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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI V.DURGA RAO & SHRI G.MANJUNATHA
PER G.MANJUNATHA, AM: This appeal filed by the assessee is directed against order of the learned Commissioner of Income Tax (Appeals)-1, Coimbatore dated 08.05.2019 and pertains to assessment year 2008-09.
The assessee has raised following grounds of appeal:-
“1. The Order of the Ld. CIT(A) is against the principles of Law & Justice. 2. The Ld. CIT(A) failed to appreciate that a sum of Rs.26,60,383/- the money belonging to the Assessee - was wrongly withheld by the Department for a period of 6 years and 4 months and hence the Assessee should be compensated for the same in the form of interest. 3. The Ld. CIT(A) ought to have followed, the following two decisions of the Apex Court brought to his notice, which are squarely on the same issue and identical on facts as that of the Assessee: (copies attached) a. Sandvik Asia Ltd. v. CIT [2006] 280 ITR 643 (SC) and b. CIT v. Narendra Doshi [20021 254 ITR .06(SC), in which the H’ble Apex Court has approved the decisions of the H’ble Gujarat High Court in the cases of: i) D.J. Works v. DCIT [1992)195 ITR 227 ii) Chimanlal S. Patel v. CIT [1994] 210 ITR 419 4. The Ld. CIT (A) is bound in law to follow the decisions of the Apex Court on facts which are just the same as that of the case of the Assessee and has erred in just mentioning, without reasoning out, that the decision of the Hon'ble Supreme Court is on different set of facts.”
Brief facts of the case are that the assessee has filed its return of income for the assessment year 2008-09 on 30.09.2008 and same was processed u/s.143(1) of the Income Tax Act, 1961, on 08.03.2010 determining refund due at Rs.1,22,51,690/-. The assessment for impugned assessment year has been subsequently completed u/s.143(3) on 30.12.2010 and determined tax payable at Rs.1,11,77,610/-.
The assessee preferred an appeal before first appellate authority. The learned CIT(A) vide order dated 22.09.2011 allowed appeal filed by the assessee. The Assessing Officer has subsequently passed an order dated 03.11.2011, order giving effect to the learned CIT(A) order and determined refund due to the assessee at Rs.1,17,09,984/-. However, said refund cheque was issued only after ten months on 04.09.2012. The assessee subsequently noticed that while determining refund due to the assessee, the Assessing Officer has not allowed interest payable u/s.244A of the Act, and hence, it has made various efforts before the authorities to pursue the matter for payment of interest and finally, the Assessing Officer has passed order dated 15.03.2018 and determined interest payable at Rs.26,60,383/-.
The assessee has challenged order passed by the Assessing Officer before the learned CIT(A) and contended that the Assessing Officer has not paid compensation on interest due to the assessee upto 03.11.2011 amounting to Rs.26,60,383/- for unlawful retention of money for a period of 6 years and 4 months and in light of certain judicial precedents, including decision of the Hon'ble Supreme Court in the case of Sandvik Asia Ltd. vs CIT (2006) 280 ITR 643. The learned CIT(A), after considering relevant facts rejected arguments taken by the assessee and dismissed appeal by holding that although, there was an inordinate delay in granting interest u/s.244A of the Act, to the assessee, interest claimed on interest due cannot be accepted because, in the case law cited by the assessee, the Hon'ble Supreme Court has directed the revenue to pay compensation to the assessee for unlawful retention of money due to him for a period of more than 17 years without any reason. However, in present case although, there is an error from the Assessing Officer in not granting interest due to the assessee u/s.244A of the Act, but the assessee has failed to prove such retention of money is unlawful action and thus, rejected arguments of the assessee.
Being aggrieved by the learned CIT(A) order, the assessee is in appeal before us.
The learned A.R for the assessee referring to various orders passed by the authorities along with decision of the Hon'ble Supreme Court in the case of M/s. Sandvik Asia Ltd. Vs CIT(supra) submitted that the Hon'ble Supreme Court has directed the revenue to pay compensation for unlawful retention of money for decades and thus, issue involved in the present appeal is squarely covered by the decision of Hon'ble Supreme Court and hence, the learned CIT(A) has erred in not entertaining appeal filed by the assessee against order of the Assessing Officer in not granting interest on interest due to the assessee. The learned AR further referring to the decision of the Hon'ble Supreme Court in the case of CIT Vs. Gujarat Fluoro Chemicals (2014) 42 taxmann.com 1 (SC) submitted that subsequent judgement of the Hon'ble Supreme Court is only clarificatory in nature and thus, it has not overruled its earlier decision in the case of M/s.Sandvik Asia Ltd. Vs CIT (supra). Therefore, as per settled principles of law in the case of M/s.Sandvik Asia Ltd. Vs CIT(supra), the Assessing Officer ought to have paid interest on interest to the assessee for the period from 03.11.2011 to 15.03.2018, when he had given interest due to the assessee u/s.244A of the Income Tax Act, 1961.
The learned DR, on the other hand, supporting order of the learned CIT(A) submitted that there is no provision in the Act u/s.244A to pay interest on interest and as per said provision, the assessee is entitled to only interest on refund due upto date of determination of refund. In this case, the Assessing Officer has determined refund due to the assessee by passing order giving effect to the learned CIT(A) order on 03.11.2011 and by further order dated 15.03.2018 determined interest payable to the assessee upto 03.11.2011 u/s.244A of the Act in accordance with law. Therefore, there is no merit in the arguments of the learned AR for the assessee that assessee is entitled for interest on interest to compensate unlawful retention of money for a period of more than six years.
In this regard, he has relied upon decision of Hon’ble Karnataka High Court in the case of CIT Vs. Syndicate Bank in of 2013 vide order dated 07.10.2020.
We have heard both the sides, perused material available on record and gone through orders of the authorities below.
Admittedly, the Assessing Officer did not compute interest payable u/s.244A of the Act, when refund due to the assessee was determined while giving effect to the order of the learned CIT(A). It is also an admitted fact that the Assessing Officer has determined interest payable to the assessee, as per provisions of section 244A by an order dated 15.03.2018 and paid interest due on income tax refund of Rs.26,60,383/-. However, such interest was paid upto 03.11.2011, i.e., till the date determining refund due to the assessee.
In light of the above factual background, provisions of section 244A of the Act, and also decision of the Hon'ble Supreme Court in the case of M/s. Sandvik Asia Ltd. Vs CIT (supra), if we consider facts of the present case, we ourselves do not agree with arguments taken by the learned AR for the assessee for simple reason that although, there is a delay in payment of interest due to the assessee, as per provisions of section 244A of the Act, but fact remains that the assessee was unable to justify its case of unlawful retention of money belongs to the assessee by the department for decades.
Further, the Hon'ble Supreme Court in the case of M/s.
Sandvik Asia Ltd. Vs CIT (supra), has considered payment of compensation to the assessee for delay in payment of interest, after considering fact that revenue without any valid reason has retained refund due to the assessee for a period of 17 years. In this case, although there is a delay of 6 years and 4 months in determining payment of interest due to the assessee u/s.244A of the Act, but fact remains that the assessee has failed to prove its claim of unlawful retention of money due to the assessee by the department. Further, period involved in the case cited above before the Hon'ble Supreme Court was more than 17 years, whereas in the present case period involved is only 6 years and 4 months. Further, it is not a case of the assessee that money due to the assessee was determined and retained by the department without any reason. In fact, interest payable to the assessee was itself determined on 15.03.2018.
If we consider date of determination of interest payable to the assessee as per provisions of section 244A of the Act, i.e., 15.03.2018, then the arguments of the assessee that there is inordinate delay in payment to the assessee which requires payment of compensation cannot be accepted. Moreover, as
per provisions of section 244A of the Act, the assessee is entitled only interest on income tax refund due to the assessee upto the date of payment of such refund. However, there is no provision in the Act to pay compensation to the assessee for certain delay in payment of interest, more particularly, such delay is on account of technical reasons. Therefore, we are of the considered view that there is no merit in arguments taken by the assessee in light of decision of the Hon'ble Supreme Court in the case of M/s.Sandvik Asia Ltd. Vs CIT (supra) and also the decision in the case of CIT VS. Narendra Dosh (2002)
254 ITR 606(SC).
Be that as it may, the Hon’ble Karnataka High Court in the case of CIT Vs. M/s. Syndicate Bank in of 2013 dated 07.10.2020 has considered identical issue and after considering decision of the Hon'ble Supreme Court in the case of Sandvik Asia Ltd. vs CIT (supra) observed that although, the Hon'ble Supreme Court very clearly held that revenue is liable to pay interest on the amount of interest while deciding issue, but fact remains that in the said case there was inordinate delay of 17 years and under those facts, it was held that the revenue is liable to pay compensation for unlawful retention of money due to the assessee. But, fact remains that as per provisions of section 244A of the Act, interest has to be paid to the assessee and such interest has to be paid in terms of section 244A of the Act only, which prescribes interest upto the date of granting refund to the assessee.
Therefore, considering facts and circumstances of the case and also various case laws discussed hereinabove, we are of the considered view that there is no merit in arguments taken by the learned AR for the assessee in light of decision of the Hon'ble Supreme Court in the case of M/s.
Sandvik Asia Ltd. Vs CIT (supra) and thus, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the assessee.
In the result, appeal filed by the assessee is dismissed.
Order pronounced in the open court on 5th January, 2022