THE TATA POWER CO. LTD, MUMBAI V. DCIT 2(3), MUMBAI

ITA 3450/MUM/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9273 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-12-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Assessee Lawyers: DINESH VYAS
• Section: 143(3); 244A

Judgement Text

, BZ BZBZ BZ INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , ! ' ' ' ' #$ , # ! BEFORE S/SH.JOGINDER SINGH, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.3450/MUM/2012, % % % % & & & & / ASSESSMENT YEAR-2005-06 THE TATA POWER CO. LTD. CORPORATE CENTER, BLOCK 'B', 5TH FLOOR, 34, SANT TUKARAM ROAD, CARNAC BUNDER, MUMBAI-400009 PAN: AAACTOO54A % VS. DCIT-2(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( '( / APPELLANT) ( )*'( / RESPONDENT) /. ITA NO.3451/MUM/2012, % % % % & & & & / ASSESSMENT YEAR-2006-07 THE TATA POWER CO. LTD. CORPORATE CENTER, BLOCK 'B', 5TH FLOOR, 34, SANT TUKARAM ROAD, CARNAC BUNDER, MUMBAI-400009 PAN: AAACTOO54A % VS. DCIT-2(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( '( / APPELLANT) ( )*'( / RESPONDENT) /. ITA NO.4069/MUM/2012, % % % % & & & & / ASSESSMENT YEAR-2006-07 DCIT-2(3), R.NO. 552, 5TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 % VS. THE TATA POWER CO. LTD. CORPORATE CENTER, BLOCK 'B', 5TH FLOOR, 34, SANT TUKARAM ROAD, CARNAC BUNDER, MUMBAI-400009 PAN: AAACTOO54A ( '( / APPELLANT) ( )*'( / RESPONDENT) % +, % +, % +, % +, - - - - # ## # / ASSESSEE BY : SHRI DINESH VYAS ! . - # / REVENUE BY : SHRI MANJUNATHA SWAMY % % % % . .. . , / , / , / , / / DATE OF HEARING :12 -02-2015 0& . , / / DATE OF PRONOUNCEMENT :11 -03-2015 % % % % , 1961 . .. . 254(1) # ## # ,, ,, ,, ,, #1 #1 #1 #1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) # ## # % % % % PER BENCH : CHALLENGING THE ORDERS DATED 15.03.2012 OF THE CIT( A)-6,MUMBAI,THE ASSESSEE HAD RAISED SIMILAR GROUNDS OF APPEAL FOR AY-2005-06 & 2006-07: 1. THE CIT(A) HAS ERRED IN HOLDING THAT THE APPELLA NT IS NOT ENTITLED TO INTEREST FOR THE PERIOD OF 7 MONTHS, BEING THE PERIOD OF DELAY IN ISSUE OF REFUN D VOUCHER. WHILE ARRIVING AT THIS CONCLUSION, THE CIT(A) HAS ERRONEOUSLY MENTIONED THAT THERE IS NO P ROVISION IN LAW FOR ALLOWING INTEREST IN SUCH SITUATION. THE CIT(A) HAS FAILED TO APPRECIATE THAT THE MEANING OF THE WORD 'GRANTED' AS APPEARING IN SECTION 244A IS 'RECEIVED BY THE ASSES SEE' AS UNLESS AND UNTIL THE REFUND VOUCHER IS ACTUALLY RECEIVED BY THE ASSESSEE, THE PROCESS OF ' GRANTING REFUND' IS NOT COMPLETE. 2. THE APPELLANT CRAVES IT'S LEAVE TO ADD, ALTER, A MEND ANY GROUND OR GROUNDS. ASSESSING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUG NED IN THE GROUNDS ENUMERATED BELOW: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN DELETING THE INTEREST U/S.220(2) WITHOUT CONSIDERING THE FACT TH AT CHARGING OF INTEREST U/S.220(2) IS A MANDATORY 2 ITA NOS. 3450, 3451 & 4069/MUM/2012 THE TATA POWER CO. LTD. PROVISION AND CIT(A) ALSO FAILED TO APPRECIATE THAT ACCORDING TO THE PROVISION TO SEC. 220(2) INTEREST U/S.220(2) GETS MODIFIED AUTOMATICALLY AS A RESULT OF RECTIFICATION OR APPEAL EFFECT. 2. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 2. FROM THE ANALYSIS OF THE GROUNDS IT IS CLEAR THAT T HE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APPEAL ABOUT INTEREST TO BE GRANTED UNDER SECTION 2 44A OF THE ACT FOR BOTH THE AY.S.GROUND PERTAINING TO 244A INTEREST IS WITH REGARD TO ORDER S PASSED BY THE AO U/S.154 OF THE ACT IN PURSUANCE OF THE ORDER OF THE FIRST APPELLATE AUTHO RITY(FAA).FOR THE AY. 2006-07,THE AO HAS CHALLENGED THE ORDER OF THE FAA WITH REGARD TO CHARGING OF INTEREST U/S. 220(2) OF THE ACT. ITA NO. 3450 MUM 2012,AY.2005 -06: 3. FACTS OF THE CASE ARE THAT THE AO DID NOT DISPATCH THE REFUND VOUCHERS TO THE ASSESSEE FOR A PERIOD OF SEVEN MONTHS,EVENAFTER PASSING THE ORDER TO GRANTIN G THE REFUND.IN THE APPELLATE PROCEEDINGS,THE FAA ADMITTED THAT THE ASSESSEE WAS ENTITLED TO REFU ND AS PER THE PROVISIONS OF SECTION 244A OF THE ACT, BUT HE COULD NOT DO ANYTHING IN THAT REGARD. 4. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)SUBMITTE D THAT LATE DISPATCH OF VOUCHERS HAD RESULTED IN SHORT ALLOWANCE OF INTEREST,THAT TILL T HE VOUCHERS WERE NOT RECEIVED BY THE ASSESSEE IT COULD NOT BE HELD THAT THE ASSESSEE WAS GRANTED REF UND,THAT THE FAA SHOULD HAVE GRANTED THE RELIEF,THAT THERE WAS PROVISION IN LAW TO GRANT INT EREST IN SUCH SITUATIONS.DEPARTMENTAL REPRESENTA - TIVE(DR)LEFT THE ISSUE TO THE DISCRETION OF THE BEN CH. 5. IT IS TRUE THAT THE PRIMARY DUTY OF THE DEPARTMENTA L AUTHORITIES IS TO COLLECT TAXES ON BEHALF OF THE STATE.BUT,THAT DOES NOT MEAN THAT THEY DO NOT HAVE ANY DUTY TOWARDS THE SUBJECT I.E.THE TAXPAYER. THE FIRST AND FOREMOST DUTY OF THE AO/FAA IS TO COL LECT DUE AND ONLY DUE TAXES.PHRASE DUE TAXES INCLUDE CHARGING OF INTEREST,UNDER VARIOUS SECTION OF THE ACT,WHILE COMPLETING THE ASSESSMENT AS WELL AS CHARGING THE SURCHARGE,WHEREVER APPLICABLE. THE OTHER SIDE OF THE COIN IS TO ALLOW DEDUCTI- ONS/ EXEMPTIONS/REBATES TO THE ASSESSEE AND GRANT R EFUND TO THEM. PROVISIONS OF SECTION 244A OF THE ACT GOVERN PAYMEN T OF INTEREST TO THE ASSESSEE.VIDE ITS CIRCULAR 007 OF 2013 DATED 15.07.2013 THE CBDT HAS DIRECTED THE AO.S.TO GRANT INTEREST TO THE ASSESSEE. THE CIRCULAR IS TITLED PAYMENT OF INTEREST UNDER SECTION 244A OF THE INCO ME-TAX ACT, 1961, WHEN ASSESSEE IS NOT AT FAULT-REGARDING .REFERRING TO THE JUDGMENT OF THE HONBLE DELHI HIG H COURT IN CASE OF COURT ON ITS OWN MOTION V.UNION OF INDIA IN W. P. (C). 