Dy. CIT Vs Peerless General Finance & Investment Co. Ltd. (ITAT Kolkata)
Assessee is entitled for interest under section 244A of the Act on the unpaid interest and the unpaid interest partakes of the character of the principal amount due to the assessee as section 244A of the Act states any amount due to the assessee.
Full Text of the ITAT Order is as follows:-
This appeal preferred by the Revenue is against the order passed by the learned Commissioner (Appeals) (in short “the learned Commissioner (Appeals)”) vide Appeal No. 152/CIT(A)-I/Cir-3/07-08, dt. 30-9-2008 for the assessment year 2002-03 against the order of assessment determining refund under section 251/143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) dated 10-7-2006.
2. The first issue to be decided in this appeal is as to whether the learned Commissioner (Appeals) was justified in directing the learned assessing officer to grant interest on refunds under section 244A of the Act on the unpaid portion representing tax as well as interest, in the facts and circumstances of the case.
3. The brief facts of this issue is that the learned assessing officer passed an order under section 143(3) of the Act for the assessment year 2002-03 on 18-3-2005. The assessee filed an appeal against the said order and the learned Commissioner (Appeals) granted certain relief in his order dated 10-5-2006. The learned assessing officer thereafter passed an order under section 251/143(3) of the Act on 10-7-2006 in pursuance of the order of the learned Commissioner (Appeals) inAppeal No. 109/CIT(A)-III/AC, Circle-3/04-05, dt. 10-5-2006. In the said order, the learned assessing officer determined the revised total income at Rs. 47,47,72,019 and determined the amount due (refundable) to the assessee at Rs. 106,01,09,259. The learned assessing officer while determining the amount due to the assessee did not grant any interest under section 244A of the Act in the said order.
3.1 Later the learned assessing officer passed an order under section 154/251/143(3) of the Act dated 13-9-2006 wherein after adjustment of refund of Rs. 106,01,09,259 with the outstanding demands in the file for the assessment years 2001-02 and 2003-04, he granted interest under section 244A of the Act at Rs. 6,10,69,725 and determined the amount due (refundable) to the assessee at Rs. 6,10,69,725.
3.2 The learned Commissioner (Appeals) passed an appellate order in Appeal No. 80/CIT(A)-1/Cir-3/07-08, dt. 22-1-2008 in the context of deduction of certain provisions while computing the book profits under section 115JB of the Act by placing reliance on the Special Bench decision of this Tribunal in the case of Joint CIT v. Usha Martin Industries Ltd. (2007) 288 ITR (AT) 63 (Kol) (SB).
3.3 Later the learned assessing officer passed an order under section 251/154/154/251/143(3) of the Act dated 22-4-2008 (enclosed in pages 24 to 25 of the paper book filed by the learned Authorised Representative) wherein he finally determined the amount refundable (due to assessee) at Rs. 7,42,18,259 after due consideration of interest under section 244A of the Act. This order was passed in pursuance of the order of the learned Commissioner (Appeals) in Appeal No. 80/CIT(A)-1/Cir-3/ 07-08, dt. 22-1-2008.
3.3.1 Later this order dated 22-4-2008 was sought to be rectified by the learned assessing officer vide his order passed under section 154/ 154/154/251/143(3) of the Act dated 30-6-2008 wherein the amount refundable (due to the assessee) was determined at Rs. 7,14,02,332 by calculating interest under section 244A of the Act only at Rs. 10,18,29,380 as against the interest under section 244A of the Act earlier granted at Rs. 10,46,45,307. The reason for this reduction as adduced by the learned assessing officer in his order dated 30-6-2008, among others, was that the refund of excess tax amount as well as the interest amount under section 244A has become due on giving effect to the order of Commissioner (Appeals) and the same are to be paid together, the question of any delay in payment of interest amount does not arise. This order is enclosed in pages 26 to 30 of the paper book filed by the learned Authorised Representative.
3.3.2 The assessee preferred an appeal before the learned Commissioner (Appeals) against this rectification order dated 22-4-2008 questioning the action of the learned assessing officer in reducing the interest under section 244A of the Act. The learned Commissioner (Appeals) confirmed the action of the learned assessing officer vide Appeal No. 67/CIT(A)-I/Circle-3/08-09, dt. 2-11-2011 which is enclosed in pages 31 to 33 of the paper book filed by the learned Authorised Representative.
3.3.3 The assessee preferred further appeal before this Tribunal against the order of the learned Commissioner (Appeals) dated 2-11-2011. The Tribunal allowed the appeal of the assessee vide order in Peerless General Finance and Investment Co. Ltd. v. Asst. CIT I.T.A. No. 1706/Kol/2011, dt. 11-7-2013 (enclosed in pages 34 to 37 of the paper book filed by the learned Authorised Representative) wherein it was held as under :–
“4. In view of the above, we find the ground of interest on unpaid interest by the assessing officer vide his order dated 22-4-2008 is keeping in view the judgment of this Tribunal in I.T.A. No. 585/K/ 2006 for the assessment year 2000-01 dated 28-2-2007 in its own case even the dispute regarding grant of interest on unpaid interest is covered by the decision of the Hon’ble Supreme Court in the case of Sandvik Asia Ltd. v. CIT (2006) 280 ITR 643 (SC). Even on the merits, the Hon’ble Madhya Pradesh High Court in the case of CIT v. H.E.G. Ltd. (2009) 310 ITR 341 (MP) has held that the provisions of section 244(1A) and 244A are almost similar and in the case of granting of interest on unpaid interest is applicable in terms of section 244A of the Act. This decision of the Hon’ble Madhya Pradesh High Court in the case of H.E.G. Ltd. (2009) 310 ITR 341 (MP) was approved by the Hon’ble Supreme Court by dismissing the appeal of the Department as CIT v. H.E.G. Ltd. (2010) 324 ITR 331 (SC). In such circumstances, we are of the view that this is a debatable issue and the assessing officer has no jurisdiction to exercise power of rectification under section 154 of the Act. Hence, on jurisdictional issue, we allow the appeal of the assessee.”
3.3.4. The Revenue preferred an appeal against this Tribunal order dated 11-7-2013 before the Hon’ble Calcutta High Court. The Hon’ble Calcutta High Court disposed of the appeal in G.A. No. 222 of 2014, dt. 16-1-2015 in CIT v. Peerless General Finance and Investment Co. Ltd. (enclosed in pages 38 to 45 of the paper book filed by the learned Authorised Representative) held as under :–
We are, as such, of the opinion that the learned Tribunal was justified in reversing the order passed in exercise of section 154 by the assessing officer.
In that view of the matter the first question is answered in the affirmative. The second question need not be answered for the purpose of disposal of the appeal.
Thus, the appeal is disposed of.
3.4. Hence the entire series of proceedings could be summarised in the following sequence of events :–
