LUBRIZOL INDIA PVT LTD, MUMBAI V. DCIT LTU-2, MUMBAI

ITA 4678/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6826 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 10-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYA PINISETTY; BRAJENDRA KUMAR
• Keywords: Rectification of order; Set aside
• Section: 244A; 72; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.4678/M/2019 ASSESSMENT YEAR: 1989-90 M/S. LUBRIZOL INDIA P. LTD., 9/3, THANE-BELAPUR ROAD, TURBHE, NAVI MUMBAI - 400705 PAN: AAACL0126H VS. THE DEPUTY COMMISSIONER OF INCOME- TAX, LTU-2, 29 TH FLOOR, CENTRE NO.1, WORLD TRADE CENTRE, CUFFE PARADE, MUMBAI (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NEERAJ SHETH, A.R. REVENUE BY : SHRI SATYA PINISETTY, D.R. & SHRI BRAJENDRA KUMAR, D.R. DATE OF HEARING : 09.07.2021 DATE OF PRONOUNCEMENT : 22.07.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 14.05.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 1989-90. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE 1 ST GROUND OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) WHEREBY T HE LD. CIT(A) HAS UPHELD THE ACTION OF THE AO IN GRANTING SHORT I NTEREST UNDER SECTION 244A OF THE ACT AND ALSO NOT DIRECTING THE AO TO ADJUST THE REFUND GRANTED FIRST TOWARDS THE INTEREST RECEI VABLE AND THE BALANCE REMAINING AGAINST THE TAX AMOUNT RECEIVABLE BY THE ITA NO.4678/M/2019 M/S. LUBRIZOL INDIA P. LTD. 2 ASSESSEE. THE ASSESSEE HAS ALSO CHALLENGED THE ORD ER OF LD. CIT(A) ON THE ISSUE OF HOLDING THAT THE ISSUE IS DE BATABLE AND CAN NOT BE RECTIFIED UNDER SECTION 154 OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT IN TERMS OF ORDER DA TED 20.07.2011 PASSED UNDER SECTION 154 OF THE ACT, THE AO DETERMINED THE AMOUNT OF RS.2,98,529/- AS REFUNDABL E TO THE ASSESSEE. AGAINST THE SAID ORDER, THE ASSESSEE MOV ED ANOTHER RECTIFICATION APPLICATION UNDER SECTION 154 OF THE ACT DATED 24.08.2011 AND 06.08.2012 REQUESTING THE AO TO ALLO W INTEREST ON INTEREST SECTION 244A OF THE ACT RELYING ON THE DECISION OF APEX COURT IN THE CASE OF SANDVIK ASIA LTD. VS. CIT (2006) 280 ITR 643 AND SUBMITTED THAT A REFUND OF RS.3,48,62,9 54/- SHOULD HAVE BEEN GRANTED TO THE ASSESSEE. AGAIN THE AO RE JECTED THE RECTIFICATION APPLICATION VIDE ORDER DATED 12.04.20 18. THE ASSESSEE AGAIN FILED A RECTIFICATION APPLICATION DA TED 15.05.2018 AGAINST THE ORDER DATED 12.04.2018 REQUESTING THE A O THAT THE AMOUNT OF REFUND ISSUED TO THE ASSESSEE ON VARIOUS DATES SUCH AS 31.07.1990, 29.11.1991 AND 15.10.2007 SHOULD FIR ST BE ADJUSTED TOWARDS INTEREST RECEIVABLE UNDER 244A OF THE ACT AS ON THAT DATE AND BALANCE AMOUNT IF ANY SHOULD BE ADJUS TED AGAINST THE TAX RECEIVABLE BY THE ASSESSEE. IN DEFENCE OF HIS ARGUMENTS, THE ASSESSEE RELIED ON THE DECISION OF THE CO-ORDIN ATE BENCH OF THE TRIBUNAL OF MUMBAI BENCH IN