2659 OF 2012, DATED 14- 3-2013 THE CBDT HAS DIRECTED THE AO.S.AS UNDER: 3.IN VIEW OF THE DIRECTION OF THE HONBLE COURT, I AM DIRECTED TO CONVEY THAT IN NO CASE SHOULD INTEREST UNDER SECTION 244A OF THE ACT BE DENIED TO THE ASSESSEE WHERE THE ASS ESSEE IS NOT AT FAULT. THE OBSERVATION OF THE HONBLE HIGH COURT IN PARA. 32 ABOVE BE STRICTLY KEPT IN MIND WHILE DEALING WITH SUCH MATTERS. WE FIND THAT THE HONBLE DELHI HIGH COURT WAS DEALI NG WITH SITUATIONS WHERE THERE WAS MISTAKE IN THE CLAIM OF TDS IN THE E-RETURN AND THE RETURN WAS PROCESSED AND A DEMAND WAS RAISED AND SUBSEQUENTLY,THE ASSESSEE WOULD RECTIFY THE MISTAKE IN THE CLAIM AND WOULD FILE AN ONLINE RECTIFICA TION APPLICATION.IN THAT MATTER THE HONBLE COURT H ELD THAT INTEREST HAD TO BE GRANTED TO THE ASSESSEE FOR THE PERIOD AFTER EXCLUDING THE PERIOD OF DELAY ATTRIBUTABLE TO THE ASSESSEE IN TERMS OF SUB-SECTION (2) OF SECTION 244A OF THE ACT.THUS,THE HONBLE COURT WAS VERY CLEAR O N THE ISSUE OF GRANT OF REFUND AND IT HELD THAT THE ASSESSEE CAN B E DENIED REFUND FOR THE PERIOD OF DELAY THAT IS ATTRIBUTABLE TO THE ASSESSEE AND FOR NO OTHER REASO NS.APPLYING THE SAME ANALOGY,WE HOLD THAT IF THERE WAS NO DEFAULT ON PART OF THE ASSESSEE,IT SHO ULD NOT BE DENIED THE INTEREST U/S.244A OF THE ACT. 6. IN THE MATTER UNDER CONSIDERATION,THE ASSESSEE WAS NOT ISSUED VOUCHERS FOR A PERIOD OF SEVEN MONTHS AND THE FAA SHOWED HIS HELPLESSNESS BY STATI NG THAT DELAY WAS REGRETTABLE AND HE COULD NOT DO ANYTHING IN THAT REGARD.IN OUR OPINION,THERE IS NO NEED TO QUOTE ANY AUTHORITY TO STATE THAT 3 ITA NOS. 3450, 3451 & 4069/MUM/2012 THE TATA POWER CO. LTD. THE FAA HAS CO- TERMINUS POWER OF THE AO AND HE CAN DO EVERYTHING WHICH AN AO CAN DO.NOT ONLY THIS HE CAN GET THE THINGS DONE THROUGH THE AO .AS FAA HE HAS BEEN GIVEN POWERS OF ENHANCEMENT ALSO. HE CANNOT SAY THAT IT WAS MATTER CONCERNED WITH ADMINISTRATION AND THUS WASH HIS HANDS OFF THE ISSUE BEFORE HIM.HE AS A RESPONSI BLE SENIOR OFFICER OF THE DEPARTMENT,HAVING SERVICE OF ROUGHLY TWO DECADES,IS SUPPOSED TO ADMIN ISTER THE ACT AND IT IS PART OF HIS DUTY TO SEE THAT JUSTICE IS DONE TO THE ASSESSEE.HE DOES NOT DE NY THAT THE VOUCHERS WERE NOT ISSUED TO THE ASSESSEE FOR A PERIOD OF SEVEN MONTHS. HAD THE ASSE SSEE NOT DEPOSITED THE TAX FOR SEVEN MONTHS AFTER ISSUING A CHEQUE IN FAVOUR OF THE DEPARTMENT WOULD THE FAA HAVE TAKEN THE SAME STAND ? THERE CANNOT BE TWO STANDARDS FOR CHARGING OF INTER EST AND GRANTING INTEREST.SOVEREIGN AND SUBJECT HAVE EQUAL RIGHTS BEFORE THE EYES OF LAW.THE STATUT ORY OBLIGATION TO REFUND CARRIES WITH IT THE RIGHT TO INTEREST ALSO.THIS IS TRUE IN THE CASE OF ASSESS EES UNDER THE ACT. SECTION 244A TALKS ABOUT GRANTING OF INTEREST AND W ORD GRANT IN NORMAL SENSE WOULD MEAN HANDING OVER OF THE AMOUNT TO THE ASSESSEE.IF THE ASSESSEE DOES NOT GET MONEY IN ITS ACCOUNT FOR THE FAULT OF THE AO,IT HAS TO BE HELD THAT HE HAS NOT BEEN GRANT ED REFUND.GRANTING OF REFUND CANNOT BE A MERE FORMALITY OR TOKENISM.IT HAS TO BE PROVED THAT NOT ONLY REFUND ORDER WAS PASSED,BUT VOUCHERS WERE ALSO SENT TO THE BANK BY THE AO IN DUE COURSE OF TI ME.IT IS A FACT THAT WITHOUT THE VOUCHERS THE REFUND ORDER IS A PIECE OF PAPER FOR THE ASSESSEE,B ECAUSE THE STATE WOULD BE USING HIS MONEY TILL THE VOUCHERS ARE NOT ISSUED. IN THE CASE OF BISWANATH PASARI(364 ITR 404)THE HON BLE CALCUTTA HIGH COURT HAS HELD THAT IF THE AO,WHILE MAKING FRESH ASSESSMENT IN PURSUANCE OF OR DER OF THE FAA DOES NOT GRANT REFUND APPEAL FILED AGAINST SUCH ORDER IS MAINTAINABLE.IN THAT MA TTER IN PURSUANCE OF THE ORDER OF THE FAA,THE AO EXERCISED THE JURISDICTION UNDER SECTION 143(3) R.W.S. 251 OF THE ACT AND GRANTED REFUND BUT NOT GRANTING INTEREST.THE FAA HELD THAT AN APPEAL F OR CLAIMING INTEREST UNDER SECTION 244(1A) WAS NOT ENTERTAINABLE IN A CASE WHERE THE ORDER GIVING EFFECT TO THE ORDER PASSED IN APPEAL ITSELF WAS NOT BEING CHALLENGED ON ANY GROUND.HOWEVER,THE TRIB UNAL HELD THAT AN APPEAL COULD BE FILED AGAINST AN ORDER REFUSING TO GRANT INTEREST UNDER S ECTION 244(1A) AND DIRECTED THE ASSESSING OFFICER TO ALLOW INTEREST TO THE ASSESSEE IN ACCORD ANCE WITH LAW.DISMISSING THE APPEAL FILED BY THE ASSESSEE,THE HONBLE COURT HELD AS UNDER: .THE ORDER PASSED BY THE COMMISSIONER (APPEALS) HA D VIRTUALLY SET ASIDE THE EARLIER ORDER OF ASSESSMENT.THEREFORE, A FRESH ASSESSMENT WAS REQUIR ED TO BE MADE WHICH THE ASSESSING OFFICER DID AND DIRECTED REFUND BUT OMITTED TO PASS AN ORDER DI RECTING PAYMENT OF INTEREST. THEREFORE, IT WAS AN ORDER PASSED UNDER SECTION 143(3) OF THE ACT. AN APPEAL AGAINST AN ORDER PASSED UNDER SECTION 143(3) WAS PERMISSIBLE.ONCE THE INCOME HAS LEGALLY ACCRUED TO THE ASSESSEE, I.E., THE ASSESSEE HAS ACQUIRED A RIGHT TO RECEIVE THE INCOME, THOUGH ITS VALUATION MAY BE POSTPONED TO A FUTURE DATE, THE DETERMINATION OR QUANTIFICATION OF THE AMOUNT DOES NOT POSTPONE THE ACCRUAL. IN OTHER WORDS, IF THE RIGHT HAS LEGALLY ACCRUED TO THE ASSESSEE, THE RIGH T SHOULD BE DEEMED TO HAVE ACCRUED IN THE RELEVANT YEAR EVEN THOUGH THE DISPUTE AS TO RIGHT I S SETTLED IN A LATER YEAR, BY ONE OR THE OTHER OF T HE AUTHORITIES IN THE HIERARCHY. WE ARE OF THE OPINION THAT CONSIDERING THE PECULIAR FACTS OF THE ASSESSEE AND THE ABOVE DISCUSSION THE ORDER OF THE FAA CANNOT BE SUSTAINED.THEREFORE, REVERSING HIS ORDER WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE AND DIRE CT THE AO TO GRANT INTEREST FOR THE PERIOD OF SEVEN MONTHS TO THE ASSESSEE. ITA NO. 3451 & 4069/MUM/2012-AY.2006-07: 7. IN THE APPEAL FILED BY THE ASSESSEE ISSUE IS SAME I .E. GRANTING OF INTEREST FOR DELAYED PAYMENT OF REFUND. WHILE DECIDING THE APPEAL FOR THE EARLIER A Y.,WE HAVE DECIDED THE ISSUE IN FAOVUR OF THE ASSESSEE. FOLLOWING THE SAME,WE DECIDE EFFECTIVE GR OUND IN FAVOUR OF THE ASSESSEE. 8. IN THE APPEAL FILED BY THE AO,HE HAS CHALLENGED THE ORDER OF THE FAA CONTENDING THAT ORDER OF 4 ITA NOS. 3450, 3451 & 4069/MUM/2012 THE TATA POWER CO. LTD. THE FAA WITH REGARD TO INTEREST TO BE LEVIED U/S.22 0(2)OF THE ACT WAS NOT AS PER THE PROVISIONS OF ACT.DURING THE ASSESSMENT PROCEEDINGS,THE LEVIED IN TEREST UNDER SAID SECTION. 9. BEFORE THE FAA THE ASSESSEE SUBMITTED THAT IT WAS N OT AN ASSESSEE TO DEFAULT,THAT OVER 40 RECTIFICATIONS AND APPEAL EFFECTS WERE PENDING AND ENTIRE DEMAND OF RS.70.97 CRORES WOULD HAVE BEEN WIPED OFF HAD THE AO TAKEN APPROPRIATE ACTION. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,THE FAA HELD THAT LARGE NUMBER OF RECTIFIC ATION PETITION AND GRANTING APPEAL EFFECT FOR VARIOUS YEARS WERE PENDING BEFORE AO, THAT THE AO'S ACTION TO TREAT THE ASSESSEE AS ASSESSEE- DEEMED-IN-DEFAULT WAS NOT VALID,THAT CONSEQUENTLY T HE LEVY OF INTEREST U/S 220(2) WAS NOT CORRECT.HE ALLOWED THE APPEAL FILED BY THE ASSESSEE . 10. BEFORE US,THE DR STATED THAT MATTER COULD BE DECIDE D ON MERITS.THE AR SUBMITTED THAT THE DEMAND RAISED WAS FINALLY ADJUSTED AGAINST REFUNDS OF AY.S. 1998-99, 2000-01,2001-02,2002-03, 2003-04,2006-07 [FBT) AND AY 2007-08,THAT THE FINAL BALANCE AMOUNT WAS ADJUSTED AGAINST A Y. 2005-06. WE HAVE PERUSED THE MATERIAL ON RECORD.WE FIND THAT REFUND ADJUSTMENT AND RECTIFICATION APPLICATIONS WERE PENDING BEFORE THE AO SINCE AY.19 85-86.HE DID NOT TAKE IN TO CONSIDERATION THE PENDENCY OF THOSE APPLICATIONS WHILE LEVYING IN TEREST U/S.220(2)OF THE ACT.IN OUR OPINION THE FAA HAD RIGHTLY HELD THAT WHEN HUGE REFUND WAS DUE TO THE ASSESSEE,THE AO SHOULD NOT HAVE CHARGED INTEREST U/S.220(2)OF THE ACT WITHOUT DISCO UNTING FOR THE SAME.IN OUR OPINION,HIS ORDER DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.SO,CONFIRM ING HIS ORDER,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEALS FILED BY THE ASSESSEE FOR BOTH THE AY.S.ARE ALLOWED AND THE APPEAL FILED BY THE AO STAND DISMISSED. 2,3% +, 4 5 . %6 %.. 8 9 . , : ; % +, / . % 9 . , < . ORDER PRONOUNCED IN THE OPEN COURT ON 11TH,MARCH,2 015. #1 . 0& # 8 =% 11 > , ,, , 201 5 . B SD/- SD/- ( /JOGINDER SINGH) ( #$ / RAJENDRA) ! / JUDICIAL MEMBER # # # # ! ! ! ! / ACCOUNTANT MEMBER / MUMBAI, =% /DATE: 11.03.2015 SK #1 #1 #1 #1 . .. . ),C ),C ),C ),C D#C&, D#C&, D#C&, D#C&, / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '( 2. RESPONDENT / )*'( 3. THE CONCERNED CIT(A)/ E F , 4. THE CONCERNED CIT / E F 5. DR E BENCH, ITAT, MUMBAI / CG ),% BZ BZBZ BZ , . . . 6. GUARD FILE/ 2 * C, ), //TRUE COPY// #1 % / BY ORDER, H / DY./ASST. REGISTRAR , /ITAT, MUMBAI