Income Tax Appellate Tribunal - Mumbai
Tata Bp Solar India Ltd, Mumbai vs Department Of Income Tax on 13 January, 2015
आयकर अपील य अ धकरण "ई" यायपीठ मुंबई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI ी जो ग दर संह, या यक सद य एवं ी संजय अरोड़ा, लेखा सद य के सम ।
BEFORE SHRI JOGINDER SINGH, JM AND SHRI SANJAY ARORA, AM आयकर अपील सं./I.T.A. No.5576/Mum/2013 ( नधारण वष / Assessment Year: 2005-06) Dy. CIT-7(3) Tata BP Solar India Ltd., Room No. 615, 6th Floor, बनाम/ 76, Electrics City, Hosur Road, Aayakar Bhavan, M. K. Road, Vs. Bangalore-560 100 Mumbai-400 020 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AAACV 2809 D (अपीलाथ /Appellant) : ( यथ / Respondent) अपीलाथ क ओर से / Appellant by : Shri Neil Philip यथ क ओर से/Respondent by : None ु वाई क तार ख / सन : 05.01.2015 Date of Hearing घोषणा क तार ख / : 13.01.2015 Date of Pronouncement आदे श / O R D E R Per Sanjay Arora, A. M.:
This is an Appeal by the Revenue directed against the Order by the Commissioner of Income Tax (Appeals)-13, Mumbai ('CIT(A)' for short) dated 06.06.2013, allowing the assessee's appeal contesting the rejection of its claim for interest on self- assessment tax u/s.154 of the Income Tax Act, 1961 ('the Act' hereinafter) subsequent to the completion of assessment vide order dated 25.04.2011.
2. None appeared for and on behalf of the assessee-respondent when the appeal was called out for hearing, nor any adjudication application stands received. This, despite service of notice, which has been per the acknowledgement (of appeal memo) cum notice 2 ITA No. 5576/Mum/2013 (A.Y. 2005-06) Dy. CIT vs. Tata BP Solar India Ltd.
(of hearing) issued and delivered per hand post on 28.08.2013. There is also no letter of authority in favour of any counsel on record. Under the circumstances, we considered it fit and proper to proceed with the matter and decide the appeal on merits after hearing the party before us.
3. The assessment year (A.Y.) under reference is 2005-06. As indicated earlier, the only issue arising in this appeal is the validity or otherwise in law of the direction by the first appellate authority to the assessing authority to allow the assessee interest on the self assessment tax component of the principal refund amount of Rs.174.83 lacs, as determined upon assessment u/s. 143(3) of the Act for the relevant year vide order dated 29.12.2008. The primary facts are not in dispute, with the relevant grounds as agitated by the Revenue being reproduced below so as to project the issue arising for adjudication:
'1. The Learned CIT(A) has erred on facts and in law in holding that the assessee is eligible for interest on refund as per clause (b) of Sub-section (1) of section 244A of the Income Tax Act, 1961 without properly appreciating the factual and legal matrix of the case as clearly brought out by the Assessing Officer.
2. The Learned CIT(A) has erred on facts and in law in holding that the assessee is entitled for interest u/s 244A(1)(b) of the Income Tax Act, 1961 on refund out of excess Self Assessment Tax paid, without properly appreciating the fact that the said Self Assessment Tax was not collected through a notice of demand as provided in Explanation to clause (b) of Sub- section 244A(1) of the Income Tax Act, 1961.' The ld. CIT(A), after noticing the several decisions advanced by the assessee before him, as under, directed the Assessing Officer (A.O.) to allow the assessee interest u/s.244A(1)(b) of the Act on the self assessment tax of Rs.150 lacs, found to be paid in excess upon assessment (refer para 2.3 of the impugned order):
(i) CIT vs. Cholarnandalam Investment & Finance Co. Ltd. [2007] 294 ITR 438 (Mad.);
(ii) CIT vs. Sutlej Industries Ltd. [2010] 325 ITR 331 (Del);
(iii) ADIT(IT) vs. Asia Today Ltd. (in ITA No.1605/Mum/2010);3 ITA No. 5576/Mum/2013 (A.Y. 2005-06)
Dy. CIT vs. Tata BP Solar India Ltd.
(iv) B.S.E.S. Ltd. vs. DCIT [2008] 113 TTJ 227 (Mum); and
(v) ACIT vs. Grindwell Norton Ltd. [2006] 100 ITD 245 (Mum) [102 TTJ 265 (Mum)].
3. We have heard the party before us, and perused the material on record. 3.1 The issue before us is purely legal in nature. We may begin by reproducing the relevant provision:
'Interest on refunds.
244A. (1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely :-
(a) where the refund is out of any tax paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which the refund is granted:
Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined under sub-section (1) of section 143 or on regular assessment;
(b) in any other case, such interest shall be calculated at the rate of one- half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted.
Explanation.--For the purposes of this clause, "date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand.
(2) .........
(3) ..........
(4) ..........
3.2 There can be no doubt that the refund of the self-assessment tax, being neither
advance tax nor a tax credit for which is allowed u/s. 199, falls under clause (b) of sub- section (1) of section 244A. Both the commencement and the terminus dates comprising the period for which the refund is to be granted, stand specified. While the termini date in 4 ITA No. 5576/Mum/2013 (A.Y. 2005-06) Dy. CIT vs. Tata BP Solar India Ltd.
all cases is the date of grant of the refund, the commencement date, fixed u/s. 244A(1)(a) for prepaid taxes at April 1 of the assessment year, is the date/s of payment of tax (or penalty), which stands further defined per Explanation to the provision, for tax paid otherwise than by way of prepaid tax. The only issue, therefore, would be the date from which the interest is to be granted. The ld. Departmental Representative (DR), on being so communicated by the Bench during hearing, would concede thereto, adverting albeit our attention to Explanation to the relevant provision - also referred to in its grounds of appeal by the Revenue - for the purpose. Interest would, he argued, even as explicitly clarified per the provision itself, run from the date on which the payment of the tax (or penalty), for which the refund is being granted, is paid or deemed to have been paid in excess of the demand. This is as it was inconceivable that anyone would pay more than what stands demanded of him per the notice of demand u/s. 156 and, further, that the law provides for interest on such excess and, rather, only on such excess. The excess is determined only on the raising of the demand, and which is upon the processing of the assessee's return of income u/s. 143(1), and issue of intimation pursuant thereto - the intimation serving as a notice of demand u/s. 156. The apex court in the case of Modi Industries Ltd. vs. CIT [1995] 216 ITR 759 (SC), he would continue, clarified that on the adjustment of the tax paid, whether by way of advance tax or tax deducted/collected at source or any other, the said tax would assume the character of the tax paid on regular assessment. By legal fiction, it was explained, the advance tax becomes income tax in respect of the income for the period. That is, loses its character as advance tax for the relevant previous year. The self-assessment tax would, likewise, also assume the character of income tax (on the income for the year) on its adjustment against the tax liability upon processing of the return u/s. 143(1), so that the date of payment of interest on its refund would commence from this date. None of the decisions referred to by the ld. CIT(A), he informed, dilate on this aspect of the matter, referring to or reading the term 'payment of tax' as explained or defined per the provision. The foregoing sums up the controversy arising before us.
5 ITA No. 5576/Mum/2013 (A.Y. 2005-06)Dy. CIT vs. Tata BP Solar India Ltd.
3.3 The hon'ble apex court in Modi Industries Ltd. (supra) clarified that there was no right to interest on refund except as provided by the statute; a view confirmed by it again recently in CIT v. Gujarat Flouro Chemicals Ltd. [2013] 358 ITR 291 (SC). Reference, therefore, in the cases of Cholarnandalam Investment & Finance Co. Ltd. (supra) and Sutlej Industries Ltd. (supra), relying on the decision in the case of Sandvik Asia Ltd. vs. CIT [2006] 280 ITR 643 (SC), since explained by the apex court in Gujarat Flouro Chemicals Ltd. (supra), to the interest being granted by the Department on general principles, would, with respect, not represent the correct view, even as, as pointed out by the hon'ble high courts, the payment of interest on account of self-assessment tax would stand to be covered by clause (b) of section 244A(1), while clause (a) of the provision would govern the interest on refund of prepaid tax, and qua which the date of grant of interest would run from the first day of assessment year. The entire tax on the income for the year, and per prepaid taxes itself, having fallen due for payment as at the close of the year, the law, per s. 244A(1)(a), postulates an adjustment of the entire prepaid tax there- against, so that the excess becomes refundable to the assessee with effect from the first day of the assessment year. Interest on refund of self-assessment tax falls u/s. 244A(1)(b), to be allowed in terms of the said provision, read with Explanation thereto, defining the term 'date of payment of tax or penalty', using the word 'means', so that it is prima facie restrictive and exhaustive of the meaning to be assigned to the said words. An Explanation, it is well settled, is at times appended to a section to explain the meaning of the words contained therein (S. Sundaram Pillai vs. Pattabhiraman [1985] 1 SCC 591, pp. 611, 613; Deepak Chandra Ruludas vs. Chandan Kumar Sarkar [2003] 7 SCC 66, p.71). The Explanation rather becomes a part of the section (refer, inter alia, Bengal Immunity Co. Ltd. vs. State of Bihar, AIR 1977 SC 915, p. 733). It is again trite law that an Explanation should normally be so read so as to harmonize with and clear up any ambiguity in the main section, and should not be construed so as to widen the ambit of the section. We delineate the legal position also as pertinently, as also pointed out by the ld. DR, none of the decisions referred before the first appellate authority expound the Explanation, with reference to which the relevant term is to be necessarily read.
6 ITA No. 5576/Mum/2013 (A.Y. 2005-06)Dy. CIT vs. Tata BP Solar India Ltd.
There is, however, in our view, nothing in the language of the provision or the Explanation thereto, that would suggest the commencement date of the interest as the date of the processing of the return qua which the refund is being granted, i.e., as being argued before us in context of refund of self assessment tax. True, it is only upon processing of the return that the excess is determined under the procedure of assessment provided for under the Act. However, the payment of self-assessment tax assumes the nature of income tax on its payment by the assessee itself (refer: s. 140A). If not toward the same, what for, one may ask, the same is paid for or toward? When the entire tax liability for the year falls due for payment as at the close of the year, so that the excess of advance tax or TDS/TCS paid is liable for refund with interest from the following date, i.e., the first day of the assessment year, the payment of tax, either as self-assessment tax or otherwise than by way of prepaid tax, which would be only subsequent to the expiry of the relevant previous year, would surely be from the date of its payment. It is, in fact, inconceivable that one would pay in excess of the demand as raised upon him and, two, that the law actually provides for interest on such payment! The same, which can even otherwise be considered as only exceptional; rather, would not fall to be regarded as payment of tax (or penalty), i.e., on facts, on which the Revenue is always free to challenge a particular payment, for surely the payment to the central government, as contemplated, is only qua and not dehors any liability (for the same), and can not be for the purpose of seeking its refund subsequently along with interest. Even where the refund arises on the reduction in demand pursuant to an appellate order, the reduced demand vide the appeal effect giving order is of a later date while the excess payment stands made earlier, i.e., on an anterior date. The payment of the amount being refunded is thus always prior to the subsequent determination of and, thus, of it being found in excess. That in fact is the reason or the raison de'tre for the payment of interest in the first place. The amount paid in excess of the demand, though determined subsequent to the payment, being so in the very nature and chronology of events, would thus only be with reference to the date on which the payment is actually made. The date of payment of the excess is not to be confused with the date on which it is so found, i.e., to be in excess; the payment 7 ITA No. 5576/Mum/2013 (A.Y. 2005-06) Dy. CIT vs. Tata BP Solar India Ltd.
of interest being even otherwise compensatory in character. The Explanation, it may be appreciated, is worded in the manner it is, as it is intended to cover all or every situation inasmuch as the procedure of assessment contemplates raising of demand in every case.
We have, it would be apparent, accorded a meaning to the Explanation to s. 244A(1)(b) which harmonizes with the language employed in the section. The different meaning to its language, sought to be ascribed to it with reference to the decision in Modi Industries Ltd. (supra), is to our mind misplaced. The apex court was in that case explaining the concept with reference to the term 'tax on regular assessment'. The extant law however provides for grant of interest with separate commencement and termini dates for prepaid taxes and other taxes, so that the said elucidation by the apex court may not be of much assistance to the Revenue, which has not charged the payment of self- assessment tax of Rs. 150 lacs, the entire of which stands to be refunded, as being not bona fide and, thus, as being not liable to be considered as such.
3.4 Further, in-as-much as every return is to be mandatorily processed in the first instance, i.e., irrespective of it being, or not so, subsequently subject to the verification procedure under the Act by the issue of notice u/s. 143(2), it is surprising that the interest, as being prayed for by the assessee in the instant case, was not paid or allowed thereto on the processing of its return u/s. 143(1) itself. In fact, if and where it is actually so, the interest on assessment u/s.143(3) would only be on the differential amount, i.e., on the additional refund, or would even be liable to be withdrawn, as where the tax liability on regular assessment falls below that determined on processing u/s.143(1). The period for which the additional refund is granted shall be from the date of payment of the corresponding (additional) tax or April 1 of the assessment year, as the case may be, to the date of the refund. The period of withdrawal (of interest) shall be with reference to the same period for which the refund was initially allowed in excess. The loss of interest to the Central Government for the said period is taken care of by sec. 234D. If, however, as it appears, no interest has been allowed on the processing of return u/s. 143(1), the same would run uninterruptedly from the date of payment of the tax to the date of grant 8 ITA No. 5576/Mum/2013 (A.Y. 2005-06) Dy. CIT vs. Tata BP Solar India Ltd.
of the refund of the corresponding principal amount. We are conscious that while interest is to be in all cases allowed for this period, the principal amount could well be different, i.e., as determined on processing and that upon assessment subsequently. So, however, where no interest has been allowed in the first instance, it is only the refund amount worked out with reference to the demand determined on assessment that would obtain. Rather, as would be quite clear, it is only the interest with reference to this amount that would prevail even where interest had been granted earlier, i.e., on the processing of return u/s. 143(1).
3.5 Finally, it may appear that the issue involved is debatable and, thus, outside the ambit of sec. 154. However, as sought to be clarified hereinbefore, the reading of the order, the language of sec. 244A(1) is patently clear and admits of no debate. Even the argument raised by the Revenue with reference to the Explanation thereto arises only out of a misreading of the same. The matter, as further explained by the tribunal in B.S.E.S. Ltd. (supra), is appealable.
3.6 Under the circumstances, we, for the reasons afore-stated, confirm the order of the first appellate authority in principle. The AO shall verify if any interest has been allowed to the assessee on the processing of its return for the year or not, and allow interest u/s. 244A(1)(b) on the self-assessment tax of Rs. 150 lacs accordingly. We decide accordingly.
4. In the result, the Revenue's appeal is disposed of on the aforesaid terms.
Order pronounced in the open court on January 13th, 2015 Sd/- Sd/-
(Joginder Singh) (Sanjay Arora)
या यक सद य / Judicial Member लेखा सद य / Accountant Member
मुंबई Mumbai; दनांक Dated : 13.01.2015
व. न.स./Roshani, Sr. PS
9
ITA No. 5576/Mum/2013 (A.Y. 2005-06)
Dy. CIT vs. Tata BP Solar India Ltd.
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु त(अपील) / The CIT(A)
4. आयकर आयु त / CIT - concerned
5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard File
आदे शानस
ु ार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai