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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri Mahavir Singh & Shri Ramit Kochar
O R D E R Per Mahavir Singh, Judicial Member
This appeal by assessee is arising out of order of CIT(A) – 24, Mumbai, in appeal No.CIT(A)-LTU/Addl.CIT Rg.3(2)/176/11-12 dated 19.12.2012. Assessment was framed by ACIT Cen Cir 5, Mumbai, for A.Y. 1994-95 vide his order dated 26.03.1997 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
The only issue in this appeal of the assessee is against charging of interest on interest withdrawn u/s. 244 of the Act. For this the assessee has raised the following grounds:
“On the facts and in the circumstances of the case and in law, the learned Dy. Commissioner of Income tax 3(2) (hereinafter referred as AO) has erred in charging interest of Rs.2,30,153 on interest withdrawn of Rs.5,02,110 on self assessment tax paid by the appellant and learned CIT(A) has erred in confirming the order of the learned AO. The learned AO be directed to withdraw the demand of Rs.2,30,153/- and to reduce the total demand accordingly.”
At the outset the learned counsel for the assessee stated that the AO has charged interest amounting to Rs.2,30,153 u/s. 234D of the Act on interest withdrawn u/s. 244A of the Act. According to the learned counsel the relevant assessment year involved is 1994-95 and assessment was completed u/s. 143(3) of the Act on 26.03.1997. This assessment was challenged and finally the Tribunal decided the issue and the AO while giving appeal effect to the Tribunal order dated 26.10.2009, computed the withdrawal of interest u/s. 244A of the Act at Rs.5,02,110/- on which interest was charged at Rs.2,30,153/-. The learned counsel for the assessee, in view of the above facts, stated that applicability of the provisions of section 234D of the Act have been held to be prospective and not retrospective w.e.f. 01.06.2003 only. The learned counsel explained that the Hon’ble Supreme Court in the case of CIT vs. Reliance Energy Ltd. (2013) 358 ITR 371 (SC) has held that the provisions of section 234D of the Act will apply to the pending assessments, which are pending as on 01.06.2003. The learned counsel further stated that in the present case the assessment was completed on 26.03.1997 and nothing was pending. On query from the Bench, the learned senior DR took us through the order of the AO, computation part, wherein the AO giving appeal effect to the ITAT order dated 26.10.2009 has computed the interest and created a demand of Rs.2,30,153/-. He referred to the following:
244A as per ITN & 150A dated 19.02.09 = 2,84,84,686 Less: on 14,34,678 1) 30.11.94 to 30.02.97 @ 1% = 502110 (35m) Interest on 5,02,110/- 2) 01.08.02 to 07.09.03 @ 6.67% = 46886 (14m) 3) 01.10.03 to 26.10.09 @ 5% = 183267 (73m)
Total = 732263 In view of the above calculation it was explained that the interest on interest was amounting to Rs. 2,30,153/-.
The learned senior DR stated that there is no charging of interest u/s. 234D and, hence, appeal itself is not maintainable. On further query, learned counsel for the assessee explained that this interest charged by revenue is on withdrawal of interest u/s. 244A of the Act amounting to Rs.5,02,110/-, on which interest u/s. 234D was computed. He further argued that if this is not interest u/s. 234D, in that eventuality no interest can be charged on interest and this levy itself is illegal and without any provision. According to him, this should be deleted.
We have heard the rival contentions and have gone through the facts and circumstances of the case. We find that the AO while giving appeal effect to the order of the Tribunal dated 26.10.2009 has charged interest amounting to Rs.2,30,153 on withdrawal of interest u/s. 244A of the Act amounting to Rs.5,02,110/- . The AO has not charged this interest under any of the provisions as is apparent. In case, this is interest us/. 234D, since assessment was framed on 26.03.1997 u/s. 143(3) of the Act for the relevant A.Y. 1994-95, interest u/s. 234D cannot be charged in view of the decision of Hon’ble Supreme Court in the case of Reliance Energy Ltd. (supra), wherein this provision is held to be prospective and will apply only to pending assessment, pending as on 01.06.2003. In this case assessment was completed prior to this date. However, if this is interest on interest, even then this levy is without any provisions of law and cannot be charged.
In view of the above facts and circumstances, we deleted the charging of interest and allow the appeal of the assessee.
In the result, assessee’s appeal is allowed.
Order pronounced in the open court on this day of 15th June 2016.