ASST. C I T vs. SARABHAI FOUNDATION

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TAXAP/45/2001HC GujaratGJHC24024480200121 December 2013Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.D.KOTHARI3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessee is entitled to interest under Section 244(1A) on the refund amount of interest levied under Sections 139(8) and 215 of the Income Tax Act, provided such interest was collected pursuant to an assessment order that was subsequently refunded. This position was supported by the Madras High Court's decision in CIT vs. Needle Industries Pvt. Ltd. and the Gujarat High Court's own Division Bench decision in CIT vs. Gujarat State Warehousing Corporation, which relied on the Madras High Court's ruling. Applying these precedents, the substantial question of law was answered against the revenue. Consequently, all the appeals filed by the revenue were dismissed. No costs were awarded.

What were the facts?

The appeals were filed by the Assistant Commissioner of Income Tax (Revenue) against the Sarabhai Foundation (Assessee) concerning multiple assessment years. The core issue revolved around the admissibility of interest under Section 244(1A) of the Income Tax Act on amounts that were themselves interest levied under Sections 139(8) and 215 of the Act. The dispute pertained to periods prior to April 1, 1989. The appeals were consolidated for a common judgment due to identical questions of law and fact.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has substantially erred in holding that interest under Section 244(1A) is admissible on the amount of interest levied under Section 139(8) and 215 of the Income Tax Act? Assessee's Contentions: The assessee argued that the question was covered against the revenue by the Gujarat High Court's decision in CIT vs. Gujarat State Warehousing Corporation (256 ITR 596) and the Madras High Court's decision in CIT vs. Needle Industries Pvt. Ltd. (233 ITR 370). They contended that for the period prior to April 1, 1989, Section 244(1A) would apply to the refund of interest levied under Sections 139 and 215, and not Section 244A. Revenue's Contentions: The revenue's learned advocate was not in a position to dispute the assessee's submissions.

Which sections of the Income-tax Act were involved?

Section 244(1A),Section 139(8),Section 215,Section 244A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
O/TAXAP/45/2001 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL  NO. 45 of 2001 With  TAX APPEAL NO. 46 of 2001 TO  TAX APPEAL NO. 47 of 2001 With  TAX APPEAL NO. 61 of 2001   FOR APPROVAL AND SIGNATURE:  HONOURABLE MR.JUSTICE M.R. SHAH ­sd and HONOURABLE MR.JUSTICE R.D.KOTHARI sd/­ ============================================= 1. Whether   Reporters   of   Local   Papers   may   be  allowed to see the judgment ? NO 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy  of the judgment ? NO 4. Whether this case involves a substantial question  of law as to the interpretation of the constitution  of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ============================================= ASST. C I T....Appellant(s) Versus SARABHAI FOUNDATION....Opponent(s) ============================================= Appearance: MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MR. B.D. KARIA FOR MR RK PATEL, ADVOCATE for the Opponent(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.D.KOTHARI  Date : 21/12/2013

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH)

1.0.

As common question of law and facts arise in this group of appeals and as such with respect to same assessee but with respect to O/TAXAP/45/2001 JUDGMENT different assessment years, all these appeals are decided and disposed of by this common judgment and order.

2.0.

In   all   these   appeals,   the   following   common   substantial question law is framed to be considered by this Court in this group of appeals. “Whether on the facts and the circumstances of the case, the Appellate Tribunal has substantially erred in holding that interest under Section 244(1A) is admissible on the amount as interest under Section 139(8) & 215 of the Income Tax Act?” 3.0. contended on behalf of the revenue. O/TAXAP/45/2001 JUDGMENT

5.0.

Ms. Bhatt, learned advocate for the revenue is as such  not in a position to dispute   the above and as such is not disputing the above.  In  the  case  of  Needle Industries Pvt. Ltd (supra),  identical question  came to be considered by the Madras High Court and it is held that the assessee is entitled to interest under Section 244(1A) on refund amount of interest levied under Section 139(8) and 215 of the Act and collected in pursuance of an order of assessment which was refunded and therefore, the assessee would be entitled to interest under Section 244(1A) in respect of refund of interest levied under Section 139(8) and 215 of the Act.

6.0.

In   the   case   of  Gujarat  State  Warehousing  Corporation (supra) the Division Bench of this Court has also taken the similar view, relying upon the decision of the Madras High Court In the case of Needle Industries Pvt. Ltd (supra).

7.0.

Applying the ratio / law laid down by the Madras High Court in the case of Needle Industries Pvt. Ltd (supra) and the decision of   the   Division   Bench   of   this   Court   in   the   case   of  Gujarat   State Warehousing Corporation (supra), to the facts of the case on hand, the question raised in the present appeals is answered against the revenue. Consequently   all   the   appeals   deserves   to   be   dismissed   and   are

accordingly dismissed. No costs. ­ (M.R.SHAH, J.) ­ (R.D.KOTHARI, J.) Kaushik

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