R. K. Garg V. Commissioner of Income Tax, Chandigarh and another

ITA/212/2010

AI Insights

The case involves R. K. Garg, the appellant, who contested the taxability of interest received on a refund from the Income Tax Department for the assessment year 2005-06. The interest was awarded following the deletion of certain additions made by the Assessing Officer for the assessment year 2001-02, which were initially contested but later led to a refund with interest under Section 244-A of the Income Tax Act. The main legal contention was whether the interest, received during ongoing litigation regarding the refund, should be taxable in the year it was received or only after the dispute was resolved. The High Court, referencing the decisions of the lower authorities and the provisions of the Income Tax Act, dismissed the appeal, affirming the taxability of the interest in the year it was received.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 679546 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 27-08-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: AKSHAY BHAN
• Keywords: Assessment Year; Income tax appellate tribunal; Taxable interest; Pending adjudication; Refund interest
• Section: 154; 260A; 244(A)

Judgement Text

"ITA No. 212 of 2010 (1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 212 of 2010 (O&M) Date of decision: 27.8.2010 R. K. Garg ....Appellant vs Commissioner of Income Tax, Chandigarh and another ...Respondent Coram: Hon'ble Mr. Justice Adarsh Kumar Goel Hon'ble Mr. Justice Rajesh Bindal Present: Mr. Akshay Bhan, Advocate for the appellant. Rajesh Bindal, J. The assessee is in appeal before this court under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 7.5.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A), Chandigarh (hereinafter referred to as “the Tribunal”) in ITA No. 1010/CHANDI/2008 for the assessment year 2005-06, raising the following substantial questions of law:- “(i) Whether in facts and circumstances of the case, the action of the authorities below in holding that the amount of interest is taxable as the same cannot be said to have accrued to the assessee as the matter is still pending adjudication is legally sustainable in the eyes of law? (ii) Whether in fact and circumstances of the case, the action of the authorities below, in not following the judgment of the various Court including the Hon'ble Apex Court and this Hon'ble Court is legally sustainable in the eyes of law? (iii) Whether in fact and circumstances of the case, the action of the authorities below, the impugned orders Annexure A-1 to A-3 are legally sustainable in the eyes of law?” Briefly the facts are that while framing the assessment for the assessment year 2001-02, certain additions were made by the Assessing officer. In the appeal, the Commissioner of Income Tax (Appeals) (for short, “the CIT (A)”). ITA No. 212 of 2010 (2) accepted the plea raised by the assessee and deleted the additions. Along with the refund, the assessee was held entitled to interest under Section 244-A of the Act. The revenue went in appeal before the Tribunal against the order passed by the CIT (A) accepting the appeal filed by the assessee. Along with the refund, the interest was received by the assessee in the financial year 2004-05. It was considered for assessment in the assessment year 2005-06 by the assessing officer vide order dated 29.11.2007. In appeal, the order of assessment bringing the amount of interest received by the assessee on the amount of refund was upheld by the CIT (A). Even the Tribunal also upheld that order. It is against this order that the assessee is in appeal before this court. Learned counsel for the assessee submitted that the matter in dispute being pending, the interest awarded thereon should not be taxed till such time the dispute attains finality as there can be a chance that the order awarding interest may be set aside and in that eventuality the assessee may have to refund back that amount. The same should be assessed to tax only in the year it attains finality. After hearing learned counsel for the assessee, we do not find any merit in the submissions made. Once the assessee has received the amount of interest, the same has rightly been brought to tax by the assessing officer in the year it was received. However, in case subsequently there is any variation in the order in the pending litigation, the same can very well taken care of in proceedings under Section 154 of the Act, as has been rightly upheld by the Tribunal. For the reasons mentioned above, we do not find any substantial question of law arises in the present appeal. Accordingly, the same is dismissed. (Rajesh Bindal) Judge 27.8.2010 (Adarsh Kumar Goel) vs Judge "