THE CASE OF UOI VS. ACIT (2016) 521 ITR(T) 221. NOTEWORTHY TO STATE THAT WHI LE MAKING THE ABOVE RECTIFICATION APPLICATION, THE ASSESSEE H AS NOT CLAIMED INTEREST ON INTEREST RECEIVABLE U/S 244A OF THE ACT . THE AO AGAIN REJECTED THE RECTIFICATION APPLICATION MOVED UNDER SECTION 154 OF THE ACT BY THE ASSESSEE BY RELYING ON THE HO NBLE SUPREME COURT DECISION IN THE CASE OF GUJARAT FLURO CHEMICALS ITA NO.4678/M/2019 M/S. LUBRIZOL INDIA P. LTD. 3 AS REPORTED IN (2014) 42 TAXMANN.COM 1 WHICH PROVID ES THAT ONLY INTEREST PROVIDED UNDER THE STATUTE CAN BE GIV EN BY THE DEPARTMENT AND NO OTHER INTEREST. 4. AGGRIEVED BY THE ORDER OF RECTIFICATION ORDER DA TED 21.05.2018, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) SUBMITTING THAT ORDER PASSED BY THE AO IS BAD IN LA W AS THE SAME IS AGAINST THE RATIO LAID IN THE DECISION OF C O-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF UOI VS. ACIT ( 2016) 72 TAXMANN.COM 348 WHEREIN IT HAS BEEN HELD THAT REFUN D GRANTED SHOULD BE ADJUSTED FIRST AGAINST INTEREST COMPONENT OF EARLIER REFUND AND THEREAFTER BALANCE AMOUNT SHOULD BE ADJU STED AGAINST PRINCIPAL COMPONENT OF TAX IN THE REFUND GR ANTED EARLIER. THE ASSESSEE ALSO DISTINGUISHED THE DECISION OF HON BLE APEX COURT IN THE CASE OF GUJARAT FLURO CHEMICALS (SUPRA ) ON THE GROUND THAT SAID DECISION DEALS WITH THE ISSUE OF I NTEREST ON INTEREST WHEREAS ASSESSEE HAS NOT CLAIMED ANY INTER EST ON INTEREST BUT ASKING FOR THE ADJUSTMENT OF REFUND PA ID BY THE DEPARTMENT AGAINST THE INTEREST DUE FIRST AND THERE AFTER AGAINST THE PRINCIPAL AMOUNT. HOWEVER THE LD CIT(A) DISMISS ED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT THE ISSUE RAISED BY THE ASSESSEE IS DEBATABLE IN NATURE AND CAN NOT BE RECT IFIED UNDER SECTION 154 OF THE ACT. 5. AT THE OUTSET, THE LD. A.R. SUBMITTED BEFORE US THAT THE DECISION OF THE APEX COURT IN THE CASE OF GUJARAT F LUORO CHEMICALS (SUPRA) HAS NO BEARING ON THE INSTANT CAS E SINCE THAT CASE DEALT WITH THE ISSUE WHETHER INTEREST ON INTER EST CAN BE ALLOWED TO AN ASSESSEE, WHEREAS THE APPELLANT HAS N OT MADE A CLAIM OF INTEREST ON INTEREST BUT HAS MERELY REQUES TED THAT THE ITA NO.4678/M/2019 M/S. LUBRIZOL INDIA P. LTD. 4 PROPER METHOD OF ADJUSTMENT OF REFUND BE FOLLOWED, NAMELY, THE REFUND SHOULD FIRST BE ADJUSTED AGAINST THE INTERES T AND THEREAFTER AGAINST THE TAX. IT IS WELL SETTLED THA T REFUND GRANTED BY THE TAX DEPARTMENT HAS TO BE FIRST ADJUSTED AGAI NST THE INTEREST AND THEREAFTER AGAINST TAX AMOUNT REFUNDAB LE TO THE ASSESSEE. THE LD COUNSEL IN HIS DEFENSE PLACED RELI ANCE ON THE FOLLOWING DECISIONS: A. UNION OF INDIA V/S. ACIT [2016] 72 TAXMANN.COM 348; B. DCIT V/S. STATE BANK OF SAURASHTRA (NOW MERGED WITH SBI) [ITA NO. 99/MUM/2016]; C. BANK OF BARODA V/S. DCIT [ITA NO. 1646 & 2565/ MUM/2017]; D. DCIT V/S. PEERLESS GENERAL FINANCE & INVESTMEN T CO. LTD. [2017] 88 TAXMANN.COM 708 THE LD. A.R. ALSO SUBMITTED THAT THE DECISION OF TH E HON'BLE SUPREME COURT IN GUJARAT FLOURO CHEMICALS (SUPRA) H AS BEEN CONSIDERED IN THE AFOREMENTIONED DECISIONS. RELIANC E IS ALSO PLACED ON THE DECISION OF THE MUMBAI TRIBUNAL IN TH E CASE OF GRASIM INDUSTRIES LTD. V/S. DCIT REPORTED IN [2021] 123 TAXMANN.COM 312 WHEREIN THE SAME VIEW WAS TAKEN. I N VIEW OF THE ABOVE, THE LD AR SUBMITTED THAT THE VIEW CANVAS SED BY THE APPELLANT IS SUPPORTED BY SEVERAL RULINGS OF THE TR IBUNAL REFERRED ABOVE AND HENCE AND HENCE, THE ISSUE CANNOT BE REGA RDED AS BEING DEBATABLE IN NATURE AS HELD BY THE CIT(A). T HE LD. A.R. PRAYED BEFORE THE BENCH THAT IN VIEW OF THE FOREGOI NG JUDICIAL PRONOUNCEMENTS, THE AO MAY BE DIRECTED TO ADJUST TH E AMOUNT OF REFUND FIRST AGAINST INTEREST RECEIVABLE U/S. 24 4A OF THE ACT AND THEREAFTER THE BALANCE AMOUNT AGAINST THE PRINC IPAL COMPONENT OF TAX. THE AO MAY FURTHER BE DIRECTED TO GRANT FURTHER INTEREST UNDER SECTION 244A OF THE ACT IN A CCORDANCE THEREWITH. ITA NO.4678/M/2019 M/S. LUBRIZOL INDIA P. LTD. 5 6. THE LD. D.R., ON THE OTHER HAS, HEAVILY RELIED O N THE ORDERS OF AO AND LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS CLAIMED BEFORE THE AO VIDE RE CTIFICATION APPLICATION DATED 12.04.2018 THAT INTEREST GRANTED ON VARIOUS DATES SHOULD FIRST BE ADJUSTED AGAINST THE INTEREST ON INCOME TAX REFUND AND THEREAFTER IF BALANCE REMAINING ANY SHOU LD BE ADJUSTED AGAINST THE PRINCIPAL AMOUNT OF TAX DUE T O THE ASSESSEE BY WAY OF REFUND. THE LD. CIT(A) DISMISSE D THE APPEAL OF THE ASSESSEE BY JUST MENTIONING THAT THE ISSUE I S DEBATABLE ONE AND CAN NOT BE DECIDED AT THIS POINT UNDER SECT ION 154 OF THE ACT AND THUS UPHELD THE ORDER OF THE AO. HOWEV ER, WE FIND THAT THE ADJUSTMENT OF REFUND ISSUED EARLIER HAS TO BE ADJUSTED AGAINST THE INTEREST AND ONLY THEREAFTER AGAINST TH E PRINCIPAL AMOUNT OF TAX. THE ISSUE IS SQUARELY COVERED BY T HE VARIOUS DECISIONS CITED BY THE LD. A.R. DURING THE COURSE O F HEARING NAMELY; UNION OF INDIA VS. ACIT (SUPRA), DCIT VS. S TATE BANK OF SAURASHTRA (NOW MERGED WITH SBI) (SUPRA), BANK OF B ARODA VS. DCIT (SUPRA) AND DCIT VS. PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. (SUPRA). IN VIEW OF THESE FACT S, WE ARE OF THE CONSIDERED OPINION THAT A REFUND ISSUED TO THE ASSE SSEE ON VARIOUS DATES HAS TO BE FIRST ADJUSTED AGAINST THE INTEREST DUE ON THE INCOME TAX AND THEREAFTER AGAINST THE PRINCIPAL AMOUNT. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) A ND DIRECT THE AO TO MAKE ADJUSTMENT OF REFUND AS INDICATED ABOVE. ITA NO.4678/M/2019 M/S. LUBRIZOL INDIA P. LTD. 6 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.07.2021. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.07.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.