KUMAGAI SKANSKA HCC ITOCHU GROUP (KSHI JV), MUMBAI V. ASST CIT 23(1), MUMBAI

ITA 5306/MUM/2012

• Counselvise Citation: 530619914 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAGHUVEER MADNAPPA
• Section: 244A

Judgement Text

, ' INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANJAY GARG,JUDICIAL MEMBER /. ITA NO. 5 3 06 /MUM/201 2 , / ASSESSMENT YEAR - 20 0 5 - 0 6 KUMAGAI SKANSKA HCC ITOCHU GROUP (KSHI JV) HINCON HOUSE, LBS MARG, VIKHROLI (WEST) MUMBAI - 400 083 PAN:AAAAK 1477 G VS ACIT - 23(1)(1) 1 ST FL OOR, C - 10, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX MUMBAI - 400 051. /ASSESSEE BY :SH. KARTIK NATRAJAN / REVENUE BY : SH. RAGHUVEER MADNAPPA / DATE OF HEARI NG :1 5 - 0 9 - 2015 / DATE OF PRONOUNCEMENT : 23 - 09 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(A CT) PER RAJENDRA, AM - CHALLEN GING THE ORDER,DATED 18 .0 6.201 2,OF THE CIT(A ) - 36 ,MUMBAI THE ASSESS EE HAS RAISED FOLLOWING GROUNDS OF APPEAL: BEING AGGRIEVED BY THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) - 36 ,[CIT(A)] MUMBAI, THE ASSESSEE JOINT VENTURE IS IN APPEAL ON THE FOLLOWING GROUND 1. A) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN UPHOLDING THE DECISION OF THE LEARNED ASSESSING OFFICER OF NOT GRANTING INTERE ST U/S 244A FROM THE FIRST DAY OF THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE FINANCIAL YEAR IN WHICH THE TAX HAD BEEN DEDUCTED AT SOURCE. THE LEARNED ASSESSING OFFICER BE DIRECTED TO GRANT INTEREST AS PER LAW. B) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DISCUSSING ABOUT YEAR IN WHICH THE REFUND BECAME DUE TO ASSESSEE INSTEAD OF ADJUDICATING THE DATE FROM WHICH THE INTEREST IS PAYABLE. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT ( A) ERRED IN NOT ADJUDICATING ON GROUND NO. 2. THE LEARNED CIT(A) BE DIRECTED TO ADJUDICATE THEREON THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER, OR DELETE THE GROUND TAKEN IN APPEAL. BRIEF FACTS: WHILE DECIDING THE APPEALS, FILED BY THE ASSESS ING O FFICER(AO),FOR THE AY.20 02 - 03,2003 - 04, AND 2004 - 05,THE TRIBUNAL ,VIDE ITS ORDERS DATED 24.11.2008 AND 29.10.2009 (ITA/67&68/MUM/ 2007AND ITA/6866/MUM/2008 )HELD AS UNDER: ..THE ASSESSING OFFICER IS BOUND TO GIVE CREDIT OF TAX DEDUCTION AT SOURCE IN THE YEAR IN WHICH THE INCOME IS OFFERED TO TAX BY THE ASSESSEE AND TAXED BY THE REVENUE. ACCORDINGLY,THE TAX CREDIT ON CONTRACT RECEIPT AND INTEREST INCOME THAT HAD BEEN WITHDRAWN IN THE YEAR OF ORIGINAL CLAIM MADE BY THE ASSESSEE I.E.AY.2002 - 03 TO 2004 - 05 WAS REC ALCULATED BY HIM. FOR THE AY.2002 - 03,HE HELD THAT DURING THAT YEAR NO TAX WAS DEDUCTED FROM CONTRACT RECEIPTS BY THE CLIENTS OF THE ASSESSEE ,THAT IT HAD ACCOUNTED FOR INTEREST INCOME OF RS.2.69 CRORES FOR WHICH TDS OF RS.21.08 LAKHS WAS DEDUCTED.HE HELD TH AT TDS CREDIT OF RS.21.08 LAKHS WAS DUE TO THE ASSESSEE IN AY.2005 - 06.FOR THE AY.2003 - 04 IT WAS FOUND THAT THE ASSESSEE HAD INTEREST INCOME AND CONTRACT RECEIPTS OF RS.2.22 CRORES AND RS.174.87 CRORES RESPECTIVELY AND TAX OF RS.32.31 LAKHS AND 1.09 CRORES RESPECTIVELY WAS DEDUCTED.HE HELD THAT TDS OF RS.32,31,011/ - AND RS. 1,09,19,370/ - WAS REFUNDABLE IN THE AY.2005 - 06.FOR THE NEXT AY.,THE AO HELD THAT TDS OF RS.4.75 LAKHS AND RS.8 4 . 29 LAKHS WAS TO BE REFUNDED TO THE ASSESSEE .HE SUMMARISED THE TDS CREDIT TO BE ALLOWED IN THE AY.2005 - 06 AS UNDER: 5306/12 KUMGAI - AY.0 5 - 06 2 AY. TDS CREDIT (IN RS.) 2002 - 03 21,08,043/ - 21,08,043/ - 2003 - 04 32,31,011/ - 1,09,19,370/ - 1,41,50,381/ - 2004 - 05 4,75,435/ - 89,05,422/ - 84,29,987/ - TOTAL 2,51,63,730/ - AT THE END OF THE CALCULATION, HE MENTIONED THAT INTEREST U/S.244A OF THE ACT WOULD BE ALLOWED AS PER THE LAW APPLICABLE. 2.1. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,IT WAS AR GUED THAT THE AO HAD GRANTED TDS FROM 01.04.2005,THAT AS PER THE PROVISIONS OF SECTION 244A INTEREST WAS TO BE GRANTED FROM FIRST DAY OF APRIL SUCCEEDING THE FINANCIAL YEAR IN WHICH TDS WAS DEDUCTED,THAT THE AO HAD ERRED IN COMPUTING INTEREST FROM 01.04.20 05. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ORDER OF THE AO THE FAA REFERRED TO THE PROVISIONS OF SECTION 214 AND 244 OF THE ACT AND HELD THAT REFUND COULD BE WORKED OUT ONLY AFTER INCOME IS OFFERED FOR TAXATION,THAT THE ASSESSEE HAD OFFERE D THE INCOME FOR THE AY.2005 - 06,THAT INTEREST COULD BE CALCULATED ONLY FROM THE FIRST DAY OF AY.2005 - 06.HE ALSO MADE A REFERENCE TO THE CASES OF DINESH T TAILOR (5TAXMANN.COM. 78),SANDVIK ASIA LTD.(280ITR643),AND TO THE CBDT CIRCULAR NO.549 DTD.31. 10.1989. 2.2. BEFORE US, THE AUTHORISED REPRESENTATIVE(AR) CONTENDED THAT THE INTEREST HAD TO BE CALCULATED FROM THE FIRST DAY OF THE SUCCEEDING FINANCIAL YEAR.HE RELIED UPON THE CASE OF TATA CHEMICALS LTD.(CIVIL APPEAL NO.6301 OF 2011,DTD.26.02.2014).D EPARTMENTAL RE PRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL.WE FIND THAT THE BASIC QUESTION TO BE DECIDED IS THE DATE FROM WHICH THE INTEREST ON REFUND HAS TO BE CALCULATED.IN OUR OPINION , THE HONBLE APEX COURT HAS DELIBERATED UPON AND DISCUSSED THE MATTER IN DETAIL WHILE ADJUDICATING THE CASE OF TATA CHEMICALS LTD.(363ITR658).WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE DECISION AND SAME READS AS UNDER: 37. A 'TAX REFUND' IS A REFUND OF TAXES W HEN THE TAX LIABILITY IS LESS THAN THE TAX PAID. AS PER THE OLD SECTION AN ASSESSEE WAS ENTITLED FOR PAYMENT OF INTEREST ON THE AMOUNT OF TAXES REFUNDED PURSUANT TO AN ORDER PASSED UNDER THE ACT, INCLUDING THE ORDER PASSED IN AN APPEAL. IN THE PRESENT FACT SCENARIO, THE DEDUCTOR/ASSESSEE HAD PAID TAXES PURSUANT TO A SPECIAL ORDER PASSED BY THE ASSESSING OFFICER/INCOME - TAX OFFICER. IN THE APPEAL FILED AGAINST THE SAID ORDER THE ASSESSEE HAS SUCCEEDED AND A DIRECTION IS ISSUED BY THE APPELLATE AUTHORITY TO RE FUND THE TAX PAID. THE AMOUNT PAID BY THE RESIDENT/DEDUCTOR WAS RETAINED BY THE GOVERNMENT TILL A DIRECTION WAS ISSUED BY THE APPELLATE AUTHORITY TO REFUND THE SAME. WHEN THE SAID AMOUNT IS REFUNDED IT SHOULD CARRY INTEREST IN THE MATTER OF COURSE. AS HELD BY THE COURTS WHILE AWARDING INTEREST, IT IS A KIND OF COMPENSATION OF USE AND RETENTION OF THE MONEY COLLECTED UNAUTHORIZEDLY BY THE DEPARTMENT. WHEN THE COLLECTION IS ILLEGAL, THERE IS CORRESPONDING OBLIGATION ON THE REVENUE TO REFUND SUCH AMOUNT WITH I NTEREST INASMUCH AS THEY HAVE RETAINED AND ENJOYED THE MONEY DEPOSITED. EVEN THE DEPARTMENT HAS UNDERSTOOD THE OBJECT BEHIND INSERTION OF SECTION 244A, AS THAT, AN ASSESSEE IS ENTITLED TO PAYMENT OF INTEREST FOR MONEY REMAINING WITH THE GOVERNMENT WHICH WO ULD BE REFUNDED. THERE IS NO REASON TO RESTRICT THE SAME TO AN ASSESSEE ONLY WITHOUT EXTENDING THE SIMILAR BENEFIT TO A 5306/12 KUMGAI - AY.0 5 - 06 3 RESIDENT/DEDUCTOR WHO HAS DEDUCTED TAX AT SOURCE AND DEPOSITED THE SAME BEFORE REMITTING THE AMOUNT PAYABLE TO A NON - RESIDENT/FOREIGN CO MPANY. 38. PROVIDING FOR PAYMENT OF INTEREST IN CASE OF REFUND OF AMOUNTS PAID AS TAX OR DEEMED TAX OR ADVANCE TAX IS A METHOD NOW STATUTORILY ADOPTED BY FISCAL LEGISLATION TO ENSURE THAT THE AFORESAID AMOUNT OF TAX WHICH HAS BEEN DULY PAID IN PRESCRIBED T IME AND PROVISIONS IN THAT BEHALF FORM PART OF THE RECOVERY MACHINERY PROVIDED IN A TAXING STATUTE. REFUND DUE AND PAYABLE TO THE ASSESSEE IS DEBT OWED AND PAYABLE BY THE REVENUE. THE GOVERNMENT,THERE BEING NO EXPRESS STATUTORY PROVISION FOR PAYMENT OF INT EREST ON THE REFUND OF EXCESS AMOUNT/TAX COLLECTED BY THE REVENUE, CANNOT SHRUG OFF ITS APPARENT OBLIGATION TO REIMBURSE THE DEDUCTORS LAWFUL MONIES WITH THE ACCRUED INTEREST FOR THE PERIOD OF UNDUE RETENTION OF SUCH MONIES. THE STATE HAVING RECEIVED THE M ONEY WITHOUT RIGHT, AND HAVING RETAINED AND USED IT, IS BOUND TO MAKE THE PARTY GOOD, JUST AS AN INDIVIDUAL WOULD BE UNDER LIKE CIRCUMSTANCES. THE OBLIGATION TO REFUND MONEY RECEIVED AND RETAINED WITHOUT RIGHT IMPLIES AND CARRIES WITH IT THE RIGHT TO INTER EST. WHENEVER MONEY HAS BEEN RECEIVED BY A PARTY WHICH EX AEQUO ET BONO OUGHT TO BE REFUNDED, THE RIGHT TO INTEREST FOLLOWS, AS A MATTER OF COURSE. 39. IN THE PRESENT CASE, IT IS NOT IN DOUBT THAT THE PAYMENT OF TAX MADE BY RESIDENT/DEPOSITOR IS IN EXCESS AND THE DEPARTMENT CHOOSES TO REFUND THE EXCESS PAYMENT OF TAX TO THE DEPOSITOR. WE HAVE HELD THE INTEREST REQUIRES TO BE PAID ON SUCH REFUNDS. THE CATECHIZE IS FROM WHAT DATE INTEREST IS PAYABLE, SINCE THE PRESENT CASE DOES NOT FALL EITHER UNDER CLAUSE (A ) OR CLAUSE (B) OF SECTION 244A OF THE ACT. IN THE ABSENCE OF AN EXPRESS PROVISION AS CONTAINED IN CLAUSE (A), IT CANNOT BE SAID THAT THE INTEREST IS PAYABLE FROM THE 1ST OF APRIL OF THE ASSESSMENT YEAR. SIMULTANEOUSLY, SINCE THE SAID PAYMENT IS NOT MADE P URSUANT TO A NOTICE ISSUED UNDER SECTION 156 OF THE ACT, THE EXPLANATION TO CLAUSE (B) HAS NO APPLICATION. IN SUCH CASES, AS THE OPENING WORDS OF CLAUSE (B) SPECIFICALLY REFERRED TO 'AS IN ANY OTHER CASE', THE INTEREST IS PAYABLE FROM THE DATE OF PAYMENT O F TAX. THE SEQUEL OF OUR DISCUSSION IS THE RESIDENT/DEDUCTOR IS ENTITLED NOT ONLY THE REFUND OF TAX DEPOSITED UNDER SECTION 195(2) OF THE ACT, BUT HAS TO BE REFUNDED WITH INTEREST FROM THE DATE OF PAYMENT OF SUCH TAX. RESPECTFULLY,FOLLOWING THE ABOVE DECIS ION,WE REVERSE THE ORDER OF THE FAA.EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER,2015. 23 , 2015 S D/ - SD/ - ( / SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 23 .09.2015 . . . JV. S R.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.