Income Tax Appellate Tribunal - Mumbai
Haldar Topse A/S Kopenhegen , vs Assessee
आयकर अपीलीय अिधकरण, मंब ु ई यायपीठ 'एल' मंब ु ई।
IN THE INCOME TAX APPELLATE TRIBUNAL "L " BENCH, MUMBAI सवर् ी पी.एम.जगताप, ले.स. एवं ी अिमत शक्ला ु , या.स. के समक्ष ।
BEFORE SHRI P.M.JAGTAP,AM & SHRI AMIT SHUKLA,JM आयकर अपील सं./ ITA No.5122/Mum/2002 (िनधार्रण वषर् / Assessment Year : 1984-1985) M/s Haldor Topsoe, A/S, ADIT (International Taxation 1(1), Copenhagen, C/o M/s Vijay Mumbai Deepak & Co., Chartered Vs. Accountants, Jeevan Vihar Annexe, 3, Sansad Marg, New Delhi-110 001 थायी ले खा सं . /जीआइआर सं . /PAN No.AAACH 2767 A (अपीलाथीर् /Appellant) : (प्र यथीर् / Respondent) अपीलाथीर् ओर से / Appellant by : Mr. H.P.Agrawal प्र यथीर् की ओर से/Respondent by : Mr.V.Saxena सनवाई ु की तारीख / Date of Hearing : 15 t h May 2012 घोषणा की तारीख /Date of Pronouncement : 27 t h July, 2012 आदे श / O R D E R PER AMIT SHUKLA (J.M.) :
This appeal has been filed by the assessee against order dated 16-7-2002, passed by the CIT(A)-XXXI, Mumbai in relation to order giving effect to ITAT's order dated 18-6-1997 for the assessment year 1984-1985 on the following grounds :-
"1. The learned Commissioner of Income-tax(Appeals) erred in law and on facts in not allowing interest due to the appellant for the period from the date of payment of tax 2 ITA No : 5122/m/02 (by way of TDS) up to the date of assessment order i.e. upto 26.03.1987.
2. The learned Commissioner of Income-tax(Appeals) erred in law and on facts in not allowing interest due to the appellant on the amount of 'refund' (comprising both tax and interest).The said 'refund' became due to the appellant on the basis of ITAT's order dated 18.06.1997 and should have been refunded to the appellant within a reasonable time from the said date, but was actually granted on 25.05.2000."
2. Brief facts of the case are that the assessee is a non-resident company incorporated under the laws of Denmark. The assessee has filed return of income claiming refund of `.75,52,774/-. The assessment was completed under Section 143(3) by the Assessing Officer on 26-3-1987 and a refund of `.25,18,809/- was granted against the claim of `.75,52,774/-. The assessee's appeal was finally decided by the ITAt vide order dated 18-6-1997, wherein major part of the appeal was allowed. The effect of ITAT's order dated 18-6-1997 was given by the Assessing Officer vide order dated 4-5-2000 (as per the date incorporated in the order giving effect to the ITAT passed by the JCIT, Special Range, 12, Mumbai). In the said order the Assessing Officer granted interest under Section 244(1)A on the refund from the date of regular assessment order i.e. 26-3-1987 till the date of granting of the refund.
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3. Aggrieved by such refund of interest, the assessee came up before the first appeal on the ground that the interest has to be given from 1st April, 1984 till the date of granting of the refund. Simultaneously a rectification application under section 154 was also moved before the Assessing Officer. The Assessing Officer rejected the said objection made under section 154 on the ground that in view of the decision of the Hon'ble Supreme Court in the case of M/s Modi Industries Ltd. Vs. CIT, 216 ITR 759, the advance tax/TDS becomes tax paid in pursuance of the assessment order only. Before the CIT(A), the assessee contended that the interest is to be allowed from 1-4- 1984, till the date of assessment order and not from 26-3-1987, ie. from the date of regular assessment order. The second contention of the assessee was that the interest has been calculated on the amount of tax only and not on the interest due on the amount of refund, both comprising tax and interest.
4. Learned CIT(A), rejected both the grounds of the assessee after holding that in view of the clear cut mandate of law laid down by the Hon'ble Supreme Court in the case of Modi Industries Ltd. (supra), wherein the Hon'ble Apex Court after analysing the provisions of Section 244(1)A and various other case laws, has held that the advance tax and TDS is to be treated as payment of income-tax in pursuance of the order of assessment on or from the date when these amounts are set off against the tax demand raised in the assessment 4 ITA No : 5122/m/02 order i.e. from the date of the assessment order. On the second aspect, the CIT(A) held that the interest on interest is also not permissible
5. Learned counsel appearing on behalf of the assessee submitted that the earlier judgment of the Hon'ble Supreme in the case of M/s Modi Industries Ltd.(supra) stands diluted by the latest judgment of the Hon'ble Supreme Court in the case of Sandvik Asia Ltd. v. Commissioner of Income-tax, reported in 280 ITR 643, wherein it has been held that interest is compensation for holding back the money and should be paid even there is no provision of law for payment of interest. Thus, in view of this principle of law laid down by the Hon'ble Supreme Court, the interest should be granted to compensate the assessee from the period 1-4-1984 to 26-3-1987. Various other judgments were also relied upon viz.:
i) CIT v. Sutlej Industries Ltd., 325 ITR 331;
ii) DCIT Vs. BSES Ltd., 113 TTJ 227; and
iii) Addl.CIT Vs. Green , 100 ITD 245 (Mum).
On the second ground, it was submitted by him that the Assessing Officer gave the appeal effect of the ITAT's order dated 8-6-1997 on May, 2000 and, therefore, the interest should have to be paid in 1-10- 1997, (i.e. after the expiry of three months from the date of ITAT order), till the date of passing of the order giving effect of the ITAT and further interest on balance amount of refund shall become 5 ITA No : 5122/m/02 payable from the date of 26-3-1987 to the date of issue of the refund. In support of this contention, several other case laws have been cited.
6. On the other hand, learned Senior DR submitted that the first issue is squarely covered by the decision of the Hon'ble Supreme in the case of Modi Industries Ltd. (supra) and the in the case of Sandvik Asia Ltd. (supra), is clearly distinguishable. On the second issue, he relied upon the findings given by the CIT(A).
7. We have carefully considered the rival submissions and also perused the material on record. So far as the assessee's contention in ground No1 that the interest of refund should be allowed from the 1st of April of the financial year in which TDS was deducted, ie. from 1-4- 1984 and not from the date of regular assessment order 26-3-1987, we find that, in assessee's case, provision of section 244 would be applicable as the matter pertains to assessment year 1984-1985 and not 244A, which has been brought in the statue from A.Y.1989-1990. The Hon'ble Apex Court in the case of Modi Industries (supra), while interpreting the section 244(1A) has clearly held that :-
"If any tax is paid pursuant to an assessment order after March 31,1975 (which will include tax deducted at source and advance tax to the extent the same has been retained and treated by the Income-tax Officer as payment of tax in discharge of the assessee's tax liability in the assessment order), becomes refundable wholly or in part as a result of any appellate or other order passed, the Central Government will have to pay the 6 ITA No : 5122/m/02 assessee interest on the refundable amount under section 244(1A). For the purpose of this section, the amount of advance payment of tax and the amount of tax deducted at source must be treated as payment of income-tax pursuant to an order of assessment on and from the date when these amounts were set off against the tax demand raised in the assessment order, in other words, the date of the assessment order."
In view of the aforesaid proposition of law laid down by the Hon'ble Supreme Court, we do not find any merits in the contention of the Ld. Counsel and the finding of the CIT(A) on this score is thus upheld. The assessee's contention can only be appreciated in view of the provisions contained in Section 244A which has been brought in the statute w.e.f. 1-4-1989. Therefore, the provisions of Section 244A will not be applicable in the assessment year 1984-1985. We also do not agree with the contention of the learned counsel that the judgment of the Hon'ble Supreme Court in the case of Sandvik Asia Ltd. (supra), has in any manner diluted the ratio and the proposition of law laid down by the Hon'ble Supreme Court in the case of Modi Industries Ltd.(supra), as in the case of Sandvik Asia Ltd. (supra), the Hon'ble Supreme Court, was besieged with the issue of withholding of refund without sanction of law. Thus, there is no merit in the assessee's ground No.1. Accordingly, ground No.1 is dismissed.
8. In ground No.2, the assessee has challenged that the interest should be paid on the amount of refund delayed from the date of 7 ITA No : 5122/m/02 ITAT's order till the date of actual granting of refund. From the records, it is evident that the effect of the ITAT's order dated 8.6.1997 has been given almost after three years and no interest has been granted for the delay of this three years. Section 240 provides that "where as a result of any order passed in appeal or other proceedings under this Act, refund of any amount becomes due to the assessee, the A.O. shall, except as otherwise, provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf". Thus, the refund of any amount becomes due, as a result of any appellate order, the A.O. is legally obliged to grant refund, without any assessee's claim. Section 244(1) prescribes that if such a refund as stipulated in section 240 has not been granted by the A.O. within a period of three months from the end of the month in which such order is passed, the Government shall pay the assessee the interest on the amount of refund due from the date immediately following the expiry of three months aforesaid to the date on which refund is granted. Similar provisions of three months are provided in section 244(2) also. Thus, as per the statutory provisions contained in Sections 244(1) and 244(2), the time limit prescribed for granting of refund is within a period of three months from the end of the month in which the order was passed, which in this case should have been before 30th September, 1997, till the date when refund is granted. There is no reason why the refund has been delayed from this period onwards. 8
ITA No : 5122/m/02 8.1 The assessee is entitled for interest u/s 244(1A) in the first step, on the refund from the date of regular order i.e., 26th March 1987 to the date of refund is made to the assessee, as already given by the Assessing Officer and in the second step, the assessee should be granted interest on the total refund due for the period 1st October, 1997 till the date of actual refund is granted, as the effect of ITAT's order dated 8.6.1997 should have been given within three months from the end of June 1997, i.e. before 30th September 1997 as per section 244(1). This granting of interest in the second step, stands covered in favour of the assessee by the judgment of Hon'ble Apex Court in the case of Sandvik Asia Ltd. (supra), and by host of other case laws, which has been referred to by the learned counsel of the assessee. Such an interest is to be granted even though the effect of granting of such interest on the refund from 1-10-1997, till the date of refund, amounts to interest on interest. This proposition of law stands covered by the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Hynoup Food and Oil Industries Ltd., reported in [2010] 320 ITR 365 (Guj.), Garden Silk Mills Ltd. v. Deputy Commissioner of Income-tax (Assessment), (2008) 296 ITR 577; Commissioner of Income-tax v. Narendra Doshi, (2002) 254 ITR 606 (SC) and Commissioner of Income-tax v. H. E. G. LTD., (2010) 324 ITR 331. Further, that the payment of interest is to be calculated upto the date of refund voucher has also been clarified by the CBDT vide Circular 9 ITA No : 5122/m/02 No.20-D(XXII-22), dated 20.8.1968, wherein it has been clarified as under :-
"1421. Interest payable by Central Government to assessees under the section is to be calculated upto the date of issue of refund voucher.
Under the terms of section 243, interest is payable by the Government where the refund is not granted within three months from the date on which the total income is determined and the interest, where payable, is to be calculated at the specified rate, from the date immediately following the expiry of the three months aforesaid to the date of the order granting the refund. From this it is clear that the date of the order granting the refund is the date of the refund voucher itself. The view stated to have been taken by some Income-tax Officers that the date of the assessment order is to be taken as the "date of the order granting the refund" is not correct. Thus, in cases where interest is payable by the Central Government to assessees under section 243, such interest is to be calculated upto the date of issue of the refund voucher."
No.20-D(XXII-22), dated 20.8.1968"
8.2 In view of the aforesaid judicial pronouncements and the CBDT Circular, we hold that the assessee is entitled for interest for the amount of refund and interest withheld from the period 1-10-1997 till the date of actual grant of refund voucher. Accordingly, ground No.2 of the assessee is treated as allowed.
9. In the result, the appeal of the assessee is partly allowed.
पिरणामतः िनधार्िरती की अपील आंिशक वीकत
ृ की जाती है
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ITA No : 5122/m/02
Order pronounced in the open court on 27th July, 2012 .
आदे श की धोषणा खले ु यायालय म िदनांकः 27th July, 2012 को की गई ।
Sd/- Sd/-
(पी.एम.जगताप) ( अिमत शक्ला
ु )
(P.M.JAGTAP) (AMIT SHUKLA)
लेखा सद य/ACCOUNTANT MEMBER याियक सद य/JUDICIAL MEMBER
मंब
ु ई Mumbai; िदनांक Dated 27th / July /2012
प्र.कु.िम/pkm.िन.स./PS
आदे श की प्रितिलिप अग्रेिषत/Copy of the Order forwarded to :
1. अपीलाथीर् / The Appellant
2. प्र यथीर् / The Respondent.
3. आयकर आयक्त ु (अपील) / The CIT(A)-
4. आयकर आयक्त ु / CIT
5. िवभागीय प्रितिनिध, आयकर अपीलीय अिधकरण, मंब ु ई/ DR, ITAT, Mumbai
6. गाडर् फाईल / Guard file.
स यािपत प्रित //True Copy// आदे शानसार ु / BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मंब ु ई / ITAT, Mumbai