M/s. Narmada Chematur Petrochemicals Co.Ltd, Bharuch v. The Income tax Officer,TDS,, Bharuch

ITA 1023/AHD/2013 | 1996-1997
Pronouncement Date: 06-10-2016 | Result: Dismissed

Appeal Details

RSA Number 102320514 RSA 2013
Assessee PAN AAACG8372Q
Bench Ahmedabad
Appeal Number ITA 1023/AHD/2013
Duration Of Justice 3 year(s) 5 month(s) 24 day(s)
Appellant M/s. Narmada Chematur Petrochemicals Co.Ltd, Bharuch
Respondent The Income tax Officer,TDS,, Bharuch
Appeal Type Income Tax Appeal
Pronouncement Date 06-10-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 06-10-2016
Date Of Final Hearing 08-08-2016
Next Hearing Date 08-08-2016
Assessment Year 1996-1997
Appeal Filed On 12-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER ./ ITA.NO.1023/AHD/2013 / ASSTT. YEAR: 1996-1997 NARMADA CHEMATUR PETROCHEMICALS CO. LTD. (NOW MERGED WITH GUJARAT NARMADA VALLEY FERTILIZERS & CHEMICALS LTD.) P.O. NARMADANAGAR 392 015. DIST. BHARUCH. PAN NO. AAACG 8372 Q VS ITO TDS BHARUCH. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI SANJAY R. SHAH REVENUE BY : SHRI SATISH SOLANKI SR.DR / DATE OF HEARING : 10/08/2016 / DATE OF PRONOUNCEMENT: 06 /10/2016 $%/ O R D E R ASSESSEE IS IN APPEAL AGAINST ORDER OF THE LD.CIT(A )-VI BARODA DATED 31.1.2013 PASSED FOR THE ASTT.YEAR 1996-97. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE AO FOR NOT GRANTING INT EREST ON REFUND OF TDS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE (E RSTWHILE NARMADA CHEMATUR PETROCHEMICALS CO. LTD.) HAD ENTERED INTO AN ENGINEERING AGREEMENT WITH GERMAN COMPANY. UNDER THE AGREEMENT TECHNICAL FEES WERE ITA NO.1023/AHD/2013 2 PAID TO THE GERMAN COMPANY AFTER DEDUCTING TDS. AC CORDING TO THE ASSESSEE IT HAS MADE DOUBLE PAYMENT OF TDS ON THE SAME AMOUN T OF TECHNICAL FEES. ACCORDINGLY IT HAD MOVED AN APPLICATION FOR SEEKIN G REFUND OF DOUBLE PAYMENT OF TDS. THIS APPLICATION WAS REJECTED BY T HE AO AND THE ASSESSEE HAS FILED A WRIT PETITION (IN SCA NO.3327 OF 2007) BEFORE THE HONBLE GUJARAT HIGH COURT WHICH WAS ALLOWED. IN PURSUANCE OF THE HONBLE HIGH COURT DIRECTION THE AO HAS GRANTED REFUND OF RS.5 76 876 /- BUT THE AO DID NOT GRANT INTEREST ON THIS REFUND. THE ASSESSEE AGGRIEV ED WITH THE ORDER OF THE AO FILED APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) H AS REJECTED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE ORDER GIVI NG EFFECT TO THE ORDER OF GUJARAT HIGH COURT PASSED BY THE AO ORDER OF TH E GUJARAT HIGH COURT AND THE SUBMISSION MADE BY THE APPELLANT. WHILE DECIDING THE ISSUE OF REFUND THE HONBLE GUJ ARAT HIGH COURT HAS NOT GIVEN ANY DIRECTION WHATSOEVER WITH REGARD TO G RANTING OF INTEREST ON REFUND. THE LD. AR WAS SPECIFICALLY ASKED DURING THE COURSE OF HEARING AS TO WHICH PROVISIONS OF INCOME-TAX ACT AR E APPLICABLE IN THE CASE OF THE APPELLANT. HOWEVER THE LD. AR DID NOT FURNISH ANY REPLY BUT KEPT ON ARGUING ON EQUITY AND THE RATIOS OF THE CASE OF FAG BEARING INDIA LTD VS CIT 25 TAXMANN.COM 36(GUJ). IN THIS CASE THE APPELLANT HAS SUO-MOTO DEDUCTED T DS TWICE AND DEPOSITED THE SAME WITH THE EXCHEQUER. SECONDLY TH ERE IS NO PROVISION IN THE INCOME TAX 1961 TO GRANT INTEREST ON REFUND OF DOUBLE DEDUCTED TDS AMOUNT. IN VIEW OF THE ABOVE THE APPELLANT'S A PPEAL FOR GRANT OF INTEREST ON REFUND IS HEREBY DISMISSED. 4. BEFORE ME ON THE STRENGTH OF HONBLE GUJARAT HI GH COURTS DECISION IN THE CASE OF FAG BEARINGS INDIA LTD. VS. CCIT 25 TA XMANN.COM 36 THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO B E DIRECTED TO GRANT INTEREST TO THE ASSESSEE ON SUCH REFUND. APART FROM THIS DE CISION THE ASSESSEE HAS ALSO RELIED UPON THE FOLLOWING DECISIONS: ITA NO.1023/AHD/2013 3 I) CIT VS. HEG LTD. 324 ITR 331 (SC); II) UNION OF INDIA VS. TATA CHEMICALS 363 ITR 658 (SC) ; III) RAJ & CO. VS. UNION OF INDIA 42 TAXMANN.COM 184 (G AUH.) 5. ON THE OTHER HAND THE LD.DR RELIED UPON THE ORD ERS OF THE REVENUE AUTHORITIES. 6. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. AUTHORITIES UNDER THE INCOME TAX ACT V IZ. INCOME TAX OFFICER COMMISSIONER OF INCOME TAX OR THE INCOME TAX APPELL ATE TRIBUNAL ARE THE CREATURE OF THE INCOME TAX ACT. THEY DERIVE THEIR SOURCE OF POWER FROM THE INCOME TAX ACT ONLY. THE LD.REVENUE AUTHORITIES HA VE DECLINED THE PRAYER OF THE ASSESSEE FOR THE REASON THAT IT FAILED TO BRING ANY PROVISION OF THE ACT TO THEIR NOTICE WHICH AUTHORIZES AUTHORITIES TO EXERCI SE THEIR POWER IN FAVOUR OF THE ASSESSEE. DURING THE COURSE OF HEARING I ALSO PUT A QUERY TO THE LD.COUNSEL FOR THE ASSESSEE AS TO HOW IN THE PRESENT PROCEEDIN GS ASSESSEE CAN ENFORCE ITS RIGHT TO INTEREST. THE LD.COUNSEL FOR THE ASSESSEE WAS UNABLE TO POINT OUT ANY PROVISION IN THE INCOME TAX ACT WHICH CAN EMPOWER THE TRIBUNAL TO GIVE DIRECTIONS TO THE AO FOR GRANT OF INTEREST ON SUCH REFUND. THE LD.COUNSEL FOR THE ASSESSEE HAS BROUGHT TO MY NOTICE FOLLOWING OBS ERVATIONS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF FAG BEARINGS INDI A LTD (SUPRA): 'DEDUCTION OF TAX AT SOURCE TWICE AND DEPOSITING WI TH GOVERNMENT TWICE WAS A PURE MISTAKE. THE REVENUE CANNOT RETAIN ANY AMOUNT THAT THE ASSESSEE PAID UNDER PURE MISTAKE PARTICULARLY WHEN THE REFUND THEREOF WAS CLAIMED SHORTLY AFTER THE SECOND PAYMEN T WAS MADE AND MISTAKE WAS DETECTED. IF THE AMOUNT DEPOSITED WITH THE GOVERNMENT OF INDIA WAS NOT TAXABLE AT ALL THERE WAS NO QUESTION OF HOLDING ON SUCH AMOUNT DEPOSITED WITH THE GOVERNMENT UNDER MISTAKE. [PARA 9] UNDER THE CIRCUMSTANCES THE ORIGINAL SUM OF RS. 19 .49 LAKHS MUST BE REFUNDED TO THE ASSESSEE ON THE APPLICATION BEING M ADE. SUCH REFUND SHOULD CARRY REASONABLE INTEREST AT LEAST AFTER REA SONABLE PERIOD OF THE ITA NO.1023/AHD/2013 4 ASSESSEE MAKING APPLICATION FOR SUCH REFUND. NO DOU BT IN CIRCULAR DATED 6-8-1998 AS ALSO IN CIRCULAR DATED 20-4-2000 IT IS CLARIFIED THAI