M/s Bharat Rice & Oil Mills, Hyderabad V. ACIT., Circle-8, Hyderabad, Hyderabad

ITA 34/HYD/2015

• Counselvise Citation: 3422514 RSA 2015
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-07-2015
• Assessment Year: 1991-1992
• Appeal Filed On: 06-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: K L RATHI
• Section: 28; 154; 244A

Judgement Text

ITA NO 34 OF 2015 BHARAT RICE AND OIL MILLS HYDERAB AD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A SMC BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER ITA NO.34/HYD/2015 (ASSESSMENT YEAR: 1991-92) BHARAT RICE & OIL MILLS HYDERABAD PAN-AADFB 2444 G VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 8 HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.L. RATHI FOR REVENUE : SHRI RAMAKRISHNA BANDI, DR DATE OF HEARING : 10.07.2015 DATE OF PRONOUNCEMENT : 15 .07.2015 O R D E R SHRI P.M. JAGTAP, A.M THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD CIT (A)-III HYDERABAD, DATED 13.11. 2014. THE GROUNDS RAISED BY THE ASSESSEE THEREIN READ AS UNDE R: 1. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING TH E ORDER OF ASSESSING OFFICER NOT ALLOWING INTEREST UN DER SECTION 244A ON THE REFUND OF INTEREST ALREADY ACCR UED UNDER SECTION 244A. 2. THAT THE LEARNED CIT(APPEALS) ERRED IN RELYING O N THE OBSERVATION OF HON'BLE SUPREME COURT JUDGEMENT REPORTED IN 358 ITR PAGE 291, (MADE WITH REFERENCE TO ITS EARLIER DECISION IN SANDVIK ASIA LIMITED) BUT T HIS OBSERVATION IS NOT APPLICABLE IN CASE OF THE ASSESS EE. FURTHER THE HON'BLE SUPREME COURT HAS UPHELD THE GRANT OF INTEREST ON INTEREST IN CASE OF CIT VS. NA RENDRA DOSHI (254 ITR PAGE 606). ITA NO 34 OF 2015 BHARAT RICE AND OIL MILLS HYDERAB AD PAGE 2 OF 5 3. THAT THE HON'BLE TRIBUNAL HAS ALLOWED THE ASSESSEE'S APPEAL IN ASSESSMENT YEAR 1990-91 ON IDENTICAL ISSUE. 4. THAT THE HON'BLE SUPREME COURT HAS CONSISTENTLY HELD THAT IN CASE OF ANY DEBATABLE ISSUE OR DOUBLE INTERPRETATION OR ANY AMBIGUITY THE INTERPRETATION WHICH FAVOURS THE ASSESSEE SHOULD BE ADOPTED. 5. THE REASONS ASSIGNED BY CIT(APPEALS) ARE WRONG, INSUFFICIENT AND ILLEGAL. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH IS APPEAL ARE AS FOLLOWS. IN THE CASE OF THE ASSESSEE, AN ORDER D ATED 23.02.2007 WAS PASSED BY THE TRIBUNAL GIVING SOME RELIEF. WHILE GIVING EFFECT TO THE SAID ORDER OF THE TRIBUNAL, A CONSEQUENTIAL ORDER DATED 6.6.2007 WAS PASSED BY THE AO DETERMINI NG THE REFUND PAYABLE TO THE ASSESSEE AT RS.27,660/- WHICH WAS DULY PAID TO THE ASSESSEE ON 20.06.2007. SINCE THE REFUN D SO DETERMINED BY THE AO VIDE CONSEQUENTIAL ORDER DATED 6.6.2007 WAS NOT CORRECT, AN APPLICATION FOR RECTIFICATION U /S 154 WAS FILED BY THE ASSESSEE GIVING THE WORKING OF EXACT AMOUNT REFUNDABLE TO IT. ON VERIFICATION OF THE SAID WORKING, AO FOUND T HAT THE AMOUNT ACTUALLY REFUNDABLE TO THE ASSESSEE WAS RS.5,32,604 AS AGAINST THE REFUND OF RS.27,660 ONLY DETERMINED AS PER THE CONSEQUENTIAL ORDER PASSED ON 6.6.2007. HE, THEREFO RE, RECTIFIED THE SAID ORDER BY PASSING AN ORDER U/S 154 DATED 28 .10.2010 GRANTING THE BALANCE REFUND OF RS.5,04,944. HE, HO WEVER, DID NOT ALLOW ANY INTEREST ON THE AMOUNT SO REFUNDED AS CLAIMED BY THE ASSESSEE IN THE APPLICATION U/S 154 ON THE GROU ND THAT THE BALANCE REFUND OF RS.5,04,944 WAS ENTIRELY ON ACCOU NT OF INTEREST PAYABLE U/S 244A AND THEREFORE, NO FURTHER INTEREST ON SUCH INTEREST WAS ALLOWABLE. ITA NO 34 OF 2015 BHARAT RICE AND OIL MILLS HYDERAB AD PAGE 3 OF 5 3. AGAINST THE ORDER PASSED BY THE AO U/S 154, AN A PPEAL WAS FILED BY THE ASSESSEE BEFORE THE LD CIT (A) AND AFT ER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS MAT ERIAL AVAILABLE ON RECORD, THE LD CIT (A) UPHELD THE ORDE R PASSED BY THE AO U/S 154 RELYING ON THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF CIT VS. GUJARAT FLUORO CHEMICALS (35 8 ITR 291). THE RELEVANT OBSERVATIONS OF THE LD CIT (A) RECORDE D IN THIS REGARD AS CONTAINED IN PRA NO.5.1 ARE EXTRACTED BELOW: 5.1 THE FACTS AND ISSUES OF THE CASE AND ORDER OF THE AO PASSED U/S 154, THE SUBMISSIONS OF THE APPELLANT WERE DULY CONSIDERED. IT WOULD BE PERTINENT TO MENT ION HERE THAT 'INTEREST ON INTEREST' CLAIM WAS THE CLAI M OF THE APPELLANT. IN THIS CONTEXT, IT IS PERTINENT TO BRIN G TO NOTE THAT THE HON'BLE SUPREME COURT IN A DIVISION BENCH JUDGEMENT IN THE CASE OF CIT VS. GUJARAT FLUORO CHEMICALS [358 ITR 0291 ][2013] HELD THAT: 'IN OUR CONSIDERED VIEW, THE AFORESAID JUDGMENT HAS BEEN MISQUOTED AND MISINTERPRETED BY THE ASSESSES AND AL SO BY THE REVENUE. THEY ARE OF THE VIEW THAT IN SANDVIK CASE (SUPRA) THIS COURT HAD DIRECTED THE REVENUE TO PAY INTEREST ON T HE STATUTORY INTEREST IN CASE OF DELAY INTHE PAYMENT. IN OTHER W ORDS, THE INTERPRETATION PLACED IS THAT THE REVENUE IS OBLIGE D TO PAY AN INTEREST ON INTEREST IN THE EVENT OF ITS FAILURE TO REFUND THE INTEREST PAYABLE WITHIN THE STATUTORY PERIOD. AS WE HAVE ALREADY NOTICED, IN SANDVIK CASE (SUPRA) THIS COURT WAS CONSIDERING THE ISSUE WHETHER AN ASSESSEE WHO IS MA DE TO WAIT FOR REFUND OF INTEREST FOR DECADES BE COMPENSATED FOR T HE GREAT PREJUDICE CAUSED TO IT DUE TO THE DELAY IN ITS PAYM ENT AFTER THE LAPSE OF STATUTORY PERIOD. IN THE FACTS OF THAT CASE, THI S COURT HAD COME TO THE CONCLUSION THAT THERE WAS AN INORDINATE DELAY O N THE PART OF THE REVENUE IN REFUNDING CERTAIN AMOUNT WHICH INCLUDED THE STATUTORY INTEREST AND THEREFORE, DIRECTED THE REVENUE TO PA Y COMPENSATLON FOR THE SAME NOT AN INTEREST ON INTEREST. FURTHER, IT IS BROUGHT TO OUR NOTICE THAT THE LEGIS LATURE BY THE ACT NO.4 OF 1988 (WITH EFFECT FROM APRIL 1, 198 9) HAS INSERTED SECTION 244A TO THE ACT WHICH PROVIDES FOR INTEREST ON RERUNDS UNDER VARIOUS CONTINGENCIES. WE ITA NO 34 OF 2015 BHARAT RICE AND OIL MILLS HYDERAB AD PAGE 4 OF 5 CLARIFY THAT IT IS ONLY THAT INTEREST PROVIDED FOR UNDER THE STATUTE WHICH MAY BE CLAIMED BY AN ASSESSEE FROM TH E REVENUE AND NO OTHER INTEREST ON SUCH STATUTORY INTEREST. AGGRIEVED BY THE ORDER OF THE LD CIT (A), ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS HELD BY THE AO IN THE ORDER PASSED U/S 154, THE BALANCE REFUND DETERMINED BY HIM AS PAYABLE TO THE ASSESSEE COMPRISED OF INTEREST U/S 2 44A OF THE ACT AND THIS POSITION WHICH IS CLEARLY EVIDENT FROM THE WORKING GIVEN BY THE AO IN HIS ORDER IS NOT DISPUTED EVEN BY THE LD COUNSEL FOR THE ASSESSEE. HE, HOWEVER, HAS RELIED ON THE DECISI ON OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. HEG LT D (324 ITR 331) TO CONTEND THAT THE INTEREST COMPONENT PAR TOO K THE CHARACTER OF AMOUNT DUE U/S 244A AND THE ASSESSEE THEREFORE, WAS ENTITLED TO INTEREST ON SUCH AMOUNT DUE. A PERU SAL OF THE JUDGMENT PASSED IN THE SAID CASE, HOWEVER, SHOWS TH AT IT WAS SPECIFICALLY NOTED BY THE HON'BLE APEX COURT THAT I T WAS NOT A CASE WHERE THE ASSESSEE WAS CLAIMING COMPOUNDING IN TEREST OR INTEREST ON INTEREST AS WAS SOUGHT TO BE MADE OUT I N THE CIVIL APPEAL FILED BY THE DEPARTMENT. AS FURTHER NOTED BY THE HON'BLE APEX COURT, THE AMOUNT OF RS.45,73,528 WAS DUE TO T HE ASSESSEE AS PRINCIPAL AMOUNT ON ACCOUNT OF REFUND OF TAX AND THE ASSESSEE WAS THEREFORE, HELD TO BE ENTITLED FOR THE INTEREST THEREON U/S 244A FOR A DELAY OF 57 MONTHS. IN ANY CASE, THE HON 'BLE SUPREME COURT IN ITS SUBSEQUENT JUDGMENT IN THE CASE OF CIT VS. GUJARAT FLUORO CHEMICALS (SUPRA) HAS CLARIFIED THAT IT IS O NLY THAT INTEREST PROVIDED FOR U/S 244A OF THE ACT, WHICH MAY BE CLAI MED BY AN ITA NO 34 OF 2015 BHARAT RICE AND OIL MILLS HYDERAB AD PAGE 5 OF 5 ASSESSEE FROM THE REVENUE AND NO FURTHER INTEREST O N SUCH STATUTORY INTEREST. IN THE PRESENT CASE, THE AMOUNT OF RS.5,04,944 REFUNDABLE TO THE ASSESSEE WAS ON ACCOU NT OF INTEREST U/S 244A AND THIS BEING THE UNDISPUTED POS ITION, I FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD CIT (A ) HOLDING THAT NO FURTHER INTEREST ON SUCH INTEREST WAS PAYABLE TO THE ASSESSEE RELYING ON THE DECISION OF THE HON'BLE SUPREME COUR T IN THE CASE OF CIT VS. GUJARAT FLUORO CHEMICALS (SUPRA). EVEN O THERWISE, THE CASE LAW CITED BY THE LD COUNSEL FOR THE ASSESSEE A ND THE CASE LAW RELIED UPON BY THE CIT (A) CLEARLY SHOWS THAT T HE CLAIM OF THE ASSESSEE FOR INTEREST ON INTEREST IS HIGHLY DEBATAB LE WHICH IS BEYOND THE SCOPE OF SECTION 154. I, THEREFORE, UPHO LD THE IMPUGNED ORDER OF THE LD CIT (A) CONFIRMING THE ORD ER PASSED BY THE AO U/S 154 AND DISMISS THE APPEAL FILED BY THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2015. S D/ - (P.M. JAGTAP) ACCOUNTANT MEMBER HYDERABAD, DATED 15 TH JULY, 2015. VNODAN/SPS COPY TO: 1. BHARAT RICE & OIL MILLS, C/O. K.L.RATHI ADVOCATE, 3 -5-144/5 EDEN GARDEN, HYDERABAD 500001 2. ASSTT. COMMISSIONER OF INCOME TAX, CIRCE 8 HYDERABA D 3. CIT(A) - III HYDERABAD 4. CIT II HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER