Indo Gulf Corporation Limited, v. DCIT, Lucknow

ITA 396/LKW/2009 | 1997-1998
Pronouncement Date: 15-07-2011 | Result: Allowed

Appeal Details

RSA Number 39623714 RSA 2009
Assessee PAN AAACH1201R
Bench Lucknow
Appeal Number ITA 396/LKW/2009
Duration Of Justice 2 year(s)
Appellant Indo Gulf Corporation Limited,
Respondent DCIT, Lucknow
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 15-07-2011
Date Of Final Hearing 18-05-2011
Next Hearing Date 18-05-2011
Assessment Year 1997-1998
Appeal Filed On 15-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B - BENCH LUCKNOW. BEFORE SHRI H.L.KARWA HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI ACCOUNTANT MEMBER I.T.A.NOS.396 & 397(LKW.)/2011 A.YS. : 1997-98 & 2002-03 M/S. INDO GULF CORPORATION LTD. VS. THE DY.CIT RANGE -I (SINCE AMALGAMATED WITH HINDALCO LUCKNOW. INDUSTRIES LIMITED) P.O. JAGDISHPUR INDL. AREA DISTT. SULTANPUR- 227817 (U.P.). PAN AAACH1201R (APPELLANT) (RESPONDENT) I.T.A.NOS.419 & 420(LKW.)/2011 A.YS. : 1997-98 & 2002-03 THE DY.CIT RANGE -I VS. M/S. INDO GULF CORPORATION LTD. LUCKNOW. (SINCE AMALGAMATED WITH HINDALCO INDUSTRIES LIMITED) P.O. JAGDISHPUR INDL. AREA DISTT. SULTANPUR- 227817 (U.P.). PAN AAACH1201R (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI AMIT SHUKLA ADVOCATE DEPARTMENT BY : SHRI P.K.BAJAJ SR. D.R. O R D E R PER N.K.SAINI ACCOUNTANT MEMBER THESE CROSS APPEALS BY THE ASSESSEE AND THE DEPARTMENT ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 27.4.2009 OF THE LD. CIT(A)-I LUCKNOW FOR THE ASSESSMENT YEARS 1997-98 AND 2002-03. THESE APPEALS 2 HAVING COMMON ISSUE WERE HEARD TOGETHER SO ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE WILL DEAL WITH THE CROSS APPEALS OF THE ASSESSMENT YEAR 1997-98. THE ASSESSEE IN ITS APPEAL I.T.A. NO.396(LKW.)/2009 HAS TAKEN THE FOLLOWING GROUNDS : 1. BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I LUCKNOW (HEREINAFTER REFERRED TO AS THE 'CIT(A)') ERRED IN NOT ALLOWING INTEREST ON INTEREST UNDER SECTION 244A OF THE INCOME TAX ACT 1961. 2. BECAUSE THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED INTEREST ON INTEREST TILL THE DATE OF ACTUAL GRANT OF INTEREST SHORT ALLOWED BY THE A.O. ON 29.05.2006. 3. BECAUSE THE LEARNED CIT(A) ERRED IN DISTINGUISHING PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. (280 ITR 643) FOR GRANT OF INTEREST ON INTEREST U/S. 244A TILL THE DATE OF ACTUAL GRANT OF INTEREST. 4. BECAUSE THE LEARNED CIT(A) FAILED TO APPRECIATE THAT IN GRANTING INTEREST PROVISIONS OF SEC.244A IS TO BE COMPLIED AND THERE IS NO SCOPE FOR NON-GRANT OF INTEREST FOR DELAY EVEN IF IT IS NOT WILFUL/WRONGFUL. 5. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY. 6. BECAUSE THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND SUBSTANTIATE OR VARY FROM ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2.1 THE DEPARTMENT IN ITS APPEAL IN I.T.A.NO.419(LKW)/2009 HAS TAKEN THE FOLLOWING GROUNDS : 3 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED ON THE FACTS AND IN LAW IN ALLOWING INTEREST ON REFUND TILL THE DATE OF ISSUE OF REFUND WITHOUT APPRECIATING THAT THERE WAS NO WILFUL/WRONGFUL WITHHOLDING OF IT. 2. WITHOUT PREJUDICE TO THE ABOVE UNDER THE FACTS & PECULIAR CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ALLOWING THE INTEREST U/S. 244A TILL THE DATE OF 'ISSUE' OF THE REFUND VOUCHER BY MISINTERPRETING THE DIRECTIONS FOR PAYMENT OF INTEREST ON REFUNDS AS GIVEN U/S. 244A OF I.T.ACT I.E. THAT THE INTEREST IS TO BE PAID ONLY TILL THE DATE ON WHICH THE REFUND IS 'GRANTED' THAT IS UPTO 17.01.2006 IN THE INSTANT CASE. 3. APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY ONE OR MORE OF THE GROUNDS OF APPEAL AS STATED ABOVE AS AND WHEN NEED OF DOING SO ARISES WITH THE PRIOR PERMISSION OF THE HON'BLE BENCH. 2.2 FROM THE ABOVE GROUNDS IT WOULD BE CLEAR THAT THE GRIEVANCE OF BOTH THE PARTIES REVOLVE ROUND THE INTERPRETATION OF THE PROVISIONS OF SECTION 244A OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) . 