ON SUCH REFUND NO INTEREST UNDER SECTION 244A WOULD BE PAYABLE SINCE SUCH AMOUNT IS NOT A TAX. HOWEVER SUCH PROVISION C ANNOT BE APPLIED IN THE INSTANT CASE. FIRSTLY PRESENT IS NOT A CASE OF TAX DEDUCTED AT SOURCE WHICH WAS LATER ON FOUND TO BE IN EXCESS OF THE ASS ESSEE'S LIABILITY. PRESENT IS A CASE WHERE OUT OF SHEER MISTAKE AN AM OUNT WAS DEDUCTED TWICE AND ALSO DEPOSITED WITH THE GOVERNMENT. AS PE R THE REVENUE THE DEDUCTION OF RS. 19.49. LAKHS AND DEPOSITING WITH T HE GOVERNMENT AT THE TIME OF MAKING PROVISION FOR PAYMENT WAS NOT A TAX AT ALL. IF THAT BE THE POSITION SUCH AMOUNT WHICH WAS DEPOSITED WITH THE GOVERNMENT UNDER MISTAKEN BELIEF OUGHT TO HAVE BEEN REFUNDED EVEN WITHOUT REFERENCE TO ANY OF THE CIRCULARS. BOTH THE CIRCULA RS ESSENTIALLY GOVERNED THE SITUATIONS WHERE THE TAX AT THE TIME I T WAS DEDUCTED AT SOURCE IS RIGHTLY DEDUCTED AND DEPOSITED. HOWEVER DUE TO SUBSEQUENT DEVELOPMENTS SUCH TAX DEPOSITED WITH THE GOVERNMENT TURNS OUT TO BE IN EXCESS OF THE LIABILITY OF THE DEDUCTEE. SUCH DEDUC TEE WOULD BE ENTITLED TO REFUND THEREOF. BUT BEING A FOREIGN COMPANY AND NOT REGULARLY ASSESSED TO TAX IN INDIA MAY NOT BE INTERESTED IN PURSUING SUCH REFUND CLAIMS. TO OBVIATE SUCH HARDSHIP CIRCULARS MADE SP ECIAL PROVISION ENABLING THE ASSESSEE TO CLAIM REFUND UNDER CERTAIN CIRCUMSTANCES. IN THE INSTANT CASE THE ASSESSEE DEPOSITED AN AMOUNT WHICH WAS NOT REQUIRED TO BE DEPOSITED AT ALL. SUCH AMOUNT WAS DE POSITED PURELY ON MISTAKE. THE REVENUE COULD NOT AND SHOULD NOT HAVE TRIED TO CAPITALIZE ON SUCH A MISTAKE. ON THE REVENUE PASSING THE REFUN D CLAIM WITHIN A REASONABLE PERIOD FROM THE ASSESSEE MAKING APPLICAT ION FOR SUCH PURPOSE THE INTEREST LIABILITY TO THAT EXTENT COUL D HAVE BEEN AVOIDED. HOWEVER SUCH APPLICATION WAS FIRSTLY NOT DECIDED F OR A LONG TIME AND THEREAFTER WAS WRONGLY REJECTED. THE REVENUE MUST P AY REASONABLE INTEREST. UNDER THE CIRCUMSTANCES THE REVENUE WAS TO BE DIRECTED TO REFUND TO THE ASSESSEE THE SUM OF RS. 19.49 LAKHS W ITH SIMPLE INTEREST FOR THE PERIOD AFTER EXPIRY OF FOUR MONTHS FROM THE DATE OF RECEIPT OF APPLICATION DATED 2-11-1998 TILL ACTUAL PAYMENT [PA RA 12] I HAVE PERUSED ALL THE DECISIONS REFERRED BY THE L D.COUNSEL FOR THE ASSESSEE INCLUDING THE DECISION OF THE HONBLE GUJA RAT HIGH COURT IN THE CASE OF FAG BEARINGS INDIA LTD (SUPRA). ALL THESE DECIS IONS WERE RENDERED WHILE EXERCISING POWER UNDER ARTICLE 226 AND 227 OF THE C ONSTITUTION OF INDIA. THESE DIRECTIONS HAVE NOT BEEN GIVEN BY ENFORCING O F ANY PROVISION OF INCOME TAX ACT. THE TRIBUNAL HAS NO SUCH POWER. IT CAN O NLY ENFORCE VIOLATION OF ITA NO.1023/AHD/2013 5 ANY PROVISION WHICH IS SUBJECT TO THE APPELLATE JUR ISDICTION. THEREFORE I DO NOT FIND ANY MERIT IN THIS APPEAL OF THE ASSESSEE. IT IS DISMISSED. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 6 TH OCTOBER 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER