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Income Tax Appellate Tribunal, G BENCH, MUMBAI
order : 28.10.2022 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Revenue has challenged the order, dated 09.06.2022, passed by the Ld. Commissioner of Income Tax (Appeals)-47, Mumbai, [hereinafter referred to as „the CIT(A)‟] for the Assessment Year 2009-10, whereby the Ld. CIT(A) had partly allowed the appeal against the appeal effect order, dated 04.08.2020 passed under Section 143(3) read with Section 250 and 254 of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟).
Assessment Year: 2009-10 2. The Revenue has raised the following grounds of appeal:
“1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the appeal of the assessee, without appreciating the fact that there is no provision in Income tax Act, 1961 to provide interest on interest accrued to the assessee and If any such amount is to be payable at all, it is penal in nature and subject to adjudication by either Hon'ble High Court or Hon'ble Apex Court in the form of compensation; and that too for any inordinate delay for issuing refund?" 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the appeal of the assessee, without appreciating the fact that the relief sought in by the assessee is in the nature and character of seeking relief or compensatory interest viz. interest on interest for delay contrary to the provisions of the Act and contrary to the facts of the case?" 3. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the appeal of the assessee and thereby completely ignoring the decision of Hon'ble Apex Court in the case of Sandvik Asia Ltd Vs CIT (150 Taxman 591 SC) and CIT Vs Gujrat Fluoro Chemicals (24 Taxmann.com 338 SC)?"
This is a second round of appeal before the Tribunal for the Appellant-Assessee for the Assessment Year 2009-10. In first round of appeal, the Tribunal had disposed off the cross appeals for Assessment Year 2009-10 vide order, dated 20.01.2019, passed in (Assessee‟s appeal) and ITA No. 2963/Mum/2014 (Department‟s appeal). Pursuant thereto, the Assessing Officer had passed order, dated 04.08.2020, under Section 143(3) read with Section 250 & 254 of the Act determining interest under Section 244A of the Act at INR.7,20,07,705/-.
Assessment Year: 2009-10 4. The Appellant, being aggrieved, preferred appeal before the CIT(A) contending, inter alia, that as per Section 244(1A) of the Act the correct interest amount works out to be INR.9,64,84,258/- as opposed to INR 7,20,07,705/- determined by the Assessing Officer and that the refund should first to be adjusted against interest due under Section 244A of the Act till the date of receipt of refund, and balance amount should be adjusted towards tax (principal). It was contended on behalf of the Appellant that the Assessing Officer had adjusted entire amount of tax refund against tax (principal), and this has resulted in short-grant of interest under Section 244(1A) of the Act. The CIT(A), following the decision of the Tribunal in the case of the Assessee for Assessment Years 2007-08 and 2008- 09 (ITA No. 473-474/Mum/2016, dated 11.11.2020), accepted the contention raised on behalf of the Appellant holding, inter alia, that the refund granted should firstly be adjusted against interest due under Section 244A of the Act till the date of receipt of such refund. The relevant extract of the order of CIT(A) reads as under:
5.2. These are cross appeals….. 5.3. xx xx 5.4. Respectfully following the above judgment where the issue under consideration is extensively discussed, the AO is directed to computing the interest u/s 244A of the Act as held in para 8 of the Hon‟ble Tribunal judgment in appellant‟s own case in dated 11.11.2020 wherein it is clearly held that refund granted first needs to be adjusted against interest due u/s 244A of the I.T. Act till the date of receipt of such refund. Hence, the ground of appeal no. 1 is allowed.
Assessment Year: 2009-10 5. Being aggrieved, the Revenue is in appeal before us. We have heard the rival contention and perused the material on record. We note that the CIT(A) has granted relief to the Assessee by following the decision of the Tribunal in the case of the Assessee for the Assessment Year 2007-08 and 2008-09 (ITA No. 473&474/Mum/2016, dated 11.11.2020) wherein identical issue was decided in favour of the Assessee holding as under:
“6. We find that assessee has raised ground before us stating that refund granted to the assessee is to be first adjusted against the correct amount of interest due on that date and thereafter, the left over portion should be adjusted with the balance tax. We find that in the instant case refund was granted to the assessee vide refund order in October 2013 and it was pleaded by the assessee that the said refund is to be adjusted against the correct amount of interest payable thereof to be computed as per the directions of the ld. CIT(A) and only the balance amount is to be adjusted against tax paid. Accordingly, unpaid amount is the tax component and therefore, the assessee would be entitled for claiming interest on the tax component remaining unpaid. In our considered opinion, the same would not tantamount to interest on interest as alleged by the ld. CIT(A) in para 4.2 on his order. Similarly, the refund granted to the assessee in July 2016 is to be adjusted against the correct interest payable on the tax amount remaining unpaid and balance towards tax component. We find that this issue is already settled in favour of the assessee by the following decisions of this Tribunal:- a. Decision in the case of Union Bank of India vs. ACIT reported in 162 ITD 142 dated 11/08/2016. b. Decision in the case of Bank of Baroda vs. DCIT in dated 20/12/2018.
7. In view of our aforesaid decision in the facts and circumstances of the instant case and respectfully following the judicial precedents relied upon hereinabove, the alternative argument made by the ld. AR on without prejudice basis, need Assessment Year: 2009-10 not be gone into and no opinion is given herein and they are left open.
Accordingly, we direct the ld. AO to compute the correct amount of interest allowable to the assessee as directed by the ld. CIT(A) as on the date of giving effect to the Tribunal‟s order i.e.06/09/2013. We further hold that the refund granted on 06/09/2013 be first appropriated or adjusted against such correct amount of interest and consequently, the short fall of refund is to be regarded as shortfall of tax and that shortfall should then be considered for the purpose of computing further interest payable to the assessee u/s.244A of the Act till the date of grant of such refund. Accordingly, the grounds raised
by the assessee in this regard are allowed for both the years.” (Emphasis Supplied)
6. On perusal of above, it is clear that the contentions raised by the Revenue in the present appeal stand rejected by the Tribunal. It is not the stand of the Revenue that the above decision of the Tribunal has been overturned or set aside. We do not see any reason to depart from the view already taken by the Tribunal on identical issue in the case of the Appellant for the immediately preceding assessment years. Therefore, respectfully following the above decision of the Tribunal, we reject all the grounds raised by the Revenue in the present appeal.
In the result, the present appeal is dismissed. Order pronounced on 28.10.2022.