Toyota Kirloskar Motor Private Limited, Bidadi V. DCIT, Bangalore

ITA 626/BANG/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8658 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 244A; 143(1); 154

Judgement Text

PAGE 10 OF 10 ITA NO.626 & 627/BANG/2010 10 7. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THE ORDER PRONOUNCED ON FRIDAY, THE 19 TH DAY OF NOVEMBER, 2010 AT BANGALORE. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMB ER COPY TO :- 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT(A) CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR 6. GF BY ORDER MSP/18/11. ASSISTANT REGISTRAR, ITAT, BANGALORE. PAGE 9 OF 10 ITA NO.626 & 627/BANG/2010 9 THE DCIT HAS DISMISSED THE APPLICATION FOR RECTIF ICATION AND HAS OBSERVED THAT: (D) INTEREST IS PAYABLE UNDER SUB-SECTION 1(B) OF SECTION 244A ONLY ON THE AMOUNT WHICH IS IN EXCESS OF THE AMOUNT SPECIFIED IN A NOTICE OF DEMAND. AS SELF ASSESSMENT TAX IS NOT PAID IN PURSUANCE TO A NOTICE OF DEMAND, THE SAME IS NOT LIABLE TO BE INCLUDED FOR THE PURPOSES OF CALCULATING INTEREST U/S 244A. (E) THE DEPARTMENT IS IN APPEAL BEFORE THE SUPREME COURT AGAINST THE DECISION OF THE CHENNAI HIGH COURT IN THE CASE OF CIT V CHOLAMANDALAM INVESTMENT AND FINANCE CO. PVT. LTD. (166 TAXMAN 132) WHICH HAS BEEN RELIED UPON BY THE ASSESSEE TO SUPPORT ITS VIEWS. (F) IN VIEW OF THE DIVERGENCE OF JUDICIAL VIEWS ON THIS ISSUE, THE SAME IS NOT FREE FROM DOUBT. ACCORDINGLY, IT CANNOT BE SAID THAT THE INTIMATION ISSUED U/S 143(1) SUFFERS FROM ANY MISTAKE APPARENT FROM THE RECORDS. 6.1 THE VIEW OF THE ASSESSING OFFICER WAS AFFIRMED BY THE CIT(A), HENCE, THIS SECOND APPEAL FILED BEFORE US. 6.2 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE FINDING/REASONING EXPRESSE D BY US IN ITA NO.626/2010 HOLDS GOOD IN THIS CASE ALSO AND ACCORD INGLY, WE REVERSE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OF FICER TO GRANT INTEREST U/S 244A ON THE SELF ASSESSMENT TAX PAID . PAGE 8 OF 10 ITA NO.626 & 627/BANG/2010 8 ITA NO.627/2010 6. THE BRIEF FACTS IN RELATION TO THE ABOVE CASE A RE AS FOLLOWS:- FOR THE YEAR UNDER APPEAL, THE ASSESSEE FILED A RE TURN OF FRINGE BENEFITS ON 29.9.2008. THE VALUE OF FRINGE BENEFITS OFFERED TO TAX WAS RS.5,67,29,439/-. THE TAX LIABILITY ON THE SAME AMOUNTED TO RS.1,92,99,039/-. AGAINST THE SAME, THE ASSESSEE PAID ADVANCE TAXES OF RS.2,40,05,000/- AND SELF ASSESSMENT TAX OF RS.2 1,70,000/-. ACCORDINGLY, THE ASSESSEE HAS CLAIMED A REFUND OF RS .68,75,961/- IN THE RETURN. THE RETURN WAS PROCESSED U/S 115WE( 1) ON 23.06.09 AND THE DEPUTY COMMISSIONER OF INCOME-TAX (LTU), BANGALO RE ISSUED AN INTIMATION GRANTING A REFUND OF RS.72,28,910/- INCL UDING INTEREST OF RS.3,52,950/- U/S 244A ON THE EXCESS TAXES PAID BY T HE ASSESSEE. WHILE COMPUTING THE INTEREST ON THE REFUND U/S 244A , THE DCIT HAS CONSIDERED ONLY THE EXCESS PAYMENT OF ADVANCE TAX. N O INTEREST HAS BEEN CONSIDERED ON THE EXCESS PAYMENT ATTRIBUTABLE T O THE SELF ASSESSMENT TAX PAID. VIDE LETTER DATED 03.08.09, THE ASSESSEE MADE AN APPLICATION U/S 154 OF THE I T ACT TO THE DCIT REQU ESTING FOR RECTIFICATION OF THE ORDER ISSUED U/S 115WE(1) OF T HE ACT. THE RECTIFICATION WAS SOUGHT ON THE GROUND THAT THE EXC ESS TAX PAYMENT ATTRIBUTABLE TO THE SELF ASSESSMENT TAX WAS NOT CON SIDERED FOR THE PURPOSE OF CALCULATING THE INTEREST U/S 244A OF THE ACT. PAGE 7 OF 10 ITA NO.626 & 627/BANG/2010 7 5.10 THE ASSESSING OFFICER HAD ALSO REJECTED THE RECTIFICATION APPLICATION BY OBSERVING THAT IN VIEW OF DIVERGENCE OF JUDICIAL OPINION ON THIS ISSUE, THE SAME IS NOT FRE E FROM DOUBT AND ACCORDINGLY, IT CANNOT BE SAID THAT THE INTIMATION I SSUED U/S 143(1) SUFFERS FROM ANY MISTAKE APPARENT FROM THE RECORDS. IN THIS CONTEXT, WE REFER TO THE BOARD CIRCULAR NO.68 DATED 7 TH NOVEMBER, 1971 (83 ITR (ST.) 6), WHEREIN IT HAS BEEN OBSERVED AS UNDER :- IT HAS, THEREFORE, BEEN DECIDED THAT WHERE AN ASSESSEE MOVES AN APPLICATION U/S 154 POINTING OUT THAT IN THE LIGHT OF A LATER DECISION OF THE SUPREM E COURT PRONOUNCING THE CORRECT LEGAL POSITION, A MISTAKE HAS OCCURRED IN ANY OF THE COMPLETED ASSESSMENTS IN HIS CASE, THE APPLICATION SHALL BE ACTED UPON, PROVIDED THE SAME HAS BEEN FILED WITHIN TIME AND IS OTHERWISE IN ORDER. 5.11. THE HONBLE SUPREME COURT AS WELL AS HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V NGEF LIMITED CITED SUPRA HAVE VERY CATEGORICALLY HELD THAT INTEREST U/S 244A IS TO BE PAID ON SELF ASSESSMENT TAX. IN THE LIGHT OF THE ABOVE, WE ARE OF THE VIEW THAT INTIMATION ISSUED U/S 143(1) SUFFERS FROM A MI STAKE APPARENT WARRANTING INTERFERENCE U/S 154 OF THE ACT. IN VIE W OF THE AFORESAID REASONING, WE HOLD THAT THE CIT(A)S ORDER IS NOT C ORRECT AND IN ACCORDANCE WITH LAW AND WE REVERSE THE SAME AND DIR ECT THE ASSESSING OFFICER TO GRANT INTEREST ON SELF ASSESSM ENT TAX PAID U/S 140A OF THE ACT. PAGE 6 OF 10 ITA NO.626 & 627/BANG/2010 6 OTHERWISE, IT IS TRITE LAW THAT WHEREVER THE ASSESSEE IS ENTITLED TO REFUND, THERE IS STATUTORY LIABILITY ON THE REVENUE TO PAY THE INTEREST ON SUCH REFUND ON GENERAL PRINCIPLES TO PAY THE INTEREST ON SUMS WRONGFULLY RETAINED (SANDVIK ASIAS LTD. SUPRA). 