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

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TAXAP/931/2018HC GujaratGJHC24035724201827 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 held that the issue concerning interest under Section 244A of the Income Tax Act, 1961, had been considered by the Supreme Court in the case of K. Lakshmansa and Co. vs. Commissioner of Income Tax and anr, reported in 399 ITR 657. The Supreme Court observed 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, which is parasitical. The right to claim refund is automatic once statutory provisions are complied with. Based on this precedent, the High Court found no error in the ITAT's decision. The operative direction was to dismiss the appeal.

What were the facts?

The Revenue, Principal Commissioner of Income Tax, Vadodara 1, is in appeal against an order of the Income Tax Appellate Tribunal (ITAT) dated December 13, 2017. The appeal concerns the assessment year(s) not explicitly stated in the judgment. The dispute revolves around the ITAT's decision to grant interest under Section 244A of the Income Tax Act, 1961, on the refund of interest previously charged under Section 234B of the Act. The ITAT's order is the action under challenge, passed by the ITAT itself. The amount in dispute is not specified. The procedural history involves the Revenue filing this Tax Appeal before the High Court after the ITAT's decision.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned ITAT has erred in law and on facts in granting interest under Section 244A of the Income Tax Act, 1961, on the refund of interest charged under Section 234B of the Income Tax Act, 1961? Assessee's contentions: The judgment does not record any specific contentions made by the assessee, Gujarat State Fertilizers and Chemicals Ltd. Revenue's contentions: The Revenue's contention is implicitly that the ITAT erred in granting interest under Section 244A on the refund of interest charged under Section 234B. The Revenue is challenging the ITAT's interpretation of the relevant provisions concerning interest on refunds.

Which sections of the Income-tax Act were involved?

Section 244A,Section 234B

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/931/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 931 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 WITH 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.

Leave to amend.

2.

Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 13.12.2017 raising following question for our consideration: “Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in granting interest u/s. 244A on refund of the interest charged u/s. 234B of the Income Tax Act?”

3.

The question pertains to interest under section 244A of the Income Tax Act, 1961 ['the Act' for short]. We notice that such issue came up for consideration before Supreme Court in case of K. Lakshmansa and Co. vs. Commissioner of Income Tax C/TAXAP/931/2018 ORDER and anr reported in 399 ITR 657 in which following observations were made:

“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 clear that the right to interest is parasitical. The right to claim refund is automatic once the statutory provisions have been complied with.”

4.

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

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