3. THE FACTS OF THE CASE IN BRIEF ARE THAT AN ORDER UNDER SECTION 254/154/143(3)/148 OF THE ACT WAS PASSED ON 17.1.2006 AT BOOK PROFIT OF RS.36 78 90 550 AND A REFUND OF RS.9 94 57 031 WAS ISSUED. SUBSEQUENTLY THE ASSESSEE MOVED AN APPLICATION UNDER SECTION 154 OF THE INCOME-TAX ACT 1961 ON 16.7.2007 STATING THEREIN THAT INTEREST HAS BEEN SHORT ALLOWED BY RS.17 99 663 UNDER SECTION 244A FOR THE PERIOD OF FOUR MONTHS I.E. FROM FEBRUARY 2006 TO MAY 2006 (TILL THE DATE REFUND RECEIVED). IT WAS STATED THAT SINCE THE ABOVE INTEREST OF RS.17 99 663 WAS WRONGFULLY RETAINED THEREFORE AS PER THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S. SANDVIK ASIA LTD. REPORTED IN 280 ITR 643(S.C.) THE INTEREST ON SUCH INTEREST AT RS.1 25 976 WAS ALSO PAYABLE UNDER SECTION 244A OF THE ACT. THE 4 AO DID NOT ACCEPT THE REQUEST OF THE ASSESSEE BY STATING THAT THE REFUND ALONGWITH INTEREST UNDER SECTION 244A OF THE ACT WAS GRANTED TO THE ASSESSEE BY PASSING ORDER ON THE SAID DATE. HE FURTHER OBSERVED THAT SINCE THE REFUND WAS EXCEEDING RS.25 LACS THE ADMINISTRATIVE APPROVAL OF THE HIGHER AUTHORITIES WAS SOUGHT FOR WHICH WAS DONE AS PER THE PROCEDURE &INSTRUCTIONS OF THE C.B.D.T. ACCORDING TO THE AO THERE WAS NO DELAY IN GRANTING REFUND OR INTEREST. 4. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A) AND MADE THE FOLLOWING SUBMISSIONS: THE AO HAS PASSED ORDER DATED 17.01.2006 U/S.254/154/148 OF THE INCOME TAX ACT 1961 VIDE WHICH A REFUND OF RS.9 94 57 031/- HAS BEEN DETERMINED. THE ABOVE REFUND HAS ACTUALLY BEEN GRANTED TO THE APPELLANT ON 29.05.2006. THE SAID REFUND HAS BEEN ISSUED TO THE APPELLANT VIDE R.V.NO.414611 DATED 29.05.2006 FOR RS.24.22 13 625/- WHICH COMPRISED OF OTHER REFUNDS ALSO. IN THE ABOVE REFUND INTEREST U/S 244A HAS BEEN GRANTED UPTO THE MONTH OF JANUARY 2006 WHILE SUCH INTEREST SHOULD HAVE BEEN GRANTED TILL THE MONTH OF MAY 2006 DURING WHICH THE REFUND VOUCHER HAS BEEN PREPARED. HENCE THE A.O. HAS ISSUED SHORT REFUND FOR AN AMOUNT OF RS.17 99 663/-. THE APPELLANT FILED AN APPLICATION DATED 16.07.2007 U/S 154 BEFORE THE A.O. FOR GRANT OF ABOVE SHORT INTEREST. THE A.O DISPOSED OFF THE APPLICATION U/S 154 VIDE ORDER DATED 07.08.2007 BY REJECTING REQUEST FOR GRANT OF INTEREST SHORT ALLOWED BY HIM. WHILE DISPOSING OFF THE ABOVE APPLICATION THE A.O. HAS STATED THAT THERE WAS NO WRONGFUL RETENTION OF THE REFUND AS THE APPROVAL FOR REFUND WAS REQUIRED FROM HIGHER AUTHORITIES AS PER THE PROCEDURES AND INSTRUCTIONS OF CBDT AND THERE WAS NO WILLFUL RETENTION OF THE REFUND. THEREFORE THE APPELLANT FILED AN APPLICATION DATED 04.09.2007 BEFORE A.O. TO PROVIDE TO IT COPY OF THE CBDT INSTRUCTIONS WHICH HAS BEEN REFERRED TO BY THE A.O. WHILE REJECTING THE APPLICATION U/S154. THE APPLICATION HAS NOT BEEN DISPOSED OFF BY THE A.O. 5 IN THIS RESPECT THE APPELLANT SUBMITS THAT THE INTEREST IS ALLOWABLE TO THE ASSESSEE U/S 244A OF THE ACT UNTIL THE DATE OF GRANT OF THE REFUND IRRESPECTIVE OF ANY REASON FOR DELAY ON THE PART OF THE DEPTT. THE APPELLANT FURTHER SUBMITS THAT INTEREST U/S 244A OF THE ACT IS ALSO ALLOWABLE TO THE APPELLANT ON ABOVE INTEREST OR RS.17 99 663 FROM THE MONTH OF JUNE 2006 TILL THE DATE OF ACTUAL GRANT OF ABOVE INTEREST IN VIEW OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. (280 ITR 643). A STATEMENT OF COMPUTATION OF REFUND OF RS.21 14 604/- FURTHER ALLOWABLE TO THE APPELLANT AS ON DATE IS ENCLOSED. THE A.O. MAY KINDLY BE DIRECTED TO ALLOW ABOVE INTEREST SHORT GRANTED AS ON 9.05.2006 AS ALSO INTEREST ON ABOVE AMOUNT OF RS.17 99 663 WITHHELD FROM 29.05.2006 TILL THE DATE OF ACTUAL GRANT OF ABOVE REFUND IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. (280 ITR 643). A.Y. 2002-03 THE AO HAS PASSED ORDER DATED 17.10.2007 U/S 143(3)/251/154 OF THE INCOME TAX ACT 1961 VIDE WHICH A REFUND OF RS.41 86 27 727/- HAS BEEN DETERMINED. THE ABOVE REFUND HAS ACTUALLY BEEN GRANTED TO THE APPELLANT ON 14.11 2007. IN THE ABOVE REFUND INTEREST U/S 244A HAS BEEN GRANTED UP TO THE MONTH OF OCTOBER 2007 WHILE SUCH INTEREST SHOULD HAVE BEEN GRANTED TILL THE MONTH OF NOVEMBER 2007 DURING WHICH THE REFUND VOUCHER HAS BEEN PREPARED. A FEW TDS CERTIFICATES AGGREGATING TO RS.3 40 596/- HAS BEEN SUBMITTED BY THE APPELLANT ON 19.08.2004 SINCE THE SAME WERE NOT RECEIVED BY THE APPELLANT TILL THE TIME OF FILING OF THE RETURN. THE A.O. HAS NOT GRANTED INTEREST ON REFUND AGAINST SUCH TDS