DCIT 2(3), MUMBAI vs. TATA SONS LTD, MUMBAI

In all these years, the Assessing Officer passed rectification order u/s.154 of the Income Tax Act, 1961( in short “the Act”) withdrawing a portion on interest granted to the assessee u/s. 244A of the Act on the refund arising upon giving effect to the appellate order.

The assessee was aggrieved by the rectification order passed by the Assessing Officer and hence filed appeals before learned CIT(A) challenging validity on rectification order and also challenged the withdrawal of interest already granted to the assessee. The learned CIT(A) upheld the validity of rectification order. With regard to the contentions raised by the assessee on merits, the learned CIT(A) directed the Assessing Officer to follow the decision rendered by him for A.Y.1990-91. Aggrieved by the order passed by learned CIT(A) in upholding the validity on I.T.A. No.5388-5396/Mum/2014 & I.T.A. 5373-5377/Mum/2014 A.Y. 1985-86, 1986-87, 1988-89, 1989-90, 1992-93,1994-95 & 1996-97

The brief facts relating to the issue are that the assessee became entitled to higher refund than originally granted to it. The assessing officer, while computing the interest payable on the enhanced amount of refund, reduced the tax portion as well as interest element from the total refund due and accordingly computed interest on the remaining amount. According to the assessee, the interest element should not be deducted and only the tax portion of the refund alone should be deducted and accordingly the interest should be granted on the enhanced refund. Though the AO originally accepted the submissions of the assessee, but by passing the impugned rectification orders, he reduced the amount of interest already granted u/s 244A of the Act.

The learned AR submitted that the Assessing Officer had originally granted refund to the assessee along with interest. Subsequent to the passing of order by Income Tax Appellate Tribunal, the refund due to the assessee got enhanced. While, calculating the interest payable on the enhanced refund, the Assessing Officer deducted the interest already granted to the assessee from the tax portion of the refund due and accordingly computed the interest on the amount so reduced. In the original proceeding the Assessing Officer had accepted the claim of the I.T.A. No.5388-5396/Mum/2014 & I.T.A. 5373-5377/Mum/2014 A.Y. 1985-86, 1986-87, 1988-89, 1989-90, 1992-93,1994-95 & 1996-97

The learned AR submitted that an identical issue was confirmed by the co-ordinate bench of Tribunal in the case of JCIT Vs. Tata Power Co. Ltd. (ITA No.6863/Mum/11 dated 06.03.2013), wherein the Tribunal had confirmed the order of learned CIT(A) in upholding that the interest element of refund granted earlier should not be deducted from the refund arising while giving effect to the order of the Appellate Authorities. The learned AR submitted that the Tribunal has passed the order on 06.03.2013 and the Assessing Officer has passed the impugned orders on 13.08.2013. Hence on the date of passing of impugned rectifications orders the issue was debatable one. By placing reliance on the decision of Hon’ble Supreme Court rendered in the case of T.S.Balram ITO Vs. Volkart Bros. 82 ITR 50(SC), the learned AR submitted that the debatable issue will not fall under the definition of ‘mistakes apparent from record’ and hence such I.T.A. No.5388-5396/Mum/2014 & I.T.A. 5373-5377/Mum/2014 A.Y. 1985-86, 1986-87, 1988-89, 1989-90, 1992-93,1994-95 & 1996-97

The learned AR also submitted that the decision rendered by the co-ordinate bench of Tribunal in case of Tata Power Co. Ltd. (Supra) has since been upheld by the Hon’ble Juri ictional Bombay High Court in his decision dated 07.07.2015 rendered in the case of CIT Vs Tata Power Co. Ltd. in ITA No.1560/M/2013. Accordingly, the learned AR submitted that the orders passed by learned CIT(A) on merits have to be upheld, since they are in accordance with the decision rendered by the Hon’ble Juri ictional Bombay High Court.

On the contrary the learned DR placed strongly reliance on the assessment order.

We have heard the parties and perused the record. We find merit in the submission of the assessee that the issue sought to be rectified u/s. 154 of the Act is a debatable issue, since an identical issue has been decided in favour of the assessee by the co-ordinate bench of Tribunal Tata Power Co. Ltd. (Supra). The very fact that an identical issue has travelled up to the level of Tribunal would show that the said issue is a debatable one. The Hon’ble Supreme I.T.A. No.5388-5396/Mum/2014 & I.T.A. 5373-5377/Mum/2014 A.Y. 1985-86, 1986-87, 1988-89, 1989-90, 1992-93,1994-95 & 1996-97

Even on merit we notice that claim of the assessee is supported by the decision of Hon’ble Bombay Court rendered in the case of Tata Power Co. Ltd. (Supra). It is also pertinent to note that the decision rendered by the Co-ordinate bench of Tribunal in the case of Tata Power Co. Ltd (supra) was available on the date of passing of impugned rectification orders. Accordingly, we are of the view that the assessee wins on merits also and accordingly we do not find any merit in the appeals filed by the revenue.

In the result, all the appeals filed by the Assessee are allowed and appeals filed by the Revenue are dismissed.

""यथ" / The Respondent. 3. आयकर आयु"त(अपील) / The CIT(A)- 4. आयकर आयु"त / CIT

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