ACIT, Jaipur V. M/S CHANNI CARPET INDUSTRIES, Jaipur

ITA 708/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62010 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1991-1992
• Appeal Filed On: 02-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: G G MUNDRA
• Section: 244A; 154

Judgement Text

ITA 708-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : A JAIPUR BEFORE SHRI R.K.GUPTA AND SHRI SANJAY ARORA ITA NO.708/JP/2011 ASSTT. YEAR : 1991-92 THE ASSISTANT COMMISSIONER OF VS. M/S. CHANNI CARP ET INDUSTRIES, INCOME TAX, CIRCLE-5, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K.MEENA RESPONDENT BY : SHRI G.G.MUNDRA DATE OF HEARING : 23.04.2012 DATE OF PRONOUNCEMENT : 30.04.2012 ORDER DATE OF ORDER : 30.04.2012 PER R.K.GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD.CIT(A) RELATING TO ASSESSMENT YEAR1991-92. 2. THE DEPARTMENT IS OBJECTING DIRECTING TO GRANT I NTEREST ON TAX PAID UNDER SELF ASSESSMENT FROM DATE OF PAYMENT TO DATE OF DISPATCH OF REFUND WITHOUT APPRECIATING THE FACT THAT INTEREST WOULD ONLY BE PAYABLE FROM DATE OF ASSESSMENT TO DATE OF REFUND IN CASE OF PAYMENT UNDER SELF ASSESSMENT. 3. THE ASSESSMENT WAS COMPLETED U/S 143(1)(A) THERE AFTER ASSESSEE MOVED APPLICATION U/S 154 WHEREBY THE ASSESSEE REQUESTED TO GRANT INTEREST U/S 244(A) OF THE ACT. HOWEVER A.O. DISMISSED THE APPLICATION BY OBSERVING THAT THERE IS NO PROVISION IN ACT FOR - 2 - ALLOWING INTEREST U/S 244A ON SELF ASSESSMENT TAX W HICH WAS REFUNDED TO THE ASSESSEE. ASSESSEE FILED APPEAL BEFORE CIT(A) AND FILED ITS O BJECTIONS, RELIANCE WAS PLACED ON VARIOUS CASE LAWS. THE CIT(A) AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD WAS OF THE VIEW THAT ASSESSEE IS ENTITLED FOR INTEREST U/S 244A OF THE ACT. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE TRIBUNAL. L D.D/R PLACED RELIANCE ON THE ORDER OF THE A.O. THE LD.A.R. PLACED RELIANCE ON THE ORDER O F THE LD.CIT(A). FURTHER RELIANCE WAS PLACED IN CASE OF ROYAL BANK OF SCOTT LAND, 130 ITD 305. 4. AFTER CONSIDERING THE ORDER OF THE A.O. AND CIT( A) WE FOUND NO INFIRMITY IN THE ORDER OF CIT(A). THE LD.CIT(A) HAS GIVEN A DETAILED REASONING AFTER CONSIDERING VARIOUS CASE LAWS RELIED UPON AND HIS FINDING ARE RECORDED IN PARA 3 & 4 OF HIS ORDER WHICH ARE AS UNDER :- 3. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE A PPELLANT. IN THIS CASE, THE DEPARTMENT HAS NOT ALLOWED INTEREST U/S 2 44A ON THE REFUND ARISING OUT OF EXCESS SELF ASSESSMENT TAX PAID BY T HE ASSESSEE. FURTHER THE ASSESSEE HAS ALSO REQUESTED FOR INTEREST ON INTERES T SINCE THE ORDER RESULTING INTO REFUND WAS PASSED ON 20.07.2006 HOWE VER THE REFUND WAS DISPATCHED TO THE ASSESSEE ON 26.10.2006. IT IS SEE N FROM THE RECORDS THAT THE AO REJECTED RECTIFICATION APPLICATION OF THE AS SESSEE VIDE HIS ORDER DATED 05.06.2009 HOLDING THAT NO INTEREST IS ALLOWA BLE ON SELF ASSESSMENT TAX. IT IS TRITE LAW THAT WHEREVER THE ASSESSEE IS ALLOWABLE ON SELF ASSESSMENT TAX. IT IS TRITE LAW THAT WHEREVER THE A SSESSEE IS ENTITLED TO REFUND, THERE IS A STATUTORY LIABILITY ON THE REVEN UE TO PAY THE INTEREST ON SUCH REFUND ON GENERAL PRINCIPLES. SECTION 244A OF THE INCOME-TAX ACT, 1961, WAS INSERTED IN THE STATUTE AS A MEASURE OF R ATIONALIZATION TO ENSURE THAT THE ASSESSEE IS DULY COMPENSATED BY THE GOVERN MENT, BY WAY OF PAYMENT OF INTEREST FOR MONIES LEGITIMATELY BELONGI NG TO THE ASSESSEE AND RETAINED BY THE GOVERNMENT, WITHOUT ANY GAPS. ON AN ANALYSIS OF SECTION 244A OF THE ACT, IT IS SEEN THAT WHERE REFUND OF A NY AMOUNT BECOMES DUE TO THE ASSESSEE, THE ASSESSEE IS ENTITLED TO SI MPLE INTEREST THEREON. THE MODE AND MANNER OF CALCULATING SUCH INTEREST IS LAI D DOWN IN CLAUSES (A) AND (B) OF SUB-SECTION (1) OF SECTION 244. EVEN THO UGH THE SHORT TITLE TO SECTION 140A READS SELF-ASSESSMENT, THE CHARGING PHRASE EMPLOYED IN SECTION 140A MAKES IT CLEAR THAT THERE IS NO DIFFER ENCE BETWEEN : (I) THE TAX - 3 - PAID UNDER SECTION 115 WJ, WHICH DEALS WITH ADVANCE TAX IN RESPECT OF FRINGE BENEFITS; OR (II) THE TAX COLLECTED AT SOURC E UNDER SECTION 206C; OR (III) ANY TAX PAID BY WAY OF ADVANCE TAX OR ANY TAX TREATED AS PAID UNDER SECTION 199, WHICH DEALS WITH CREDIT FOR TAX DEDUCT ED, WHICH ARE PROVIDED UNDER SECTION 244A(1)(A). HENCE WHERE SELF-ASSESSME NT TAX PAID BY THE ASSESSEE UNDER SECTION 140A IS REFUNDED, THE ASSESS EE SHOULD BE, ON PRINCIPLE ENTITLED TO INTEREST THEREON SINCE THE SE LF-ASSESSMENT TAX FALLS WITHIN THE EXPRESSION REFUND OF ANY AMOUNT. THE C OMPUTATION OF INTEREST ON SELF-ASSESSMENT TAX HAS TO BE IN TERMS OF SECTIO N 244A(1)(B), I.E. FROM THE DATE OF PAYMENT OF SUCH AMOUNT UP TO THE DATE O N WHICH REFUND IS ACTUALLY GRANTED. THIS VIEW FINDS SUPPORT FROM THE DECISION OF HONOURABLE MADRAS HIGH COURT IN THE CASE OF CIT V. CHOLAMANDAL AM INVESTMENT AND FINANCE CO.LTD. (294 ITR 438). IN ACCORDANCE WITH T HE PROVISIONS OF CLAUSE (B) OF SECTION 244A(1)(B), I.E., FROM THE DA TE OF PAYMENT OF SUCH AMOUNT UP TO THE DATE ON WHICH REFUND IS ACTUALLY G RANTED. THIS VIEW FINDS SUPPORT FROM THE DECISION OF HONOURABLE MADRAS HIGH COURT IN THE CASE OF CIT V. CHOLAMANDALAM INVESTMENT AND FINANCE CO.L TD., (294 ITR 438). IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE (B) OF SECTION 244A(I), INTEREST IS PAYABLE ON EXCESS PAYMENT OF SELF-ASSESSMENT TAX . THE PROVISIONS OF SECTION 244A CLEARLY PROVIDE THAT IN ADDITION, INTE REST IS PAYABLE ON SUCH SUMS WHICH ARE HELD AND UTILISED BY THE GOVERNMENT OVER AND ABOVE THE TAX DUES OF THE ASSESSEE UNDER THE PROVISIONS OF TH E ACT. THE PROVISIONS OF THE STATUTE ARE TO BE GIVEN THEIR FULL EFFECT IN TH E CASE OF AN ASSESSEE ONCE THE RETURN HAD BEEN PROCESSED UNDER SECTION 143(1)( A) AND REFUND WAS DETERMINED AS PAYABLE TO THE ASSESSEE. THEREFORE, I N ADDITION TO THE REFUND OF THE MONEY, THE ASSESSEE WAS ENTITLED TO THE INTE REST UNDER SECTION 244A ON THE EXCESS AMOUNT PAID UNDER SECTION 140A. IT IS A SETTLED LAW THAT INTEREST IS PAYABLE ON ALL REFUNDS UNDER SECTION 24 4A OF THE ACT. THE FACT THAT THE REFUND ARISED OUT OF SELF-ASSESSMENT TAX O VER-PAID SHOULD MAKE NO DIFFERENCE. IT WAS SO HELD BY THE HONOURABLE MADRAS HIGH COURT IN THE CASE OF CIT V. ASHOK LEYLAND LTD. (254 ITR 641) AND HONOURABLE MUMBAI TRIBUNAL IN THE CASE OF ADDL. CIT VS GRINDWELL NORT ON LTD (285 ITR AT 13). ACCORDINGLY I DIRECT THE AO TO ALLOW INTEREST U/S 244A(1)(B) ON REFUND OF RS.9,61,323/- TO THE APPELLANT I.E. FROM THE DATE OF PAYMENT OF SELF ASSESSMENT TAX UP TO THE DATE ON WHICH REFUND WAS ACTUALLY GRANTED. THIS GROUND OF APPEAL IS ALLOWED. 4. AS REGARDS THE CONTENTION OF THE APPELLANT FRO I NTEREST ON INTEREST, I HAVE EXAMINED THE FACTS OF THE CASE. IN THIS CASE, THE ORDER U/S 143(3)/260A WAS PASSED ON 20.07.2006 WHICH RESULTED IN REFUND OF RS.9,61,323/-. HOWEVER IT DID NOT INCLUDE ANY INTER EST U/S 244A(1) ON SELF ASSESSMENT TAX. HAD IT INCLUDED THE INTEREST U/S 24 4A(1), THEN NO INTEREST ON INTEREST WAS PAYABLE. HOWEVER WHEN NO INTEREST I S PAID U/S 244A(1), THEN ASSESSEE IS ENTITLED TO INTEREST AS PER THE DE CISION OF HONOURABLE DELHI HIGH COURT IN THE CASE OF MOTOR AND GENERAL F INANCE LTD (320 ITR - 4 - 88). THE FOLLOWING OBSERVATIONS OF HONOURABLES COUR T ARE PERTINENT FOR THE ISSUE UNDER CONSIDERATION : WHEN THE REFUND OF TAX BECOMES PAYABLE AS A RESULT OF ORDERS PASSED IN APPEAL OR OTHER PROCEEDINGS UNDER THE INCOME-TAX A CT, 1961, THIS REFUND IS TO BE GIVEN ALONG WITH INTEREST, WHICH IS TO BE CALCULATED AS PER SECTION 244A OF THE ACT. IF THAT INTEREST IS PAID ALONG WIT H THE EXCESS TAX, NO FURTHER PAYMENT IS TO BE MADE. IT IS ONLY WHEN THE EXCESS AMOUNT OF TAX IS REFUNDED BUT THE INTEREST IS NOT REFUNDED THEREWITH , THAT THE RETENTION OF INTEREST AMOUNT WOULD BECOME UNJUSTIFIED AND INTERE ST ON INTEREST WOULD ALSO BECOME PAYABLE. THE REASON IS SIMPLE. IT IS TH E TAX WHICH WAS PAID IN EXCESS BY THE ASSESSEE WHICH BECAME REFUNDABLE. THE ASSESSEE WOULD BE COMPENSATED BY PAYING INTEREST THEREUPON. IT IS ONL Y WHEN THE INTEREST IS NOT REFUNDED ALONG WITH EXCESS TAX THAT THE WITHHOL DING OF THE INTEREST BECOMES UNJUSTIFIED AND IT BECOMES AN AMOUNT DUE TO THE ASSESSEE ON WHICH THE ASSESSEE CAN CLAIM FURTHER INTEREST. THE HONOURABLE DELHI HIGH COURT HAD AN OCCASION IN THE CITED CASE TO EXPLAIN THE DECISION OF HONOURABLE APEX COURT IN TH E CASE OF SANDVIK ASIA LTD (280 ITR 643) AT DEPTH. THE AO IS DIRECTED TO V ERIFY THE DATE OF DISPATCH OF REFUND FROM THE RECORDS. ACCORDINGLY I DIRECT THE AO TO ALLOW INTEREST ON INTEREST ON THE REFUND FOR THE INTERVEN ING PERIOD I.E. 20.07.2006 TILL THE DATE OF DISPATCH. THIS GROUND OF APPEAL IS ALLOWED. 5. SINCE THE ABOVE FINDING REMAIN UNCONTROVERTED, T HEREFORE, WE CONFIRM THE ORDER OF LD.CIT(A). 6. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON .30 -04-2012. SD/- SD/- (SANJAY ARORA) (R.K.GUPTA) ACCOUNTANT MEMBER JUDICIAL ME MBER JAIPUR, *BASANT* - 5 - COPY FORWARDED TO :- THE ACIT, CIRCLE-5, JAIPUR. M/S.CHANNI CARPET INDUSTRIES, JAIPUR. THE CIT(A) THE CIT THE D/R GUARD FILE (ITA NO.708JP/11) BY ORDER AR, ITAT, JAIPUR.