The Jt. CIT (OSD), Central Circle-1(4), Ahmedabad V. Riddhi Siddhi Gluco Biols Ltd., Ahmedabad

ITSSA 1/AHD/2021

AI Insights

The case involves an appeal by the Department against the decision of the CIT(A) which allowed interest on the excess tax paid by Riddhi Siddhi Gluco Biols Ltd. under section 244A(1)(b) of the Income Tax Act. The dispute centered on the interpretation and application of sections 244A, 234B, and 234C of the Act concerning the levy and calculation of interest on tax payments and refunds. The Tribunal examined various precedents and statutory provisions, ultimately agreeing with the CIT(A)'s interpretation that the assessee is entitled to interest on the refund of excess tax paid, calculated from the date of payment to the date of actual refund.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131388 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-11-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 31-12-2020
• Other Referred Cases: CIT Vs Sultej Industries Limited, CIT Vs Asian Paints Ltd, CIT v H.E.G. Ltd., Alembic Glass Industries Ltd., Mangalam Arts, Royal Bank of Scotland N.V, Punjab Chemical & Crop Protection Ltd., Stock Holding Corporation of India Ltd., Grasim Industries Ltd., Sutlej Industries Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; TDS; Set aside
• Section: 244A; 153A; 234B; 201

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Th e Joint Commis sioner of In co me-tax (OS D), Central Circle-1(4), Ah medabad (Appellant) Vs Riddhi Siddh i Gluco Biols Ltd. 70 1, Sak ar-1 , Op p. Gandhig ram Railway Station, Ashram Ro ad, Ah med abad PAN: AABCR34 17Q (Resp ondent) Asses see b y : Shri P. D. Shah, A. R. Revenue by : Shri S udhendu Das, CIT-D. R. Date of hearing : 14-11 -2022 Date of pronouncement : 18-01 -2023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the Department against the order of the ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad in Appeal no. CIT(A)-11/C.C-1(4)/Ahd/10379/19-20, in proceeding u/s. 153A r.w.s. 254 vide order dated 23/10/2020 passed for the assessment year 2012-13. IT(SS)A No. 1/Ahd/2021 Assessment Year 2012-13 I.T.A No. 1/Ahd/2021 A.Y. 2012-13 Page No. JT. CIT (OSD) vs. Riddhi Siddhi Gluco Biols Ltd. 2 2. The Department has taken the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing interest u/s 244A of the Act on the payments made towards interest u/s 234 B & 234C of the Act? 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the provisions of section 244A r.w.s. 2(43) of the I.T. Act, 1961 as the resultant payments were not against the Income Tax/Corporate tax but against interest u/s 234B and 234C and the same amounts to granting of interest on interest? 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 3. The brief facts of the case are that during the course of assessment proceedings, the learned AO has disallowed depreciation of Rs. 1,18,82,500/- and computed interest u/s 234B and 234C of the Income Tax Act. Against the assessment order, the assessee has made an application u/s 154 of the Act and in response to the same the learned AO has passed rectification order raising demand of Rs. 10,68,86,080/-. The learned CIT(A) has allowed the claim of depreciation but confirmed levy of interest under section 234B and 234C of the income Tax Act. The appellant filed appeal before the ITAT with regard to chargeability and levy of interest under section 234B and 234C of the Income Tax Act. The Ahmedabad ITAT vide order dated 20/06/2019 held that no interest under section 234B and 234C of the Act is leviable for the initial two months i.e April and May 2012. After the assessment, regular tax of Rs.9,98,67,720/- was paid by the assessee on 30/09/2014. I.T.A No. 1/Ahd/2021 A.Y. 2012-13 Page No. JT. CIT (OSD) vs. Riddhi Siddhi Gluco Biols Ltd. 3 3.1 Accordingly, the learned AO did not allow interest on the tax paid on regular assessment of Rs. 9,98,67,720/- on 30/9/2014 and therefore the assessee filed appeal before Ld. CIT(A) with a request to allow the interest on said payment of regular tax made from the date of its payment to till the date of its actual payment. The assessee submitted that the said interest is payable to the assessee under section 244A(l)(b) of the Act and in support of the above contention, the assessee placed reliance on following judgements before Ld. CIT(A) :- (a) Hon'ble Delhi High Court in the case CIT Vs Suite] Industries Limited (325 ITR 331) (Delhi) (b) Hon'ble Bombay High Court CIT Vs Asian Paints Ltd [2011] 201 Taxman 179 (Bom.) (Mag.): 12 taxmann.com 484 (Bom.) 4. In appeal, the CIT(A) allowed the appeal with the following observations:- “5.2. I have considered the facts of the case and the submission filed by the appellant. In the assessment order the AO has disallowed depreciation of Rs. 1,18,82,500/- and computed interest u/s 234C and 234B of the Income Tax Act on the tax payable amount. Further the AO has passed rectification order raising demand of Rs. 10,68,86,080/- after assessment. In the first appeal the CIT(A) has allowed the claim of depreciation but confirmed levy of interest under section 234B and 234C of the income Tax Act. After the assessment regular tax of Rs.9,98,67,720/- has been paid by the appellant on 30/09/2014. Thereafter, the appellant has filed appeal before the Honorable ITAT with regard to levy of interest under section 234B and 234C of the Income Tax Act. The 'Hon'ble ITAT vide order dated 20/06/2019 has held that no interest under section j 234B & 234C is leviable for the initial two months i.e April and May 2012. I.T.A No. 1/Ahd/2021 A.Y. 2012-13 Page No. JT. CIT (OSD) vs. Riddhi Siddhi Gluco Biols Ltd. 4 The appellant has contended that the AO has not allowed interest u/s.244A, on the Regular assessment Tax paid of Rs. 9,98,67,720/- on 30/9/2014 and therefore the AO should be directed to allow the interest on said payment of regular tax. The said interest is payable to the assessee under section 244A(l)(b)of the Act and the same is reproduced here under:- "244A (1) [Where refund of any amount becomes due to the assessee under this Act], he shall, subject to the provisions of this section, be entitled receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:- [(a) where .................. (b) in any other case, such interest shall be calculated at the rate of one per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation.- For the purposes of this clause, " date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. " In support of the contention, the appellant made reliance on following judgements:- (c) Hon'ble Delhi High Court in the case CIT Vs Sultej Industries Limited (325 ITR 331) (Delhi) (d) Hon'ble Bombay High Court CIT Vs Asian Paints Ltd [2011] 201 Taxman 179 (Bom.) (Mag.): 12 taxmann.com 484 (Bom.) In view of the above facts and legal position, appellant requested to direct the AO to grant interest under section 244A(I)(b) on the regular tax payment made from the date of its payment to till the date of its actual payment. Having considered the facts and submission it is noticed that after the order of Hon'ble ITAT dated 20.06.2019 the total income of the appellant remained at the returned income. However, it has already paid the regular tax of Rs9,98,67,7207- on 30.09.2014 which the appellant intend to pay the refund alongwith interest thereupon as per the provisions of section 244A(1)(b) of IT Act. The Hon'ble Delhi High Court in the case of CIT Vs. Suite] Industries Ltd. 325 ITR 331 has followed the another judgment stating that "Even 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 Asia Ltd, supra)". As per the above provisions the appellant is entitled to get the interest on the refund amount as per the provisions of section 244A of IT Act. No reasons I.T.A No. 1/Ahd/2021 A.Y. 2012-13 Page No. JT. CIT (OSD) vs. Riddhi Siddhi Gluco Biols Ltd. 5 have been extended by the AO for not granting the interest upon the refund due as claimed by the appellant u/s. 244A(1)(b) of IT Act. Thus, the interest to the appellant has to be granted strictly as per the above provisions of law and directions of the Hon'ble ITAT. The AO is directed to grant the interest on refund to the appellant subject to the above directions. This ground of appeal is allowed.” 5. The Department is in appeal against the aforesaid order passed by Ld. CIT(A) allowing interest on excess tax paid on regular assessment by the assessee under section 244A(1)(b) of the Act. Before adjudicating on this issue, it would be useful to refer to some of the decisions on the subject passed by various Courts. The Supreme Court in the case of CIT v H.E.G. Ltd. [2010] 189 Taxman 335 (SC) held that assessee is entitled to interest under section 244A when refund has arisen on account of payment of self- assessment tax. The facts of the case were that during assessment year 1993- 94 amount paid by assessee towards TDS was Rs. 45,73,528 - Tax paid after original assessment was Rs. 1,70,00,320. The Assessee was entitled to refund of Rs. 2,16,73,848 (consisting of Rs. 1,71,00,320 and Rs. 45,73,528) which payment was made after 57 months. The assessee claimed statutory interest for delayed refund of Rs. 45,73,528 for 57 months between 1-4-1993 and 31-12-1997 in terms of section 244A(1)(b) of the Act. The Department contended that words 'any amount' would not include interest which accrued to respondent for non-refunding of Rs. 45,73,528 for 57 months. The Supreme Court held that interest component partakes of character of 'amount due' under section 244A(1)(b) and therefore, assessee would be entitled to interest for 57 months on Rs. 45,73,528. In the case of Alembic Glass Industries Ltd. [2008] 111 ITD 320 (Ahmedabad), the Ahmedabad ITAT held that in context of section 244A(1)(b), expression 'tax' would include I.T.A No. 1/Ahd/2021 A.Y. 2012-13 Page No. JT. CIT (OSD) vs. Riddhi Siddhi Gluco Biols Ltd. 6 interest also and definition of tax in section 2(43) meaning 'income-tax' would not be applicable in context of section 244A(1). The ITAT further held that consequently, interest paid in pursuance of order under section 234B has to be regarded as forming part of tax or an adjunct to income-tax and assessee would be entitled to interest on refund of interest paid under section 234B also. In the case of Mangalam Arts [2013] 37 taxmann.com 157 (Rajasthan), the High Court held that where assessee paid self assessment tax under section 140A, it is eligible to get interest under section 244A(1)(b) on refund arising on account of such payment. In the case of Royal Bank of Scotland N.V [2011] 15 taxmann.com 333 (Kolkata), the ITAT held that an assessee is entitled to interest on refund granted to it on account of excess payment of self assessment tax. The ITAT further held that the said computation of interest has to be made in terms of section 244A(1)(b) i.e. from date of payment of such amount up to date on which refund is actually granted. In the case of Punjab Chemical & Crop Protection Ltd. [2015] 57 taxmann.com 283 (Punjab & Haryana), the High Court held that Assessee would be entitled to interest under section 244A(1)(b) on amount of refund which was deposited by it by way of self assessment tax under section 140A(1)(b) of the Act. In the case of Stock Holding Corporation of India Ltd. [2015] 53 taxmann.com 106 (Bombay), the Bombay High Court held that ax paid on self assessment would fall under section 244A(1)(b), i.e. a residuary clause covering refunds of amount not falling under section 244A(1), therefore, interest is payable on refund on excess amount paid on self assessment tax. In the case of Grasim Industries Ltd. [2021] 123 taxmann.com 312 (Mumbai - Trib.), the Mumbai ITAT held that Assessee having paid self assessment tax, it would I.T.A No. 1/Ahd/2021 A.Y. 2012-13 Page No. JT. CIT (OSD) vs. Riddhi Siddhi Gluco Biols Ltd. 7 be entitled to interest under section 244A(1)(b) on self-assessment tax from date of payment of self-assessment tax till date of actual payment of refund. In the case of Sutlej Industries Ltd. [2010] 190 Taxman 136 (Delhi), the High Court held that where self-assessment tax paid by an assessee under section 140A is refunded, assessee would be entitled to interest thereon. The facts in this case were that for the relevant assessment year, the assessee, in addition to TDS and advance tax, also paid self-assessment tax under section 140A. The assessment order was framed under section 250/143(3) whereby refund of amount, earlier paid as self-assessment tax by the assessee, was made. The assessee claimed interest on the amount refunded which was not allowed by the Assessing Officer. On appeal, the Commissioner (Appeals) confirmed the order of the Assessing Officer. However, the Tribunal allowed the assessee's appeal. On the revenue's appeal to the High Court, the High Court while dismissing the Department’s appeal made the following observations: On an analysis of section 244A, it is seen that where 'refund of any amount' becomes due to the assessee, the assessee is entitled to simple interest thereon. The mode and manner of calculating such interest is laid down in clauses (a) and (b ) of sub-section (1) of the said section. Where the refund is out of pre-paid taxes, interest is calculated in terms of section 244A(1)(a ). Where the refund is of taxes paid other than pre-paid taxes covered in clause (a), the computation of interest is for the period prescribed in clause (b), sub-section (1) of the said section. [Para 11] I.T.A No. 1/Ahd/2021 A.Y. 2012-13 Page No. JT. CIT (OSD) vs. Riddhi Siddhi Gluco Biols Ltd. 8 The tax due on the returned income has to be paid by way of tax deducted at source (section 199), advance tax (section 209) or by way of self-assessment tax (section 140A). In addition, where the assessment is completed at an income higher than the returned income, the tax payable by the assessee is specified in the notice of demand issued under section 156. Where there is a shortfall in payment of tax vis-a-vis the tax finally due on the assessed income, the assessee is liable to pay interest under section 234B. Conversely, where the revenue makes a high-pitched assessment which is subsequently reduced/modified in an appeal, any payment of taxes made, which are subsequently refunded as a consequence of relief obtained in appeals, etc., are monies legitimately belonging to the taxpayers and wrongly withheld by the Government. This is based on the principle that if the revenue had, in the first instance, made correct assessment of the tax liability of the assessee, the assessee would not have been deprived of the use of money. In such a situation, where pre-paid taxes are in excess of the assessed tax, the assessee is entitled to refund of such tax along with interest thereon. [Para 12] Where an assessee out of abundant caution pays self-assessment tax whilst staking a claim in the return, which claim is accepted, resulting in refund of self-assessment tax, the assessee would be equally entitled to interest thereon. [Para 13] Section 244A was inserted in the statute as a measure of rationalization to ensure that the assessee is duly compensated by the Government by way of payment of interest for monies legitimately I.T.A No. 1/Ahd/2021 A.Y. 2012-13 Page No. JT. CIT (OSD) vs. Riddhi Siddhi Gluco Biols Ltd. 9 belonging to the assessee and wrongfully retained by the Government without any gaps. [Para 14] Therefore, where the self-assessment tax paid by the assessee under section 140A is refunded, the assessee would be 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. [Para 15] 5.1 In view of the above consistent position taken by the courts and Tribunal on the issue of interest on self-assessment/tax on regular assessment paid by the assessee under section 244A(1)(b) of the Act, we are of the considered view, that Ld. CIT(A) has not erred in facts and in law in allowing the assessee’s appeal and directing that interest be granted to the assessee in terms of section 244A(1)(b) of the Act. 6. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 18-01-2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 18/01/2023 I.T.A No. 1/Ahd/2021 A.Y. 2012-13 Page No. JT. CIT (OSD) vs. Riddhi Siddhi Gluco Biols Ltd. 10 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद