHORT] DATED 08/10/2013 IN THE MATTER O F RECTIFICATION ORDER PASSED UNDER S.154 OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 26/05/ 2011 BY THE ASSESSING OFFICER (AO) CONCERNING ASSESSMENT YEAR (AY) 1995 -96. ITA NO.3052/AHD /2013 TORRENT PHARMACEUTICALS LTD. VS. ACIT (OSD) ASST.YEAR 1995-96 - 2 - 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS BUT IN ESSENCE SEEKS TO IMPUGN THE ORDER OF THE REVENUE ON TWO GROUNDS (I) SHORT-PAYMENT OF INTEREST UNDER S.244A OF THE ACT ON EXCESS TAX COL LECTED BY THE REVENUE (II) COMPENSATION PAYABLE TO THE ASSESSEE TOWARDS I NORDINATE DELAY IN PAYMENT OF REFUND AND CONSEQUENTIALLY UNDUE RETENTI ON OF HUGE TAX AMOUNT. 3. THE LD.SENIOR COUNSEL FOR THE ASSESSEE MR.S.N.SO PARKAR NARRATED THAT THE FIRST DISPUTE IS ON ACCOUNT OF QUANTIFICAT ION OF INTEREST UNDER S.244A AND SECOND DISPUTE TO TOWARDS GRANT OF COMPE NSATION WHICH THE ASSESSEE WAS ENTITLED ON ACCOUNT OF WRONGFUL RETENT ION OF THAT INTEREST FOR THE PERIOD INVOLVED. IT WAS SUBMITTED BY THE LD.CO UNSEL THAT THE ISSUE REGARDING QUANTIFICATION OF INTEREST UNDER S.244A T RAVELLED TO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 17/09/2009 IN ITA NO.1420/AHD/2006 FOR AY 1995-96 ORDER DATED 17/09/2009 INTER ALIA ACCEPTED THE ASSESSEES CLAIM THAT IT WAS ENTITLED TO INTEREST UNDER S.244A FOR THE FULL PERIOD RIGHT FROM 01/04/1995. EFFECT TO THE ITAT ORDER WAS GIVE N BY THE AO VIDE ORDER DATED 30/12/2009 AND INTEREST ON REFUND UNDER S.244A OF THE ACT WAS GIVEN W.E.F. 01/04/1995 TO 06/06/2002. A REFUN D OF RS.97,77,906/- WAS ACCORDINGLY ISSUED TO THE ASSESSEE ON 20/04/201 0. NOT SATISFIED, THE ASSESSEE FILED RECTIFICATION APPLICATION ON 26/04/2 010 SEEKING RECTIFICATION OF ORDER GIVING EFFECT TO THE ITAT O RDER. CONSEQUENT ITA NO.3052/AHD /2013 TORRENT PHARMACEUTICALS LTD. VS. ACIT (OSD) ASST.YEAR 1995-96 - 3 - THERETO, AN ORDER UNDER S.154 DATED 26/05/2010 WAS PASSED BY THE AO. A FURTHER REFUND OF RS.75,65,194/- WAS ISSUED TO THE ASSESSEE AS A CONSEQUENCE. A FURTHER RECTIFICATION OF THE AFORES AID ORDER PASSED UNDER S.154 WAS SOUGHT BY THE ASSESSEE VIDE ITS APPLICATI ON DATED 21/07/2010. IN SHORT, THE ASSESSEE RECEIVED INTEREST UPTO 30/06 /2003. THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE HAS RECEIVED TOTAL REFU ND RS.1,91,21,810/- AS AGAINST THE CORRECT REFUND OF RS.1,95,51,989/- HAVI NG REGARD TO THE DATE ON WHICH THE REFUND WAS ACTUALLY ISSUED. THEREFORE , THERE IS SHORT- PAYMENT OF REFUND BY RS.4,30,179/- WHICH REPRESENTS THE AMOUNT OF INTEREST UNDER S.244A BETWEEN 30/06/2003 I.E. THE D ATE UPTO WHICH THE REFUND WAS DETERMINED AS AGAINST THE DATE OF ACTUAL REFUND. THE LD.COUNSEL POINTED OUT THAT THE DIRECTIONS OF THE I TAT ARE CLEAR THAT THE ASSESSEE IS ENTITLED TO INTEREST ON REFUND UNDER S. 244A OF THE ACT W.E.F. 01/04/1995. NATURALLY, THE INTEREST IS TO BE DETER MINED TILL THE DATE OF ACTUAL PAYMENT WHICH HAS NOT BEEN DONE. 4. THE LD.DR, IN THIS REGARD, RELIED UPON THE ORDER OF THE CIT(A). 