TORRENT PHARMACEUTICALS LTD.,AHMEDABAD vs. THE ACIT, (OSD),CIRCLE-8, AHMEDABAD

The assessee has raised several grounds but in essence seeks to impugn the order of the Revenue on two grounds (i) short-payment of interest under s.244A of the Act on excess tax collected by the revenue (ii) compensation payable to the assessee towards inordinate delay in payment of refund and consequentially undue retention of huge tax amount.

The Ld.Senior Counsel for the assessee Mr.S.N.Soparkar narrated that the first dispute is on account of quantification of interest under s.244A and second dispute to towards grant of compensation which the assessee was entitled on account of wrongful retention of that interest for the period involved. It was submitted by the Ld.Counsel that the issue regarding quantification of interest under s.244A travelled to the Tribunal and the Tribunal vide order dated 17/09/2009 in ITA No.1420/Ahd/2006 for AY 1995-96 order dated 17/09/2009 inter alia accepted the assessee’s claim that it was entitled to interest under s.244A for the full period right from 01/04/1995. Effect to the ITAT order was given by the AO vide order dated 30/12/2009 and interest on refund under s.244A of the Act was given w.e.f. 01/04/1995 to 06/06/2002. A refund of Rs.97,77,906/- was accordingly issued to the assessee on 20/04/2010. Not satisfied, the assessee filed rectification application on 26/04/2010 seeking rectification of order giving effect to the ITAT order. Consequent

The Ld.DR, in this regard, relied upon the order of the CIT(A).

On consideration, we concur with the assertions made on behalf of the assessee that the error committed by the AO is plain and simple arithmetical mistake in computing the interest accrued to the assessee and it is entitled to interest under s.244A of the Act on excess payment retained by the Revenue till the date of actual payment as a part of procedure and not any other prior date. Therefore, on first principle, we

Second limb of appeal of the Assessee is towards claim of compensation on account of allegedly wrongful retention of interest for the period 01/04/1995 to 30/06/2003. The Ld.Counsel for the assessee submitted that the assessee is entitled in law for compensation for such wrongful withholding of tax beyond period permissible in statue. The assessee referred to the decision of Hon’ble Apex Court in the case of CIT vs. HEG Ltd. (2010) 324 ITR 331(SC) and Hon’ble Gujarat High Court in the case of Gujarat Flourochemicals Ltd. vs. CIT (2015) 377 ITR 307 (Guj.) for the proposition that by not refunding the substantial amount of excess tax the revenue is liable to compensate the assessee.

The Ld.DR strongly defended the action of the Revenue and submitted that the assessee is entitled to interest under s.244A towards delay, if any, in grant of refund and the Act does not provide for payment of separate compensation by the revenue for such delay. For this proposition, he relied the decision of the Coordinate Bench of the

We have given our thoughtful consideration to the issue of additional compensation for delay in granting of refund raised on behalf of the assessee. It is the case of the Assessee that revenue is entitled to collect tax within the four corners of Act. When any amount has been collected by revenue in excess and it is withheld beyond period permissible under statute, taxpayer is entitled to be suitably compensated for deprivation of such amount.

In this regard, we take note of the fact that the present appeal lies in the matter of rectification proceedings under s.154 of the Act. Section 154 of the Act enables rectification of an order towards mistake apparent from record. The source of power available to Assessing Officer under s.154 towards rectification of mistake is thus very narrow in scope. A remedy by way of claim of compensation towards possible damages over and above interest under s.244A is not provided in the Statute. Therefore, to examine such claim in the proceedings under s.154 by the revenue authorities, in our view, is farfetched. A point which is not examined on fact or in law cannot be dealt with as mistake apparent from record. The relief sought by the assessee ostensibly does not fall within the purview of section 154 of the Act.

The additional liability interest by way of compensation thus cannot be approved and more so in a rectification proceedings the scope of which is circumscribed. Therefore, this plea of the assessee is unintelligible and cannot be entertained. 12. In the result, appeal of the assessee is partly allowed. This Order pronounced in Open Court on 16/ 10 /2017