CERTIFICATES. THE APPELLANT SUBMITS THAT SINCE TAX WAS DEDUCTED BY THE PERSON ISSUING SUCH CERTIFICATES DURING THE PREVIOUS YEAR RELEVANT TO A.Y.2002-03 INTEREST WAS ALLOWABLE TO THE APPELLANT ON REFUND OF SUCH TDS AMOUNT 6 FROM THE 1 ST DAY OF THE ASSESSMENT YEAR TILL THE ACTUAL GRANT OF THE REFUND. IN THE APPELLANT'S CASE IN AN EARLIER YEAR IN A.Y.1994-95 THE HON'BLE CIT(A) AS WELL AS HON'BLE ITAT HAVE HELD THAT THE ASSESSEE WOULD BE ENTITLED TO INTEREST WITH EFFECT FROM 1 ST APRIL OF THE ASSESSMENT YEAR PROVIDED THE TAX DEDUCTOR HAD DEPOSITED THE TAX IN TIME. HENCE THE A.O. HAS ISSUED SHORT REFUND FOR AN AMOUNT OF RS.16 87 183/-ON 14.11.2007 FOR THE REASONS MENTIONED HEREINABOVE. THE APPELLANT FILED AN APPLICATION DATED 12.03.2008 U/S 154 BEFORE THE A.O. FOR GRANT OF ABOVE SHORT INTEREST. THE A.O. DISPOSED OFF OUR ABOVE APPLICATION U/S.154 VIDE ORDER DATED 09.04.2008 BY REJECTING REQUEST FOR GRANT OF INTEREST SHORT ALLOWED BY HIM. WHILE DISPOSING OFF THE ABOVE APPLICATION THE A.O. HAS STATED THAT THERE WAS NO WRONGFUL RETENTION OF THE REFUND AS THE APPROVAL FOR REFUND WAS REQUIRED FROM HIGHER AUTHORITIES AND THERE WAS NO WILFUL RETENTION OF THE REFUND. IN THIS RESPECT THE APPELLANT SUBMITS THAT THE INTEREST IS ALLOWABLE TO THE ASSESSEE U/S 244A OF THE ACT UNTIL THE DATE OF GRANT OF THE REFUND IRRESPECTIVE OF ANY REASON FOR DELAY ON THE PART OF THE DEPTT. THE APPELLANT FURTHER SUBMITS THAT INTEREST U/S 244A OF THE ACT IS ALSO ABLE TO THE APPELLANT ON ABOVE INTEREST OF RS.16.87 183 FROM 14.11.2007 IN VIEW OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LID. (280 ITR 643). A STATEMENT OF COMPUTATION OF REFUND OF RS.18 30 593/- FURTHER ALLOWABLE TO THE APPELLANT AS ON DATE IS ENCLOSED. THE A.O. MAY KINDLY BE DIRECTED TO ALLOW ABOVE INTEREST SHORT GRANTED AS ON 14.11.2007 AS ALSO INTEREST ON ABOVE AMOUNT OF RS.16 87 183/- WITHHELD FROM NOVEMBER 2007 TILL THE DATE OF ACTUAL GRANT OF ABOVE REFUND IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. (280 ITR 643). 7 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT A REFUND OF RS.9 94 57 031 ALONGWITH INTEREST HAD BEEN ALLOWED TO THE ASSESSEE IN CONSEQUENCE OF THE ORDER UNDER SECTION 254/154/143(3)/148 DATED 17.1.2006 THE SAID INTEREST WAS ALLOWED UPTO THE MONTH OF JANUARY 2006. THE LD. CIT(A) POINTED OUT THAT THE SAID REFUND WAS ISSUED VIDE REFUND VOUCHER NO.414611 DATED 29.5.2006 AND THE AO DID NOT APPRECIATE THE FACT THAT IN CASE OF A REFUND THE INTEREST ON THE REFUNDABLE AMOUNT WAS ALLOWED UPTO THE DATE OF GRANT OF THE SAID REFUND. ACCORDING TO HIM THE REFUND WAS GRANTED TO THE ASSESSEE ON 29.5.2006 AND THUS THE INTEREST ON THE REFUNDABLE TAX WAS ALSO TO BE ALLOWED TILL THAT DATE. AS REGARDS TO THE ADMISSIBILITY OF THE INTEREST ON INTEREST THE LD.CIT(A) WAS OF THE VIEW THAT THE DECISION OF THE HON'BLE SUPREME COURT RELIED UPON BY THE ASSESSEE WAS DELIVERED ON THE PECULIAR FACTS OF THAT CASE. IN THE PRESENT CASE THE ASSESSEE DID NOT SHOW THAT THERE WAS ANY WILFUL/WRONGFUL WITHHOLDING OF THE GRANT OF INTEREST THIS SITUATION OCCURRED ONLY DUE TO TIME FACTOR FOR TAKING ADMINISTRATIVE APPROVAL SINCE THE REFUND EXCEEDED RS.25 LACS. THE LD.CIT(A) WAS THEREFORE OF THE VIEW THAT THE ASSESSEE WAS ELIGIBLE TO INTEREST UPTO THE DATE OF GRANT OF THE REFUND AND INTEREST ON INTEREST WAS NOT ADMISSIBLE IN THE ASSESSEES CASE. 6. NOW BOTH THE PARTIES ARE IN APPEAL. 7. THE LEARNED COUNSEL FOR THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS WHICH READ AS UNDER : 'MAY IT PLEASE YOUR CONCERN I CHRONOLOGY OF RELEVANT DATES AND EVENTS 8 SL. NO. DATE EVENT (I) 11.03.2003 ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SECTION 147 WAS PASSED. (II) -- TOWARDS DISPUTED DEMAND (AS HAD BEEN RAISED IN TERMS OF THE SAID ORDER) FOLLOWING PAYMENTS WERE MADE: (RS.) 05.02.2004 PAID BY CHALLAN 5 00 00 000 04.08.2004 ADJUSTED OUT OF REFUND FOR THE ASSESSMENT YEAR 1995-96 3 95 73 884 18.11.2004 ADJUSTED OUT OF REFUND FOR THE ASSESSMENT YEAR 1996-97 4 09 282 8 99 83 166 (III) 26.09.2005 ASSESSEES 2 ND APPEAL AGAINST THE ABOVE REFERRED ASSESSMENT ORDER DATED 11.03.2003 WAS DECIDED BY THE HONBLE ITAT. AS A RESULT OF SAID ORDER THE SUMS AGGREGATING RS.8 99 83 166 BECAME REFUNDABLE AS PER PROVISIONS CONTAINED IN SECTION 240 OF THE ACT. (IV) 31.12.2005 AS PER SECTION 240 READ WITH SECTION 243 REFUND (OF THE PAYMENTS MADE IN PURSUANCE OF ASSESSMENT) WAS DUE TO BE ALLOWED IN A PERIOD OF THREE MONTHS (ALONGWITH INTEREST TO BE CALCULATED FROM THE DATE OF PAYMENTS MADE IN PURSUANCE OF THE DEMAND CREATED AS A RESULT OF ASSESSMENT) AFTER GIVING EFFECT TO APPELLATE ORDER PARTICULARS OF WHICH ARE GIVEN AT SL NO.(II) ABOVE. (V) 17.01.2006 THE ASSESSING OFFICER REVISED THE ASSESSMENT ORDER DATED 11.03.2003 UNDER SECTION 143(3) READ WITH SECTION 254 ON THIS DATE AND WORKED OUT THE REFUND AT RS.9 94 57 031 (COPY APPEARING AT PAGES 1 TO 5 OF THE 1 ST PAPER BOOK). (VI) 27.05.2006 THE SAID ORDER ALONGWITH A CHEQUE FOR REFUND OF RS.24 22 13 625 (INCLUDING THE AFORESAID SUM OF RS.9 94 57 031) WAS RECEIVED BY THE APPELLANT. II CLAIM OF THE APPELLANT 2. THE APPELLANTS CLAIM IS THAT IT IS ENTITLED TO INTEREST. IN THE FIRST INSTANCE : FROM RESPECTIVE DATES OF PAYMENT OF SUMS AGGREGATING RS.8 99 83 166 TO 26.09.2005 (ON WHICH DATE THE APPELLANT HAD BECOME ENTITLED) WHICH IS THE DATE OF THE ORDER PASSED BY THE HONBLE ITAT. IN THE SECOND INSTANCE: IT IS CONTENDED THAT THE SAID REFUND (ALONGWITH INTEREST AS AFORESAID) SHOULD HAVE BEEN ALLOWED WITHIN A PERIOD OF THREE 9 MONTHS SAY LATEST BY 31.12.2005 AS PER SECTION 244(1) OF THE ACT. ALTHOUGH THE SAID SECTION HAS BECOME INOPERATIVE W.E.F. 01.04.1989 THE TIME LIMIT LAID DOWN THERE SHOULD BE READ UNDER SECTION 244A ALSO AS NO SPECIFIC TIME FOR ISSUING REFUND IN CONSEQUENCE OF APPELLATE ORDER HAS BEEN PRESCRIBED THERE. IN THE THIRD INSTANCE: WHATEVER REFUND HAD BECOME DUE ON 31.12.2005 (RS.8 99 83 166 + INTEREST AS CALCULATED FROM RESPECTIVE DATES OF PAYMENT TO 31.12.2005) AS MENTIONED UNDER THE HEAD FIRST INSTANCE FURTHER INTEREST SHOULD BE GRANTED FROM 01.01.2006 ONWARD TILL FINAL REFUND IS MADE OWING TO DELAY IN ISSUING THE REFUND BY APPLYING THE RULE OF HARMONIOUS CONSTITUTION. IN THE FOURTH INSTANCE: THE COMPUTATION OF FURTHER REFUND DUE AS ON 31.05.2006 SHOULD BE AS UNDER:- (RS.) REFUND UPTO 31.12.2005 8 99 83 166 ADD: INTEREST ON ABOVE SUM OF RS.9 91 25 596 (I) ON RS.5 CRORE FROM FEB.2004 TO DEC. 2005 FOR 23 MONTHS I.E. 11.5%. 57 50 000 (II) ON RS.3 95 73 884 FROM AUG. 2004 TO DEC. 2005 FOR 17 MONTHS I.E. 8.5%. 33 63 780 (III) ON RS.4 09 282 FROM NOV. 2004 TO DEC. 2005 FOR 14 MONTHS I.E. 7%. 33 63 780 AS ON 31.12.2005 9 91 25 596 INTEREST FROM 1.1.2006 TO MAY 2006 FOR FIVE MONTHS I.E. 2.5% (FOR DELAY IN ISSUING THE REFUND BEYOND A PERIOD OF THREE MONTHS. 24 78 140 10 16 03 736 DEDUCT: REFUND RECEIVED ON 29.5.2006 9 94 57 031 FURTHER REFUND DUE AS AT 31.05.2006 (ON THIS 10 AMOUNT FURTHER INTEREST SHOULD BE ALLOWED TILL THE ACTUAL DATE OF REFUND) 21 46 705 3. THE AFORESAID CALCULATIONS ARE BASED ON THE CONTENTION THAT REFUND DUE TO THE APPELLANT (AS A RESULT OF THE TRIBUNALS ORDER DATED 26.09.2005) SHOULD HAVE BEEN ALLOWED WITHIN A PERIOD OF THREE MONTHS. THE SAID CIRCULAR ALSO GO TO SUPPORT THE CONTENTION THAT INTEREST DUE TO AN ASSESSEE SHOULD BE CALCULATED UPTO THE DATE ON WHICH ACTUAL REFUND IS ISSUED AND NOT TILL THE DAT4E OF ASSESSMENT ORDER. THIS CONTENTION IS SUPPORTED VIDE CIRCULAR NO.1421 ISSUED BY CBDT WHICH IS REPRODUCED HEREUNDER:- 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. CIRCULAR: NO.20-D(XXII-22) DATED 20.8.1968 THE SAID CIRCULAR HAS GOT BINDING EFFECT IN VIEW OF THE DECISION OF HONBLE APEX COURT I THE CASE OF UNION OF INDIA & ANOTHER VS. AZADI BACHAO ANDOLAN AND ANOTHER REPORTED IN (2003) 263 ITR 706. 4. FINALLY THE APPELLANTS CONTENTION WAS TWO FOLD FIRSTLY : INTEREST SHOULD NOT BE RESTRICTED UPTO THE DATE ON WHICH THE ORDER GIVING EFFECT TO THE APPELLATE ORDER WAS PASSED WHICH IS 17.01.2006 BUT IT SHOULD BE ALLOWED TILL THE DATE ON WHICH THE REFUND WAS RECEIVED WHICH 29.05.2006; SECONDLY : INTEREST ON INTEREST SHOULD BE ALLOWED. THIS MEANS THAT AFTER REFUND HAD BECOME DUE ON 31.12.2005 I.E. WITHIN A PERIOD OF THREE MONTHS FROM THE DATE WHEN THE ELIGIBILITY STARTED INTEREST ON INTEREST SHOULD BE ALLOWED. 11 5. THE LD. CIT (A) HAS ACCEPTED THE FIRSTLY VIDE PARA 6 OF HIS ORDER WHICH IS REPRODUCED HEREUNDER:- 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE LD. AR. I FIND THAT IN A.Y. 1997-98 A REFUND OF RS.9 94 57 031/- ALONGWITH INTEREST HAS BEEN ALLOWED TO THE APPELLANT IN CONSEQUENCE TO THE ORDER U/S 254/154/143(3)/154 DATED 17.01.2006 THE INTEREST WAS ALLOWED UPTO THE MONTH OF JANUARY 2006. I ALSO FIND THAT THE SAID REFUND HAS BEEN ISSUED VIDE REFUND VOUCHER NO.414611 DATED 29.05.2006. THE AO DID NOT APPRECIATE THE FACT THAT IN THE CASE OF A REFUND THE INTEREST ON THE REFUNDABLE AMOUNT IS ALLOWED UPTO THE DATE OF GRANT OF THE SAID REFUND. HERE IN THE INSTANT CASE THE REFUND WAS GRANTED TO THE APPELLANT ON 29.05.2006 AND THUS THE INTEREST ON THE REFUNDABLE TAX WAS DUE TO BE ALLOWED TILL THAT DATE. THE SAID FINDING OF THE LD. CIT(A) ARE FULLY COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GARDEN SILK MILLS LTD. VS. DY. CIT REPORTED IN (2008) 296 ITR 577 WHICH IN TURN IS BASED ON THE DECISIONS OF HONBLE APEX COURT IN THE CASES OF (I) MODI INDUSTRIES LTD. VS. CIT REPORTED IN (1995) 216 ITR 759 (II) CIT VS. NARENDRA DOSHI REPORTED IN (2002) 254 ITR 606 COPY OF THE LATER JUDGMENT APPEARS AT PAGES 1 AND 2 OF THE SUPPLEMENTARY PAPER BOOK. 6. THE POINT AT ISSUE IS FURTHER SUPPORTED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. HYNOUP FOOD AND OIL INDUSTRIES LTD. REPORTED IN (2010) 320 ITR 365 (COPY ENCLOSED). 7. AS FAR AS SECONDLY IS CONCERNED THE SAME WAS DECIDED BY THE LD. CIT(A) AGAINST THE APPELLANT VIDE PARA 6.2 OF THE APPELLATE ORDER WHICH IS REPRODUCED HEREUNDER:- 6.2 IN REGARD TO THE ADMISSIBILITY OF THE INTEREST ON INTEREST THE DECISION OF THE HONBLE SUPREME COURT RELIED UPON BY THE APPELLANT WAS DELIVERED ON THE PECULIAR FACTS OF THAT CASE. IN THE INSTANT CASE THE FACTS DO NOT SHOW THAT THERE WAS ANY WILLFUL/WRONGFUL WITHHOLDING OF THE GRANT 12 OF INTEREST THIS SITUATION IS OCCURRED ONLY DU TO TIME FACTOR FOR TAKING ADMINISTRATIVE APPROVAL SINCE THE REFUND EXCEEDED RS.25 LACS. ASSESSEES APPEAL : 8. THE APPELLANT IS AGGRIEVED BY THE FINDING GIVEN IN PARA 6.2 AS AFORESAID IN APPEAL NO 396/LKW/09. IN ITS APPEAL THE APPELLANT BEGS TO REFER AND RELY UPON THE FOLLOWING CASE LAWS:- SL. NO. PARTICULARS (I) CHIMAN LAL S PATEL VS. CIT REPORTED IN (1994) 210 ITR 419 (GUJ) APPROVED BY THE HONBLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. VS. CIT REPORTED IN (2006) 280 ITR 643. (II) CIT VS. NARENDRA DOSHI REPORTED IN (2002) 254 ITR 606. (III) PUNJAB SMALL INDUSTRIES AND EXPORT CORPN. LTD. VS. IAC REPORTED IN (2005) 278 ITR 92 (P & H) WHEREIN THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. NARENDRA DOSHI REPORTED IN (2002) 254 ITR 606 HAS BEEN FOLLOWED. (IV) R.K. JAIN & SONS (HUF) VS. CIT REPORTED IN (2005) 193 CTR (DEL) 659 (V) GARDEN SILK MILLS LTD. VS. DY. CIT REPORTED IN (2008) 296 ITR 577 WHEREIN THE DECISION OF NARENDRA DOSHI WAS FOLLOWED. (VI) CIT VS. HEG LTD. REPORTED IN (2009) 310 ITR 341 (M.P.) WHEREIN THE DECISION OF HONBLE APEX COURT IN THE CASE OF NARENDRA DOSHI AS ALSO OF ANOTHER DECISION OF APEX COURT IN THE CASE OF SANDVIK ASIA LTD. VS. CIT WAS FOLLOWED. (VII) CIT VS. HEG LTD. REPORTED IN (2010) 324 ITR 331 (VIII) CIT VS. SUTLEJ INDUSTRIES LTD. REPORTED IN (2010) 37 DTR (DEL) 25 (COPY ENCLOSED). (IX) ITAT (DELH BENCH) ORDER DATED 25.05.2005 IN THE CASE OF MMTC LTD. VS. DY. CIT IN ITA NO.1170/DEL/2002 WHEREIN EARLIER DECISION OF HONBLE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SUTLEJ INDUSTRIES (WHICH HAS BEEN AFFIRMED BY THE HONBLE DELHI HIGH COURT AS PER JUDGMENT LISTED AT SL. NO.(VIII) AND THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF D.J. WORKS VS. DY. CIT REPORTED IN 195 ITR 227 WAS FOLLOWED. (X) D.J. WORKS VS. DY. CIT REPORTED IN (1952) 195 ITR 227 (WHICH WAS APPROVED BY THE HONBLE APEX COURT IN THE CASE OF SANDVIK ASIA LTD.(SUPRA). 13 REVENUES APPEAL (ITA NO.419/LKW/09) : 9. THE REVENUE IS AGGRIEVED BY THE RELIEF GRANTED VIDE PARA 6 AS HAS BEEN REPRODUCED IN PARA 5 ABOVE. IN SUPPORT ITS PLEA THE REVENUE HAS FILED WRITTEN SUBMISSIONS WHEREIN RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAJASTHAN STATE ELECTRICITY BOARD VS. CIT AND OTHERS REPORTED IN (2006) 281 ITR 274 (COPY OF WHICH FORMS PART OF THE WRITTEN SUBMISSION). RESPONDENTS CONTENTION IN THIS RESPECT IS THAT WHERE TWO VIEWS ARE POSSIBLE THE VIEW FAVOURABLE TO THE SUBJECT SHOULD BE FOLLOWED UNTIL THE MATTER IS CONCLUDED EITHER WAY BY THE DECISION OF JURISDICTIONAL HIGH COURT OR BY THE DECISION OF HONBLE APEX COURT. THIS CONTENTION IS COVERED BY THE FOLLOWING CASE LAWS:- (I) CIT VS. VEGETABLE PRODUCTS LIMITED REPORTED IN (1973) 88 ITR PAGE 192 (II) CIT VS. J.K. HOSIERY FACTORY REPORTED IN (1986) 159 ITR PAGE 85 AS STATED IN PARA 5 THE DECISION OF LD. CIT(A) (WHICH HAS BEEN CHALLENGED BY THE REVENUE IN THIS APPEAL) IS COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GARDEN MILLS LTD VS. DY. CIT REPORTED IN (2008) 296 ITR 577. 10. ASSESSEES APPEAL BEING ITA NO.396/LKW/09 SHOULD BE ALLOWED SO AS TO HELD THAT IT IS ENTITLED TO A REFUND OF RS.21 46 705 (WHICH REPRESENTS INTEREST ON ACCOUNT OF DELAY IN GRANTING REFUND) AND FURTHER INTEREST ON THE SAID SUM BE ALLOWED TILL THE ACTUAL REFUND IS MADE. AT THE SAME TIME THE REVENUES APPEAL BEING ITA NO.419/LKW/09 DESERVES TO BE DISMISSED. RESPECTFULLY SUBMITTED ENCL.: AS ABOVE (S.K. GARG) 8. IN HIS RIVAL SUBMISSIONS THE LD.D.R. SUPPORTED THE ORDER OF THE AO AND FURTHER SUBMITTED THAT THE LD.CIT(A) HAD ERRED IN ALLOWING THE INTEREST UNDER SECTION 244A OF THE I.T.ACT TILL THE DATE OF ISSUE OF REFUND VOUCHER BY MISINTERPRETING DIRECTIONS FOR PAYMENT OF INTEREST ON REFUNDS AS GIVEN UNDER SECTION 244A OF THE I.T.ACT I.E. THE INTEREST SHALL BE PAID ONLY TILL THE DATE ON WHICH THE REFUND IS GRANTED I.E. UPTO 17.1.2006 IN THE PRESENT CASE. IT 14 WAS FURTHER STATED THAT THE REFUND WAS GRANTED THE MOMENT THE CONCERNED OFFICER SIGNED THE ORDER REGARDING PAYMENT OF INTEREST UNDER SECTION 244A OF THE I.T.ACT AND THE INTEREST SHOULD HAVE BEEN GRANTED TILL THE DATE WHEN THE ORDER REGARDING PAYMENT OF INTEREST HAD BEEN SIGNED. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF RAJASTHAN STATE ELECTRICITY BOARD VS. CIT (2006) 281 ITR 274(RAJ.). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS NOT IN DISPUTE THAT THE AO PASSED THE ORDER UNDER SECTION 254/154/143(3)/148 OF THE I.T.ACT. ON 17.1.2006 VIDE WHICH A REFUND OF RS.9 94 57 031 HAD BEEN DETERMINED. SINCE THE AMOUNT OF REFUND EXCEEDED RS.25 LACS THE AO SOUGHT THE APPROVAL FROM THE HIGHER AUTHORITIES AND ULTIMATELY ISSUED THE REFUND VOUCHER NO.414611 DATED 29.5.2006 TO THE ASSESSEE. HOWEVER THE INTEREST UNDER SECTION 244A WAS GRANTED UPTO THE MONTH OF JANUARY 2006. TO RESOLVE THIS CONTROVERSY IT BECOMES NECESSARY TO SEE THE PROVISIONS CONTAINED IN SECTION 244A OF THE I.T.ACT. THE SAID PROVISIONS READ AS UNDER : 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 UNDER SECTION 115WJ OR] [COLLECTED AT SOURCE UNDER SECTION 206C OR] 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 15 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 52 [SUB-SECTION (1) OF SECTION 115WE OR] 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. 9.1 AS PER PROVISIONS CONTAINED IN CLAUSE (B) OF SUB-SECTION (1) OF SECTION 244A OF THE I.T.ACT THE INTEREST SHALL BE CALCULATED FOR EVERY MONTH OR FOR PART OF THE 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. THE CRUCIAL WORDS ARE THE DATE ON WHICH THE REFUND IS GRANTED. IN THE PRESENT CASE THE AO PREPARED THE REFUND VOUCHER ON 17.1.2006 HOWEVER APPROVAL WAS TAKEN AS PER THE INSTRUCTIONS OF THE C.B.D.T. FROM THE HIGHER AUTHORITIES WHICH WAS GRANTED ONLY ON 29.5.2006 AND THE REFUND VOUCHER NO.414611 WAS ISSUED ON THE SAID DATE I.E. 29.5.2006. IN THE PRESENT CASE IT APPEARS THAT THE DELAY OCCURRED IN TAKING ADMINISTRATIVE APPROVAL SO THE DELAY WAS DUE TO THE INTERNAL WORKING OF THE DEPARTMENT WHICH WAS NOT ATTRIBUTABLE TO THE ASSESSEE AS SUCH THE ASSESSEE WAS ENTITLED TO INTEREST UPTO THE DATE ON WHICH THE REFUND HAS BEEN ISSUED. IN 16 THE PRESENT CASE THE REFUND WAS GRANTED TO THE ASSESSEE ONLY ON 29.5.2006 AND THEREFORE THE ASSESSEE WAS ENTITLED FOR INTEREST UPTO THE SAID DATE. 9.1(I) THE AFORESAID VIEW IS IN CONSONANCE WITH THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUTLEJ INDUSTRIES LTD. (2010) 37 DTR 25 WHEREIN IT HAS BEEN HELD AS UNDER : ON AN ANALYSIS OF S.244A IT IS SEEN THAT WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASESSEE THE ASESSEE IS ENTITLED TO SIMPLE INTEREST THEREON. THE MODE AND MANNER OF CALCULATING SUCH INTEREST IS LAID DOWN IN CLS. (A) AND (B) OF SUB-S.(1) OF THE SAID SECTION. WHERE THE REFUND IS OUT OF PREPAID TAXES INTEREST IS CALCULATED IN TERMS OF S. 244A(1)(A). WHERE THE REFUND IS OF TAXES PAID OTHER THAN PREPAID TAXES COVERED IN CL. (A) THE COMPUTATION OF INTEREST IS FOR THE PERIOD PRESCRIBED IN CL. (B) SUB-S. (1) OF THE SAID SECTION. THE TAX DUE ON THE RETURNED INCOME HAS TO BE PAID BY WAY OF TDS (S. 199) ADVANCE TAX (S. 209) OR BY WAY OF SELF-ASSESSMENT TAX (S. 140A). IN ADDITION WHERE THE ASSESSMENT IS COMPLETED AT AN INCOME HIGHER THAN THE RETURNED INCOME THE TAX PAYABLE BY THE ASSESSEE IS SPECIFIED IN THE NOTICE OF DEMAND ISSUED UNDER S. 156. WHERE THERE IS A SHORTFALL IN PAYMENT ON TAX VIS-A-VIS THE TAX FINALLY DUE ON THE ASSESSED INCOME THE ASSESSEE IS LIABLE TO PAY INTEREST UNDER S. 234B. CONVERSELY WHERE THE REVENUE MAKES A HIGH-PITCHED ASSESSMENT WHICH IS SUBSEQUENTLY REDUCED/MODIFIED IN APPEAL ANY PAYMENT OF TAXES MADE WHICH ARE SUBSEQUENTLY REFUNDED AS A CONSEQUENCE OF RELIEF OBTAINED IN APPEALS ETC. ARE MONIES LEGITIMATELY BELONGING TO THE TAXPAYERS AND WRONGLY WITHHELD BY THE GOVERNMENT. THIS IS BASED ON THE PRINCIPLE THAT IF THE REVENUE HAD IN THE FIRST INSTANCE MADE CORRECT ASSESSMENT OF THE TUX LIABILITY OF THE ASSESSEE THE ASSESSEE WOULD NOT HAVE BEEN DEPRIVED BY THE USE OF MONEY. IN SUCH A SITUATION WHERE PREPAID TAXES ARE IN EXCESS OF THE ASSESSED TAX THE ASSESSEE IS ENTITLED TO REFUND OF SUCH TAX ALONG WITH INTEREST THEREON. WHERE AN ASSESSEE OUT OF ABUNDANT CAUTION PAYS SELF-ASSESSMENT WHILST STAKING A CLAIM IN THE RETURN WHICH CLAIM IS ACCEPTED RESULTING IN REFUND OF SELF-ASSESSMENT TAX THE ASSESSEE SHOULD BE EQUALLY ENTITLED TO INTEREST THEREON. SEC. 244A WAS INSERTED IN THE STATUTE AS A MEASURE OF RATIONALIZATION TO ENSURE THAT THE ASSESSEE IS DULY COMPENSATED BY THE GOVERNMENT BY WAY OF 17 PAYMENT OF INTEREST FOR MONIES LEGITIMATELY BELONGING TO THE ASSESSEE AND WRONGFULLY RETAINED BY THE GOVERNMENT WITHOUT ANY GAPS. THEREFORE WHERE THE SELF-ASSESSMENT TAX PAID BY THE ASSESSEE UNDER S. 140A IS REFUNDED THE ASSESSEE SHOULD BE ON PRINCIPLE ENTITLED TO INTEREST THEREON SINCE THE SELF-ASSESSMENT TAX FALLS WITHIN THE EXPRESSION 'REFUND OF ANY AMOUNT'. THE COMPUTATION OF INTEREST ON SELF-ASSESSMENT TAX HAS TO BE IN TERMS OF S. 244A(1)(B) I.E. FROM THE DATE OF PAYMENT OF SUCH AMOUNT UP TO THE DATE ON WHICH REFUND IS ACTUALLY GRANTED. EVEN OTHERWISE IT IS TRITE LAW THAT WHEREVER THE ASSESSEE IS ENTITLED TO REFUND THERE IS STATUTORY LIABILITY ON THE REVENUE TO PAY THE INTEREST ON SUCH REFUND ON GENERAL PRINCIPLES TO PAY THE INTEREST ON SUMS WRONGFULLY RETAINED.CIT VS. CHOLAMANDALAM INVESTMENT & FINANCE CO. LTD. (2007) 211 CTR (MAD) 384 : (2007) 294 ITR 438 (MAD) CONCURRED WITH; SANDVIK ASIA LTD. VS. CIT (2006) 200 CTR (SC) 505 : (2006) 280 ITR 643 (SC) FOLLOWED. 9.2 IN THE PRESENT CASE ALSO THERE WAS STATUTORY LIABILITY ON THE REVENUE TO PAY THE INTEREST ON THE REFUND WHICH WAS RETAINED FOR SEEKING THE ADMINISTRATIVE APPROVAL. AS THE REFUND WAS GRANTED TO THE ASSESSEE ONLY ON 29.5.2006 THEREFORE THE ASSESSEE WAS ENTITLED FOR THE INTEREST UPTO THE SAID DATE AND THE AO WAS NOT JUSTIFIED IN GRANTING THE INTEREST ONLY UPTO JANUARY 2006. 10. NOW ANOTHER CONTROVERSY TO BE RESOLVED WHICH IS AGITATED BY THE ASSESSEE RELATES TO INTEREST ON INTEREST. 11. ON A SIMILAR ISSUE THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GARDEN SILK MILLS LTD. VS.DY. CIT(ASSESSMENT) (2008) 296 ITR 577(GUJ.) HAS HELD AS UNDER : (I) THAT THE PROVISIONS OF SECTION 214(1) CONTEMPLATE PAYMENT OF INTEREST ON THE AMOUNT OF ADVANCE TAX PAID IN THE FINANCIAL YEAR TO THE EXTENT IT EXCEEDS THE AMOUNT OF ASSESSED TAX. THE PETITIONER HAD PAID 18 THE AMOUNT OF RS.54 LAKHS AFTER THE FINANCIAL YEAR HENCE IT WAS NOT IN THE NATURE OF ADVANCE TAX. THEREFORE THE PETITIONER WAS NOT ENTITLED TO THE PAYMENT OF INTEREST UNDER THE PROVISIONS OF SECTION 214(1). (II) THAT THE PETITIONER WAS ENTITLED TO INTEREST ON THE AMOUNT OF RS.54 LAKHS FROM FEBRUARY 1 1991 TO SEPTEMBER 25 1992 I.E. FROM THE DATE OF ASSESSMENT ORDER TO THE DATE OF PAYMENT OF REFUND UNDER THE PROVISIONS OF SECTION 244(1A). MODI INDUSTRIES LTD. V. CIT [1995] 216 ITR 759 (SC) APPLIED. (III) THE PETITIONER WAS ALSO ENTITLED TO PAYMENT OF SIMPLE INTEREST ON THE AMOUNT OF INTEREST PAYABLE ON THE SUM OF RS. 54 LAKHS AT THE RATE SPECIFIED UNDER SECTION 244(1A) FROM THE DATE IT HAD BECOME PAYABLE UNTIL THE DATE OF ACTUAL PAYMENT. . 