The ACIT, Circle-1(1)., Vijayawada V. M/s KCP Ltd., Chennai

ITA 338/VIZ/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7058 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 10-08-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Section: 154

Judgement Text

PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.267 & 338/VIZAG/2006 ASSESSMENT YEAR: 1972-73 ACIT, CIRCLE-1(1) VIJAYAWADA VS. KCP LTD., CHENNAI (APPELLANT) (RESPONDENT) . APPELLANT BY: SHRI SUBRATA SARKAR, CIT( DR) RESPONDENT BY: SHRI C. SUBRAHMANYAM, CA ORDER PER BENCH: THESE TWO APPEALS FILED AT THE INSTANCE OF THE REV ENUE ARE DIRECTED AGAINST THE ORDER DATED 31-03-2006 PASSED BY THE LD CIT (A) VIJAYAWADA AND THEY RELATE TO THE ASSESSMENT 1972-73. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NOTICE BY BOTH THE PARTIES THAT THE APPEAL NO.I TA/338/V/2006 WAS WRONGLY FILED BY THE REVENUE FOR THE SECOND AND THE SAME IS DUPLICATE OF THE APPEAL WHICH IS NUMBERED AS ITA 267/V/2006. IN VIEW OF THE ABOVE, THE SECOND APPEAL FILED BY THE REVENUE BECOMES INFRUCTUOUS AND ACCORD INGLY WE DISMISS THE APPEAL NUMBERED AS ITA 338/V/2006 AS INFRUCTUOUS. 2. THE ONLY ISSUE THAT EMERGES OUT OF THE GROUNDS O F THE APPEAL FILED BY THE REVENUE IN THE SURVIVING APPEAL IS WHETHER THE LD C IT(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO GRANT INTEREST ON INTEREST . 3. THE FACTS RELATING TO THE ISSUE ARE DISCUSSE D IN BRIEF. IN RESPONSE TO THE PETITION DATED 18/3/2004 FILED ON 19/5/2004 U/S 154 OF THE ACT, THE AO GRANTED PAGE 2 OF 3 INTEREST U/S 244(1A) OF THE ACT BUT REFUSED TO GRAN T INTEREST ON INTEREST. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE T HE LD CIT (A) WHO BY PLACING RELIANCE ON THE FOLLOWING CASE LAW OF THE HONBLE S UPREME COURT DIRECTED THE AO TO GRANT INTEREST ON INTEREST: A) CIT VS. NARENDRA DOSHI (254 ITR 606) B) SANDVIK ASIA LTD. VS. CIT (288 ITR 643) AGGRIEVED BY THE ORDER OF THE LD CIT (A) THE REVENU E IS IN APPEAL BEFORE US. 4. THE LD DR OBJECTED TO THE ORDER OF THE LD CI T (A) ON THE FOLLOWING GROUNDS: I) IN THE CASE OF SANDVIK ASIA LTD., THERE WAS INORDINA TE DELAY IN GRANTING REFUND AND HENCE THE HONBLE SUPREME COURT DIRECTED THE DEPARTMENT TO GRANT INTEREST ON INTEREST. II) THE ISSUE WHETHER THE INTEREST ON INTEREST IS PAYAB LE OR NOT IS A DEBATABLE ONE AND HENCE THE SAME CANNOT FALL WITHIN THE JURISDICTION OF THE RECTIFICATION U/S 154 OF THE AC T. III) EVEN IN THE CASE OF SANDVIK ASIA LTD., THE HONBLE SUPREME COURT ALLOWED INTEREST ON INTEREST AT THE RATE OF 9% ONLY INSTEAD OF 15% AND HENCE IT IS IN THE NATURE OF COMPENSATORY RELIE F AND NOT A BINDING DECISION. ON THE OTHER HAND THE LD AR SUPPORTED THE ORDER OF THE LD CIT (A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. IT IS WELL SETTLED PREPOSITION THAT UNDER ARTICLE 141 OF THE CONSTITUTION, THE DECISION RENDERED BY THE HONBLE SUPREME COURT IS A DECLARAT ION OF LAW AND IS BINDING ALL OVER INDIA. IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT CITED ABOVE, THE QUESTION OF ALLOWING INTEREST ON INTEREST IS NO LONGER A DEBATABLE ISSUE. THUS INTEREST ON INTEREST IS PAYABLE WHENEVER THERE IS D ELAY IN GRANTING THE INTEREST DUE UNDER THE ACT. SINCE THE DECISION RENDERED BY T HE LD CIT (A) IS IN ACCORDANCE WITH THE DECISION OF THE HONBLE SUPREME COURT, WE DO NOT FIND ANY PAGE 3 OF 3 NECESSITY TO INTERFERE WITH THE SAME. REGARDING TH E RATE OF INTEREST, WE NOTICE THAT THE LD CIT (A) HAS NOT GIVEN ANY SPECIFIC DIRE CTION AND HENCE THE AO IS FREE TO TAKE HIS OWN DECISION IN ACCORDANCE WITH THE DEC ISION OF THE HONBLE SUPREME COURT AND ALSO IN ACCORDANCE WITH THE LAW. 6. IN THE RESULT BOTH THE APPEALS FILED BY THE REVEN UE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 09-03-2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 9 TH MARCH, 2010. COPY TO 1 THE ACIT, CIRCLE-1(1), VIJAYAWADA 2 M/S THE K C P LTD., RAMAKRISHNA BUILDINGS.2, DR. P V CHERIAN CRESCENT, CHENNAI 600 008 3 THE CIT-1 VIJAYAWADA 4 THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM