NALWA SONS INVESTMENTS LTD.,,HISAR vs. ACIT, NEW DELHI

PER BEENA A PILLAI, J.M.

The present appeal has been filed by the assessee against the order of Ld. CIT (A) vide order dated 22.02.2013 for assessment year 2003-04 on the following grounds of appeal: 1. “The ld. CIT(A) has erred in law and on the facts and circumstances of the case in denying the appellant interest on the refund of pre-paid taxes from 15.3.2004 to 1.07.2009. The assessee is entitled for interest on the refund u/s 244A and should be allowed. 2. The CIT(A) having held that for the impugned year under consideration the credit for earlier years MAT payment has to be allowed as pre-paid taxes as decided by the Hon’ble Supreme Court in the case of CIT vs. Tulsiyan NEC Ltd. 330 ITR 226, the

consequential interest u/s 244A statutorily becomes due to the appellant which should have been allowed. 3. The CIT(A) has misdirected himself in deciding an issue which was not at all a ground in appeal. 4. The appellant contends that interest on refund which is due on pre-paid taxes should be allowed from 1st April, 2003 upto the date of granting of the refund under the provisions of 244A. There is no power under the Income Tax Act given to CIT(A) to curtail the period of interest on the refund. 5. The above grounds are independent and without prejudice to one and other. 6. The appellant may be allowed to add, amend and forgo any of the ground at the time of hearing.”

of 143 (3) for a loving the MAT credit or stop the Ld.CIT(A) as well as coordinate bench of this Hon’ble tribunal word of the considered opinion that the claim of tax credit under section 115JAA of the act could be agitated against the order of 143 (1) or 143 (3) of the act and cannot be rectified filed under section 154 of the act. This Hon’ble tribunal wide order dated 20. 03. 2009 rejected the appeal of the assessee. 2.3 The assessee accordingly preferred an appeal against the order of intimation dated 15. 03. 2004 before the Ld.CIT (A) wherein the assessee raised the ground of non-determination of MAT credit under section 115JA of the act. before the Ld.CIT(A), the assessee relied upon the decision of Hon’ble Supreme Court in the case of NTPC, reported in 2 to 9 ITR 383 and Maha Lakshmi textiles reported in 66 IETR 710. 2.4 The Ld.CIT(A) observed that there is a delay of 5 years and one month in filing the appeal before him as the assessee was pursuing the application filed by a under section 154 of the act. The Ld.CIT(A) opined that the delay in filing of this appeal was not deliberate on behalf of the assessee. As there is a substantial justice in the issue for consideration the Ld.CIT(A) condoned the delay. 2.5 The Ld. CIT(A) held as under: “It is undisputed that MAT was paid by appellant as claimed it is well settled position of law that credit of MAT is to be allowed as prepaid taxes as decided by orderable apex court in C I T VS. Tulsyan NEC Ltd. reported in 330 ITR 226. In this view of the matter, the appellant deserves lawful relief. I, therefore direct the credit for MAT may be allowed as prepaid taxes for the present a by after due verification. 4 following a wrong line of litigation, the

appellant must suffer the consequence. In my considered view, it would serve the interest of Justice’s interest on refund, if any, is denied to the appellant’s from the date of the order under section 143 (1), i.e. 15. 03. 2004, upto the date of filing of the present appeal on 01. 07. 2009 this would be in accordance with the observations of Hon’ble Supreme Court in the case of Tulsyan NEC Ltd. cited super. I direct the AO accordingly.” 2.6 Aggrieved by the order of Ld.CIT(A), the assessee is in appeal before us on the issue of entitlement of interest on the refund under section 244 A of the act. 3. We have produced the documents on record and judgements relied upon by the Ld. AR. 3.1 It is undisputed fact that mat credit is allowable to the assessee under section 115JAA of the act the Ld. CIT(A) has respectfully following the decisions of Hon’ble Supreme Court in the case of Tulsyan NEC (supra) has rightly allowed the MAT credit. However the Ld.CIT(A) has travelled beyond his powers in not allowing the interest on the refund of prepaid taxes from 15.030 2000 401. 07. 2009 being the interim period during which the assessee was pursuing the rectification application under section 154 of the act. 3.2 At this juncture we referred to the judgement of Hon’ble Supreme Court in the case of UOI Vs. TATA chemicals Ltd reported in 363 ITR 658, wherein the Hon’ble Supreme Court has held as under: “The language of section 244A of the income tax act, 1961, is precise, clear and unambiguous. Subsection (1) of section 244A speaks of interest on refund of amounts due to an assessee under the act. The assessee is entitled to refund with interest thereon as calculated in accordance with clauses(a) and(b) of subsection (1) of section 244A. In

calculating the interest payable, this section provides 4 different dates from which the interest is to be calculated. Clause (a) of subsection (1) of section 244A talks of payment of interest on the amount of tax paid under section 155WJ, tax collected at source under section 206C, taxes paid by way of advance tax, taxes treated as paid under section 199 during the financial year immediately preceding the assessment year. Under this clause, the interest shall be payable for the period starting from the 1st day of the assessment year to the date of the grant of refund. No interest is payable if the excess payment is less than 10% in stocks of the tax data mined under section 143 (1) of the act or on regular assessment. Clause (b) of subsection (1) of 244A opens with the words “in any other case” that means in any case other than the amounts paid under clause (A) of subsection (1) of section 244A. Under this clause, the rate of interest is to be calculated at the rate of one and a half percent. Per month or a part of a month priced in the period or the periods from the date or, as the case may be, either the dates of payment of the tax or the penalty to the date on which the refund is granted. The explanation appended to clause (B) of this subsection clarifies that the “date of payment of tax or penalty” would mean thE date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. Interest payment is a statutory obligation and nondiscretionary in nature to the assessee. The language employed in section 244A of the act is clear and plain. It grants a substantive right of interest and is not procedural. The principal of grant of interest are the same as under the provisions of section 244 applicable to the assessments before 01/04/1989, albeit with clarity of application as contained in section 244A. Circular No. 549, dated 31/10/1989, clarified the purpose and object of introducing section 244A of the act to replay section 214, 243 and 2 for 4 of the act as providing for payment of interest by the Department for delay in grant of refunds since there were some lacunae in the earlier provisions with regard to non-payment of interest by the

government to the assessee for money remaining with the government.” 3.3 Respectfully following the above decision of Hon’ble Supreme Court in Tata chemicals Ltd supra we are of the considered opinion that the assessee is entitled for refund of interest under section 244A. It is therefore directed that the assessee may be granted the refund which is due on prepaid taxes from 01/04/2003 upto the date of granting of the refund under the provisions of section 244A of the act. Accordingly the grounds raised by the assessee stands allowed 4. In the result, the appeal stands allowed. Order pronounced in the open court on 29.03.2016 Sd/- Sd/- (G.D. AGRAWAL) (BEENA A PILLAI) VICE PRESIDENT JUDICIAL MEMBER Dated: 29.03.2016 *Kavita Arora