DCIT (TDS) 1(1), MUMBAI V. GODREJ INDUSTRIES LTD, MUMBAI

ITA 515/MUM/2011

• Counselvise Citation: 51519914 RSA 2011
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-10-2013
• Assessment Year: 1996-1997
• Appeal Filed On: 19-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C P PATHAK
• Keywords: Opportunity of being heard
• Section: 244A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NOS. 515 & 516/MUM/2011 ASSESSMENT YEAR: 1996-97 & 1997-98 DCIT (TDS)-1(1) 8 TH FLOOR, R. NO. 803, SMT. K.G. MITTAL HOSPITAL BLDG. CHARNI ROAD, MUMBAI 400 002 VS. M/S. GODREJ INDUSTRIES LTD. PHIROJSHANAGAR, ESTERN EXPRESS HIGHWAY, VIKHROLI, MUMBAI 400 079 PAN: AAACG 2953 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M. M. GOLVALA & AJIT SHAH REVENUE BY : SHRI C. P. PATHAK DATE OF HEARING : 01.11.2013 DATE OF PRONOUNCEMENT : 29.11.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AG AINST THE ORDERS OF THE LD.CIT(A) -14, MUMBAI BOTH DATED 25.10.2010 FOR THE ASSESSMENT YEARS 1996-97 & 1997-98. SINCE IDENTICAL ISSUES ARE INVOLVED IN THE APPEALS, THE SAME ARE DISPOSED OFF BY THIS COMMON ORDER. 2. IN BOTH THE APPEALS, THE REVENUE HAS AGITATED AG AINST THE ORDERS OF THE LD.CIT(A) DIRECTING THE AO TO DETERMINE THE AMOUNT OF INTERES T U/S 244 A OF THE INCOME TAX ACT IN ACCORDANCE WITH THE APEX COURT DECISION IN THE CASE OF CIT VS. NARENDRA DOSHI REPORTED IN 254 ITR 606. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE, A COMP ANY WAS ENGAGED IN MANUFACTURING OF SOAPS, AND OCCASIONALLY IMPORTED OILS FROM MALAY SIA AND SINGAPORE. THE SAID IMPORT WAS FUNDED BY A SUPPLIERS CREDIT, AND INTEREST WAS PAYABLE THEREON, WHICH INTEREST IS EXEMPT FROM TAX UNDER SECTION 10(15) (IV)(C), IF AP PROVED BY THE GOVERNMENT OF INDIA. DURING THE YEARS UNDER CONSIDERATION APPROVALS WERE GRANTED BY THE GOVERNMENT OF INDIA, AFTER THE DUE DATES FOR THE PAYMENT OF WITHHOLDING TAX UNDER SECTION 195 OF THE ACT. THE ITA NOS. 515 & 516/MUM/2011 M/S. GODREJ INDUSTRIES LTD. ASSESSMENT YEAR: 1996-97 & 1997-98 2 ASSESSEE, THEREFORE, PAID WITHHOLDING TAX ON THE DU E DATE BEFORE REMITTING THE FUNDS. THE ASSESSEE COMPANY OBTAINED APPROVAL UNDER SECTION 10 (15)(IV)(C) SUBSEQUENTLY. THE ASSESSEE COMPANY CLAIMED THE REFUND OF TAX DEDUCTED AT SOURCE OF RS.35,41,589/- AND FILED RECTIFICATION APPLICATION, WHICH THE AO DENIE D. ON APPEAL, THE LD.CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 16 .01.2001 AGAINST WHICH THE DEPARTMENT FILED AN BEFORE THE TRIBUNAL AND THE SAME WAS DISMI SSED BY THE TRIBUNAL VIDE ITS ORDER DATED 31.05.2005. THE AO GAVE EFFECT TO THE SAID OR DER OF THE LD.CIT(A) AND GRANTED A TAX REFUND AMOUNTING TO RS.35,41,589/- TO THE ASSES SEE, BUT DID NOT ALLOW INTEREST UNDER SECTION 244A OF THE ACT. THE ASSESSEE FILED AN APPE AL AGAINST THE SAID ORDER CLAIMING THE GRANT OF INTEREST UNDER SECTION 244A OF THE ACT AND THE LD.CIT(A) DISMISSED THE SAID APPEAL. THE ASSESSEE FURTHER FILED THE APPEAL TO TH E TRIBUNAL WHICH WAS DISMISSED BY THE TRIBUNAL VIDE ITS ORDER DATED 13.01.2006. IN VIEW O F THE SUBSEQUENT DECISION OF THE APEX COURT IN THE CASE OF SANDVIK ASIA LIMITED VS. CIT A ND ORS. (280 ITR 634) ON ISSUE OF INTEREST UNDER SECTION 244A, THE ASSESSEE COMPANY M OVED A MISCELLANEOUS APPLICATION FOR RECTIFICATION TO THE SAID TRIBUNAL ORDER. THE MISCE LLANEOUS APPLICATION WAS ALLOWED AND THE TRIBUNAL VIDE ORDER DATED 25.09.2006 DIRECTED INCOM E TAX DEPARTMENT TO ALLOW THE INTEREST UNDER SECTION 244A ON THE TAX REFUND OF RS .35,41,589/-. THE AO HAD GIVEN EFFECT TO THE SAID ORDER OF THE TRIBUNAL ON 25.09.2008 AND ALLOWED INTEREST UNDER SECTION 244A OF THE ACT AMOUNTING TO RS.1,620,277/- TO THE ASSES SEE COMPANY. HOWEVER, THE SAID REFUND OF TAX ALONG WITH THE INTEREST UNDER SECTION 244A OF THE ACT HAD NOT BEEN GRANTED BY THE AO SIMULTANEOUSLY WITH THE REFUND DUE TO THE ASSESSEE COMPANY I.E. ON 27.06.2001 AS CLAIMED BY THE ASSESSEE. 3.1 ON APPEAL BEFORE THE LD.CIT(A), IT WAS THE CONT ENTION OF THE ASSESEE THAT THE INTEREST UNDER SECTION 244A HAD TO BE GRANTED SIMU LTANEOUSLY WITH THE REFUND DUE TO THE ASSESSEE AND THERE SHOULD NORMALLY BE NO REASON TO GRANT REFUND WITHOUT ADDING THE ENTITLED INTEREST. ACCORDING TO THE ASSESSEE, AS PE R THE INSTRUCTION NO. 2/2007 DATED 28.03.2007 ISSUED BY THE CENTRAL BOARD OF DIRECT TA XES, THE ASSESSEE WAS ENTITLED TO RECEIVED THE INTEREST CALCULATED IN THE MANNER PROV IDED IN THE SECTION 244A OF THE ACT ON THE REFUND DUE TO THE ASSESSEE. THE AO HAD GRANTED REFUND OF TAX AMOUNTING TO RS.3,541,589/- ON 27.06.2001 AND GRANTED INTEREST O N THE SAID REFUND AMOUNTING TO RS.1,620,277/- VIDE HIS ORDER DATED 25.09.2008, WHI CH WAS ALMOST 7 YEARS LATER. THE SAID REFUND OF TAX ALONG WITH THE INTEREST UNDER SECTION 244A OF THE ACT SHOULD HAVE BEEN ITA NOS. 515 & 516/MUM/2011 M/S. GODREJ INDUSTRIES LTD. ASSESSMENT YEAR: 1996-97 & 1997-98 3 GRANTED BY THE AO SIMULTANEOUSLY WITH THE REFUND DU E TO THE ASSESSEE COMPANY I.E. ON 27.06.2001, WHICH THE AO FAILED TO DO. THE LD.CIT(A ) WHILE OBSERVING THAT THE AO HAD ALREADY GRANTED INTEREST ON THE SAID REFUND TO THE EXTENT OF RS.16,20,277/-, DIRECTED THE AO TO DETERMINE THE AMOUNT OF INTEREST U/S 244A OF THE ACT IN VIEW OF THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. NARENDRA DOSHI (2 54 ITR 606). AGGRIEVED BY THE IMPUGNED ORDERS, THE REVENUE IS IN APPEAL BEFORE US . 4. BEFORE US, THE LD.DR HAS CONTENDED THAT THE LD.C IT(A) IS NOT CORRECT IN DIRECTING AO TO DETERMINE THE AMOUNT OF INTEREST U/S. 244A OF THE IT ACT, IN VIEW OF THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. NARENDRA DOSHI AS REPORTED IN (254 ITR 606) AS THE DECISION HAS BEEN RENDERED U/S 214 OF THE IT ACT, 1 961 AND THEREFORE CAN HAVE NO APPLICABILITY TO ISSUES U/S 244A. THE DECISION OF H ONBLE SUPREME COURT IN THE CASE SANDVIK ASIA LTD. VS. CIT AND OTHERS AS REPORTED IN (280 ITR 643) (SC) PERTA INS TO ADVANCE TAX AND IS DISTINGUISHABLE ON FACTS. THE LD .DR HAS FURTHER CONTENDED THAT THE RATIO OF HONBLE M.P. HIGH COURT IN THE CASE OF UNIVERSAL CABLES LTD. VS. CIT (2010) 191 TAXMAN 370 (M.P.) THAT NO INTEREST WAS PAYABLE U/S. 244A IF THE ASSESSEE ERRONEOUSLY DEDUCTED TAX ON INTEREST PAYMENTS MADE TO IDBI WHIC H WAS EXEMPTED U/S. 194A, IS SQUARELY APPLICABLE TO THE PRESENT CASE OF THE ASSE SSEE AS THE ASSESSEE IS HIMSELF IN ERROR IN MAKING TDS FROM THE AMOUNT OF INTEREST WHICH WAS EXEMPT. ON THE OTHER HAND, THE LD.AR HAS SUBMITTED THAT THE LD.CIT(A) HAS CORRECTL Y ALLOWED THE CLAIM OF INTEREST UNDER SECTION 244A OF THE ACT BY DRAWING OUR ATTENTION TO THE PROVISIONS OF SECTION 244A, VARIOUS DECISIONS OF THE HIGH COURTS AND THE SUPREM E COURT. 5. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE ASSESSEES APPEAL BEFORE THE TRIBU NAL ON ISSUE OF INTEREST UNDER SECTION 244A, WHICH HAS EARLIER BEEN DISMISSED BY THE TRIBU NAL VIDE ITS ORDER DATED 13.01.2006, HAS SUBSEQUENTLY BEEN RECTIFIED IN VIEW OF THE DECI SION OF THE APEX COURT IN THE CASE OF SANDVIK ASIA LIMITED VS. CIT AND ORS. (280 ITR 634). THE TRIBUNAL, VIDE THE SAID ORDER DATED 25.09.2006, DIRECTED INCOME TAX DEPARTMENT TO ALLOW THE INTEREST UNDER SECTION 244A ON THE TAX REFUND. HOWEVER, THE SAID REFUND OF TAX ALONG WITH THE INTEREST UNDER SECTION 244A OF THE ACT HAS NOT BEEN GRANTED BY THE DEPARTMENT SIMULTANEOUSLY WITH THE REFUND DUE TO THE ASSESSEE COMPANY I.E. ON 27.06.20 01 AS CLAIMED BY THE ASSESSEE. THUS, THE ENTIRE GENESIS OF THE ISSUE IS BASED ON THE DEC ISION OF THE TRIBUNAL DATED 25.09.2006 ITA NOS. 515 & 516/MUM/2011 M/S. GODREJ INDUSTRIES LTD. ASSESSMENT YEAR: 1996-97 & 1997-98 4 WHICH HAS DIRECTED INCOME TAX DEPARTMENT TO ALLOW T HE INTEREST UNDER SECTION 244A ON THE TAX REFUND BY RELYING ON THE DECISION OF THE AP EX COURT IN THE CASE OF SANDVIK ASIA LIMITED (SUPRA). HOWEVER, THE HONBLE APEX COURT IN THE CASE OF CIT VS. GUJARAT FLOURO CHEMICALS IN SLP(C) 11406 OF 2008 VIDE ORDER DATED 18.09.2013 , HAS HELD THAT SECTION 244A OF THE ACT PROVIDES FOR INTEREST ON REFUNDS UN DER VARIOUS CONTINGENCIES. HOWEVER, IT HAS BEEN CLARIFIED THAT IT IS ONLY THAT INTEREST PR OVIDED FOR UNDER THE STATUTE WHICH MAY BE CLAIMED BY AN ASSESSEE FROM THE REVENUE AND NO OTHE R INTEREST ON SUCH STATUTORY INTEREST. WHILE DECIDING THE SAID CASE, THE HONBLE APEX COURT HAS CONSIDERED THE EARLIER DECISION OF THE SAME COURT IN THE CASE OF SANDVIK ASIA LIMITED IN WHICH THE MAIN ISSUE IS WHETHER THE ASSESSEE IS ENTITLED FOR COMPENSATION B Y THE REVENUE FOR DELAY IN PAYMENT OF THE AMOUNT ADMITTEDLY DUE TO THE ASSESSEE. CONSIDER ING THE TOTALITY OF FACTS, AFTER NOTING THAT THE EARLIER DECISION OF THE TRIBUNAL IS BASED ON THE DECISION OF THE APEX COURT IN THE CASE OF SANDVIK ASIA LIMITED , WE ARE OF THE CONSIDERED VIEW THAT IT IS JUST AND PROP ER TO REMIT BACK THE ENTIRE MATTER TO THE FILE OF THE AO TO DECIDE THE MATTER AFRESH IN THE LIGHT OF THE DECISION OF THE APEX COURT IN THE CASE OF GUJARAT FLOURO CHEMICALS AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO SUBST ANTIATE ITS CLAIM. WE ORDER AND DIRECT ACCORDINGLY. 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF NOVEMBER, 2013. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 29.11.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR G BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.