JCIT, BANGALORE vs. M/S ABB LTD., BANGALORE

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ITA 1413/BANG/2013Status: DisposedITAT Bangalore22 April 2016AY 1988-894 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the later Supreme Court judgment in Gujarat Fluoro Chemicals, rendered by a larger bench, must be followed. This judgment clarified that only statutory interest is claimable, not interest on statutory interest.

What were the facts?

The Revenue appealed against the CIT(A)'s order which relied on the Sandvik Asia judgment. The Revenue argued that a later Supreme Court judgment in Gujarat Fluoro Chemicals reversed the Sandvik Asia ruling.

What were the issues?

Whether interest on statutory interest is allowable, considering a subsequent Supreme Court judgment that reversed a prior ruling.

Which sections of the Income-tax Act were involved?

Section 244

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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE

Before: SHRI A.K. GARODIA & SHRI VIJAY PAL RAO

For Appellant: Dr. P.K. Srihari, Addl. CIT(DR)
For Respondent: Shri K.S. Lukose
Hearing: 20.04.2016Pronounced: 22.04.2016

Per A.K. Garodia, Accountant Member

1.

This is Revenue’s appeal directed against the order of ld. CIT (Appeals), LTU, Bangalore dated 22.7.2013 for the assessment year 1988- 89.

2.

The grounds raised by the Revenue are as under:-

“1. The order of the ld. CIT (A) is opposed to law and facts of the case.

2. The ld. CIT(A) erred in relying upon the order of Supreme Court in the case of Sandvik Asia, which is reversed by the apex court in the case of Gujarat Fluoro Chemicals stating section 244 provides only simple interest.

3. For these and such other grounds that may be urged at the time of hearing.”

3.

It was submitted by the ld. DR of Revenue that ld. CIT (Appeals) has followed the judgment of Hon’ble Apex Court rendered in the case of Sandvik Asia Ltd. v. CIT, (2006) 280 ITR 643, but as per the later judgment rendered by the Hon’ble Apex Court in the case of CIT v. Gujarat Fluoro Chemicals reported in 42 taxmann.com 1 (SC), the Hon’ble Apex Court has reversed its judgment rendered in the case of Sandvik Asia Ltd. (supra). He has submitted a copy of this judgment of the Hon’ble Apex Court rendered in the case of CIT v. Gujarat Fluoro Chemicals (supra) and urged that in view of this later judgment rendered by a larger Bench of Hon’ble Apex Court, this later judgment should be followed and the order of ld. CIT (Appeals) should be reversed and that of the AO should be restored.

4.

On behalf of the assessee, Shri K.S. Lukose appeared and supported the order of ld. CIT (Appeals).

5.

We have considered the rival submissions. We find that in the later judgment rendered by the larger Bench of the Hon’ble Apex Court in the case of CIT v. Gujarat Fluoro Chemicals (supra), it was held by the Hon’ble Apex Court that only that interest provided for under the statute may be claimed by the assessee from Revenue and no other interest on statutory interest. The Hon’ble Apex Court in this case has duly considered the earlier judgment rendered by a Bench of Two Hon’ble Judges of the Hon’ble Apex Court in the case of Sandvik Asia Ltd. (supra), and this later judgment is rendered by a Larger Bench of the Hon’ble Apex Court and therefore, this later judgment of the Hon’ble Apex Court rendered by a Larger Bench has to be followed instead of earlier judgment of Hon’ble Apex Court rendered in the case of Sandvik Asia Ltd. (supra). We therefore, set aside the order of ld. CIT(Appeals) and restore the matter back to the file of Assessing Officer for fresh decision in the light of this later judgment of the Hon’ble Apex Court rendered in the case of CIT v. Gujarat Fluoro Chemicals (supra) after providing adequate opportunity of being heard to the assessee.

6.

In the result, the appeal of Revenue stands allowed for statistical purposes.

Pronounced in the open court on this 22nd day of April, 2016.

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