5.8 THE HONBLE DELHI HIGH COURT HAD FOLLOWED THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V CHOLAMANDALAM INVESTMENT AND FINANCE CO. LTD. 294 ITR 438, WHEREI N IT WAS CLEARLY HELD THAT WHEN THE SELF-ASSESSMENT TAX IS PAID BY TH E ASSESSEE U/S 140A AND THE SAME IS REFUNDED, THE ASSESSEE WOULD B E ENTITLED TO INTEREST THEREON FROM THE DATE OF PAYMENT OF THE SAM E. THE JUDGEMENT OF THE HONBLE HIGH COURT OF MADRAS (SUPR A) WAS AFFIRMED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V HE G LTD. 324 ITR 331. 5.9 THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT V NGEF LTD. 244 ITR 665 HAS ALSO CATEGORICALLY HELD TH AT INTEREST U/S 244(1)(A) HAS TO BE GRANTED ON SELF-ASSESSMENT TAX PAID. THE HONBLE JURISDICTIONAL HIGH COURT HAD CONCLUDED THE MATTER IN FAVOUR OF THE ASSESSEE BY OBSERVING THUS:- THE TRIBUNAL THEREFORE WAS RIGHT IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE INTEREST U/S 244(1)(A) OF THE ACT AFTER CONSIDERING THE SELF ASSESSMENT TAX PAID BY THE ASSESSEE ALSO AS TAX PAID IN PURSUANCE OF THE ASSESSMENT. THE REFERENCE IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. PAGE 5 OF 10 ITA NO.626 & 627/BANG/2010 5 5.6 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. CIRCULAR NO.549 DATED 31 ST OCTOBER, 1989 (182 ITR (ST.) 1) HAD EXPLAINED THE PROVISIONS OF SECTIO N 244A. IN PARA 11 THEREOF, IT IS STATED THAT THESE PROVISIONS, APART FROM BEING COMPLICATED, LEFT CERTAIN GAPS FOR WHICH INTEREST W AS NOT PAID BY THE DEPARTMENT TO THE ASSESSEE FOR MONEY REMAINING WITH THE GOVERNMENT. TO REMOVE THIS INEQUITY AS ALSO TO SIMP LIFY THE PROVISIONS IN THIS REGARD, THE AMENDING ACT, 1987 HAS INSERTED NEW S.244A OF THE IT ACT, 1961, APPLICABLE FROM THE ASST. YEAR 198 9-90 ONWARDS WHICH CONTAINS ALL THE PROVISIONS FOR PAYMENT OF INT EREST BY THE DEPARTMENT AND DELAY IN THE GRANT OF REFUNDS. THE L EGISLATIVE INTENT THEREBY IS TO COMPENSATE AN ASSESSEE, IF THE GOVERNM ENT HAS HAD THE USE OF THE FUNDS. 5.7 THE HONBLE DELHI HIGH COURT IN THE CASE OF CI T V SUTLEJ INDUSTRIES LTD. 325 ITR 331 AT PAGE 339 HAD HELD AS FOLLOWS:- THEREFORE, IN OUR VIEW WHERE THE SELF-ASSESSMENT TAX PAID BY THE ASSESSEE U/S 140A IS REFUNDED, THE ASSESSEE SHOULD BE, ON PRINCIPLE ENTITLED TO INTEREST THEREON SINCE THE SELF-ASSESSMENT TAX FALLS WITHIN THE EXPRESSION REFUND OF ANY AMOUNT. THE COMPUTATION OF INTEREST ON SELF-ASSESSMENT TAX HAS TO BE IN TERMS OF SECTION 244A(1)(B), I.E. FROM THE DATE OF PAYMENT OF SUCH AMOUNT UP TO THE DATE ON WHICH REFUND IS ACTUALLY GRANTED. WE FIND SUPPORT FOR THIS CONCLUSION FROM THE DECISION OF THE MADRAS HIGH COURT IN CHOLAMANDALAM INVESTMENT AND FINANCE CO. LTD. (2007) 294 ITR 438, THE SPECIAL LEAVE PETITION AGAINST WHICH ORDER WAS DISMISSED BY THE SUPREME COURT. EVEN PAGE 4 OF 10 ITA NO.626 & 627/BANG/2010 4 OF DEMAND. THE ASSESSEE ALSO REFERRED TO THE CBDT CIRCULAR NO.549 DATED 31/10/1989. 5.2 THE CIT(A), HOWEVER, REJECTED THE CONTENTIONS RAISED BY THE ASSESSEE AND DISMISSED THE APPEAL FOR HIS REASO NING MENTIONED IN PARA 3.2 TO 3.5 OF THE IMPUGNED ORDER. 5.3 THE ASSESSEE, BEING AGGRIEVED BY THE ORDER OF T HE CIT(A), IS IN SECOND APPEAL BEFORE US. 5.4 IT WAS CONTENDED THAT INTEREST SHOULD BE GRANT ED U/S 244A IN RESPECT OF INCOME TAX REFUND ARISING OUT OF PAYMENT OF SELF ASSESSMENT TAX. IT WAS ARGUED THAT EXPLANATION TO S ECTION 244A(1) CANNOT CURTAIL/RESTRICT THE SCOPE OF CLAUSE (B) OF SUB-SECTION (1) OF SECTION 244A OF THE ACT. THE ASSESSEE RELIED ON TH E FOLLOWING DECISIONS OF SUPREME COURT AND HIGH COURTS AND CONT ENDED THAT IN THE SAID CASES, IT HAS BEEN CATEGORICALLY STATED THA T INTEREST IS TO BE GRANTED ON THE SELF ASSESSMENT TAX PAID. CIT V HEG LTD. (2010) 324 ITR 331 (SC); CIT V CHOLAMANDALAM INVESTMENT AND FINANCE CO. LTD. (2007) 294 ITR 438 (CHENNAI); CIT V SUTLEJ INDUSTRIES LTD. (2010) 325 ITR 331 (DEL.) & CIT V NGEF LTD. (2000) 244 ITR 665 (KAR.) 5.5 THE LEARNED DR, ON THE OTHER HAND, SUPPORTED T HE IMPUGNED ORDERS OF THE INCOME TAX AUTHORITIES. PAGE 3 OF 10 ITA NO.626 & 627/BANG/2010 3 VIDE LETTER DATED 03.08.09, THE ASSESSEE MADE AN APPLICATION U/S 154 OF THE I T ACT TO THE DCIT REQU ESTING FOR RECTIFICATION OF THE ORDER ISSUED U/S 143(1) OF THE ACT. THE RECTIFICATION WAS SOUGHT ON THE GROUND THAT THE REF UND DID NOT INCLUDE INTEREST U/S 244A OF THE ACT ON THE SELF-ASSESSMENT TAX OF RS.21,29,00,000/-.. THE DCIT HAS DISMISSED THE APPLICATION FOR RECTIF ICATION AND HAS OBSERVED THAT: (A) INTEREST IS PAYABLE UNDER SUB-SECTION 1(B) OF SECTION 244A ONLY ON THE AMOUNT WHICH IS IN EXCESS OF THE AMOUNT SPECIFIED IN A NOTICE OF DEMAND. AS SELF ASSESSMENT TAX IS NOT PAID IN PURSUANCE TO A NOTICE OF DEMAND, THE SAME IS NOT LIABLE TO BE INCLUDED FOR THE PURPOSES OF CALCULATING INTEREST U/S 244A. (B) THE DEPARTMENT IS IN APPEAL BEFORE THE SUPREME COURT AGAINST THE DECISION OF THE CHENNAI HIGH COURT IN THE CASE OF CIT V CHOLAMANDALAM INVESTMENT AND FINANCE CO. PVT. LTD. (166 TAXMAN 132) WHICH HAS BEEN RELIED UPON BY THE ASSESSEE TO SUPPORT ITS VIEWS. (C) IN VIEW OF THE DIVERGENCE OF JUDICIAL VIEWS ON THIS ISSUE, THE SAME IS NOT FREE FROM DOUBT. ACCORDINGLY, IT CANNOT BE SAID THAT THE INTIMATION ISSUED U/S 143(1) SUFFERS FROM ANY MISTAKE APPARENT FROM THE RECORDS. 5.1 ON APPEAL BY THE ASSESSEE BEFORE THE FIRST APPE LLATE AUTHORITY, IT WAS CONTENDED THAT THE ASSESSING OFFIC ER HAS ERRED IN INTERPRETING THE PROVISIONS OF SECTION 244A(1)(B) I N A NARROW MANNER COVERING ONLY CASES OF EXCESS PAYMENT OF TAXES PURSUA NT TO A NOTICE PAGE 2 OF 10 ITA NO.626 & 627/BANG/2010 2 3. ITA NO.626/2010 ARISE OUT OF REJECTION OF AN AP PLICATION OF RECTIFICATION OF INTIMATION PASSED U/S 143(1) OF THE ACT WHEREAS ITA NO.627/2010 ARISE OUT OF REJECTION OF APPLICATI ON OF RECTIFICATION OF INTIMATION PASSED U/S 115WE(1) OF THE ACT. 4. SINCE COMMON ISSUES ARE INVOLVED IN BOTH THE AP PEALS, THEY ARE HEARD TOGETHER AND DISPOSED OF BY THIS CONSO LIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO.626/2010 5. THE BRIEF FACTS IN RELATION TO THE ABOVE APPEAL ARE AS FOLLOWS:- FOR THE CONCERNED ASST. YEAR, RETURN OF INCOME WAS FILED ON 29.9.2008 DECLARING A TOTAL INCOME OF RS.365,08, 48,458/-. THE TAX LIABILITY ON THE DECLARED INCOME AMOUNTED TO RS.126, 08,64,825/-. THE ASSESSEE HAD CLAIMED CREDIT FOR TAX DEDUCTED AT SOU RCE OF RS.22,81,86,447/-, PAID ADVANCE TAXES OF RS.85,30,2 7,000/- AND SELF ASSESSMENT TAX OF RS.21,29,00,000/-. THE TAX PAID AS ABOVE TOTALED TO RS.129,41,13,447/-. ACCORDINGLY, THE ASSESSEE CL AIMED A REFUND OF RS.3,32,48,622/- IN THE RETURN. THE RETURN WAS PROCESSED U/S 143(1) ON 23.06.09 AND THE DEPUTY COMMISSIONER OF IN COME-TAX (LTU), BANGALORE ISSUED AN INTIMATION GRANTING A RE FUND OF RS.3,32,48,614/-. WHILE COMPUTING THE REFUND, THE DCIT HAD NOT CONSIDERED INTEREST U/S 244A ON THE EXCESS TAXES PA ID. PAGE 1 OF 10 ITA NO.626 & 627/BANG/2010 1 THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K, J.M. AND SHRI A MOHAN ALANKAMONY, A.M. ITA NOS.626 & 627/BANG/2010 (ASST. YEAR 2008-09) M/S TOYOTA KIRLOSKAR MOTOR PRIVATE LIMITED, PLOT NO.1, BIDAI INDUSTRIAL AREA, RAMNAGAR TALUK, BANGALORE RURAL DISTRICT 562 109. - APPEL LANT VS THE DEPUTY COMMISSIONER OF INCOME-TAX, LTU, BANGALORE. - RESPONDENT APPELLANT BY : SHRI PADAMCHAND KHINCHA, C.A. RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI, ADDL. CIT O R D E R PER GEORGE GEORGE K : THESE APPEALS PREFERRED BY THE ASSESSEE ARE DIRECT ED AGAINST SEPARATE ORDERS OF THE CIT(A)-LTU, BANGALOR E BOTH DATED 21.1.2010. THE RELEVANT ASST. YEAR IS 2008-09. 2. THOUGH SEVERAL GROUNDS ARE RAISED IN THESE APPE ALS, RELIEF SOUGHT IN THESE CASES IS THAT INTEREST U/S 244A SHO ULD BE GRANTED IN RESPECT OF REFUND OF INCOME TAX ARISING OUT OF PAYME NT OF SELF- ASSESSMENT TAX.