PRINCIPAL COMMISSIONER OF INCOME TAX VADODARA 1 vs. GUJARAT STATE FERTILIZERS AND CHEMICALS LTD

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TAXAP/934/2018HC GujaratGJHC24035738201827 August 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court referred to the Supreme Court's observations in K. Lakshmansa and Co. vs. Commissioner of Income Tax and anr, reported in 399 ITR 657. The Supreme Court held that a corresponding right exists to refund any sum paid as taxes which are found to have been wrongfully exacted or believed to be inequitable. The statutory obligation to refund is non-discretionary and carries with it the right to interest, making the right to claim interest parasitical to the right to claim refund. The Court concluded that the right to claim refund is automatic once statutory provisions are complied with. Based on this precedent, the High Court found no merit in the Revenue's appeal.

What were the facts?

The Revenue, Principal Commissioner of Income Tax Vadodara 1, filed an appeal before the High Court of Gujarat against an order passed by the Income Tax Appellate Tribunal (ITAT). The appeal concerned the ITAT's decision to grant interest under Section 244A of the Income Tax Act, 1961, to the assessee, Gujarat State Fertilizers and Chemicals Ltd. The interest was granted on the refund of interest previously charged to the assessee under Section 220(2) of the Act. The assessment years are not specified in the judgment. The procedural history leading to the ITAT's order is not detailed.

What were the issues?

1. Whether the assessee is entitled to interest under Section 244A of the Income Tax Act, 1961, on the refund of interest charged under Section 220(2) of the Act? (Question of law). Assessee's Contention: The judgment does not record any specific arguments made by the assessee. Revenue's Contention: The Revenue's appeal questions the correctness of the ITAT's view in granting interest under Section 244A on the refund of interest charged under Section 220(2). The Revenue implicitly argues against the ITAT's decision. The judgment does not name any specific authorities, circulars, or precedents relied upon by the Revenue.

Which sections of the Income-tax Act were involved?

Section 244A,Section 220(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/934/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 934 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX VADODARA 1 Versus GUJARAT STATE FERTILIZERS AND CHEMICALS LTD ========================================================== Appearance: MR.VARUN K.PATEL(3802) for the PETITIONER(s) No. 1 MR J P SHAH, SR ADV FOR MR MANISH J SHAH(1320) for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 27/08/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1.

In this appeal filed by the Revenue, question raises about the correctness of the view of the Income Tax Appellate Tribunal granting interest under section 244A of the Income Tax Act, 1961 ['the Act' for short] to the assessee on the refund of the made following observations:

“19. The above extract would clearly show that a corresponding right exists, to refund to individuals any sum paid by them as taxes which are found to have been wrongfully exacted or believed to be, for any reason, inequitable. The statutory obligation to refund, being non discretionary, carries with it the right to interest, also making it C/TAXAP/934/2018 ORDER clear that the right to interest is parasitical. The right to claim refund is automatic once the statutory provisions have been complied with.”

2.

In the result, Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) JYOTI V. JANI

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