5. ON CONSIDERATION, WE CONCUR WITH THE ASSERTIONS MADE ON BEHALF OF THE ASSESSEE THAT THE ERROR COMMITTED BY THE AO IS PLAIN AND SIMPLE ARITHMETICAL MISTAKE IN COMPUTING THE INTEREST ACCR UED TO THE ASSESSEE AND IT IS ENTITLED TO INTEREST UNDER S.244A OF THE ACT ON EXCESS PAYMENT RETAINED BY THE REVENUE TILL THE DATE OF ACTUAL PAY MENT AS A PART OF PROCEDURE AND NOT ANY OTHER PRIOR DATE. THEREFORE , ON FIRST PRINCIPLE, WE ITA NO.3052/AHD /2013 TORRENT PHARMACEUTICALS LTD. VS. ACIT (OSD) ASST.YEAR 1995-96 - 4 - AGREE WITH THE PLEA RAISED ON BEHALF OF THE ASSESSE E. IN THIS VIEW OF THE MATTER, WE REMIT THE ISSUE BACK TO THE FILE OF THE AO TO REDETERMINE AND QUANTIFY INTEREST TILL THE DATE OF ACTUAL PAYMENT. THE ASSESSEE MAY FURNISH REQUISITE DETAILS FOR THE AO WITH REGARD TO THE QUANTIFICATION OF INTEREST. 6. SECOND LIMB OF APPEAL OF THE ASSESSEE IS TOWARDS CLAIM OF COMPENSATION ON ACCOUNT OF ALLEGEDLY WRONGFUL RETEN TION OF INTEREST FOR THE PERIOD 01/04/1995 TO 30/06/2003. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENTITLED IN LAW FOR COMPENSATION FOR SUCH WRONGFUL WITHHOLDING OF TAX BEYOND PERIOD PERMISSIB LE IN STATUE. THE ASSESSEE REFERRED TO THE DECISION OF HONBLE APEX C OURT IN THE CASE OF CIT VS. HEG LTD. (2010) 324 ITR 331(SC) AND HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT FLOUROCHEMICALS LTD. V S. CIT (2015) 377 ITR 307 (GUJ.) FOR THE PROPOSITION THAT BY NOT REFU NDING THE SUBSTANTIAL AMOUNT OF EXCESS TAX THE REVENUE IS LIABLE TO COMPE NSATE THE ASSESSEE. 7. THE LD.DR STRONGLY DEFENDED THE ACTION OF THE RE VENUE AND SUBMITTED THAT THE ASSESSEE IS ENTITLED TO INTEREST UNDER S.244A TOWARDS DELAY, IF ANY, IN GRANT OF REFUND AND THE ACT DOES NOT PROVIDE FOR PAYMENT OF SEPARATE COMPENSATION BY THE REVENUE FOR SUCH DE LAY. FOR THIS PROPOSITION, HE RELIED THE DECISION OF THE COORDINA TE BENCH OF THE ITA NO.3052/AHD /2013 TORRENT PHARMACEUTICALS LTD. VS. ACIT (OSD) ASST.YEAR 1995-96 - 5 - TRIBUNAL IN THE CASE OF NIRMA INDUSTRIES PVT.LTD. I N ITA NO.3048/AHD/2013 FOR AY 2005-06 ORDER DATED 20/04/ 2017. 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E ISSUE OF ADDITIONAL COMPENSATION FOR DELAY IN GRANTING OF RE FUND RAISED ON BEHALF OF THE ASSESSEE. IT IS THE CASE OF THE ASSESSEE TH AT REVENUE IS ENTITLED TO COLLECT TAX WITHIN THE FOUR CORNERS OF ACT. WHEN A NY AMOUNT HAS BEEN COLLECTED BY REVENUE IN EXCESS AND IT IS WITHHELD B EYOND PERIOD PERMISSIBLE UNDER STATUTE, TAXPAYER IS ENTITLED TO BE SUITABLY COMPENSATED FOR DEPRIVATION OF SUCH AMOUNT. 9. IN THIS REGARD, WE TAKE NOTE OF THE FACT THA T THE PRESENT APPEAL LIES IN THE MATTER OF RECTIFICATION PROCEEDINGS UNDER S.154 OF THE ACT. SECTION 154 OF THE ACT ENABLES RECTIFICATION OF AN ORDER TO WARDS MISTAKE APPARENT FROM RECORD. THE SOURCE OF POWER AVAILABLE TO ASSE SSING OFFICER UNDER S.154 TOWARDS RECTIFICATION OF MISTAKE IS THUS VERY NARROW IN SCOPE. A REMEDY BY WAY OF CLAIM OF COMPENSATION TOWARDS POSS IBLE DAMAGES OVER AND ABOVE INTEREST UNDER S.244A IS NOT PROVIDED IN THE STATUTE. THEREFORE, TO EXAMINE SUCH CLAIM IN THE PROCEEDINGS UNDER S.154 BY THE REVENUE AUTHORITIES, IN OUR VIEW, IS FARFETCHED. A POINT WHICH IS NOT EXAMINED ON FACT OR IN LAW CANNOT BE DEALT WITH AS MISTAKE APPARENT FROM RECORD. THE RELIEF SOUGHT BY THE ASSESSEE OSTENSIBL Y DOES NOT FALL WITHIN THE PURVIEW OF SECTION 154 OF THE ACT. ITA NO.3052/AHD /2013 TORRENT PHARMACEUTICALS LTD. VS. ACIT (OSD) ASST.YEAR 1995-96 - 6 - 10. THE STATUTES PROVIDES REMEDY FOR DELAYED RE PAYMENT OF EXCESS TAX UNDER VARIOUS CONTINGENCIES BY WAY OF INTEREST UNDE R S.244A. NO SPECIFIC PROVISION HAS BEEN BROUGHT TO OUR NOTICE U NDER WHICH SUCH ADDITIONAL COMPENSATION CAN BE BESTOWED UPON THE AS SESSEE. THE HONBLE SUPREME COURT IN CIT VS. GUJARAT FLUORO CHE MICALS (2003) 358 ITR 291 (SC) HAS PADDLED A VIEW THAT IT IS ONLY THA T INTEREST PROVIDED FOR UNDER STATUTE WHICH MAY BE CLAIMED BY AN ASSESSEE F ROM REVENUE AND NO OTHER INTEREST ON SUCH STATUTORY INTEREST. THE INTEREST PAID UNDER S.244A OF THE ACT ITSELF IS A COMPENSATORY MEASURE. 11. THE ADDITIONAL LIABILITY INTEREST BY WAY OF COMPENSATION THUS CANNOT BE APPROVED AND MORE SO IN A RECTIFICATION P ROCEEDINGS THE SCOPE OF WHICH IS CIRCUMSCRIBED. THEREFORE, THIS PLEA O F THE ASSESSEE IS UNINTELLIGIBLE AND CANNOT BE ENTERTAINED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16/ 10 /2017 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 16/ 10 /2017 4..*,.*../ T.C. NAIR, SR. PS ITA NO.3052/AHD /2013 TORRENT PHARMACEUTICALS LTD. VS. ACIT (OSD) ASST.YEAR 1995-96 - 7 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-XIV, AHMEDABAD 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 11.10.17 (DICTATION-PAD 14 - PAGES ATTACHED AT THE END OF THIS APPEAL- FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.10.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.16.10.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.10.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER