Case Law Details
ACIT Vs Aarti International Ltd. (ITAT Chandigarh)
ITAT Chandigarh held that interest on refund resulting due to additional claim is payable from the date the additional ground, resulting into refund, has been put up for the first time. Here, TUFS receipt to be treated as capital receipt was for the first time taken up before CIT(A) on 04/01/2016.
Facts-
The assessee filed its return of income declaring total income of Rs. 83,79,59,930/-. The assessment was completed by the Assessing officer u/s. 143(3) vide order dt. 28/02/2014 wherein the assessed income was determined at Rs. 84,01,25,935/- after making certain additions and disallowances. On appeal, CIT(A) deleted the additions/disallowances made by the AO.
Notably, the claim of TUFS subsidy being exempt from tax has been raised for the first time during the appellate proceedings and such a claim was neither made while filing the return of income nor anytime during the course of assessment proceedings.
CIT(A) admitted the additional ground of appeal taken by the assessee to treat TUFS subsidy as capital receipt.
The limited issue under consideration relates to whether the proceedings resulting in a refund are delayed for reasons attributable to the assessee and the period of such delay which shall be excluded from the period for which the assessee is eligible for interest u/s 244A on refund of aforesaid taxes in respect of TUFS Subsidy.
Conclusion-
We therefore find that there are decisions rendered by different Hon’ble High Courts touching upon an identical controversy regarding additional claim made for the first time before the ld CIT(A) or the Tribunal; or a belated claim made before the AO during the course of assessment proceedings which on appeal before the ld CIT(A) or before the Tribunal have been allowed in favour of the assessee resulting in refund of taxes and consequent interest.
It goes without saying that the decision of Hon’ble High Court is binding on the Tribunal and other authorities under its superintendence throughout the territories in relation to which it exercises its jurisdiction. Where divergent views are rendered by different High Courts, an inferior authority under one of such High Courts, is bound to follow its jurisdictional High Court notwithstanding that other view of the non-jurisdictional High Court may sound more appealing on an individual level vis-a-vis the view of the jurisdictional High Court.
Held that the assessee took an additional ground of appeal for the first time before the Ld. CIT(A) vide its letter dated 04.10.2016 stating that TUFS subsidy of Rs. 10,39,49,181/- which has been received by the assessee from the Ministry of Textiles is exempt from tax and should be reduced from the assessed income. The Ld. CIT(A) vide order dt. 28/01/2019 admitted the additional ground of appeal and held that the TUFS subsidy received by the assessee company from the Ministry of Textiles, Government of India be treated as capital receipt and directed the AO to reduce the amount of TUFS subsidy received during the year from total assessed income. Therefore, the assessee shall be eligible for interest on the refund amount with effect from 04/10/2016 (and not from 01/04/2011) till the date of grant of refund.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is an appeal filed by the Revenue against the order of Learned Commissioner of Income Tax (Appeals)-5, Ludhiana [in short the ‘Ld. CIT(A)’] passed u/s 250(6) of the Income Tax Act, 1961 (in short ‘the Act’) dated 21/12/2021 pertaining to assessment year 2011-12, wherein the Revenue has taken the following grounds of appeal:
“1. Whether, in the facts as well as in law, the Ld. CIT(A) was right in holding that the assessee is entitled to interest u/s 244A on refund worked out on the amount of TUFS subsidy allowed to be treated as capital receipt for the first time at the level of CIT(A)?
2. Whether the Ld.CIT(A) was right in law in holding that the delay in refund is not attributable to assessee without appreciating that neither the assessee showed that amount as capital receipt in the return, nor filed a revised return for this purpose, nor claimed during the assessment proceedings and claimed it for the first time in appeal before CIT(A)?
3. Whether the Ld. CIT(A) was right in holding that the provisions of section 244A(2) of I.T.Act 1961 are not attracted in the case of the assessee and there is no delay in claiming refund which is attributable to the assessee ?
4. The Appellant craves leave to add, amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.”
2. Briefly the facts of the case are that the assessee filed its return of income declaring total income of Rs. 83,79,59,930/- on 28/09/2011 which was processed under section 143(1) on 29/03/2013. Subsequently, the matter was selected for scrutiny and notices were issued and assessment proceedings were thereafter completed by the Assessing officer under section 143(3) vide order dt. 28/02/2014 wherein the assessed income was determined at Rs. 84,01,25,935/-after making certain additions and disallowances.
3. Being aggrieved with the order of the AO, the assessee filed an appeal before the Ld. CIT(A) on 26.03.2014 challenging the action of the AO in making the aforesaid additions and disallowances. Further, during the appellate proceedings, the assessee took an additional ground of appeal before the Ld. CIT(A) vide its letter dated 04.10.2016 stating that TUFS subsidy of Rs. 10,39,49,181/- which has been received by the assessee from the Ministry of Textiles is exempt from tax and should be reduced from the assessed income.
4. The Ld. CIT(A) vide order dt. 28/01/2019 deleted the additions/disallowances made by the AO in the order so passed under section 143(3). Further, the ld CIT(A) admitted the additional ground of appeal taken by the assessee to treat TUFS subsidy as capital receipt. On merits, the ld CIT(A) following the decision of the Hon’ble Punjab and Haryana High Court in case of CIT vs Sh. Sham Lal Bansal (ITA No. 472/2010 dated 17.01.2011) held that the TUFS subsidy received by the assessee company from the Ministry of Textiles, Government of India be treated as capital receipt and directed the AO to reduce the amount of TUFS subsidy received during the year from total assessed income.
5. Against the order of the ld CIT(A), the Revenue preferred in appeal before the Tribunal and Coordinate Bench vide its order dt. 17/12/2019 confirmed the order and the findings of the Ld. CIT(A) holding that an identical issue having similar facts has already been adjudicated by the Coordinate Bench in case of DCIT vs M/s Vardhman Textiles (in ITA No. 1479/CHD/2018 dated 29/05/2019) and following the same, the matter was decided in favour of the assessee and appeal of the Revenue was dismissed.
6. Subsequently, the assessee moved an application under section 154 of the Act on 24/12/2019 wherein it has inter alia contended that while passing the appeal effect order pursuant to order of the ld CIT(A) and granting of refund by the AO, the interest on refund under section 244A has been given only for two months amounting to Rs. 3,32,034/- whereas it should have been worked out from the first day of the A.Y. upto date of grant of refund and the interest so worked out comes to Rs. 1,64,28,909/- and since the mistake is apparent from the record, the same may be rectified.
7. The AO vide its order passed under section 154 dt. 02/06/2020 stated that as per the provision of Section 244A(2), no interest under section 244A(1) is allowable where the proceeding resulting in the refund are delayed for reasons attributable to the assessee. It was held by the AO that in this case, since in the return of income, there was no claim as regards TUFS Subsidy but the same has been allowed only on account of additional ground of appeal taken during the course of first appeal before the Ld. CIT(A) who has since passed the order on 18/01/2019, the delay in issue of refund from 01/04/2011 to 18/01/2019 is attributable to the assessee. At the same time, it was held by the AO that the assessee is entitled to interest under section 244A for the period 18/01/2019 to the date of issue of refund i.e; 13/08/2019 whereas as per the order dt. 13/08/2019, interest has been calculated only for two months, therefore to this extent, there was a mistake apparent from the record which was rectified and matter was partly decided in favour of the assessee.
8. Against the said findings of the Ld. AO, the assessee again went in appeal before the Ld. CIT(A) and it was contended that the provision of Section 244A(2) are not applicable to the facts of the case as delay in finalization of the proceeding is not attributable to the assessee. It was submitted during the appellate proceedings that a similar issue had arisen in case of M/s Vardhman Textiles Ltd. Vs. DCIT, Ludhiana (ITA No. 1264 to 1267/CHD/2019 & 103-106/CHD/2020 dated 30.07.2021) where the Tribunal has decided the matter in favour of the assessee holding that interest under section 244A(1) is allowable from the date when taxes have been paid and it was submitted that in the present case the interest under section 244A(1) is allowable with effect from 01/04/2011. The Ld. CIT(A) referring to the decision passed by the Coordinate Bench in case of M/s Vardhman Textiles Ltd. Vs. DCIT (supra) has held that the facts of the case under consideration are almost identical to the facts of the case decided by the Tribunal vide its order dt. 30/07/2021 and therefore following the decision of the Coordinate Bench, the AO was directed to allow the interest under section 244A and the matter was decided in favour of the assessee. Against the said findings of the Ld. CIT(A), the Revenue is now in appeal before us.
9. During the course of hearing, the Ld. Senior DR relied on the findings of the AO and submitted that it is a case where the additional ground of appeal stating that TUFS subsidy is a capital receipt has been taken for the first time before the Ld. CIT(A) and since the matter has been decided in favour of the assessee by the Ld. CIT(A) vide his order dt. 18/01/2019, the AO has rightly held that the assessee is entitled for interest under section 244A for the period 18/01/2019 to the date of issue of refund i.e 13/08/2019, however for the period starting from the first day of the A.Y. i.e, 01/04/2011 to the date of passing of the Ld. CIT(A)’s order, the provision of Section 244A(2) are clearly applicable as there is no fault on the part of the Revenue in denying the refund and the delay is clearly attributable to the assessee where at first place there was no claim made in the return of income or during the course of assessment proceedings and the claim has been allowed on account of additional ground of appeal taken by the assessee before the ld CIT(A) and therefore in such a scenario, it is clear case that the period of 01/04/2011 to 18/01/2019 is to be excluded in terms of provision of Section 244A(2) of the Act. In support of her contentions, the ld Senior DR has placed reliance on the decision of Hon’ble Gauhati High Court in case of CIT Vs. Assam Roofing Ltd. [2011] 11 taxmann.com 279 which has in turn followed the decision of the Hon’ble Jurisdictional Punjab and Haryana High Court decision in case of National Horticulture Board vs Union of India [2002] 253 ITR 12 and it was submitted that the said decisions squarely covers the matter in favour of the Revenue.
10. Per contra, the Ld. AR supported the order and the findings of the ld. CIT(A), it was submitted that the Ld. CIT(A) has rightly followed the decision of Coordinate Bench in case of M/s Vardhman Textiles Ltd. Vs. DCIT (supra) and therefore following the principles of consistency, the said order should be followed in the instant case and appeal so filed by the Revenue be dismissed. Regarding the decision of Hon’ble Gauhati High Court in case of CIT Vs. Assam Roofing Ltd (supra), it was submitted that the said decision was rendered in the year 2000 and thereafter, there are subsequent decisions of various High Courts which have been referred and followed by the Coordinate Bench in case of M/s Vardhman Textiles Ltd. Vs. DCIT (supra). It was accordingly submitted that there is no infirminity in the order of the ld CIT(A) and the same should be upheld.
11. We have heard the rival contentions and purused the material available on record. It is a matter of record that the assessee has raised an additional ground of appeal before the ld CIT(A) wherein the TUFS Subsidy has been claimed to be exempt from tax. The claim of TUFS subsidy being exempt from tax has thus been raised for the first time during the appellate proceedings and such a claim was neither made while filing the return of income or anytime during the course of assessment proceedings. There is also no dispute that the assessee has since been held eligible for refund of taxes on account of TUFS Subsidy which has been held to be capital receipt by the order of the ld CIT(A) and which has subsequently been upheld by the order of the Coordinate Bench. It is also a matter of record that by virtue of appeal effect order passed by the AO, the taxes already paid and deposited by the assessee on such TUFS subsidy have since been refunded to the assessee.
12. The limited issue under consideration relates to whether the proceedings resulting in refund are delayed for reasons attributable to the assessee and the period of such delay which shall be excluded from the period for which the assessee is eligible for interest u/s 244A on refund of aforesaid taxes in respect of TUFS Subsidy.
13. The claim of the Revenue is that the delay is attributable to the assessee as the assessee has not raised any such claim either in the return of income or during the course of assessment proceedings and the same has been claimed by way of additional ground of appeal before the ld CIT(A) by virtue of which the claim of the assessee has been allowed by the ld CIT(A) and refund of taxes have become due to the assessee and therefore, the assessee is only eligible for interest from the date of passing of the order of the ld CIT(A) i.e, 18/01/2019 to the date of issue of refund i.e, 13/08/2019 which has already been granted by the AO, and the period starting from the first day of assessment year i.e, 01/04/2011 to 18/01/2019 has rightly been excluded by the AO while computing interest in terms of provision of Section 244A(2) of the Act On the other hand, the claim of the assessee is that once the taxes have been paid and subsequently, where the matter is decided in favour of the assessee even by way of raising an additional ground of appeal being a legal ground of appeal, there is no delay attributable to the assessee in the proceedings resulting in the refund as the delay in making a claim cannot be equated with the delay in the proceedings resulting in the refund and once the refund of taxes have become due to the assessee by the order of the appellate authority, the assessee shall be eligible for refund of taxes along with interest thereon from the first day of assessment year to the date of issue of refund and as the assessee has only been granted partial interest by the AO from the date of the order of the ld CIT(A) to the date of issue of refund, the interest for the remaining period starting from first date of assessment year to the date of the order of the ld CIT(A) has to be granted and which has rightly been directed to be granted by the ld CIT(A).
14. In this regard, we refer to the decision of the Hon’ble Gauhati High Court in case of CIT vs. Assam Roofing Ltd. (supra) where, briefly, the facts of the case were that the assessee filed its return of income showing transport subsidy received by it as taxable income. In the note below the computation of income it was stated by the assessee that transport subsidy is not a revenue receipt rather it is a capital receipt. Thereafter the return was processed and assessment was completed under section 143(3) and at no stage of assessment proceeding, any objection was raised to the effect that transport subsidy is not taxable. Thereafter the assessee filed an appeal raising the aforesaid issue which was decided in its favour by the Ld. CIT(A) and the transport subsidy was directed to be deleted from the total income of the assessee as determined by the AO. Pursuant to the aforesaid order of the Ld. CIT(A), the AO passed an appeal effect order deleting the transport subsidy from the total income of the assessee and the amount of refund along with interest was allowed to the assessee under section 244 A of the Act for the period starting from 01/04/1992 to 06/12/1994. Subsequently proceedings under section 263 were initiated on the ground that interest on the refundable amount was wrongly allowed. The said proceedings were subsequently dropped and thereafter rectification proceedings were initiated and by order passed by the AO dt. 09/03/1999, the period for which the interest was payable to the assessee was modified and the matter was carried in appeal before the Ld. CIT(A) and then before the Tribunal and on remand, the AO passed a fresh order dt. 31/03/2003. In the said order, the AO took a view that as the assessee had raised the question of taxability of the amount of transport subsidy only at the appellate stage, the grant of refund was delayed for the reasons attributable to the assessee and as a result interest on the refunded amount was held payable for the period starting from date of completion of assessment to the date of the appeal effect order passed by the AO consequent to the order of the Ld. CIT(A) dt. 27/10/1994. The matter was thereafter carried in appeal before the Commissioner Appeal who had reversed the view taken by the AO which was confirmed by the Tribunal and against the order of the Tribunal, the matter came up for adjudication before the Hon’ble Gauhati High Court.
15. In the aforesaid background, the issue for consideration before the Hon’ble Gauhati High Court was whether the Tribunal was justified and correct in allowing interest under section 244A of the Act for the period of delay in granting refund of tax where said delay is due to reasons attributable to the assessee. The Hon’ble Gauhati High Court held that there can be no manner of doubt that in view of the provisions contained in section 240 of the Act, the entitlement of the assessee to refund is not dependent on making of any claim for refund and same is consequential to the appellate order passed by the Ld. CIT(A) dt. 27/10/1994. Further referring to the provisions of section 244A(2) of the Act, it was held by the Hon’ble Gauhati High Court that use of expression “ proceedings resulting in the revision (refund)” is both significant and conspicuous and to read same only to situations covered by sections 238 and 239 of the Act which contemplates claim for refund to be made in the situations specified therein would be against the scheme of the Act. It was held by the Hon’ble Gauhati High Court that the expression “proceeding” referred to in sub section (2) of section 244A more reasonably would mean any proceeding as a result of which the refund has become due. Viewed from the said perspective, the expression “proceeding” in sub-section (2) may take within its ambit an appeal proceeding consequential to which refund may have become due. It was further held by the Hon’ble Gauhati High Court this aforesaid view would find support from the decision of Hon’ble Punjab & Haryana High Court in National Horticulture Board case (supra) and thereafter it referred to the findings of the case in National Horticulture Board and drawing support from the same, it was held that in the present case, the assessee itself declared the amount of transport subsidy received by it to be taxable and voluntarily paid the taxes. No claim to the contrary was raised in the course of assessment proceedings. It is only in the appeal filed that the issue was raised and by the appellate order dt. 27/10/1994, the assessee’s contentions were upheld. Consequently the order deleting the transport subsidy from the total income and for consequential refund was passed by the AO on 13/12/1994. It was held that in the above circumstances, it cannot but be held that the assessee was responsible for some delay in grant of refund. The refund being consequential to the order of the Ld. CIT(A) dt. 27/10/1994 by which the assessment dt. 16/05/1994 became liable to modification, it will be correct to hold that the assessee will be entitled to interest on the refunded amount with effect from 16/05/1994 till date of payment of refunded amount and the matter was accordingly decided in favour of the Revenue.
16. We now refer to the decision of the Hon’ble Jurisdictional Punjab & Haryana High Court in case of National Horticulture Board Vs. Union of India (supra) where, briefly, the facts of the case were that the assessment was framed under section 143(3) of the Act on 07/10/1998. Thereafter the assessee moved an application for seeking exemption under section 10(23C)(iv) on 09/02/1999 and notification in this regard was issued by the CBDT on 06/04/1999. Thereafter basing its claim on the exemption granted by the CBDT, the assessee moved an application for rectification of the assessment order on 09/04/1999 seeking refund of taxes already deposited. The said application of the assessee was allowed by the ITO on 23/04/1999 however the claim for interest was rejected on the ground that the delay in approaching the Department for rectification of the order of assessment was attributable to the assessee and there was no undue delay caused by the Department in refunding the amount. Thereafter the assessee moved a petition u/s 244A before the Ld. CIT(A) which was also rejected by order dt. 06/12/1999. The assessee thereafter moved a petition before the Hon’ble Punjab and Haryana High Court under Article 226 of the Constitution.
17. In the aforesaid background, the Hon’ble Punjab & Haryana High Court held that it is unable to accept the contention advanced by the ld. Counsel for the assessee that the assessee is entitled to interest on the refunded amount from 09/02/1999 to 23/04/1999. It was held by the Hon’ble High Court that the assessment was framed on 07/10/1998 and it was long thereafter that the assessee applied for seeking exemption under section 10(23C)(iv) on 09/02/1999 and the notification granting exemption was published on 06/04/1999 and it was then the assessee applied for rectification of the assessment order on 09/04/1999 and therefore, we are satisfied that the delay in claiming refund was attributable to the assessee in as much as it did not apply for the same prior to 09/04/1999.
18. Further as regards the interest from 09/04/1999 till the date of refund when the application for rectification was allowed, the matter was decided by the Hon’ble high Court in favour of the assessee holding that a conjoint reading of the provisions of Section 244A shows that the assessee is entitled to receive interest on the amount of refund at the rates prescribed in clause (a) and (b) of sub section (1) of section 244A. The rationale underlying this provision is to compensate the assessee in lieu of the deprivation of his property right by virtue of unlawful collection of tax. If the proceedings resulting in the refund are delayed due to reasons attributable to the assessee then the period of delay has to be excluded from the period for which the interest is payable. In other words, if the assessee is responsible for the delay in the finalization of the proceedings on the basis of which he becomes entitled to refund, then the period of delay is to be excluded from the total period for which interest becomes payable. There is nothing in the plain language of sub section (1) and sub section (2) of section 244A that the assessee can be deprived of the interest in respect of the period during which his application for refund remains pending before the competent authority. Further the contention of the Revenue that the application filed by the assessee was decided expeditiously cannot be a ground for declining its prayer for award of interest.
19. Now, coming to the decision of Coordinate Chandigarh Benches in case of M/s Vardhman Textiles Ltd. Vs. DCIT (supra). Briefly, the facts of the case were that the refund arose on account of ld CIT(A) allowing assessee’s claim of interest on TUF Subsidy being treated as capital in nature, which originally the assessee had treated as revenue in nature including the same in its income returned for taxation and had paid taxes on the same. The occasion for the ld CIT(A) to allow the claim arose on account of assessee raising an additional ground before the Tribunal in quantum proceedings which were admitted and restored to the ld CIT(A) for adjudication who thereafter allowed the claim of the assessee. In that background, the issue for consideration before the Coordinate Bench was whether the act of making a claim belatedly by the assessee resulting in refund tantamounts to the delay in proceeding resulting in refund as mentioned in sub section (2) of section 244A of the Act. The Coordinate Bench, referring to the provisions of Section 244A and drawing support from the decisions of the Hon’ble Gujarat High Court in case of Ajanta Manufacturing Ltd. Vs. DCIT (2017) 391 ITR 33 (Guj), Hon’ble Bombay High Court in cases of CIT Vs. Melstar Information Technology Ltd. (2019) 265 Taxman 50 (Bom) and Chetan N. Shah Vs. M.K. Moghe CIT (2015) taxmann.com 18 (Bom), Hon’ble Kerela High Court in case of CIT vs South Indian Bank Ltd (2012) 340 ITR 574 (Ker) decided the matter in favour of the assessee. It was held by the Coordinate Bench that any claim of the assessee allowed at any stage resulting in refund whether in the first appellate stage, the second appellate stage or even before the Hon’ble High Court or Hon’ble Supreme Court only recognizes the position that the assessee was never required to pay taxes on that portion of the income. The entire process emphasized under law of assessments and appeals is a continuous process of assessing true and correct income of the assessee beginning with the assessee himself disclosing the same in his return of income and the same thereafter being scrutinized in assessment and thereafter any adverse conclusion drawn thereon being challenged before the appellate authorities and higher judicial authority. The entire process, therefore, of assessment and appeals culminates in the determination of true and correct income on which the assessee was required to pay its taxes. Any claim allowed to the assessee at any stage whether made for the first time or whether taken up in appeal only underlines the position that no taxes were required to be paid by the assessee on the said claim at all. Therefore, in such circumstances the refund generated on account of the same, having been retained by the State unlawfully is entitled to be compensated with interest for the entire period for which it is so retained. It was further held by the Coordinate Bench that the State is entitled to only taxes due on the correct taxable income and it is the duty of the Department to determine the true and correct income and guide the assessee in the process. They are not and cannot be entitled to take the benefit of the ignorance of the assessee and collect undue taxes. Therefore any taxes mistakenly paid and unlawfully retained by the State have to be compensated with interest on refund. It was further held by the Coordinate Bench that the situation emphasized in section 244A(2)of the Act is where any proceedings where the claim of the assessee is being adjudicated or determined, the assessee resorts to methods which delay the proceedings thereby increasing the period for which interest is to be given. It is such period which is to be excluded for the purpose of calculating the interest and in the instant case, the delayed claim of the assessee cannot be said to tantamount to delay in proceedings resulting in refund attributable to the assessee.
20. We have also gone through the decision of the Hon’ble Gujarat High Court in case of Ajanta Manufacturing Ltd vs DCIT (supra). In the said decision, the Hon’ble High Court held that the Act of revising a return or raising a claim during the course of the assessment proceedings cannot be said to be the reasons for delaying the proceedings which can be attributable to the assessee. Mere fact that the claim came to be granted by the Appellate Commissioner, would not change this position. In essence, what the Commissioner (Appeals) did was to allow a claim which in law, in his opinion, was allowable by the Assessing Officer. In other words, by passing order in appeal, he merely recognized a legal position whereby, the assessee was entitled to claim certain benefits of reduced tax. Surely, the fact that the assessee had filed the appeal which ultimately came to be allowed by the Commissioner cannot be a reason for delaying the proceedings which can be attributed to the assessee. The Hon’ble High Court further held that in this case, the Department does not contend that the assessee had needlessly or frivolously delayed the assessment proceedings at the original or appellate stage. In absence of any such foundation, mere fact that the assessee made a claim during the course of the assessment proceedings which was allowed at the appellate stage would not ipso facto imply that the assessee was responsible for causing the delay in the proceedings resulting into refund.
21. In case of CIT Vs. Melstar Information Technology Ltd. (supra), the assessee had not claimed certain expenditure before the AO but eventually raised such a claim before the Tribunal. The Tribunal remanded the proceedings to the CIT(A) and who thereafter allowed the additional benefit claimed by the assessee which resulted in refund and the question of payment of interest on such refund arose for consideration. And on appeal the Tribunal came to the conclusion that the delay cannot be attributed to the assessee and therefore directed the payment of interest. The Hon’ble Bombay High Court upheld the findings of the Tribunal holding that there is no allegation or material on record to suggest that any of the proceedings hit the assessee’s appeal before the Tribunal or remanded the proceedings before the Commissioner (Appeals) whether in any manner delayed on account of the reasons attributable to the assessee.
22. In case of CIT vs South Indian Bank Ltd (supra), the assessee had not make any claim for deduction of provision of bad debts in the original return. But before completion of the assessment, the assessee had made such a claim which was rejected by the AO which in appeal was allowed by the Commissioner pursuant to which the assessee became entitled to refund. In the said background, the Revenue argued that the assessee would not be entitled to interest in view of Section 244A(2) of the Act. The Hon’ble Kerala High Court did not agree with the view so taken by the Revenue and held that sub-section(2) of Section 244A provides that the assessee shall not be entitled to interest for the period of delay in issuing the proceedings leading to the refund that is attributable to the assessee. In other words, if the issue of the proceedings, that is, refund order, is delayed for any period attributable to the assessee, then the assessee is not entitled to interest of such period. Further, where the officer feels that the delay in refund for any period is attributable to the assessee, the matter should be referred to the Commissioner or Chief Commissioner for deciding the issue and ordering exclusion of such periods for the purpose of granting interest to the assessee under section 244A(1) of the Act. In the instant case there was no decision by the Commissioner or Chief Commissioner and therefore the AO has not made out any case for delay in refund for any period which is attributable to the assessee and he therefore does not have any escapement from granting interest to the assessee in terms of Section 244A(1)(a) of the Act.
23. We therefore find that there are decisions rendered by different Hon’ble High Courts touching upon an identical controversy regarding additional claim made for the first time before the ld CIT(A) or the Tribunal; or a belated claim made before the AO during the course of assessment proceedings which on appeal before the ld CIT(A) or before the Tribunal have been allowed in favour of the assessee resulting in refund of taxes and consequent interest. Basis thereof, the decisions have been rendered by various Hon’ble High Courts which are at variance where the Hon’ble Punjab & Haryana High Court in case of National Horticulture Board vs Union of India and Hon’ble Gauhati High Court in case of Assam Roofing Ltd have decided the matter in favour of Revenue and the Hon’ble Gujarat High Court in case of Ajanta Manufacturing Ltd. Vs. DCIT, Hon’ble Bombay High Court in cases of CIT Vs. Melstar Information Technology Ltd. and Chetan N. Shah Vs. M.K. Moghe CIT, and Hon’ble Kerela High Court in case of CIT vs South Indian Bank Ltd have decided the matter in favour of the assessee, as to whether the said additional claim/delayed claim tantamount to delayed proceedings resulting in refund and whether the same are attributable to the assessee or not and resultant exclusion thereof for the purposes of grant of refund under section 244A of the Act.
24. It goes without saying that the decision of Hon’ble High Court is binding on the Tribunal and other authorities under its superintendence throughout the territories in relation to which it exercises its jurisdiction. Where divergent views are rendered by different High Courts, an inferior authority under one of such High Courts, is bound to follow its jurisdictional High Court notwithstanding that other view of the non-jurisdictional High Court may sound more appealing on an individual level vis-a-vis the view of the jurisdictional High Court. The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion either for or against on a particular matter. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not reversed by the Hon’ble Supreme Court. In case of Baradakanta Mishra vs. Bhimsen Dixit AIR 1972 SC 2466, the Hon’ble Supreme Court held that “It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that Court and start proceedings in direct violations of it. If a Tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision, just like in the case of Supreme Court, making the law declared by the High Court binding on subordinate Courts. It is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working; otherwise there would be confusion in the administration of law and respect for law would irretrievably suffer.”
25. The matter relating to binding nature of decision of the Jurisdictional High Court has also been extensively discussed by the Coordinate Chandigarh Benches in case of M/s Gilco Exports Ltd VS ACIT (ITA No. 1244/CHD/2018 dated 31/07/2019) wherein it was held as under:
4.1 A perusal of the above order passed by the Co-ordinate Bench shows that ultimately the assessee relies on the decision of the jurisdictional High Court as opposed to the decision rendered by a non jurisdictional High Court relied upon by the Revenue. In order to put the legal principles in perspective, it will not be out of place to refer to the well understood legal position that the decision of the Apex Court in terms of Article 141 of the Constitution of India, not only as a matter of judicial discipline but as a constitutional mandate is a binding precedent for all Courts and Tribunals in the country. The said Article in unambiguous terms lays down that the law declared by the Supreme Court shall be binding on all Courts within the territory of India. No doubt there is no such similar provision qua the High Courts, however, there can be no dispute or confusion on the impact of Article 227 of the Constitution which vests the High Court with the power to supervise the functions of the Tribunals and authorities within its territorial jurisdiction. The import and impact of the said Article has been addressed over the years in many landmark decisions. Thus, to our understanding we believe that it is well understood and accepted that for any authority within its territorial jurisdiction subjected to its superintendence, the decision rendered by the High Court is a binding precedent to be followed. The said principle, we find looking at the decision arrived at in the impugned order perhaps needs to be addressed and re-iterated again. Reference in this context may be made to the decision rendered by the Apex Court in the case of East India Commercial Co. Ltd. V Collector of Customs, AIR 1962 (S.C) 1893 where it was held as far back as in 1962 “that the law declared by the highest court in the state is binding on authorities or Tribunals under its superintendence and they cannot ignore it. ” For addressing the position of the High Court, reference may be made to the decision of the Apex Court in the case of Baradakanta Mishra v. Bhimsen Dixit AIR 1972 SC 2466 wherein the Court held that it would be anomalous to suggest that a Tribunal over which a High Court has superintendence can ignore the law declared by it and if a Tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision as in respect of Supreme Court, making the law declared by the High Court binding on subordinate Courts. The court further observed that it is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should confirm to the law laid down by it. If the Tribunals defy their jurisdictional High Court, there would be confusion in the administration of law.” At this point, we may also refer to the decision of the Allahabad High Court in K. N. Agarwal v. CIT [1991] 189 ITR 769 wherein the Court felt the need to address the import and necessity for the Assessing Officers to follow the judgements of the Court, it was observed-“Indeed, the orders of the Tribunal and the High Court are binding upon the Assessing officer and since he acts in a quasi judicial capacity, the discipline of such functioning demands that he should follow the decision of the Tribunal or the High Court, as the case may be”. The Court in clear unambiguous terms held addressing the Assessing Officer that, “He cannot ignore merely on the ground that the Tribunal’s order is the subject matter of revision in the High Court or the High Court’s decision is under appeal before the Supreme Court.” The Court held that, “Permitting him to take such a view would introduce judicial indiscipline, which is not called for even in such cases. It would lead to a chaotic situation”.
4.2 In similar view, it would also be appropriate to refer to the decision of the Hon ble Andhra Pradesh High Court in the case of State of A.P. v. CTO (1988) 169 ITR 564 (A.P) where the Court held that it is impermissible for the authorities and the Tribunals to ignore the decisions of the High Court or to refuse to follow the decisions of the High Court on the pretext that an appeal is pending in the Supreme Court or that steps are being taken to file an appeal. Addressing these oft repeated pleas, the Court went on to clearly opine and hold that “// any authority or the Tribunal refuses to follow any decision of the High Court on the above grounds, it would be clearly guilty of committing contempt of the High Court and is liable to be proceeded against.” The resort to the decision of another High Court by the First Appellate Authority ignoring the decisions of the jurisdictional High Court, the Court held, runs counter to judicial discipline. A perusal of decisions would show that the constant thread which binds these decisions in similar category of decisions as per the constant refrain is that it is well settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have persuasive value for other High Courts. However, as far as the ITAT is concerned, a lone decision of any High Court of the country being higher in hierarchy in the scheme of things becomes a binding precedent for the ITAT wherever the Bench of the ITAT may be situated. However, at the same time in the face of the decision of the jurisdictional High Court no amount of stretching of the doctrine of stare decisis, can judgments of one High Court be given the status of a binding precedent so far as other High Courts or Tribunal within their territorial jurisdiction are concerned. It is well settled that any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The issue as far as the present proceedings are concerned, can be said to have been addressed by the said decision. In the facts of the present case, we have a decision of the jurisdictional High Court which stands in the eyes of law and we also have a decision of the non-jurisdictional High Court on which the Id. CIT(A) has placed reliance. Considering the fact that the assessee is within the territorial jurisdiction of the Hon ble Punjab & Haryana High Court and the Id. CIT(A) an authority also within the territorial jurisdiction of the Hon ble Punjab & Haryana HighCourt, we find that the CIT(A) in the facts of the present case has erred in relying upon the decision of the non-jurisdictional High Court ignoring the binding precedent available.
4.3 Reference may also be made to the decision of the Hon ble Gujrat High Court in the case of Air Conditioning Specialists Pvt. Ltd. vs. Union of India & Ors. (1996)221 ITR 739 (Guj.) where the said issue came up for consideration. The Court in unambiguous terms addressing the settled position held that the Commissioner of Income Tax is a “Tribunal” subject to the supervisory jurisdiction of the High Court under Article 227 of the Constitution. Hence, he is bound to obey the law declared by the High Court. The Court in clear terms held that it was not open to the Commissioner of Income Tax to ignore the decision of the jurisdictional High Court or refuse to follow it on the ground that the verdict had not been accepted by the Department and that the matter was carried further and was pending before the Supreme Court. The Court held that when a point is concluded by a decision of the Court, all subordinate courts and inferior Tribunals within the territory of the State and subject to the supervisory jurisdiction of the High Court are bound by it and must scrupulously follow the said decision in letter and spirit.
4.4 Similarly in CIT vs. G. Dalabhai & Co-226 ITR 922, the Hon’ble Gujarat High Court again recorded its anguish in the face of the obduracy of the officers and remarked – “Before parting with the case, we notice with anguish the language used by the Income Tax Officer in his assessment order saying that “with due respect to the decision of the Gujarat High Court, I do not follow the same’. The Income Tax Officer in not following the decision of the Gujarat High Court within whose supervisory territory he was functioning, is far from satisfactory. The Court held that “it is the least we can say. The minimum decorum of the system of hierarchy that Tribunals in the administration of justice and their judicial subordination to the High Court of the territory in which they function requires that they restrain in the use of proper expression while following or not following the decision of the High Court.”
4.5. The Apex Court way back in 1984 addressed in cler terms in Bishnu Ram Borah and Another vs. Parag Saikia & Ors. AIR 1984 SC 898 held that “the board of Revenue any other subordinate tribunal is subject to the writ jurisdiction of the High Court under Article 226 of the Constitution. Just as the judgments and orders of the Supreme Court have to be faithfully obeyed and carried out throughout the territory of India under Article 142 of the Constitution, so should be the judgments and orders of the High Court by all inferior courts and Tribunals subject to their supervisory jurisdiction within the State under Arts. 226 and 227 of the Constitution. The Board of Revenue cannot refuse to carry out the directions of the High Court. (1961) 1 SCR 474, Foil. (Para 12)”
4.6 In this genre, it may not be out of place to refer to the oft quoted decision of the Bombay High Court in the case of CIT Vs Thana Electricity Supply Ltd. (1994) 206 ITR 727 (Bom) or alternately in the genre of cases being cited, it is necessary to also refer to this decision wherein the Court while enunciating the general principles which are in regard to precedents held that the decisions of the High Courts are binding on the subordinating Courts and authorities or Tribunals in its superintendence throughout the territories in relation to which it exercise jurisdiction. For ready reference, the relevant general principles are extracted hereunder :
(a) The law declared by the Supreme Court being binding on all courts in India, the decisions of the Supreme Court are binding on all courts, except, however, the Supreme Court itself which is free to review the same and depart from its earlier opinion if the situation so warrants. WTiat is binding is, of course, the ratio of the decision and not every expression found therein.
(b) The decisions of the High Court are binding on the subordinate courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction. It does not attend beyond its territorial jurisdiction.
(c) The position in regard to the binding nature of the decisions of a High Court on different Benches of the same court, may be summed as follows :
(i) A single judge of a High Court is bound by the decision of another single judge or a Division Bench of the same High Court. It would be judicial impropriety to ignore that decision. Judicial comity demands that a binding decision to which his attention had been drawn should neither be ignored nor overlooked.
(ii) A Division Bench of a High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court. If one Division Bench differs from another Division Bench of the same High Court, it should refer the case to a larger Bench.
(iii) Where there are conflicting decisions of courts of co-ordinate jurisdiction, the later decision is to be preferred if reached after full consideration of the earlier decisions.
(c)the decision of one High Court is neither binding precedent for another High Court nor for courts or Tribunals outside its territorial jurisdiction.
(d)The decision of one High Court is neither binding precedent for another High Court nor for courts or Tribunals outside its own territorial jurisdiction. It is well-settled that the decision of a High Court have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect.
By no amount of stretching of the doctrine of stare decisis, can judgments of one High Court be given the status of a binding precedent so far as other High Courts or Courts or Tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The fact that there is only one decision of any one High Court on a particular point or that a number of different High Courts have taken identical views in that regard is not at all relevant for that purpose. Whatever may be the conclusion, the decisions cannot have the force of binding precedent on other High Courts or on any subordinate courts or Tribunals within their jurisdiction. That status is reserved only for the decisions of the Supreme Court which are binding on all courts in the country by virtue of article 141 of the Constitution.
4.7 Similar to the position discussed above with regard to the binding nature of judicial precedent, the Court’s opinion on judicial discipline also need be referred to as held in the decision of the Supreme Court in the case of Union of India vs. Kamalakshi Finance Corporation Ltd. AIR 1992 SC 711 wherein the Court held that judicial discipline requires that decision of higher authority should to be followed in the case of quasi-judicial authority and, therefore, a lower officer is bound to follow the decision of the higher authority e.g. Assessing Officer is bound to follow the decision of the Tribunal particularly so in the case of the same assessee. This principle requires that decisions of higher authorities such as Tribunal should be followed by lower officers, viz., CIT(A) and Assessing Officer. Even decision of the Tribunal, not a jurisdictional Tribunal, is required to be followed by the lower authority. Sometimes, an argument is made and also put on record that the Department has not accepted the decision of the Tribunal and Appeal has been preferred to the High Court. The resort to such language has not met judicial approval. The Court has held unless the order of the higher authority is stayed in appeal, it operates as a valid binding decision to the lower authority not only in the case of the same assessee but also in other cases where the same law point is involved. Reference may also be made to the speaking observation of the Apex Court in the said decision addressing the binding precedent of higher Courts where the Court felt the need to hold that, “it cannot be too vehemently emphasized that it is of utmost importance that in disposing of the quasi-judicial issues before them, revenue officers are bound by the decision of the appellate authorities. The Court while holding that the order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction went on to hold that; “the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not “acceptable” to the department” The Court held; “in itself an objectionable phrase – and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws.”
4.8 The said principle has been re-iterated over the years in a number of cases. Reference may also be made to the decision of the Apex Court in the case of Bhopal Sugar Industries vs. Income Tax Officer, Bhopal [AIR 1961 SC 182] wherein at page 622 it was held ;
(a) If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior Tribunal, yet held that no manifest injustice resulted from such refusal.
4.9 It may also be appropriate to refer to the recent decision dated 28.03.2017 of the Apex Court in CIT(A) No.2315/2007 in the case of DCIT Vs M/s Raghuvir Synthetics Ltd., Ahmedabad. A perusal of the said decision would show that the issue for consideration before the Apex Court in the said decision was whether a particular adjustment made by the AO u/s 143(l)(a) of the Act held to be an impermissible adjustment by the First Appellate Authority on account of the fact that the issue was debatable was correct or not. The view of the CIT(A) on further challenge by the Revenue before the ITAT and the High Court was consistently upheld. The issue was carried in appeal before the Apex Court. The Apex Court held that in view of the decisions of the jurisdictional High Court on the said issue available on the date when the decision of the CIT(A), ITAT and the High Court were considered, the issue could not be said to be debatable the adjustment made by the Assessing Officer in terms of the binding precedent of the jurisdictional High Court was held to be permissible. It was held that as far as the Courts and Tribunal within the territorial jurisdiction of Gujrat High Court were concerned in the face of the binding precedents available in the decisions of the Gujrat High Court itself available on the issue in the case of Ahmedabad Mfg. & Calico (P) Ltd. Vs CIT (1986) 162 ITR 800 (Guj) and Alembic Glass Industries Ltd. V CIT (1993) 202 ITR 214 (Guj) the issue could be said to be well settled and there was no debate. For the purposes of the present order, the ratio of the decisions is not relevant, however for the sake of completeness, it may be noted that these decisions held that the nature of expenditure being contemplated by the Assessing Officer was a capital expenditure. In the circumstances, considering the fact that the registered office of the assessee in the facts of the said case was in the State of Gujrat, the Apex Court held that the law laid down by the Gujrat High Court in the aforesaid decisions was binding. Accordingly, the Court held that it can be said that as far as for an assessee within the jurisdiction of the Gujrat High Court, the issue could not be considered to be debatable. In view thereof, the orders of the CIT(A), ITAT as well as the decision of the Hon’ble Gujrat High Court were set aside as having been wrongly held that for an assessee, in the jurisdiction of the State High Court, the issue could be considered to be debatable. For ready reference, paras 11 and 12 of the aforesaid decision are extracted hereunder :
11. Even though it is a debatable issue but as Gujarat High Court in the case of Ahmedabad Mfg. & Calico (P) Ltd. (supra) had taken a view that it is capital expenditure which was subsequently followed by Alembic Glass Industries Ltd. V. CIT (supra) and the registered office of the respondent assessee being in the State of Gujarat, the law laid down by the Gujarat High Court was binding. (See Taylor Instrument Com. (India) Ltd. v. Commissioner of Income Tax – (1998) 232 ITR 771, Commissioner of Gift Tax v. J.K. Jain – (1998) 230 ITR 839, Commissioner of Income Tax v. Sunil Kumar – (1995) 212 1TR 238, Commissioner of Income Tax v. Thana Electricity Supply Ltd. – (1994) 206 ITR 727, Indian Tube Company Ltd. v. Commissioner of Income Tax & Ors. – (1993) 203 ITR 54, Commissioner of Income Tax v. P.C. Joshi & B.C. Joshi – (1993) 202 ITR 1017 and Commissioner of Income Tax, West Bengal, Calcutta v. Raja Benoy Kumar Sahas Roy – (1957) 32 ITR 466). Therefore, so far as the present case is concerned, it cannot be said that the issue was a debatable one.
12 . In view of the above submissions, in our considered view the order passed by the CIT (Appeals), the Income Tax Appellate Tribunal and also the order of the Gujarat High Court impugned herein cannot sustain and are set aside as they have wrongly held that the issue was debatable and could not be considered in the proceedings under section 143 (1) of the Act.
4.10 At this point, it may be salutary to again refer to the decision of Gujrat High Court in Air Conditioning Specialists (P) Ltd. v. Union of India and Ors. (1996) 221 ITR 739 (Guj.In the facts of the said case the assessee had filed writ of mandamus seeking quashing and setting aside of the order passed by CIT, Baroda. Their Lordships in the facts of the said case held ;
We may, however, add that it was not open to the second respondent (CIT) to ignore the law laid down by this Court when it was an inferior tribunal subject to the supervisory jurisdiction of this Court. It was not proper on his part not to follow binding decision of this Court on the ground that the Department had not accepted that decision and had filed an appeal and the matter was pending in the Supreme Court. It cannot be disputed and is not disputed that the second respondent is a “tribunal” subject to the supervisory jurisdiction of this Court under Art. 227 of the Constitution. Hence, he is bound to obey the law declared by this Court.
The apex Court of the country in no uncertain terms held that the law declared by a High Court is binding on all subordinate Courts and tribunals within the territory to which it exercises jurisdiction. In Bhopal Sugar Industry vs. ITO (1960) 40 ITR 618 (SC) : AIR 1961 SC 182, the ITO (subordinate authority) refused to carry out the clear and unambiguous directions of the Tribunal (superior authority). Deprecating it, their Lordships of the Supreme Court observed:
“Such refusal is in effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of Courts. If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of the appellate powers, the result will be chaos in the administration of justice”.
A direct question arose before the Hon ble Supreme Court in East India Commercial Co. Lid, vs. Collector of Customs AIR 1962 SC 1893. In that case, proceedings were initiated by Collector of Customs against petitioner-company on allegations that it had violated conditions of licence and illegally disposed of goods and thereby committed an offence punishable under the Customs Act. The High Court confirmed the order of acquittal passed by the trial Court holding that it cannot be said that “a condition of the licence amounted to an order under the Act” and, therefore, no offence was committed by the company. The High Court also passed an order directing the seized goods to be sold and the sale proceeds to be deposited in the Court. After those proceedings, a notice was issued by the Collector on the company to show cause why the amount should (not) be confiscated and penalty should not be imposed. It was contended on behalf of the company that once the High Court decided that the breach of condition of licence could not be said to be a breach of order, the Collector had no jurisdiction to issue show-cause notice. It was submitted that the decision of a High Court on a point was binding on all subordinate Courts and inferior tribunals within its territorial jurisdiction. The notice was, therefore, liable to be quashed. The precise question before the Hon ble Supreme Court was as to whether or not the decision rendered by a High Court would bind all subordinate Courts and inferior tribunals within its territorial jurisdiction. It was argued that there was no provision similar to Art. 141 of the Constitution making the law declared by a High Court, binding on all Courts and tribunals within its territorial jurisdiction. Considering relevant provisions of the Constitution and power of High Court, Subbarao, J. (as he then was), observed:
“This raises the question whether an administrative tribunal can ignore the law declared by the highest Court in the State and initiate proceedings in direct violation of the law so declared. Under Art. 215everv High Court shall be a Court of record and shall have all the powers of such a Court including the power to punish for contempt of itself. Under Art. 226, it has a plenary power to issue orders or writs for the enforcement of the fundamental rights and for any other purpose to any person or authority, including in appropriate cases any Government within its territorial jurisdiction. Under Art. 227, it has jurisdiction over all Courts and tribunals throughout the territories in relation to which it exercises jurisdiction. It would be anomalous to suggest that a tribunal over which the High Court has superintendence can ignore the law declared by the Court, and start proceedings in direct violation of it. If a tribunal can do so, all the subordinate Courts can equally do so, for there is no specific provision, just like in the case of Supreme Court, making the law declared by the High Court binding on subordinate Courts, ft is implicit in the power of supervision conferred on a superior tribunal that all the tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working, otherwise there would be confusion in the administration of law and respect for law would irretrievably suffer. We, therefore, hold that the law declared by the highest Court in the State is binding on authorities or tribunals under its superintendence and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding.”
The above view has been reiterated by the Supreme Court in a number of subsequent decisions (See Padmanabha Seity vs. Papiah Seitv AIR 1966 SC 1824, Kaushalya Devi vs. Land Acq. Officer, Aurangabad AIR 1984 SC 892, Bishnu Ram Bohra vs. Parae Saikia AIR 1984 SC 898).
In our opinion, submission of the learned counsel for the petitioner is well founded and deserves to be upheld. It is not even the case of the Department that the decision of this Court in Bharat Textiles Works (supra) has been stayed by the Hon’ble Supreme Court. Hence, so far as this Court is concerned, the point is concluded. It is settled law that unless and until decision is reversed by a superior Court, it holds the field. It also cannot be gainsaid that the second respondent is an inferior Tribunal subject to supervisory jurisdiction of this Court and this Court can exercise jurisdiction over him by in yoking Art. 227 of the Constitution. In our considered view, therefore it was not open to the second respondent to ignore the decision of this Court or to refuse to follow it on a specious plea of verdict being not accepted by the Department and that matter was carried further and was pending before Supreme Court.
In Baradakanta vs. Bhimsen Dixit AIR 1972 SC 2465, when a member of superior judicial service functioning as Commissioner of Hindu Religious Endowments, Orissa, refused to follow the decision of the High Court, contempt proceeding had been initiated against him and he was punished by the High Court. When the matter was carried by the appellant to the Supreme Court, dismissing the appeal and extending further the principle laid down in the decision of East India Commercial Co. Ltd. (supra), the Court held :
“The conduct of the appellant in not following previous decision of the High Court is calculated to create confusion in the administration of law. It will undermine respect of law laid down by the High Court and impair the constitutional authority of the High Court”.
14. In this connection we may emphasise that it would indeed be appropriate to keep in mind the following observations of Lord Diplock in Casell & Co. Ltd. vs. Broome & Anr. 1972 (l)AUER 801 :
“It is inevitable in a hierarchical system of Courts that there are decisions of the supreme appellate tribunal which do not attract the unanimous approval of all members of the judiciary. When I sat in the Court of Appeal I sometimes thought the House of Lords was wrong in overruling me. Ever since that time there have been occasions, of which the instant appeal itself is one, when, alone or in company, I have dissented from a decision of the majority of this House. But the judicial system only works if someone is allowed to have the last word and if that last word, once spoken, is loyally accepted”.
We are very clear and we have no doubt in our minds that when a point is concluded by a decision of this Court, all subordinate Courts and inferior tribunals within the territory of this State and subject to the supervisory jurisdiction of this Court are bound by it and must scrupulously follow the said decision in letter and spirit. Since the second respondent has not decided the matter in accordance with law laid down by this Court in the case ofBharat Textiles Works (supra), the order passed by him requires to be quashed and set aside.”
(emphasis supplied)
5. Thus, on a consideration of the position of law as repeatedly enunciated by the different High Courts as well as the Apex Court, we hold that the CIT(A) has erred in ignoring the decision of the jurisdictional High Court on the issue and relying upon the decision of the non jurisdictional High Court when he was duty bound to follow the binding precedent available of the jurisdictional High Court in the case of Hemla Embroidery Mills P.Ltd. (supra) which decision stands in the eyes of law as on date. Accordingly, the grounds raised by the assessee is allowed. Said order was pronounced in the open Court at the time of hearing itself.
26. In light of aforesaid discussions, we are bound to follow the view taken by the Hon’ble jurisdictional Punjab & Haryana High Court in case of National Horticulture Board vs Union of India (supra). The ld. AR failed to draw our attention towards any other subsequent decision rendered by the Hon’ble Jurisdictional High Court in favour of the assessee on this issue.
27. Further, it is noted that the decision of the Hon’ble Jurisdictional High Court in case of National Horticulture Board vs Union of India (supra) was not brought to the notice of the Coordinate Chandigarh Benches in case of M/s Vardhman Textiles Ltd (supra) and, the same was therefore not considered though the decisions of other non-jurisdictional High Courts were considered. Therefore, we are unable to follow the decision of the Coordinate Bench in face of the decision of the Hon’ble Jurisdictional High Court which is binding on us as discussed above. It is also noted that even during the course of appellate proceedings before the ld CIT(A), the ld CIT(A) has failed to take cognizance of the decision of the Hon’ble Jurisdictional High Court which is equally binding on the ld CIT(A) and has merely relied upon the decision of the Coordinate Chandigarh Benches.
28. Applying the dicta laid down by the Hon’ble Jurisdictional High Court, in the instant case, as we have noted above, the assessee has filed an appeal before the Ld. CIT(A) on 26.03.2014 and during the course of appellate proceedings, the assessee took an additional ground of appeal for the first time before the Ld. CIT(A) vide its letter dated 04.10.2016 stating that TUFS subsidy of Rs. 10,39,49,181/- which has been received by the assessee from the Ministry of Textiles is exempt from tax and should be reduced from the assessed income. The Ld. CIT(A) vide order dt. 28/01/2019 admitted the additional ground of appeal and held that the TUFS subsidy received by the assessee company from the Ministry of Textiles, Government of India be treated as capital receipt and directed the AO to reduce the amount of TUFS subsidy received during the year from total assessed income. Therefore, the assessee shall be eligible for interest on the refund amount with effect from 04/10/2016 (and not from 01/04/2011) till the date of grant of refund. We make it clear that for the prior period to 04/10/2016, it shall not be eligible for interest as the delay is attributable to the assessee. Further, the time period taking by the ld CIT(A) in disposing off the appeal cannot be attributed to the assessee and the said period cannot be excluded. Admittedly, the assessee has already been allowed interest from the date of passing of the order of the ld CIT(A) i.e, 18/01/2019 to the date of issue of refund i.e, 13/08/2019. Therefore, the assessee shall be eligible for interest for remaining period starting 04/10/2016 to 18/01/2019 and accordingly, the AO is directed to allow the interest for the said period and the order of the ld CIT(A) thus stand modified.
29. The appeal of the Revenue is partly allowed in light of aforesaid directions.
(Order pronounced in the open Court on 26/10/2022)
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