11.1 IN THE INSTANT CASE ALSO THE REFUND VOUCHER ALTHOUGH WAS PREPARED IN THE MONTH OF JANUARY 2006 BUT IT WAS WITHHELD FOR SEEKING APPROVAL SINCE THE AMOUNT EXCEEDED RS.25 LACS THEREFORE THE INTEREST ON REFUND WOULD TAKE THE SAME COLOUR AS THE EXCESS AMOUNT OF TAX WHICH BECAME REFUNDABLE IN THE MONTH OF JANUARY 2006 AND ACCORDINGLY INTEREST ON SUCH WITHHELD INTEREST WAS REQUIRED TO BE PAID BY THE REVENUE UPTO THE MONTH OF MAY 2006 SINCE THE REFUND VOUCHER WAS ISSUED TO THE ASSESSEE ONLY ON 29.5.2006. 11.2 SIMILARLY WHILE DECIDING THE CASE OF MOTOR & GENERAL FINANCE LTD. VS.CIT (2009) 185 TAXMAN 167 (DELHI) THEIR LORDSHIPS OBSERVED IN PARA 19 OF THE SAID ORDER AS UNDER : WHEN THE REFUND OF TAX BECOMES PAYABLE AS A RESULT OF ORDER PASSED IN AN APPEAL OR OTHER PROCEEDINGS UNDER THE ACT THIS REFUND IS TO HE GIVEN ALONG WITH INTEREST WHICH IS TO BE CALCULATED AS PER SECTION 244A. IF THAT INTEREST IS PAID ALONG WITH THE EXCESS TAX NO FURTHER PAYMENT IS TO BE MADE. IT IS ONLY WHEN THE EXCESS AMOUNT OF TAX IS REFUNDED BUT THE INTEREST IS NOT REFUNDED ALONG THEREWITH THE RETENTION OF THE INTEREST AMOUNT WOULD BE UNJUSTIFIED AND INTEREST ON INTEREST WOULD ALSO BECOME PAYABLE. THE REASON IS SIMPLE. IT IS THE TAX WHICH 19 WAS PAID IN EXCESS BY THE ASSESSEE WHICH BECOMES REFUNDABLE. THE ASSESSEE WOULD BE COMPENSATED BY PAYING INTEREST THEREON. IT IS ONLY WHEN THE INTEREST IS NOT REFUNDED ALONG WITH EXCESS TAX THAT THE WITHHOLDING OF THE SAID INTEREST BECOMES UNJUSTIFIED AND IT BECOMES AN 'AMOUNT DUE' TO THE ASSESSEE ON WHICH THE ASSESSES CAN CLAIM FURTHER INTEREST. 11.3 ON A SIMILAR ISSUE THE HON'BLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. VS. CIT (2006) 280 ITR 643(S.C.) HAS HELD AS UNDER : INTEREST IS PAYABLE ON THE AMOUNT TO BE REFUNDED UNDER SECTION 244(1) WITHIN THREE MONTHS FROM THE DECISION OF THE APPELLATE OR OTHER AUTHORITY SPECIFIED IN SECTION 240. THE EXPRESSION AMOUNT IN THE EARLIER PART OF SECTION 244(1A) REFERS NOT ONLY TO THE TAX BUT ALSO TO THE INTEREST ; IT IS A NEUTRAL EXPRESSION AND IT CANNOT BE LIMITED TO THE TAX PAID IN PURSUANCE OF THE ORDER OF ASSESSMENT. EVEN ASSUMING THAT THERE IS NO PROVISION FOR PAYMENT OF COMPENSATION COMPENSATION FOR DELAY IS REQUIRED TO BE PAID AS THE ACT ITSELF RECOGNIZES IN PRINCIPLE THE LIABILITY OF THE DEPARTMENT TO PAY INTEREST WHEN EXCESS TAX WAS RETAINED AND THE SAME PRINCIPLE SHOULD BE EXTENDED TO CASES WHERE INTEREST WAS RETAINED. 11.4 THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE AFORESAID REFERRED TO CASE IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. WE THEREFORE CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE AND KEEPING IN VIEW THE RATIO LAID DOWN IN THE AFORESAID REFERRED TO JUDICIAL PRONOUNCEMENT DIRECT THE AO TO ALLOW THE INTEREST TO THE ASSESSEE ALSO ON THE INTEREST WHICH WAS PAYABLE ON THE AMOUNT TO BE REFUNDED. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF THE DEPARTMENT IS DISMISSED. 12. IN CROSS APPEALS FOR THE ASSESSMENT YEAR 2002-03 I.E. I.T.A.NO.397(LKW)/2009) BY THE ASSESSEE AND I.T.A.NO.420(LKW)/2009 20 BY THE DEPARTMENT THE FACTS ARE IDENTICAL TO THE FACTS INVOLVED IN THE ASSESSMENT YEAR 1997-98 IN CROSS APPEALS I.E. ITA NO.396(LKW)/2009 BY THE ASSESSEE AND ITA NO.419(LKW)/2009 BY THE DEPARTMENT THEREFORE OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER IN RESPECT OF ASSESSMENT YEAR 1997-98 SHALL APPLY MUTATIS MUTANDIS FOR THE ASSESSMENT YEAR 2002-03. 13. IN THE RESULT APPEALS OF THE DEPARTMENT ARE DISMISSED AND THOSE OF THE ASSESSEE ARE ALLOWED. (THE ORDER PRONOUNCED IN THE OPEN COURT ON 15.7.11.) SD. SD. (H.L.KARWA) (N.K.SAINI) VICE PRESIDENT ACCOUNTANT MEMBER JULY 15TH 2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R. ITAT LUCKNOW. SRIVASTAVA.