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Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI – VIRTUAL COURT
Before: SHRI INTURI RAMA RAO & SHRI PARTHA SARATHI CHAUDHURY
C.O. No.01/PAN/2023 आदेश / ORDER
PER INTURI RAMA RAO, AM:
This is a recalled matter by this Tribunal vide order dated 16.11.2018 in M.A. No.13/PAN/2018 (arising out of for the assessment year 2002-03.
This is an appeal filed by the Revenue directed against the order of ld. Commissioner of Income Tax (Appeals), Mangalore [‘the CIT(A)’] dated 20.09.2016 for the assessment year 2002-03. The Cross Objection filed by the assessee against the appeal of the Revenue. 3. Briefly, the facts of the case are that the assessee is a nationalized commercial bank. The Return of Income for the assessment year 2002-03 was filed on 29.10.2002 declaring total income of Rs.1,31,027/- under the normal provisions of book profit of Rs.268,47,11,386/- u/s 115JB of the Income Tax Act, 1961 (‘the Act’). The assessment, against the said return of income, was completed by the Dy. Commissioner of Income Tax, Circle-1, Udupi (‘the Assessing Officer’) vide order dated 31.01.2005 passed u/s 143(3) of the Act at a total income of Rs.300,03,13,170/- under C.O. No.01/PAN/2023 the normal provisions and Rs.381,61,63,760/- u/s 115JB of the Act. The said additions made by the Assessing Officer is subject matter of appeal before the ld. CIT(A) and the ITAT. Finally, the Assessing Officer passed a consequential order dated 06.05.2013 giving effect to the order of the ITAT dated 16.03.2011 determining the total income under the normal provisions of Rs.123,64,06,123/- and book profits of Rs.375,04,01,900/- under the provisions of section 115JB of the Act. While doing so, the Assessing Officer made addition of Rs.98,38,14,000/- being the amount of provision for bad and doubtful debts debited to the Profit & Loss Account as against the actual provision for bad and doubtful debts of Rs.84,10,28,000/-. The Assessing Officer also made addition of Rs.16,73,900/- u/s 14A of the Act. The Assessing Officer had not granted interest of refund u/s 244A of the Act. 4. Being aggrieved, an appeal was filed before the ld. CIT(A), who vide impugned order allowed the ground of appeal relating to the addition of provision for bad and doubtful debts and upheld the addition of disallowance u/s 14A of the Act and Rs.10 crores being the provision the credit taken into Profit & Loss Account on account C.O. No.01/PAN/2023 of unreconciled credits. However, the ld. CIT(A) directed the Assessing Officer to allow interest of refund u/s 244A of the Act. 5. Being aggrieved, the Revenue is in appeal before us in the present appeal. 6. The Ground of appeal
nos.1 to 5 challenges the finding of the ld. CIT(A) in directing the Assessing Officer to allow interest of refund u/s 244A of the Act, as the issue is covered by the decision of the Hon’ble Karnataka High Court in assessee’s own case, 428 ITR 372 (Kar.), wherein, the Hon’ble High Court held that the payment of interest of refund does not amount to payment of interest on interest. The relevant paragraphs of the order of the Hon’ble Karnataka High Court (supra) reads as under :-
8. A three Judge Bench of the Supreme Court in Narendra Doshi (supra) upheld the decisions rendered by Gujarat High Court, which held that the revenue is liable to pay interest on the amount of interest and upheld the order of the High Court, which had answered the substantial question of law framed in favour of the assessee. Thereafter, a three judge bench of the Supreme Court in H.E.G. Ltd. (supra) while dealing with the expression 'refund of any amount becomes due to the assessee', held that the interest component will partake the character of amount due under section 244A of the Act. When an order of refund is issued, the same should include interest payable on the amount, which is refunded. If the refund does not include interest due payable on the amount refunded, the revenue would be liable to pay interest on the short fall. This does not amount to payment of interest on interest. In view of aforesaid enunciation of C.O. No.01/PAN/2023 law by a three judge bench of the Supreme Court, which is binding on us, it is not necessary for us to deal with the decision of the Supreme Court in Sandvik Asia Ltd. which has been rendered by a two judge bench of the Supreme Court and which has been subsequently clarified in Gujarat Fluoro Chemicals (supra). It is pertinent to mention here that if the interest has to be computed after 1-4-1989, the same has to be computed in accordance with section 244A of the Act only and the assessee is entitled to interest in terms of section 244A of the Act only.”
In view of the above settled position of law on the issue in appeal of the Revenue, we do not find any infirmity in the order of the ld. CIT(A). Therefore, the ground of appeal
nos.1 to 5 filed by the Revenue stands dismissed.
8. Ground of appeal nos.6 to 9 challenges the decision of the ld. CIT(A) to delete the provision for bad and doubtful debts from book profits for the purpose of computing the tax liability u/s 115JB of the Act. Admittedly, the assessee is engaged in the business of banking, whose accounts were prepared in conformity with Bank Regulations Act, 1939 and, therefore, not liable to tax under the provisions of section 115JB of the Act as held by the Hon’ble Supreme Court in the case of CIT vs. Vijaya Bank, 126 taxmann.com 167 (SC). Thus, the ground of appeal nos.6 to 9 filed by the Revenue stands dismissed.