HHA TANK TERMINAL (P) LTD. vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

The issue arises in the assessment year 2002-03. The original return of the assessee was filed on 29.10.2002 and a revised return on 22.03.2004. The assessee was issued with an order dated 03.08.2006 computing refund at Rs.34,53,882/-. There was no interest computed under Section 244 and hence the assessee filed an application under Section 154, which was considered and Annexure-B order was passed computing the interest from 1.4.2002 to 31.10.2006, on which later date the entire refund was effected.

Subsequently, an assessment was completed under Section 143(3) read with Section 147; which order is produced as Annexure-C. The tax payable was as per Section 115JB (Minimum Alternate Tax) which exceeded the tax on the total income computed. The dispute arose when a rectification was made under Section 154 reducing the interest granted to the period between 02.08.2006 to 31.10.2006 @ 0.5%. This rectification order produced as Annexure-D does not indicate as to -4- why such a rectification was made. A representation was filed by the assessee which was declined by Annexure-E. The assessee then took up the matter in appeal, which was allowed as per Annexure-F finding that the Assessing Officer (AO) did not have competence to invoke Section 244A(2). Subsequent to that, on the basis of the order issued by the Commissioner under Section 244A(2), Annexure-J order was passed.

The reason for reduction of interest was stated so in Annexure-J order: “a) Original return of income filed by the assessee on 29.10.2002 was processed u/s 143(1) of the Act on 29.12.2002 and refund thereon Rs.86,333/- was issued to the assessee on time. b) Thereafter the revised return was filed on 22.03.2004 claiming a refund of Rs.1,71,76,655/-. To that extent at least up to that date delay in granting the full refund is attributable to the assessee. c) Further the assessee has not furnished Form No.29B (MAT computation statement) as required u/s 115JB(4) along with the revised return but was filed only on 02.08.2006. Thus it is evident -5- that the delay in granting the refund is attributable to the assessee.”

Interest was found to be running only from 02.08.2006 since Form-29B (MAT computation statement) as required under Section 115JB(4) was filed on 02.08.2006. Later in the order it was found that such statement was filed on 07.09.2006. It was hence that Annexure-J confined the interest @ 0.5% between 08.09.2006 to 31.10.2006. The first appeal and the second appeal before the Tribunal went against the assessee and hence the assessee is before us raising the aforesaid questions of law.

Sri.Joseph Markos, learned Senior Counsel for the assessee, would contend that there is no question of any delay attributable to the assessee, since the MAT under Section 115JB has to be computed by the AO as available from the books of accounts, the profit and loss statement and the returns produced before the AO. Hence, the filing of a statement under Form-29B is not at all significant for determining MAT or processing -6- the refund under Section 143(1). It is also specifically pointed out that the subsequent assessment order under Section 143 (3) read with Section 147 made no modification to the original assessment as carried out under Section 143(1).

The learned Standing Counsel, Government of India (Taxes), Sri.Jose Joseph, on the contrary, would contend that there is no assessment as such carried out under Section 143(1). The verification does not necessarily lead to determination of the total income or the tax payable and the same can only be said to have been crystallised by an order under Section 143(3). Section 115JB also by sub-Section (4) thereto specifically prescribes a statement to be filed by the accountant which is in Form-29B along with the return. The delay in filing Form-29B hence has occasioned the delay in refund also. The delay in refund being attributable to the assessee, there cannot be any interest during the period of delay.

The assessee has relied on (2012) 340 ITR 574 (Ker) [Commissioner of Income Tax v. South Indian Bank Ltd.]. Therein the assessee had not made a claim, in the return, for provision made for bad debts under Section 36(1)(vii)(a). In the course of the assessment proceedings, the assessee made a claim, which was declined by the AO. In first appeal, the same was allowed and while granting refund, the CIT declined interest up to 10.01.2001, the date on which the assessee had raised a claim for bad debts before the AO in the course of the assessment proceedings. A Division Bench of this Court found that there is no provision in the Act which restricts the interest up to the time when a deduction is claimed, which is not originally claimed in the return. It was hence the assessee therein was granted full interest as computable under Section 244. 9. In the present case, the assessee had filed Forum-29B only on 07.09.2006. However, the question is -8- as to whether in carrying out verification under Section 143(1) and processing the refund, the existence of Form-29B is essential or not. In the present case, though Form-29B was filed only on 07.09.2006, it is seen that an intimation under Section 143(1) was issued before that on 20.07.2003. A refund was also issued computing the tax payable under Section 115JB on 03.08.2006. Hence, it is very clear that the filing of Form-29B was not at all required for processing the return and granting the refund which had been done prior to such filing of statement in Form- 29B. Hence, the date of filing of Form-29B cannot at all be relevant for attributing delay on the part of the assessee for processing of refund.

Now, the question arises as to clause (b) as we extracted from the impugned order hereinabove. Admittedly, the assessee had filed the original return on 29.10.2002, which was processed and a refund of Rs.86,333/- issued on 15.05.2003. Subsequently, -9- revised return was filed on 22.03.2004 claiming a refund of Rs.1,71,76,655/-. Hence, necessarily, the refund as now ordered by the AO can only relate back to the date of filing of the revised return. The delay in claiming the enhanced refund can only be attributable to the assessee and the same was claimed by a revised return only on 22.03.2004. Hence for an amount of Rs.1,70,90,322/-, the interest can be computed only from 22.03.2004. 11. We hence answer the questions partly in favour of the assessee and partly in favour of the Revenue. We do not think that the orders of the lower authorities restricting the interest till 08.09.2006 can be upheld. We have already found that Form-29B is not at all significant for processing of the return as is seen from the facts of the case which indicate that such processing having been done far earlier to the filing of such statement. As to the delay attributable to the assessee, we have found that the claim for -10- interest can arise only from the date of revised return, i.e. 22.03.2004. The AO shall make such modifications as directed herein and grant interest to the assessee from the date specified by us. The Income Tax Appeal is partly allowed. No order as to costs. K.VINOD CHANDRAN JUDGE ASHOK MENON JUDGE -11-