NIMISH A MUNIM, MUMBAI V. ACIT 10(1), MUMBAI

ITSSA 4/MUM/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8374 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-03-2014
• Assessment Year: misc
• Appeal Filed On: 06-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 244A

Judgement Text

1 INT.TAX 04 & 05 /M/2010 UNION BANK OF INDIA IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI R.K. PA NDA, A.M. INTEREST TAX NOS. 04 & 05/MUM/2010 ASSESSMENT YEARS 1999-2000 & 2000-01 UNION BANK OF INDIA, CENTRAL ACCOUNTS DEPARTMENT, 239 VIDHAN BHAVAN MARG, NARIMAN POINT, MUMBAI 400 021. PAN AAACU 0564G VS. DCIT, LTU, MUMBAI. APPLICANT RESPONDENT APPELLANT BY SHRI C. NARESH RESPONDENT BY SHRI VIJAY SHANKAR ORDER PER R.K. PANDA A.M. THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE SEPARATE ORDERS DATED 24.2.2010 OF CIT(A)- LTU, MUM BAI RELATING TO A.YRS. 1999-2000 & 2000-01 RESPECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN BOTH THE APPEALS, THEREFORE, THE SE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. INT. TAX APPEAL NO. 04/MUM/2010 (A.Y. 1999-2000) 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - 1. THE LEARNED CIT(A) ERRED IN NOT GRANTING INTERES T U/S 244A OF THE INCOME TAX READ WITH SECTION 21 OF INTEREST TAX ACT ON THE GROUND THAT THERE WAS NO WRONGFUL WITHHOLDING OF RE FUND OR UNDUE DELAY IN GIVING EFFECT TO APPELLATE ORDERS AN D HENCE THE RATIO OF APEX COURT IN THE CASE OF SANDVIK ASIA LTD . VS. CIT (280 ITR 643) IS NOT APPLICABLE. 2 INT.TAX 04 & 05 /M/2010 UNION BANK OF INDIA 2. THE CIT(A) FAILED TO APPRECIATE THAT HUGE QUANTU M OF REFUNDS HAD BECOME DUE, CONSEQUENT ON FAVORABLE APPELLATE O RDERS DISMISSING HIGH PITCHED ASSESSMENT ORDERS MADE ON ERRONEOUS VIEW OF FACTS AND LAW AND HENCE SUCH A WI THHOLDING OF REFUND IS SQUARELY COVERED AS AN UNJUSTIFIABLE D EMAND AS HELD BY APEX COURT. 3. THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSI NG OFFICER SOUGHT TO DENY THE INTEREST ON THE REFUND BY TREATI NG WHATEVER REFUND MADE IS SOLELY TOWARDS EXCESS PAID TAX AND T HEN CALCULATING INTEREST ON THE BALANCE PORTION, THE ME THOD WHICH HAS BEEN EXPRESSLY DISAPPROVED BY APEX COURT AS BEI NG DISCRIMINATORY. 4. THE CIT(A) FAILED TO APPRECIATE A NUMBER OF JUDI CIAL DECISIONS IN SIMILAR CASES OF APPELLANT BANKS HAVE UPHELD THE CLAIM OF INTEREST IN THE LIGHT OF APEX COURT DECISION AND HE NCE THE SAME OUGHT TO HAVE BEEN CONSIDERED IN APPELLANTS C ASE ALSO. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE A.O. WHI LE GIVING EFFECT TO THE ORDER OF THE ITAT IN ASSESSEES OWN CASE, QUANTIFIED A TA X LIABILITY OF ` 24,01,39,910/- AND AFTER ADJUSTING THE PRE PAID TAXES CONSISTING O F ADVANCE TAX AND TAX PAID, A REFUND OF ` 8,86,53,173/- WAS DETERMINED. ACCORDING TO THE AS SESSEE INTEREST IS PAYABLE TO IT U/S 244A(1)(B) FROM THE DATE OF PA YMENT OF TAX UP TO THE DATE OF REFUND. THE A.O. HAD CALCULATED INTEREST ON THE AF ORESAID SUM AT ` 2,08,14,506/-. THE A.O. ISSUED REFUND VOUCHER FOR ` 9,88,78,095/- ON 14.12.2005 AND REFUND VOUCHER FOR ` 45,45,692/- ON 28.04.2006. FURTHER A SUM OF ` 60,43,892/- WAS REFUNDED ON 15.10.2007. ACCORDING TO THE ASSESSEE, THE A.O. SHOULD HAVE GRANTED INTEREST ON THE AMOUNT OF ` 45,45,692/- AND ` 60,43,892/-. WHEN THE MATTER WAS CHALLENGED BEFORE THE CIT(A), HE DISMISSED THE GROUND RAISED BY THE ASSESSEE BY HOLDING AS UND ER:- 2.2: I HAVE CONSIDERED THE SUBMISSION OF THE LD. CO UNSEL AND IT IS SEEN THAT THE ASSESSING OFFICER HAS GIVEN APPEAL EF FECT TO THE ORDER OF HONBLE ITAT DTD. 27.2.2007 ITA NO. 61/MUM/2004 ON 15.10.2007 AND THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO GRANT INTEREST U/S 244A UPTO THE DATE OF ISSUE OF REFUND AND RE-COMPUT E THE INTEREST CALCULATION ACCORDINGLY. 3. AS REGARDS, THE CONTENTION OF THE LD. COUNSEL TH AT AS PER THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN T HE CASE OF SANDVIK ASIA LTD. V. CIT 289 ITR 643, THE PAYMENT OF INTERE ST ON INTEREST DOES NOT ARISE IN THIS CASE. THERE HAS BEEN NO UNDUE DEL AY OR DEFAULT IN 3 INT.TAX 04 & 05 /M/2010 UNION BANK OF INDIA GIVING THE APPEAL EFFECT TO THE APPELLANT AND THERE FORE, THE APPELLANT IS ENTITLED TO INTEREST U/S 244A OF I.T. ACT UPTO T HE DATE OF GRANT OF REFUND WHICH THE ASSESSING OFFICER HAS BEEN DIRECTE D TO CALCULATE AND GRANT ACCORDINGLY, AS ON THE FACTS OF THIS CASE THE ORDER OF HONBLE ITAT DT. 27.2.2007 REQUIRED GIVING OF APPEA L EFFECT, WHICH HAS BEEN DONE ON 15.10.2007 AND THUS THERE IS NO UN DUE DELAY OR DEFAULT AND ON FACTS THE PRESENT CASE STANDS ON A D IFFERENT FOOTING AND IS DECIDED ACCORDINGLY. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O. AND THE CIT(A) AND T HE PAPER BOOK FILED BY THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. WE FIND THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE C ASE OF MULTISCREEN MEDIA PVT. LTD. VS. ASST. C.I.T. IN ITA NO. 6602/MUM/2008 FOR A.Y. 1999-2000 ORDER DATED 19.11.2010 FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. V. CIT 280 ITR 643, HAS HELD A S UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY B OTH THE PARTIES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER B OOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. WE FIND, THE HONBLE SUPREME COURT IN THE CASE OF SAND VIK ASIA LTD (SUPRA) HAS HELD THAT IN VIEW OF THE EXPRESS PROVISIONS OF THE I T ACT, 1 961, AN ASSESSEE IS ENTITLED TO COMPENSATION BY WAY OF INTEREST FOR THE DELAY IN THE PAYMENT OF AMOUNTS LAWFULLY DUE TO THE ASSESSEE WHICH ARE WITH HELD WRONGLY AND CONTRARY TO LAW. IN THE SAID DECISION, THE HONBLE SUPREME COURT H AS FURTHER HELD THAT INTEREST IS PAYMENT ON THE AMOUNT TO BE REFUNDED U/ S 244(1) WITHIN THREE MONTHS FROM THE DECISION OF THE APPELLATE OR OTHER AUTHORITY SPECIFIED IN SECTION 240. THE EXPRESSION AMOUNT IN THE EARLIER PART OF SECTION 244(1A) REFERS NOT ONLY TO THE TAX BUT ALSO TO THE INTEREST; IT IS A NEUTRA L EXPRESSION AND IT CANNOT BE LIMITED TO THE TAX PAID IN PURSUANCE OF THE ORDER O F ASSESSMENT . THE HONBLE SUPREME COURT HAS FURTHER HELD THAT E VEN ASSUMING THAT THERE IS NO PROVISION FOR PAYMENT OF COMPENSATION, COMPENSATION FOR DELAY IS REQUIRED TO BE PAID AS THE ACT ITSELF RECOGNIZES IN PRINCIPLE THE LIABILIT Y OF THE DEPARTMENT TO PAY INTEREST WHEN EXCESS TAX WAS RETAINED AND THE SAME PRINCIPLE SHOULD BE EXTENDED TO CASES WHERE INTEREST WAS RETAINED. . THE HONBLE SUPREME COURT HAS ALSO HELD THAT THERE IS NO QUESTION OF THE DELAY BEING JUSTIFIABL E, AND EVEN IF THE REVENUE TAKES AN ERRONEOUS VIEW OF THE LAW THAT CAN NOT MEAN THAT THE WITHHOLDING OF MONIES IS JUSTIFIABLE OR NOT WRON GFUL THERE IS NO EXCEPTION TO THE PRINCIPLE FOR AN ALLEGEDLY JUSTIFIABLE WITHHO LDING. 7 CONSIDERING THE TOTALITY OF THE FACTS OF THE CAS E AND IN VIEW OF THE DECISION OF THE HONBLE APEX COURT CITED SUPRA, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED TO INTEREST U/S 244A ON DELAYED REFUND OF 4 INT.TAX 04 & 05 /M/2010 UNION BANK OF INDIA `. 42,15,279 FOR THE PERIOD FROM SEPT 2004 TO DEC. 2006. WE DO NOT FIND ANY MERIT ON THE OBSERVATIONS MADE BY THE CIT(A) THAT THE DECISION IN THE CASE OF SANDVIK ASIA LTD (SUPRA) IS AN EXCEPTIONAL CASE AN D THE SAID DECISION WOULD APPLY TO SUCH EXCEPTIONAL CASES. IN OUR OPINION, W HENEVER THERE IS A DELAY IN GRANTING REFUND TO THE ASSESSEE, IN THE VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD (SUPR A), THE DEPARTMENT HAS TO PAY COMPENSATION BY WAY OF INTEREST FOR THE DELAY I N PAYMENT OF AMOUNT LAWFULLY DUE TO THE ASSESSEE, WHICH ARE WITHHELD WR ONGLY AND CONTRARY TO LAW. 8 IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDE R OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO PAY INTEREST U/S 244A TO THE ASSESSEE AS PER LAW. THIS GROUND BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 5. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-OR DINATE BENCH OF THE TRIBUNAL CITED ABOVE, WE SET ASIDE THE ORDER OF CIT (A) AND DIRECT THE A.O. TO GRANT INTEREST ON DELAYED REFUND OF INTEREST TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. INT. TAX APPEAL NO. 05/MUM/2010 (A.Y. 2000-01) 6. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE GROU NDS RAISED BY THE ASSESSEE ARE IDENTICAL TO THE GROUNDS RAISED IN INT . TAX APPEAL NO. 04/M/2010 FOR A.Y. 1999-2000. WE HAVE ALREADY DECIDED THE SA ME AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN ALLOWED. FOLLOWING THE SA ME RATIO, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. ORDER PRONOUNCED ON 13.05.2011. SD/- SD/- (R.V. EASWAR) (R.K. PANDA) PRESIDENT ACCOUN TANT MEMBER MUMBAI, DATED 13 TH MAY, 2011. 5 INT.TAX 04 & 05 /M/2010 UNION BANK OF INDIA RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -LTU, MUMBAI 4. THE CIT- LTU, MUMBAI 5. THE DR BENCH, F 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 6 INT.TAX 04 & 05 /M/2010 UNION BANK OF INDIA DATE INITIALS 1 DRAFT DICTATED ON 4.5.2011, SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 5.5.2011 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER