THE COMMISSIONER OF INCOME TAX V. STATE BANK OF TRAVANCORE

ITA/1054/2009

AI Insights

The case involves multiple income tax appeals by the Commissioner of Income Tax, Thiruvananthapuram against the State Bank of Travancore concerning the assessment years 1989-90, 1990-91, 1991-92, 1995-96, 1997-98, and 2001-02. The core issue was the Tribunal's decision to grant interest on interest for delayed tax refunds, which was contested by the Revenue. The High Court examined the applicability of the Supreme Court's decision in Gujarat Fluoro Chemicals, which clarified that while compensation for delay in refund can be considered, it does not extend to granting interest on the interest itself. The court thus reversed the Tribunal's decision and denied the claim for interest on interest.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 698218 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 01-11-2018
• Assessment Year: misc
• Other Referred Cases: Sandvik Asia Ltd. v. CIT [(2006) 280 ITR 643 (SC)], Commissioner of Income - tax v. Gujarat Fluoro Chemicals [(2013) 358 ITR 291 (SC)]
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P BALAKRISHNAN
• Assessee Lawyers: JOSE JOSEPH
• Keywords: Income tax appeal; Income tax appellate tribunal; Interest on interest; Refund; State Bank of Travancore
• Section: 147; 148; 143(3); 153A; 68

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY, THE 01ST DAY OF NOVEMBER 2018 / 10TH KARTHIKA, 1940 I.T.A.No.1054 of 2009 AGAINST THE ORDER IN I.T.A.NO.25/COCH/2002 DATED 21-07-2006 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN [ASSESSMENT YEAR 1995-96] APPELLANT/APPELLANT: THE COMMISSIONER OF INCOME TAX, TRIVANDRUM. BY SRI.JOSE JOSEPH, STANDING COUNSEL FOR GOI (TAXES) RESPONDENT/RESPONDENT: STATE BANK OF TRAVANCORE, POOJAPURA, TRIVANDRUM. BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 01.11.2018, ALONG WITH ITA.1590/2009, ITA.1427/2009, ITA.1398/2009, ITA.1574/2009, ITA.1317/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No.1054/2009 & - 2 - connected cases IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY, THE 01ST DAY OF NOVEMBER 2018 / 10TH KARTHIKA, 1940 I.T.A.No.1590 of 2009 AGAINST THE ORDER IN I.T.A.NO.13/COCH/2002 DATED 21-07-2006 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN [ASSESSMENT YEAR 1989-90] APPELLANT/APPELLANT: THE COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM. BY ADVS. SRI.P.K.R.MENON, SENIOR COUNSEL, GOI (TAXES) SRI.JOSE JOSEPH, STANDING COUNSEL FOR GOI (TAXES) RESPONDENT/RESPONDENT: STATE BANK OF TRAVANCORE, POOJAPPURA, THIRUVANANTHAPURAM. BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 01.11.2018, ALONG WITH ITA.1427/2009, ITA.1398/2009, ITA.1574/2009, ITA.1317/2009, ITA.1054/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No.1054/2009 & - 3 - connected cases IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY, THE 01ST DAY OF NOVEMBER 2018 / 10TH KARTHIKA, 1940 I.T.A.No.1427 of 2009 AGAINST THE ORDER IN I.T.A.NO.14/COCH/2002 DATED 21-07-2006 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN [ASSESSMENT YEAR 1990-91] APPELLANT/APPELLANT: THE COMMISSIONER OF INCOME TAX, TRIVANDRUM BY SRI.JOSE JOSEPH, STANDING COUNSEL FOR GOI (TAXES) RESPONDENT/RESPONDENT: STATE BANK OF TRAVANCORE, POOJAPPURA, TRIVANDRUM. BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 01.11.2018, ALONG WITH ITA.1590/2009, ITA.1398/2009, ITA.1574/2009, ITA.1317/2009, ITA.1054/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No.1054/2009 & - 4 - connected cases IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY, THE 01ST DAY OF NOVEMBER 2018 / 10TH KARTHIKA, 1940 I.T.A.No.1398 of 2009 AGAINST THE ORDER IN I.T.A.NO.1189/COCH/2004 DATED 21-07-2006 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN [ASSESSMENT YEAR 1997-98] APPELLANT/APPELLANT: COMMISSIONER OF INCOME TAX, TRIVANDRUM. BY ADVS. SRI.P.K.R.MENON, SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, STANDING COUNSEL FOR GOI (TAXES) RESPONDENT/RESPONDENT: STATE BANK OF TRAVANCORE, POOJAPURA, TRIAVANDRUM. BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 01.11.2018, ALONG WITH ITA.1590/2009, ITA.1427/2009, ITA.1574/2009, ITA.1317/2009, ITA.1054/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No.1054/2009 & - 5 - connected cases IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY, THE 01ST DAY OF NOVEMBER 2018 / 10TH KARTHIKA, 1940 I.T.A.No.1574 of 2009 AGAINST THE ORDER IN I.T.A.NO.1187/COCH/2004 DATED 21-07-2006 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN [ASSESSMENT YEAR 1991-92] APPELLANT/APPELLANT: THE COMMISSIONER OF INCOME TAX, TRIVANDRUM. BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, STANDING COUNSEL FOR GOI(TAXES) RESPONDENT/RESPONDENT: STATE BANK OF TRAVANCORE, POOJAPPURA,TRIVANDRUM BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 01.11.2018, ALONG WITH ITA.1590/2009, ITA.1427/2009, ITA.1398/2009, ITA.1317/2009, ITA.1054/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No.1054/2009 & - 6 - connected cases IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY, THE 01ST DAY OF NOVEMBER 2018 / 10TH KARTHIKA, 1940 I.T.A.No.1317 of 2009 AGAINST THE ORDER IN I.T.A.NO.1191/COCH/2004 DATED 21-07-2006 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN [ASSESSMENT YEAR 2001-02] APPELLANT/APPELLANT: THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, STANDING COUNSEL FOR GOI (TAXES) RESPONDENT/RESPONDENT: STATE BANK OF TRAVANCORE, POOJAPURA, TRIVANDRUM. BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 01.11.2018, ALONG WITH ITA.1590/2009, ITA.1427/2009, ITA.1398/2009, ITA.1574/2009, ITA.1054/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No.1054/2009 & - 7 - connected cases JUDGMENT [ ITA 1054/2009, ITA.1590/2009, ITA.1427/2009, ITA.1398/2009, ITA.1574/2009 & ITA.1317/2009 ] Vinod Chandran,J. The assessee-respondent in these cases is the State Bank of Travancore, which is now amalgamated with the State Bank of India. The question raised is as to whether the Tribunal was correct in having granted interest on interest with respect to the refund for the various periods. The Tribunal had granted the same on the basis of the decision in Sandvik Asia Ltd. v. CIT [(2006) 280 ITR 643 (SC)]. The said two-Judge decision was clarified by a later three-Judge Bench in Commissioner of Income - tax v. Gujarat Fluoro Chemicals [(2013) 358 ITR 291 (SC)]. 2. The admitted facts, for the assessment years 1989-90, 1990-91, 1991-92, 1995-96, 1997-98 and 2001-02, which are identical sans the dates; are the following. The assessments were completed and there were various proceedings, including rectification, appeals, revision and so on and so forth. When the statutory proceedings were completed, there was a refund due to the assessee in all these years. The refund was made with interest. The assessee ITA.No.1054/2009 & - 8 - connected cases claimed interest on interest, which the Tribunal permitted as per the afore-cited decision. 3. We need only extract the following paragraph from Gujarat Fluoro Chemicals (supra): “7. As we have already noticed, in Sandvik case (supra) this court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and, therefore, directed the Revenue to pay compensation for the same not an interest on interest”. The clarification has put it in the proper perspective and the facts in the present case do not commend such a drastic measure of interest on interest. We, hence, allow the appeals and set aside the order of the Tribunal on the sole issue of grant of interest on interest on the refunds and answer the question of law in favour of the Revenue and against the assessee, following the decision in Gujarat Fluoro Chemicals (supra). ITA.No.1054/2009 & - 9 - connected cases Ordered accordingly. Parties are left to suffer their respective costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE Vku/- ITA.No.1054/2009 & - 10 - connected cases APPENDIX OF ITA 1054/2009 APPELLANT'S ANNEXURES: ANNEXURE-A TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 28/11/2001. ANNEXURE-B TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 21/7/2006. ITA.No.1054/2009 & - 11 - connected cases APPENDIX OF ITA 1590/2009 APPELLANT'S ANNEXURES: ANNEXURE-A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 14/5/97. ANNEXURE-B TRUE COPY OF THE ORDER OF THE CIT(A) DATED 28/11/2001 ANNEXURE-C TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 21/7/2006. ITA.No.1054/2009 & - 12 - connected cases APPENDIX OF ITA 1427/2009 APPELLANT'S ANNEXURES: ANNEXURE-A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 31/3/2000 ANNEXURE-B TRUE COPY OF THE ORDER OF THE CIT (A) DATED 28/11/2001 ANNEXURE-C TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 21/7/2006. ITA.No.1054/2009 & - 13 - connected cases APPENDIX OF ITA 1398/2009 APPELLANT'S ANNEXURES: ANNEXURE A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 26.3.2002. ANNEXURE B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 10.8.2004. ANNEXURE C TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 21.7.2006 ITA.No.1054/2009 & - 14 - connected cases APPENDIX OF ITA 1574/2009 APPELLANT'S ANNEXURES: ANNEXURE A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 26.3.2004. ANNEXURE B TRUE COPY OF THE ORDER OF THE CIT (A) DATED 10.8.2004. ANNEXURE C TRUE COPY OF THE ORDER OF THE GNOME TAX APPELLATE TRIBUNAL DATED 21.7.206. ITA.No.1054/2009 & - 15 - connected cases APPENDIX OF ITA 1317/2009 APPELLANT'S ANNEXURES: ANNEXURE-A TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 10/8/2004. ANNEXURE-B TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 21/7/2006. [TRUE COPY] "