ACIT 6(3), MUMBAI V. GRASIM INDUSTRIES LTD, MUMBAI

ITA 5187/MUM/2012

• Counselvise Citation: 518719914 RSA 2012
• Duration Of Justice: 3 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 16-06-2015
• Assessment Year: 1996-1997
• Appeal Filed On: 14-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEBASHIS CHANDA
• Keywords: Rectification of order
• Section: 143(3); 244A; 154

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI G BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PARTH ASARATHY CHOUDHURY,JUDICIAL MEMBER /. ITA NO. 5187 /MUM/201 2 , / ASSESSMENT YEAR - 199 6 - 97 A CIT - CIR. 6(3) ROOM NO. 52 2, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400 020. VS M/S. GRASIM INDUSTRIES LTD. CORPORATE FINANCE DIVISION 91, SHANKAR BHAVAN 230, NARIMAN POINT MUMBAI - 400 0 21 . PAN: AAAC G 4464 B ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : SHRI MADHUR AGARWAL - AR / REVENUE BY : SHRI DEBASHIS CHANDA - CIT / DATE OF HEARING : 25 - 0 8 - 2015 / DATE OF PRONOUNCEMENT : 25 - 0 8 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.31.5.2012 OF CIT(A) - 12, MUMBAI THE ASSES SING OFFICER(AO), HAS RAISED FOLLOWING GROUNDS OF APPEAL : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DIRECTING THE ASSESSING OFFICER TO GRANT INTEREST ON INTEREST TO THE ASSESSEE WHILE IGNORING THE FACT THAT THE SECTION 244A HAS NO PROVISION TO ALLOW INTEREST ON INTEREST TO THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON THE GROUND OF GRANT OF INTEREST ON INTERE ST GIVEN TO THE ASSESSEE U/S 244A WITHOUT APPRECIATING THE FACT THAT THE ISSUE IS RECTIFIABLE U/S 154 OF THE ACT. 3. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. TH E APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. BRIEF FACTS OF THE CASE: 2. ASSESSEE - COMPANY HAD FILED ITS RETURN OF INCOME ON 29.11.1996 , DECLARING TOTAL INCOME AT RS.1,38,14,85,480/ - .THE AO COMPLETED TH E ASSESSMENT , U/S. 143(3) , ON 31.3.1999. THE MATTER TRAVELLED UPTO THE TRIBUNAL.WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL , D ATED 4.1.2007 , THE AO PASSED AN ORDER ON 12.2.2009.ON RECEIPT OF THE ORDER THE A SSESSEE FILED AN APPLICATION U/S. 154 OF THE ACT VI DE HIS LETTER DT.24.7.2009.IN ITS APPLICATION THE ASSESSEE CONTENDED THAT INTEREST U/S. 244A(1)(A) TO WHICH IT WAS ELIGIBLE WAS NOT CONSIDERED BY THE AO , WHILE COMPUTING TAX REFUND DUE TO IT , THAT INT EREST UNDER THE SAID SECTION WAS SHORT ALLOWED BY RS.1.6 6 CRORES. THE ASSESSEE FURNISHED A STATEMENT SHOWING CALCULATION OF INTEREST AND COMPARED IT WITH THE INTEREST ITA/ 5187/M/ 12 ,AY. 96 - 97 GRASIM INDUS. LTD. 2 ALLOWED BY THE AO. ON 25.9.2010 ANOTHER APPLICATION WAS FILED BY THE ASSESSEE EXPLAINING THE COMPUTATION ARRIVED AT BY THE ASSESSEE .IN ITS APPLI CATION THE ASSESSEE RELIED UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT DELIVERED IN THE CASE OF HEG LTD. (324 ITR 331).ON RECEIPT OF THE APPLICATION OF 25.9.2010 , THE AO PASSED AN ORDER ON 21.10.2011.HE REJECTED THE CLAIM MADE BY THE ASSESSEE AND HELD THAT THERE WAS NO MISTAKE APPARENT FROM THE RECORD WHICH COULD BE RECTIFIED. H E HELD THAT U/S. 244A SIMPLE INTEREST WAS TO BE GRANTED, THAT THE CONTENTION OF THE ASSESSEE WAS WRONG AS THE INTEREST U/S. 244 A HAD ALREADY BEEN GRANTED TO IT WHEN THE REFUND WAS ORIGINALLY ISSUED , THAT THE FACTS OF THE CASE WERE DISTINGUISHABLE FROM THE FACTS OF H E G LTD. (SUPRA).THE AO RELIED UPON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT DELIVERED IN THE CASE OF SANDVIK ASIA LTD. (267 ITR 78). 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).IT WAS CONTENDED THAT THE INTEREST ALREADY PAID U/S. 244A WHILE GRANTING EARLIER REFUND, WAS ALSO TO BE INCLUDED AS AMOUNT DUE AND SAME HA D TO BE TAKEN INTO CONSIDERATION FOR CALCULATING INTEREST FO R TAX REFUND, THAT THE INTEREST COMPONENT WOULD PARTAKE THE CHARACTER OF THE AMOUNT DUE AS ENVISAGED BY THE PROVISIONS OF S.244A OF THE ACT.THE ASSESSEE RELIED UPON THE DECISION OF THE TRIBUNAL PASSED IN ITS OWN CASE ON 07 . 0 1.2002 FOR THE AY 1984 - 85 , WHEREIN THE TRIBUNAL HA D ALLOWED THE APPEAL OF THE ASSESSEE. AFTER CONSIDERING THE RECTIFICATION ORDER PASSED BY THE AO AND THE SUBMISSION OF THE ASSESSEE , THE FAA REFERRED TO THE JUDGMENT OF HEG LTD. (SUPRA) AND HELD THAT THE INTEREST WHICH ACCRUED TO THE ASSESSEE FOR NON REFUND OF TDS WOULD BECOME PART OF THE AMOUNT DUE U/S, 244A, THAT IT WOULD BECOME AN INTEGRAL PART OF THE PRINCIPAL AMOUNT THAT WAS NOT REFUNDED THOUGH IT WAS DUE AND PAYABLE, THAT THE ASSESSEE WAS ENTITLED TO INT EREST ON DELAYED REFUND OF TDS, THAT THE INT EREST COM PONENT WOULD PARTAKE THE CHARACTER OF THE AMOUNT DUE U/S. 244A OF THE ACT, THAT THE AO HAD TAKEN ONLY TAX COMPONENT INTO CONSIDERATION FOR CALCULATING THE INTEREST, THAT HE HAD IGNORED THE JUDGMENT OF HON'BLE SUPREME COURT DELIVERED IN THE CASE OF SANDVIK ASIA LTD. (280 ITR 643), THAT THE AO HAD NOT CONSIDERED THE ORDER OF THE TRIBUNAL . RELYING UPON THE JUDGMENT OF HEG LTD., THE FAA HELD THAT AO HAD TO RECTIFY THE ORDER PASSED BY HIM U/S. 154 OF THE ACT.SHE DIRECTED THE AO TO CONSIDER THE JUDGM ENT OF THE HEG LTD. AND ORDER OF THE TRIBUNAL DELIVERED ON 7.1.2002 FOR THE AY 19 84 - 85.SHE FURTHER HELD THAT AFTER VERIFYING THE CALCULATION SUBMITTED BY THE ASSESSEE , THE AO SHOULD ALLOW THE CORRECT REFUND TO THE ASSESSEE . 4 . DURING THE COURSE OF HEARING B EFORE US THE DEPARTMENTAL R EPRESENTATIVE (DR) ARGUED THAT IN THE CASE OF GUJARAT FLOURESCENT , (300 ITR 2 91 ) THE HONBLE APEX COURT HAD CLARIFIED THE LEGAL POSITION OF SANDVIK ASIA. HE ALSO REFERRED TO THE JUDGMENT DELIVERED BY THE TRIBUNAL ON 26.12.2014 IN CASE OF HIN DALCO, A SISTER CONCERN OF THE ASSESSEE GROUP AND STATED THAT THE AO HAD RIGHTLY REJECTED THE APPLICATION FILED BY THE ASSESSEE U/S. 154 OF THE ACT. AUTHORISED REPRESENTATIVE (AR) SUPPORTED THE ORDER OF THE FAA AND RELIED UPON THE ORDER OF HEG LTD.(SUPRA).HE RE FERRED TO PAGE NO.16 OF THE PAPER BOOK. H E FURTHER STATED THAT THE JUDGMENT OF GUJARAT FLOURESCENT AND SANDVIK ASIA WERE NOT APPLICABLE TO THE FACTS OF THE CASE UNDER APPEAL. 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL THE AO HAD CALCULATED INTEREST AS PER THE PROVISIONS OF SECTION 244A OF THE ACT., THAT THE ASSESSEE HAD FILED AN APPLICATION U/S. 154 , THAT THE AO HAD ITA/ 5187/M/ 12 ,AY. 96 - 97 GRASIM INDUS. LTD. 3 REJECTED THE APPLICATION AND DENIED FURTHER INTEREST.WE FI ND THAT IN THE CASE OF GUJARAT FLOURESCENT (SUPRA), THE HON'BLE SUPREME COURT HAD CLEARLY MENTIONED THAT IT HAD NEVER DIRECTED TO GRANT INTEREST ON INTEREST, THAT THE INTEREST GRANTED IN THE MATTER OF SANDVIK ASIA WAS COMPENSATORY IN NATURE.WE FIND THAT THE T RIBUNAL IN THE CASE OF HINDALCO INDUSTRIES (SUPRA ), HAS ALSO DISCUSSED THE ISSUE C ONSIDERING THE DEVELOPMENTS THAT HAD TAKEN PLACE AFTER THE ORDER OF THE FAA WE ARE OF THE OPINION THAT THE MATTER NEEDS FURTHER VERIFICATION.THEREFORE, WE ARE REMITTING BACK THE ISSUE TO TH E FILE OF THE AO TO CALCULATE THE INTEREST AS PER THE PROVISIONS OF S.244A OF THE ACT.HE IS DIRECTED TO CONSIDER THE JUDGMENTS OF HEG LTD. ( SUPRA), GUJARAT FLOURESCENT(SUPRA), THE ORDER OF THE T RIBUNAL DELIVERED IN THE CASE OF THE ASSESSEE FOR THE AY 19 84 - 85 AND THE DECISION OF THE T RIBUNAL PRONOUNCED IN THE CASE OF HINDALCO INDUSTRIES (SUPRA ) . HE IS ALSO DIRECTED TO CONSIDER THE CHART SUBMITTED BY THE ASSESSEE BEFORE US. EFFECTIVE GROUND OF APPEAL IS DECIDE D IN FAVOUR OF THE AO, IN PART. AS A RESULT,APPE AL FILED BY THE AO STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH AUGUST,2015. 25 TH , 2015 SD/ - SD/ - ( / PARTHASARATHY CHOUDHURY ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 25.8. 2015 . . . JV . SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITA T, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.