Assistant Commissioner of Income Tax, Thrissur v. Kerala State Financial Enterprises Ltd, Thrissur

ITA 192/COCH/2009 | 1994-1995
Pronouncement Date: 16-09-2011

Appeal Details

RSA Number 19221914 RSA 2009
Assessee PAN AABCT3817A
Bench Cochin
Appeal Number ITA 192/COCH/2009
Duration Of Justice 2 year(s) 5 month(s) 7 day(s)
Appellant Assistant Commissioner of Income Tax, Thrissur
Respondent Kerala State Financial Enterprises Ltd, Thrissur
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Department
Bench Allotted DB
Tribunal Order Date 16-09-2011
Date Of Final Hearing 12-09-2011
Next Hearing Date 12-09-2011
Assessment Year 1994-1995
Appeal Filed On 08-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S.GANESAN JM AND SANJAY AROR A AM I.T.A. NO. 192/COCH/2009 & C.O. NO. 27/COCH/2009 (BY THE ASSESSEE) ASSESSMENT YEAR: 1994-95 THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1(1) TRICHUR. VS. THE KERALA STATE FINANCIAL ENTERPRISES BHADRATHA MUSEUM ROAD CHEMBAKAVU TRICHUR-680 020. [PAN: AABCT 3817A] (REVENUE-APPELLANT) (REVENUE- RESPONDENT) REVENUE BY MS. S. VIJAYAPRABHA JR. DR ASSESSEE BY SHRI JOSE POTTOKKARAN FCA-AR DATE OF HEARING 12/09/2011 DATE OF PRONOUNCEMENT 16/09/2011 O R D E R PER SANJAY ARORA AM: THIS IS AN APPEAL BY THE REVENUE IN THE CASE OF TH E ASSESSEE A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-V KOCHI (CIT (A) FOR SHORT) DATED 5.1.2009 FOR THE ASSESSMENT YEAR (A.Y.) 1994-95 ALLOWING THE A SSESSEES APPEAL CONTESTING ITS ORDER U/S. 154 OF THE INCOME-TAX ACT 1961 ('THE ACT' HER EINAFTER) DATED 26.3.2007. 2. THE ASSESSEE HAS FILED A CROSS OBJECTION (C.O.) WHICH HOWEVER IS DELAYED BY A PERIOD OF 30 DAYS. THE CONDONATION PETITION ENCLOS ED ALONG WITH STATES THAT THE APPELLANT- COMPANY A PUBLIC SECTOR UNDERTAKING OF THE GOVERNM ENT OF KERALA WAS UNDER THE BONA FIDE BELIEF THAT THE CROSS OBJECTION COULD BE FILED AS IN THE CASE OF APPEAL BEFORE THE TRIBUNAL WITHIN A TIME PERIOD OF 60 DAYS (OF BEING COMMUNICATED THE RELEVANT DOCUMENT). THAT IS IT WAS UNAWARE OF THE TIME LIMI T OF 30 DAYS - FROM THE DATE OF THE I.T.A. NO.192 /COCH/2009 & C.O. NO. 27/COCH/2009 (ASST. YEAR: 1994-95) 2 RECEIPT OF THE NOTICE BY THE TRIBUNAL (IN RESPECT O F THE DEPARTMENT APPEAL) AS SPECIFIED U/S. 253(4) OF THE ACT. HENCE THE DELAY WHICH HA S NOT ARISEN OUT OF ANY WILFUL NEGLIGENCE BUT ONLY ON ACCOUNT OF AN ACCIDENTAL ER ROR SO THAT THE SAME MAY BE CONDONED. AFTER HEARING THE LD. DR IN THE MATTER THE BENCH W AS SATISFIED AS TO THE BONA FIDES OF THE ASSESSEES CASE AS REGARDS THE DELAY IN FILING OF I TS C.O. AND ACCORDINGLY THE HEARING WAS PROCEEDED WITH FOR BOTH THE APPEAL AND THE C.O. 3. THE FIRST ISSUE RAISED BY THE REVENUE IS WITH REGARD TO THE DELETION OF THE LEVY OF INTEREST U/S. 234D OF THE ACT IN THE SUM OF ` 1216282/- BY THE ASSESSING OFFICER (AO). THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL ON TH E BASIS OF THE EARLIER DECISIONS BY THE TRIBUNAL TAKING DIAMETRICALLY OPPOSITE VIEWS SO TH AT THE MATTER WAS CLEARLY DEBATABLE AND HENCE OUTSIDE THE PURVIEW OF S. 154 OF THE ACT; TH E TWO DECISIONS BEING ITO VS. EKTA PROMOTERS PVT. LTD . 305 ITR (AT) 1 (DEL.) (SB) AND SIGMA ALDRICH FOREIGN HOLDINGS CO. VS. ACIT 296 ITR (AT) 165.(BANG.) 4. BEFORE US IT WAS SUBMITTED BY THE LD. DR THAT T HE ISSUE COULD NO LONGER BE SAID TO BE DEBATABLE IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KERALA CHEMICALS AND PROTEINS LTD . (2010) 323 ITR 584 (KER.). THE LD. AR ON THE OTHER HAND RELIED ON THE DECISION BY THE TRIBU NAL IN ITS OWN CASE FOR A.Y. 1998-99 & 2000-01 (IN I.T.A. NOS. 526 & 527/COCH./2008 DATED 31.3.2009). THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT WAS SOUGHT TO BE DISTINGUISHED BY HIM BY STATING THAT THE HONBLE COURT HAD ITSELF CLARIFIED THAT THE SECTION WOULD BE APPLICABLE FOR ANY ASSESSMENT YEAR PROVIDED THAT THE GRANT OF REFUND IS ON OR AFT ER 1.6.2003 I.E. THE DATE ON WHICH S. 234D STOOD CO-OPTED ON THE STATUTE. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD AS WELL AS THE DECISION IN THE CASE OF KERALA CHEMICALS AND PROTEINS LTD . (SUPRA). THE DECISION IS SQUARELY ON THE POINT AND CLARIFIES THAT SEC. 234D WOULD APPLY IRRESPECTIVE OF THE ASSESSMENT YEAR WHERE ITS CONDITION/S ARE MET AND FOR THE PERIOD 1.6.2003 ONWARDS I.E. THE DATE WHEN THE SECTION COMES INTO FORCE. IT IS NOT THE GRANT OF REFUND AS CONTENDED BY I.T.A. NO.192 /COCH/2009 & C.O. NO. 27/COCH/2009 (ASST. YEAR: 1994-95) 3 THE LD. AR BUT ITS SUBSEQUENT WITHDRAWAL WHICH IS A CAUSE OF ACTION FOR THE CHARGE OF INTEREST U/S. 234D SO THAT WHERE THE SAME IS ON OR AFTER 1.6.2003 THE SECTION STANDS ATTRACTED AND THERE IS NO QUESTION OF A RETROSPECT IVE APPLICATION EVEN AS EXPLAINED BY THE HONBLE HIGH COURT; THE ASSESSMENT IN THAT CASE RE SULTING IN THE WITHDRAWAL OF THE REFUND HAVING BEEN PASSED ON 22/1/2004. FURTHER THE DECIS ION BY THE TRIBUNAL EITHER IN THE CASE OF EKTA PROMOTERS PVT. LTD (SUPRA) OR IN THE ASSESSEES OWN CASE FOR A.Y. 1998 -99 AND 2000-01 WOULD BE RENDERED OF NO CONSEQUENCE IN VIE W OF THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT WHICH IS DATED 15.1.2010 . IN FACT WE WOULD ALSO LIKE TO CLARIFY THAT THE CHARGE OF INTEREST IS A PART OF THE ASSESS MENT [ CENTRAL PROVINCES MANGANESE ORE CO. LTD. VS. CIT (1986) 160 ITR 961 (SC)] SO THAT ITS LEVY U/S. 234 D WHICH IN THE INSTANT CASE WAS FOR THE FIRST TIME VIDE THE ORDER GIVING A PPEAL EFFECT DATED 26.3.2007 IS IN ITS OWN RIGHT AND NOT BY WAY OF AN ORDER RECTIFYING A MISTAKE APPARENT FROM RECORD AS CONSTRUED BY THE LD. CIT(A). FURTHER EVEN IF IT W ERE TO BE AN ORDER U/S. 154 THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT WOULD BE A PPLICABLE IN VIEW OF THE DECISION BY THE APEX COURT IN THE CASE OF CIT (ASST.) VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD . (2008) 305 ITR 227 (SC). THE CHARGE OF INTEREST U/S. 234D IS THEREFORE LEGALLY VALID AND ACCORDINGLY UPHELD. AS REGARDS ITS QUANTUM WHICH HAS NOT BEEN SPECIFICALLY DISPUTED WE OBSERVE THAT THE INITIAL REFUND IN THIS CASE STO OD GRANTED ON 3/1996 SO THAT AS IT APPEARS INTEREST U/S. 234D STANDS CHARGED FOR THE PERIOD PRIOR TO 01/6/2003 ALSO. WE ACCORDINGLY CLARIFY THAT THE CHARGE OF INTEREST U/ S. 234D IN VIEW OF THE DECISION BY THE HONBLE HIGH COURT (SUPRA) WOULD BE RESTRICTED TO THE PERIOD 01/6/2003 ONWARDS ONLY. WE DECIDE ACCORDINGLY. 6. THE SECOND ISSUE RAISED PER THE REVENUES APPEAL IS THE DIRECTION BY THE LD. CIT(A) TO THE AO TO ALLOW INTEREST U/S. 244A TO THE ASSESSEE BY FOLLOWING THE DECISION BY THE TRIBUNAL IN THE CASE OF CIT (DY.) VS. STATE BANK OF TRAVANCORE 292 ITR (AT) 56 (COCHIN). ARGUING THE REVENUES CASE IT WAS SUBMI TTED BY THE LD. DR THAT THE THERE HAS BEEN IN THE FACTS OF THE CASE NO DELAY IN THE GRA NT OF REFUND TO THE ASSESSEE. CONSEQUENTLY THERE IS NO QUESTION OF PAYMENT OF IN TEREST ON THE INTEREST COMPONENT OF THE REFUND I.E. INTEREST ON INTEREST WHICH IN F ACT STOOD ALLOWED BY THE APEX COURT IN THE I.T.A. NO.192 /COCH/2009 & C.O. NO. 27/COCH/2009 (ASST. YEAR: 1994-95) 4 CASE OF SANDVIK ASIA LTD. VS. CIT (2006) 280 ITR 643 (SC) IN EXERCISE OF ITS EXTRAORDINARY (EXTRA-STATUTORY) POWERS AND NOT IN TERMS OF SECTION 244 OR SEC. 244A OF THE ACT. THE LD. AR ON THE OTHER HAND RELIED ON T HE DECISION DATED 31.3.2009 BY THE TRIBUNAL IN ITS OWN CASE (FOR AYS 1998-99 AND 2000- 01). 7. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD INCLUDING THE REFERRED DECISION BY THE TRIBUNAL IN THE ASSESSEES OWN CASE. 7.1 THE ASSESSEE WE FIND HAS NOT MADE OUT ANY CASE AS TO THE `DELAYED GRANT OF REFUND AS WAS THE CASE IN THE CASE OF SANDVIK ASIA LTD. VS. CIT (2006) 280 ITR 643(SC) AS ALSO IN THE CASE OF CIT (DY.) VS. STATE BANK OF TRAVANCORE (SUPRA) WHICH STANDS FOLLOWED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE SUB SEQUENT YEARS FOR IT TO SEEK GRANT OF INTEREST ON THE INTEREST ALREADY ALLOWED TO IT. EVE N THE LD. CIT(A) HAS NOT ISSUED ANY FACTUAL FINDING/S OR DILATED UPON THIS ASPECT OF THE MATTER. THE REFUND TO THE ASSESSEE IS FINALLY GRANTED PER THE ORDER DATED 26.3.2007 FOLL OWING THE ORDER BY THE FIRST APPELLATE AUTHORITY DATED 2.2.2007. WHERE THE MATTER IS BEING CONSTANTLY AGITATED BEFORE THE APPELLATE FORUMS LEADING TO EITHER A GRANT OF REFU ND OR A CONFIRMATION OF THE DEMAND RAISED THE SAID REFUND CAN ONLY BE SAID TO HAVE AR ISEN IN THE REGULAR COURSE AND NO CASE FOR THE CHARGE OF INTEREST ON THE INTEREST ON THE A MOUNT OF TAX FINALLY DETERMINED AS ACTUALLY PAID IN EXCESS OF THAT DUE AND THUS REFUN DABLE TO THE ASSESSEE WOULD RESULT. THE PRINCIPLE OR THE RATIO OF THE DECISION IN THE CASE OF VIKRANT TYRES LTD. VS. FIRST ITO (INFRA) RENDERED IN THE CONTEXT OF INTEREST U/S. 220(2) WH ICH AGAIN SEEKS TO COMPENSATE THE REVENUE FOR THE DELAY IN THE SATISFACTION OF THE DE MAND RAISED ON IT BY THE ASSESSEE WOULD APPLY IN RELATION TO SEC. 244A AS WELL. 7.2 WE ARE AS SUCH UNABLE TO SEE AS TO HOW THE RE FERRED DECISIONS WOULD IN THE FACTS AND CIRCUMSTANCES OF THE CASE BE OF ANY ASSISTANCE TO THE ASSESSEE. THE INTEREST U/S. 244A IT MAY BE APPRECIATED IS COMPENSATORY AND S EEKS TO COMPENSATE THE ASSESSEE FOR THE TIME LAG FOR WHICH ITS FUNDS PAID IN EXCESS OF THAT LEGITIMATELY DUE ARE WITHHELD OR RETAINED BY THE REVENUE. HOWEVER WHERE THE SAID RE TENTION IS IN PURSUANCE TO AN ORDER I.T.A. NO.192 /COCH/2009 & C.O. NO. 27/COCH/2009 (ASST. YEAR: 1994-95) 5 VALIDLY PASSED THE SAME CANNOT BE FACTUALLY SAID T O HAVE BEEN WITHHELD. THE ASSESSEE IS IN ANY CASE ENTITLED TO INTEREST FOR THE ENTIRE TI ME PERIOD FOR WHICH ITS SAID FUNDS HAVE BEEN RETAINED BY THE DEPARTMENT . THAT IS THE SCHEME OF THE PROVISION AS WELL AS ITS PREMISE IS THAT THE ASSESSEE IS ALLOWED COMPENSATI ON AT THE STATUTORILY DEFINED SIMPLE RATE OF INTEREST FOR THE ENTIRE PERIOD HE IS DENIE D ACCESS TO THE FUNDS NOT DUE BY HIM AND THUS SOUGHT TO BE BROUGHT AT PAR - INASMUCH AS IT IS POSSIBLE TO DO SO BY ALLOWING A TIME COST OF THE FUNDS - WITH ONE WHO HAS BEEN REFUNDED THE AMOUNT DEPOSITED/PAID IN THE FIRST INSTANCE OR HAD PAID ONLY THE AMOUNT LEGALLY DUE. AS IN THE CASE OF INTEREST U/SS. 234A AND 234B WHICH AGAIN PROVIDE FOR SIMPLE RATE OF IN TEREST THE INTEREST U/S. 244A WOULD BE LIABLE TO BE RECOMPUTED ON EACH RECOMPUTATION OF TH E ASSESSEES ASSESSED INCOME AND THE CONCOMITANT TAX LIABILITY. WE DECIDE ACCORDINGLY. 8. THE C.O. BY THE ASSESSEE IS LARGELY SUPPORTIVE O F THE IMPUGNED ORDER RAISING ONE ADDITIONAL GROUND (GROUND NO. 8) WHEREBY THE DIREC TION BY THE LD. CIT(A) TO THE AO TO RE-CALCULATE THE INTEREST U/S. 220(2) AS PER LAW IS CHALLENGED. DURING HEARING AT THE VERY OUTSET THE LD. AR WAS ENQUIRED BY THE BENCH TO POI NT OUT ANY INFIRMITY IN THE IMPUGNED ORDER; THE LD. CIT(A) ONLY REQUIRING THE AO TO COMP UTE THE INTEREST U/S. 220(2) AS PER LAW AND WHICH WOULD INCLUDE THE DECISION BY THE AP EX COURT IN THE CASE OF VIKRANT TYRES LTD. VS. FIRST ITO (2001) 247 ITR 821 (SC) BEING RELIED UPON BY THE ASSESSEE AS WELL. THE LD. AR FAIRLY CONCEDED TO THE SAME. THE APEX CO URT IN THE CASE OF VIKRANT TYRES LTD. VS. FIRST ITO (SUPRA) HAS CLARIFIED THAT INTEREST U/S. 220(2) I .E. FOR THE DELAYED SATISFACTION OF THE DEMAND RAISED U/S. 156 COULD BE LEVIED ONLY WHERE THE DEMAND SUBSISTS BEYOND THE DUE DATE OF ITS SATISFACTION AS PROVIDED U/S. 1 56 AND FOR THE PERIOD IT SO DOES. AS SUCH WHERE IT STANDS DISCHARGED IN TIME THOUGH BECOMES SUBSEQUENTLY RECOVERABLE I.E. ON BEING RESTORED FOLLOWING THE DUE PROCESS OF LAW ON ACCOUNT OF HAVING BEEN REFUNDED TO THE ASSESSEE AGAIN FOLLOWING THE PROCESS OF LAW NO INTEREST U/ S. 220(2) WOULD BE LEVIABLE AS THE ASSESSEE COULD NOT BE SAID TO BE IN DEFAULT AT ANY STAGE. IT IS NOBODYS CASE NOR POSSIBLY COULD BE THAT INTEREST THERE-UNDER WO ULD BE LEVIED EVEN WHERE NOT CHARGEABLE IN TERMS OF THE LAW AS EXPLAINED BY THE HONBLE APEX COURT. THE APPREHENSION ON THE ASSESSEES PART EVEN AS OBSERVED BY THE BEN CH DURING HEARING IS MISPLACED. I.T.A. NO.192 /COCH/2009 & C.O. NO. 27/COCH/2009 (ASST. YEAR: 1994-95) 6 ACCORDINGLY WE CONFIRM THE APPELLATE ORDER ON THIS GROUND FINDING NO INFIRMITY THEREIN. WE DECIDE ACCORDINGLY. 9. IN THE RESULT THE REVENUES APPEAL IS PARTLY AL LOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES WHILE THE ASSESSEES C.O. IS DISMISSED. SD/- SD/ - (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 16TH SEPTEMBER 2011 GJ COPY TO: 1. THE KERALA STATE FINANCIAL ENTERPRISES BHADRAT HA MUSEUM ROAD CHEMBAKAVU TRICHUR-680 020. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE -1(1) TRICHUR. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-V KOCH I. 4. THE COMMISSIONER OF INCOME-TAX TRICHUR. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE .