CENTRAL BANK OF INDIA, MUMBAI V. ASST CIT RG 2(1), MUMBAI

ITA 5434/MUM/2013

• Counselvise Citation: 543419914 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 08-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KUMAR CHAND
• Section: 244A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI , BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICI AL MEMBER ITA NO. : 5431 /MUM/20 1 3 (ASSESSMENT YEAR: 1991 - 92) ITA NO. : 5432 /MUM/20 13 (ASSESSMENT YEAR: 1997 - 98) ITA NO. : 5433 /MUM/20 13 (ASSESSMENT YEAR: 1999 - 2000) ITA NO. : 5434 /MUM/20 13 (ASSESSMENT YEAR: 2007 - 08) ITA NO. : 5435 /MUM/20 13 (ASSESSMENT YEA R: 2008 - 09) CENTRAL BANK OF INDIA, 4 TH FLOOR, CHANDER MUKHI, NARIMAN POINT, MUMBAI PAN: AAACC 2498 P VS DEPUTY COMMISSIONER OF INCOME TAX, - RANGE - 2(1), ROOM NO. 561, 5 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE MARG, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MADHUR AGRAWAL RESPONDE NT BY : SHRI NARENDRA KUMAR CHAND /DATE OF HEARING : 11 - 12 - 2014 DATE OF PRONOUNCEMENT : 31 - 12 - 2014 O R D E R , . . : PER R.C. SHARMA, AM : TH ESE ARE APPEAL S FILED BY THE ASSESSEE AGAINST THE ORD ER OF CIT(A) FOR THE ASSESSMENT YEAR 1991 - 92, 1997 - 98, 1999 - 2000, 2007 - 08 & 2008 - 09. 2. COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS, WHICH READ AS UNDER: CENTRAL BANK OF INDIA ITA S 5431 TO 5435 /M/20 1 3 2 1. THE COMMISSIONER OF INCOME - TAX (APPEALS) - 4, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] E RRED IN UPHOLDING THE METHOD ADOPTED BY THE AO OF CALCULATING INTEREST UNDER SECTION 244A OF THE INCOME TAX ACT, 1961 (THE ACT) BY REDUCING THE TOTAL REFUND GRANTED (INCLUDING THE INTEREST UNDER SECTION 244A ALREADY GRANTED) FROM THE TAX REFUND DUE TO THE APPELLANT AND COMPUTING INTEREST ON THE REMAINING AMOUNT. 2. THE CIT(A) ERRED IN STATING THAT IF THE TAX REFUND GRANTED EARLIER IS ADJUSTED AGAINST TAX DUE AND THE INTEREST UNDER SECTION 244A GRANTED EARLIER IS ADJUSTED AGAINST THE INTEREST UNDER SECTION 2 44A DUE IT WILL AMOUNT TO INTEREST ON INTEREST. THE APPELLANTS CRAVE LEAVE TO ADD TO, AMEND, ALTER, VARY, OMIT OR SUBSTITUTE THE AFORESAID GROUNDS OF APPEAL OR ADD A NEW GROUND OR GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL AS THEY MAY BE ADVISED. 3. GRIEVANCE OF ASSESSEE IN ALL YEARS PERTAINS TO METHOD OF COMPUTATION OF INTEREST U/S 244A ADOPTED BY AO AND CONFIRMED BY CIT(A). AS PER THE AR , THE AO HAS INADVERTENTLY CALCULATED INTEREST U/S 244A BY REDUCING THE REFUND (INCL UDING THE INTEREST ALREADY GRANTED) FROM THE TAX REFUND DUE TO THE APPELLANT / ASSESSEE AND COMPUTING INTEREST THEREON. THUS THE AR SUBMITTED THAT THE AMOUNT OF INTEREST DETERMINED BY THE AO IS LOWER THAN THE AMOUNT THE ASSESSEE IS ENTIT LED TO. 4. LD. AR FURTHER CONTENDED THAT T HE REFUND GRANTED SHOULD BE REDUCED FROM TAX & INTEREST SEPARATELY. THE ASSESSEE RELIES UPON THE PROVISION OF SEC 244A(3) AND THE DECISION OF ITAT MUMBAI IN THE CASE OF ABU DHABI COMMERCIAL BANK LTD FOR A. YRS. 1995 - 96 TO 2000 - 200 1, REPORTED IN 138 ITD 83, WHICH IS BASED ON DECISION IN A. YR. 1990 - 91 IN THE CASE. 5 . AT THE OUTSET, LD. AR PLACED ON RECORD THE ORDER OF THE CO - ORDINATE BENCH IN THE CASE OF ABU - DHABI COMMERCIAL BANK LTD IN ITA CENTRAL BANK OF INDIA ITA S 5431 TO 5435 /M/20 1 3 3 NO. 5136/MUM/2009, ORDER DATED 2 ND JULY 2010, (138 ITD 83), AND IT WAS CONTENDED THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL AND THE MATTER WAS RESTORED TO THE AO FOR CALCULATING INTEREST DUE TO THE ASSESSEE WITHOUT REDUCING THE INTEREST U/S 244A, WHICH IS A PART OF THE REFUND EARLIER GR ANTED , FROM THE REFUND DUE. 6 . ON THE OTHER HAND, IT WAS CONTENDED BY THE LD. DR THAT NO INTEREST ON INTEREST CAN BE GRANTED AND FOR WHICH PURPOSE RELIANCE PLACED ON THE FOLLOWING: SR. NO. CITATION CASE LAW 1 361 ITR 424 CIT VS BRAKES INDIA LTD 2 358 IT R 291 CIT VS GUJARAT FLUORO CHEMICALS 3 348 ITR 319 CIT VS GUJARAT FLOURO CHEMICALS 4 23 TAXMAN 359 AB U DHABI COMMERCIAL BANK LTD. 7. AS PER LD. DR T HE COMPUTATION OF INTEREST ALLOWED BY THE AO AND CLAIMED BY THE ASSESSEE ARE PART OF THE APPEAL REC ORD . O UR ATTENTION WAS ALSO INVITED TO SUCH COMPUTATION, COPIES WHICH WERE PLACED ON RECORD. ON PERUSAL AND COMPARISON OF THE TWO REVEALS THAT THE AO HAS WORKED OUT STAGE WISE INTEREST CONSIDERING REFUND GRANTED FROM TIME TO TIME. THE AO HAS GIVEN SIMPLE I NTEREST AT APPLICABLE RATE. THERE IS NO MISTAKE IN ALLOWING OF SIMPLE INTEREST. ON THE OTHER HAND EXCLUDING INTEREST SEPARATELY, AS CLAIMED BY ASSESSEE, IS NOWHERE PROVIDED FOR IN THE SCHEME OF ACT. THE COMPUTATION AS CLAIMED BY THE ASSESSEE AMOUNTS TO ALL OWING OF INTEREST, WHICH IS NOT PERMITTED. 8 . WE HAVE CONSIDERED RIVAL CONTENTIONS , THE ISSUE BEFORE US PERTAINS TO METHOD ADOPTED BY THE AO FOR COMPUTATION OF INTEREST U/S 244A. 9 . WE FIND THAT WHILE COMPUTING INTEREST U/S 244A, THE AO HAS REDUCED TOT AL REFUND GRANTED INCLUDING INTEREST U/S 244A ALREADY CENTRAL BANK OF INDIA ITA S 5431 TO 5435 /M/20 1 3 4 GRANTED, FROM THE TAX REFUND DUE TO THE ASSESSEE AND THEREBY COMPUT ED I NTEREST ON THE REMAINING AMOUNT, W HEREAS, CONTENTION OF LD. AR WAS THAT ONLY REFUND ALREADY GRANTED IS TO BE REDUCED AND NOT THE IN TEREST ON SUCH REFUND . WE FIND THAT EXACTLY SAME ISSUE WAS CONSIDERED BY COORDINATE BENCH IN THE CASE OF ABU DHABI COMMERCIAL BANK LTD. ( SUPRA ). RELEVANT OBSERVATION AND CONCLUSION OF THE BENCH WAS AS UNDER: 2. THE ONLY ISSUE RAISED BEFORE US IN THIS APP EAL I S WHETHER THE CIT (A) IS JUSTIFIED IN UPHOLDING THE METHOD ADOPTED BY THE AO FOR CALCULATING THE INTEREST U/S 244A OF THE ACT BY REDUCING THE REFUND INCLUSI ON OF THE INTEREST ALREADY GRANTED F ROM THE TAX REFUND TO THE ASSESSEE AND COMPUTED THE INTERES T AT THE REMAINING AMOUNT. 3. THE ASSESSEE WAS AGGRIEVED BY THE METHOD OF CALCULATION OF INTEREST ON THE REFUND U/S 244A. THE MAIN GRIEVANCE OF THE ASSESSEE WAS THAT THE INTEREST U/S 244A HAS TO BE CALCULATED ON THE TAX REFUND WITHOUT REDUCING THE INTER EST GRANTED EARLIER ON REFUND. THE ASSESSEE FILED A RECTIFICATION APPLICATION U/S 154 WHEREIN INTER ALIA RAISED THIS ISSUE OF CALCULATION OF INTEREST ON THE TAX REFUND BY REDUCING THE REFUND TAX AND NOT INTEREST ALREADY GRANTED. THE ASSESSEE SUBMITTED BEFO RE THE AO THAT THE INTEREST PART ALREADY GRANTED SHOULD NOT BE REDUCED FROM THE TAX REFUND DUE AND INTEREST WOULD BE PAID ON THE BALANCE REFUND. THE AO, VIDE ORDER DATE D 26.08.2008 PASSED UNDER SECTI ON 154 WAS OF THE VIEW THAT THERE IS NO MISTAKE IN CALCUL ATION OF INTEREST ON REF UND U/S 244A. 4. THE CIT(A) ALSO HELD THAT THE METHOD ADOPTED BY THE AO IS AS PER THE PR OVISIONS OF ACT AND CANNOT BE F AULTED WITH, THEREFORE, THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE VIDE IMPUGNED ORDER. 5. BEFORE US, T HE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT WHILE CALCULATI NG THE INTEREST BY THE AO U/S 244A, THE REFUND INCLUDED THE INTEREST ALREADY GRANTED HAS BEEN REDUCED FROM THE REFUND DUE TO THE ASSESSEE AND ON THE REM AINING AM OUNT INTEREST HAS BEEN CALCULAT ED. THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THE INTEREST ON THE REFUND DUE TO THE ASSESSEE SHOULD HAVE BEEN CALCULATED ONLY AFTER REDUCING THE REFUND OF TAX AND NOT THE REFUND OF INTEREST ALREADY GRANTED. THUS, THE LD. AR OF THE ASSESSEE HAS REFE RRED THE I NTEREST CALCULATED BY THE AO AT RS. 31,29,172/ - WHEREIN THE AO HAS REDUCED THE AMOUNT OF REFUND INCLUDED THE INTEREST U/S 244A ALREADY GRANTED FROM THE REFUND DUE TO THE ASSESSEE AND THEN THE INTEREST WAS CALCULATED. HE HAS REFERRED THE CALCULATI ON OF INTEREST IN ASSESSEES OWN WORKING AND SUBMITTED THAT IF THE INTEREST IS CA LCULATED ON THE TAX REFUND EXCL UDING THE INTEREST ALREADY GRANTED, THE ASSESSEE IS ENTITLED FOR FURTHER REFUND OF CENTRAL BANK OF INDIA ITA S 5431 TO 5435 /M/20 1 3 5 RS. 11,89,050/ - BEING THE DIFFERENCE OF ACTUAL INTEREST OF RS . 43,18,221/ - AND RS.31,29,171/ - BEING CALCULATED BY THE AO. HE HAS ALSO REFERRED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE CIT(A) HAS DECIDED THE ISSUE ONLY ON THE GROUND THAT THE METHOD ADOPTED BY THE AO IS BEING CONSISTENTLY F OLLOWED IN RESPECT OF ALL ASSESSEES CASES. THEREFORE, THE CIT(A) WIT HOUT GIVING ANY REASON AND ANALYZING THE ISSU E IS DECIDED THE ISSUE HAS ONL Y ON THE GROUND THAT THE AO IS CONSISTENTLY FOLLOWING THIS METHOD. HE HAS CONTENDED THAT THE CIT(A) HAS NOT GONE INTO THE CORRECTNESS OF THE METHOD ADOPTED BY THE AO BUT HA S CONSIDERED THE CONSISTENT METHOD ADOPTED BY THE AO . THE ASSESSEE ALSO FILED A COPY OF THE DETAILS OF WORKING OF INTEREST ON REFUND FILED BEFORE THE CIT (A) IN SUPPORT OF ITS CONTENTION. 6. ON THE OTHER HAND, THE L EARNED DR HAS SUBMITTED THAT THE INTEREST U/S 244A IS CALCULATED ON THE FINAL DETERMINATION OF THE REFUND AND WHATEVER REFUND HAS ALREADY GRANTED AND PAID TO THE ASSESSEE ARE REQUIRED TO BE REDUCED FROM THE REFUND DUE TO THE ASSESSEES. HE HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RELEVANT RECORD. IT IS EVIDENT FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THE AO HAS CALCULATED THE INTEREST U/S 244A BY REDUCING THE REFUND OF TAX ALREADY GRANTED TO THE ASSESSEE. IN THE AMOUNT OF REFUND THE INTEREST WHICH WAS GRANTED EARLIER OCCASIONS ALSO INCLUDED. THEREFORE, THE AO HAS REDUCED THE TOTAL REFUND GRANTED WHICH CONSISTS REFUND OF TAX AND INTEREST ALREADY GRANTED U/S 244A. THEREFORE, WE FIND FORCE IN THE CONTENTION OF THE LEARNED AR THAT WHILE COMPUTING THE INTEREST U/S 244A, THE AO HAS REDUCED BOTH THE REFUND OF TAX AS WELL INTEREST GRANTED U/S 244A FROM THE REFUND DUE TO THE ASSESSEES. IN ORDER TO COMPUTE THE INTEREST U/S 244A, THE AMOUNT OF BALANCE REF UND DUE TO THE ASSESSEE HAS TO BE DETERMINED AFTER DEDUCTING THE AMOUNT OF TAX ALREADY REFUNDED AND NOT AMOUNT OF INTEREST ALREADY GRANTED U/S 244A. THUS THE INTEREST COMPONENT IN THE REFUND ALREADY GRANTED SHOULD BE EXCLUDED WHILE THE SAME IS TO BE REDUCE D FROM THE REFUND DUE TO THE ASSESSEE FOR THE PURPOSES OF SECTION 244A FOR FUTURE INTEREST ON THE BALANCE REFUND DUE AMOUNT. ACCORDINGLY, WE ARE OF THE VIEW THAT THE METHOD ADOPTED BY THE AO SUFFERED FROM GRAVE ERROR AS THE SAME HAS RESULTED THE REDUCTION OF INTEREST PAYABLE TO THE ASSESSEE BECAUSE THE PRINCIPAL AMOUNT IS REDUCED BY INTEREST COMPONENT ALREADY GRANTED AND THEN FUTURE INTEREST IS COMPUTED. THE INTEREST ALREADY GRANTED UP TO A DATE IS RELEVANT ONLY FOR EXCLUSION OF PERIOD FOR WHICH IT IS GRANT ED AND THE FUTURE INTEREST HAS TO BE GRANTED FROM THE SUBSEQUENT PERIOD. THEREFORE, THE INTEREST ALREADY GRANTED CANNOT REDUCE THE PRINCIPLE REF UND DUE TO THE ASSESSEE BUT THE AMOUNT WHICH REPRESENTS THE TAX ALREADY REFUNDED HAS TO BE REDUCED FROM THE TOT AL REFUND DOE TO THE ASSESSEE FOR COMPUTATION OF INTEREST U/S 244A. W E NOTE THAT THE CIT(A) HAS DECIDED THE ISSUE IN PARA 2.2 OF THE IMPUGNED ORDER AS UNDER : 2.2 I HAVE CONSIDERED THE APPELLANTS REQUEST AND EXAMINED THE FACTS. IN VIEW OF THE FACTS ABO VE, I FIND THAT THE ISSUE RELATES TO CALCULATION METHOD ADOPTED BY THE DEPARTMENT AND ASSESSEE. IT CENTRAL BANK OF INDIA ITA S 5431 TO 5435 /M/20 1 3 6 IS SEEN THAT METHOD ADOPTED BY THE AO IS BEING CONSISTENTLY FOLLOWED IN RESPECT OF ALL ASSESSEES THEREFORE, I AM OF THE VIEW THAT METHOD ADOPTED BY THE AO A S PER PROVISOS OF THE ACT CANNOT BE FAULTED. I THEREFORE, INCLINED TO AGREE WITH THE COMPUTATION METHOD ADOPTED BY THE AO. ACCORDINGLY, THE GROUND UNDER APPEAL IS DISMISSED 8. FROM THE ABOVE IT IS CLEAR THAT THE CIT(A) HAS NOT GONE INTO THE QUESTION OF CORRECTNESS OF METHOD ADOPTED BY THE AO BUT DECIDED THE ISSUE ON THE GROUND THAT THE METHOD ADOPTED BY THE AO IS BEING CONSISTENTLY FOLLOWED IN RESPECT OF ALL ASSESSEES. THEREFORE, THE IMPUGNED ORDER OF THE CIT(A) QUA THIS ISSUE IS NOT SUSTAINABLE IN LAW A ND LIABLE TO BE SET ASIDE. W E ACCORDINGLY DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT THE AO TO CALCULATE THE INTEREST ON THE REF UND DUE TO THE ASSESSEE WITHOUT REDUCING THE INTEREST UNDER SECTION 244A WHICH IS PART OF THE REFUND EARLIER GRANTED FROM THE REFUND DUE. 10 . WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND DELIBERATED ON THE CASE LAW CITED AT BAR. FROM THE RECORD WE FOUND THAT W HILE COMPUTING THE AMOUNT ON WHICH INTEREST UNDER SECTION 244A IS TO BE PAID, THE ASSESSING OFFICER HAS REDUCED THE TOTAL REFUND GRANTED (COMPRISING OF REFUND OF TAX AS WELL INTEREST GRANTED UNDER SECTION 244A) FROM THE TAX REFUND DUE TO THE ASSESSEE. THIS HAS RESULTED IN THE AO DETERMINING A REDUCED PRINCIPAL AMOUNT OF TAX REFUND ON WHICH THE IN TEREST UNDER SECTION 244A IS COMPUTED AFTER EACH GRANT OF REFUND. IN VIEW, THEREOF, THE INTEREST DETERMINED BY THE AO IS LOWER THAN THE AMOUNT THE ASSESSEE IS ENTITLED FOR. THE ISSUE BEFORE THE SUPREME COURT IN THE CASE OF CIT V GUJARAT FLOURO CHEMICALS ( SUPRA ) AS CITED BY LD. D R, WAS WHETHER INTEREST WAS PAYABLE BY THE REVENUE TO THE ASSESSEE IF THE AGGREGATE OF THE INSTALLMENTS OF ADVANCE TAX/TDS PAID EXCEEDS ASSESSED TAX. HOWEVER, ON THE ISSUE OF METHOD OF COMPUTATION OF INTEREST UNDER SECTION 244A OF T HE ACT , THE DECISIONS OF THE TRIBUNAL IN THE CASE OF ABU DHABI COMMERCIAL BANK LIMITED V DCIT ( SUPRA ) COMPLETELY COVERS THIS ISSUE. CENTRAL BANK OF INDIA ITA S 5431 TO 5435 /M/20 1 3 7 11. A T THE OUTSET, WE FOUND THAT THE CIT(A) HAS NOT GONE INTO THE QUESTION OF CORRECTNESS OF METHOD ADOPTED BY THE AO BUT DECIDED THE ISSUE ON THE GROUND THAT THE METHOD ADOPTED BY THE AO IS BEING CONSISTENTLY FOLLOWED IN RESPECT OF THE ASSESSEE. THEREFORE, THE IMPUGNED ORDER OF THE CIT(A) QUA THIS ISSUE IS NOT SUSTAINABLE IN LAW AND LIABLE TO BE SET ASIDE. WE ACCORDINGLY R ESTORE THE MATTER TO THE AO WITH A DIRECTION TO CALCULATE INTEREST DUE TO THE ASSESSEE WITHOUT REDUCING THE INTEREST U/S 244A, WHICH IS PART OF THE REFUND EARLIER GRANTED FROM THE REFUND DUE. 1 2 . RESULTANTLY, ALL THE APPEALS OF THE ASSESSEE FOR DIFFERENT ASSESSMENT YEAR STANDS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER , 2014 . SD/ - SD/ - ( ) ( ) ( SANJAY GARG ) ( R.C. SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATE: 31 ST DECEMBER , 2014 COPY TO: - 1) THE APP E L L ANT . 2) THE RESPONDENT. 3) THE CIT (A) - 4 , MUMBAI. 4) 2 , MUMBAI THE CIT - 2 , MUMBAI. 5) C , THE D.R. C BENCH, MUMBAI. 6) COPY TO GUARD FILE. / BY ORDER [ CENTRAL BANK OF INDIA ITA S 5431 TO 5435 /M/20 1 3 8 , DY. / ASSTT. REGISTRAR I.T.A.T ., MUMBAI CHAVAN, SR. PS