Case Law Details
IN THE ITAT BANGALORE BENCH ‘A’
DCIT V/s. Bosch Ltd.
IT APPEAL NOS. 1498 to 1502 (BANG.) OF 2010
[ASSESSMENT YEARS 1995-96, 1996-97, 1999-2000 & 2004-05]
MAY 25, 2012
ORDER
PER BENCH : These five appeals instituted by the Revenue are directed against the impugned orders of the CIT(A)-LTU, Bangalore dated 18.10.2010, 25.10.10, 19.10.10, 22.10.10 and 20.10.10 respectively. The relevant assessment years are 1995-96, 1996-97, 1998-99, 1999-00 and 2004-05.
2. The Revenue had, in its identical grounds of appeals for the assessment years under dispute, raised nine grounds, out of which, ground Nos. 1, 8 and 9 are general in nature and no specific adjudication is called for; hence, the same are dismissed. The remaining grounds are relating to the solitary issue, namely, ‘the learned CIT(A) had failed to appreciate that interest can be paid only on the tax portion in the refund and not on the entire amount of refund.’
3. As the issue raised in these appeals are common and pertains to the same assessee, for the sake of convenience, they were heard, considered together and disposed off in this consolidated order.
4. Before venturing in to take up the issue for adjudication, we would like to reiterate that the issue agitated by the assessee for all the assessment years except for the assessment year 2004-05 dealt with by the authorities below being identical, for the sake of clarity, we tend to take up the issue raised for the assessment year 1995-96 and our findings being recorded hereunder would be applicable for all the assessment years under dispute (including the AY 2004-05).
A.Y 1995-96:
5. The issue, in brief, was that the assessment for the AY under dispute was concluded on 20.3.1998 u/s 143(3) of the Act. An appeal preferred by the assessee was disposed off by the learned CIT(A) on 2.9.1998. Aggrieved, both the Revenue and the assessee approached the earlier Bench of this Tribunal for relief. The Bench disposed off both the appeals vide its order dated 29.3.2006 in ITA Nos.940 to 941/Bang/1998. Consequently, not satisfied with the order of the AO giving effect to the Tribunal’s findings with regard to certain relief claimed by the assessee, an appeal was preferred before the CIT(A)-LTU which was disposed off by the CIT(A) vide order dated 25.1.2008. Subsequently, the AO had passed an order dated 16.5.2008 giving effect to the order of the CIT(A) which resulted in refund of tax and interest.
5.1 Aggrieved by the manner of calculation of refund and interest as worked out by the AO, the assessee filed a rectification application which was disposed off by the AO vide his order u/s 154 of the Act dated 26.11.2008.
5.2 Not satisfied, the assessee approached the CIT(A). Before the CIT(A), the assessee disputed the Assessing Officer’s action in not granting interest on the revised amount of interest. It was contended that the Assessing Officer did not follow the ratio laid down by the Hon’ble Supreme Court in the case of Sandvik Asia Ltd v. CIT [2006] 280 ITR 643/150 Taxman 591 and also the Instruction No.2 of 2007 dated 28.3.2007 of the CBDT.
6. After due consideration of the contentions of the assessee, extensively quoting the ruling of the Hon’ble Supreme Court cited supra and also analyzing the ruling of the Hon’ble Madhya Pradesh High Court in CIT v. H.E.G. Ltd [2009] 310 ITR 341, the CIT(A) directed the Assessing Officer to verify the veracity of the assessee’s computation and recalculate the interest on refund. The learned CIT (A)-LTU had observed thus:
“4.4. It is also of relevance that the MP High Court took cognizance of the decision of the Delhi High Court in CIT v. Goodyear India Ltd [2001] 249 ITR 527 wherein it was held that an assessee was entitled to further interest u/s 244 on interest u/s 214 which had been withheld by the Revenue. The case of the Revenue was that interest payable to an assessee u/s 214 was not a refund as defined in sec.237 and, hence, no interest could be granted to the assessee u/s 244. The Delhi High Court held that for this purpose, Sec. 240 was relevant which referred to refund of ‘any amount becoming due to an assessee’ and that the said phrase would include interest. Consequently, the assessee was entitled to further interest on interest wrongfully withheld. It is also significant that the Delhi High Court referred to the Gujarat High Court decision in D.J. Words (supra) and read it as taking the same view. Attention was drawn to the decision of the Madras High Court in CIT v. Needle Industries (P) Ltd. [1998] 233 ITR 370 wherein the phrase ‘any amount’ was interpreted in the same manner when considering the provisions of Sec. 244(1A) which also uses the same phrase in the context of interest payable by the Revenue. In express terms the Court held that the expression referred not only to the tax but also to interest. It was pointed out that the Madras High Court had agreed with a similar view taken by the Kerala High Court had agreed with a similar view taken by the Kerala High Court in the case of CIT v. Ambat Echukutty Menon [1988] 173 ITR 581. Both these were cases where cases where the Court was called upon to decide whether further interest was payable by the Revenue on interest which had to be repaid to the assessee.
4.5 It is crystal clear from the fore-going analysis that the Hon’ble Madhya Pradesh High Court considered the decisions of various High Courts before arriving at the following conclusion:-
‘In our opinion, the appellant is entitled to interest u/s 244 and/or Sec.244A in accordance with the terms and provisions of the said sections……… In CIT v. Cholomandalam Investment & Finance Co. Ltd. [2007] 211 CTR (Mad) 384: [2007] 294 ITR 438 (Mad.), it was held as under:
‘….that in view of the express provisions of the IT Act, 1961, an assessee was entitled to compensation by way of interest for the delay in the payment of amounts lawfully due to the assessee which were withheld wrongly and contrary to law. The Government was liable to pay interest at the rate applicable to the excess amount refunded to the assessee.’
In view of the aforesaid enunciation of law, we are of the considered opinion that grant of interest on interest is permissible and the change in the provision does not affect the same”
In this connection, it would be pertinent to point out that the CIT(A)-LTU, vide order ITA Nos.70 & 71/CIT(LTU)/07-08 & Nos.5 & 4/CIT(LTU)/08-09 dt. 15.07.2009 for AYs 1991-92, 1993-94, 1994-05 & 1997-08 in the appellant’s own case followed the decision of the Hon’ble MP High Court on this issue. Respectfully following the decision of the Hon’ble Madhya Pradesh High Court, the AO is directed to verify the veracity of the appellant’s computation and re-calculate the interest on refund…… .“
7. Aggrieved by the above direction of CIT(A), the Revenue has come up with the present appeal(s).
7.1 During the course of hearing, the learned DR submitted that the learned CIT(A) had erred in relying on the judgment of the Hon’ble High Court of M.P in the case of H.E.G. Ltd (supra), which in turn relied on the judgment in Sandvik Asia Ltd. (supra) and CIT v. Goodyear India Ltd [2001] 249 ITR 527/117 Taxman 501 (Delhi). It was contended that the ratio laid down in the above judgments cannot be applied to the instant case inasmuch as these cases relate to assessment year prior to 1989-90 when section 244 and not section 244A was in operation. It was, further, argued that there was a marked difference between these two sections; namely, section 244 which allows interest on the amount of refund as against section 244A which allows interest on any tax. It was, therefore, argued that in view of specific language in s.244A, interest can be paid only on the tax portion in the refund and not on the entire amount of refund. To drive home his point, the Ld. D R had placed strong reliance on the ruling of the Hon’ble Delhi High Court in the case of Motor and General Finance Ltd. v. CIT [2010] 320 ITR 88/[2009] 185 Taxman 167 (Delhi).
7.2 On the other hand, the learned A R submitted that the issue had, in fact, been analyzed comprehensively and arrived at a conclusion by the learned CIT(A) in a judicious manner which, according to the learned AR, requires no intervention of this Bench.
8. We have considered the rival submissions and perused the materials available records and also the various rulings of judiciary including that of the Hon’ble Delhi High Court relied on by the Revenue.
8.1 At the outset, we would like to highlight the core contention of the Revenue being that ‘there was a marked difference between these two sections; section 244 allows interest on the ‘amount of refund’ as against section 244A which allows interest on “any tax’. At this juncture, we would like to point out that we have carefully analyzed the wordings of s.244A of the Act which came into force w.e.f. 1.4.1989. For appreciation of facts, we extract the relevant portion of s.244A of the Act as 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 to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:-
(a) where the refund is out of any tax…..”
We would like to make it explicit that ‘refund of any amount becomes due to an assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated.… .‘. Thus, the assessee is entitled to receive interest on refund which is out of any tax. As a matter of fact, the refund arises only on tax portion. There is misconception in the interpretation of the AO that interest can be paid only on the tax portion in the refund and not on the entire amount of refund. Moreover, section 244A doesn’t distinguish that the assessee shall be entitled to receive interest only on tax portion in the refund and not on the entire amount of refund as projected by the Revenue. If the interpretation of the Revenue were to be taken on its face value, we are afraid; it would lead to miscarriage of justice. We are, therefore, declined to agree with the concept put-forth by the Revenue.
8.2 Our above views are in conformity with the ruling of the Hon’ble Madhya Pradesh High Court’s on a similar issue. For appreciation of facts, though at the cost of repetition, we tend to highlight the relevant portion of the observations of the Hon’ble Court as under:
‘…..that in view of the express provisions of the IT Act, 1961, an assessee was entitled to compensation by way of interest for the delay in the payment of amounts lawfully due to the assessee which were withheld wrongly and contrary to law. The Government was liable to pay interest at the rate applicable to the excess amount refunded to the assessee.’
In view of the aforesaid enunciation of law, we are of the considered opinion that grant of interest on interest is permissible and the change in the provision does not affect the same”
It may not be out of place to mention here that the Hon’ble High Court of M.P had, in fact, analyzed the issue as to whether that assessee [H.E.G. Ltd] was entitled to interest on interest u/s 244A of the Act or otherwise contrary to the claim of the Revenue in the present appeal under consideration.
8.3 We have, with due respects, perused the ruling of the Hon’ble Delhi High Court in the case of Motor and General Finance Ltd (supra) relied on by the Revenue. We find that, the assertion of the Hon’ble Court is conformity with the findings of this Bench supra. For ready reference, we reproduce the relevant ruling of the Hon’ble Court as under:
“When the refund of tax becomes payable as a result of orders passed in appeal or other proceedings under the Income-tax Act, 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 with 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 interest on interest would also become payable. The reason is simple. It is the tax which was paid in excess by the assessee which became refundable. The assessee would be compensated by paying interest thereupon. It is only when the interest is not refunded along with excess tax that the withholding of the interest becomes unjustified and it becomes an ‘amount due’ to the assessee on which the assessee can claim further interest.”
However, as the issue before the Hon’ble Court was on a different footing, it has been held thus:
“that while issuing the intimation under section 143(1)(a) of the Act, refund along with interest was given of the excess tax deducted at source and advance tax. Again, after the orders of the Tribunal were passed and the refund became payable as a consequence thereof, the excess amount of tax was refunded along with interest payable thereon. Hence, interest on interest was not payable.”
We are, therefore, of the firm view that the case law relied upon by the Revenue cannot come to its rescue.
8.4 Taking into account the totality of the issue and also in conformity with the ruling of the Hon’ble High Court of Madhya Pradesh cited supra, we are of the firm view that the learned CIT(A) was fully justified in her endeavour which requires no intervention of this Bench. It is ordered accordingly.
9. In the result, the Revenue’s appeals for the assessment years 1995-96, 96-97, 98-99, 99-00 and 2004-05 are dismissed.
