THE INDIAN HOTELS CO.LTD, MUMBAI v. DCIT CIR 2(2), MUMBAI

ITA 5543/MUM/2010 | 1997-1998
Pronouncement Date: 28-09-2011

Appeal Details

RSA Number 554319914 RSA 2010
Assessee PAN AAACT3957G
Bench Mumbai
Appeal Number ITA 5543/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 20 day(s)
Appellant THE INDIAN HOTELS CO.LTD, MUMBAI
Respondent DCIT CIR 2(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Assessee
Bench Allotted I
Date Of Final Hearing 22-09-2011
Next Hearing Date 22-09-2011
Assessment Year 1997-1998
Appeal Filed On 08-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I BEFORE SHRI J SUDHAKAR REDDY (AM) & SHRI VIJAY PAL RAO (JM) I.T.A.NO. 5542/MUM/2010 (ASSESSMENT YEAR : 1995-96) I.T.A.NO. 5543/MUM/2010 (ASSESSMENT YEAR : 1997-98) I.T.A.NO. 5544/MUM/2010 (ASSESSMENT YEAR : 2000-01) I.T.A.NO. 5545/MUM/2010 (ASSESSMENT YEAR : 2006-07) THE INDIAN HOTELS CO. LTD. MANDLIK HOUSE MANDLIK ROAD 3 RD FLOOR COLABA MUMBAI 400001. VS. DCIT CIRCLE 2(2) MUMBAI PAN/GIR NO. : AAACT3957G ASSESSEE BY : SHRI DHARMESH SHAH DEPARTMENT BY : SHRI SUNIL KUMAR SINGH DATE OF HEARING : 22.9.2011 DATE OF PRONOUNCEMENT : 28.9.2011 ORDER PER J. SUDHAKAR REDDY (AM) :- ALL THESE APPEALS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST AN IDENTICAL BUT SEPARATE ORDERS OF LEARNED CIT(A) DAT ED 6.5.2010 FOR A.Y. 1995-96 1997-98 2000-2001 AND 2006-07. 2. FACTS IN BRIEF. THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND IT FILED ITS RETURN OF INCOME FOR ALL THESE ASSESSMENT YEARS AND THESE RETURNS OF INCOME WERE INITIALLY PROCESSED U/S. 143 (1) AND THEREAFTER ASSESSMENT ORDER WAS PASSED U/S. 143(3). THE ASSESS ING OFFICER MADE CERTAIN DISALLOWANCES AND ADJUSTMENTS TO THE RETURN ED INCOME. ON APPEAL LEARNED CIT(A) GRANTED PART RELIEF. 3. ON FURTHER APPEAL THE TRIBUNAL GRANTED FURTHER RELIEF VIDE ITS ORDER DATED 12.9.2006. THE ASSESSING OFFICER PASSED AN OR DER GIVING EFFECT TO THE ITAT ORDER ON 11.5.2007 FOR A.Y. 1995-96 AND DE TERMINED REFUND OF CERTAIN AMOUNT WHICH INCLUDED INTEREST U/S. 244A. THOUGH REFUND WAS DETERMINED THE SAME WAS NOT PAID TO THE ASSESSEE. ON 30.8.2007 THE AMOUNT OF REFUND WAS ADJUSTED BY THE ASSESSING OFF ICER AGAINST TAX THE INDIAN HOTELS CO. LTD. 2 LIABILITY OF THE COMPANY FOR ANOTHER ASSESSMENT YEA R. THE ASSESSEE APPLIED FOR INTEREST U/S. 244A FOR THE PERIOD 11.5 .2007 TO 30.8.2007. THE ASSESSING OFFICER REJECTED THE SAME VIDE HIS OR DER DATED 27.5.2009 BY OBSERVING AS FOLLOWS THE CONTENTION OF THE ASSE SSEE CAN NOT BE ACCEPTED AS THERE IS NO PROVISION IN THE INCOME TAX ACT 1961 TO PAY INTEREST ON INTEREST. THE APPLICATION OF THE ASSESS EE IS HEREBY REJECTED. SIMILARLY FOR OTHER ASSESSMENT YEARS THE FACTS ARE SIMILAR THOUGH THE DATES ARE DIFFERENT. AS ISSUES ARE THE SAME WE DO NOT FEEL IT NECESSARY TO GIVE THE DATES OF EACH OF THE ASSESSMENT YEAR RESPE CTIVELY. 4. ON APPEAL THE FIRST APPELLATE AUTHORITY PLACED RELIANCE ON THE DECISION OF THE THIRD MEMBER OF THE TRIBUNAL IN THE CASE OF NIRMA CHEMICAL WORKS LTD. VS. JCIT (2009) 29 DTR 76 (AHD) (TM) AND REJECTED THE ARGUMENT OF THE ASSESSEE. 5. AGGRIEVED THE ASSESSEE FILED THIS APPEAL ON THE FOLLOWING EFFECTIVE GROUND:- THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS I N REJECTING THE CLAIM OF THE APPELLANT FOR INTEREST U/S. 244A OF TH E ACT ON DELAY PAYMENT OF INTEREST ON REFUND. 6. SHRI DHARMESH SHAH LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ISSUE IS NO MORE RES-INTEGRA IN VIEW OF TH E DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. HEG LTD. 234 ITR 331 (SC) WHEREIN JUDGEMENT OF MADHYA PRADESH HIGH COURT IN T HE CASE OF HEG LTD. 310 ITR 341 (MP) WAS UPHELD. IT WAS ALSO POI NTED OUT THAT HON'BLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. VS. CIT (2006) 280 ITR 643 (SC) HAS HELD THAT UNDER THE STATUTE THE ASSES SEE WAS ENTITLED FOR INTEREST ON INTEREST. RELIANCE WAS ALSO PLACED ON T HE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GR EAVES INDIA LTD. INCOME TAX APPLICATION NO. 151 152 OF 1999 DATED 6. 3.2007. RELIANCE WAS ALSO PLACED ON NUMBER OF DECISIONS OF THE TRIBU NAL IN SUPPORT OF HIS CONTENTIONS. 7. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THERE IS NO ABNORMAL DELAY IN REFUNDING OR ADJUSTING THE AMOUNT IN THIS CASE AND THE INDIAN HOTELS CO. LTD. 3 THE DELAY WAS ONLY BETWEEN MAY AND AUGUST OF THE YE AR 2007. HE SUBMITTED THAT IN THE CASES RELIED UPON BY LEARNED COUNSEL FOR THE ASSESSEE WERE DISTINGUISHABLE AS THERE WAS HUGE DE LAY BETWEEN THE ORDER IN WHICH REFUND PLUS INTEREST WAS QUANTIFIED AND THE DATE OF ACTUAL PAYMENT. IN ITA NO. 5544/MUM/2010 FOR A.Y. 2000-01 HE SUBMITTED THAT THE ASSESSEE HAS NOT MADE ANY CLAIM OF INTERES T ON INTEREST BEFORE THE ASSESSING OFFICER AS SUCH LEARNED CIT(A) HAS RI GHTLY REJECTED THE APPEAL. 8. WE HAVE HEARD THE RIVAL CONTENTION. WE HAVE PERU SED THE PAPERS ON RECORD ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAWS CITED. FIRST WE SEE ITA NO. 5544/MUM/2010. LEARNED COUNSEL FOR THE ASSESSEE DID NOT DISPUTE THE CONTENTION OF THE LEARNED DEPARTMEN TAL REPRESENTATIVE THAT THE ASSESSEE HAS NOT MADE A CLAIM OF INTEREST ON INTEREST IN THE APPLICATION MADE BEFORE THE ASSESSING OFFICER FOR A .Y. 2000-01. UNDER THESE CIRCUMSTANCES WE UPHOLD THE ORDER OF LEARNED CIT(A) FOR A.Y. 2000-01 AND DISMISS THIS APPEAL OF THE ASSESSEE. 9. COMING TO OTHER APPEALS THE REFUND ORDER IN ALL THE CASES WERE PASSED QUANTIFYING REFUND OF TAX PLUS INTEREST THER EON. NO REFUND WAS GIVEN BUT AFTER A LAPSE OF SOME TIME THE REFUND W AS ADJUSTED AGAINST DEMAND OF ANOTHER YEAR IN THE MONTH OF AUGUST. THE ISSUE IS WHETHER THE ASSESSEE IS ENTITLED TO INTEREST ON INTEREST FO R THIS PERIOD I.E. THE DATE OF QUANTIFYING THE REFUND PLUS INTEREST BY PASSING CONSEQUENTIAL ORDER TO THE ORDER OF ITAT AND DATE OF ADJUSTMENT OF THE REF UND DUE AGAINST OUTSTANDING DEMAND FOR ANOTHER ASSESSMENT YEAR. FIR ST APPELLATE AUTHORITY RELIED ON THE DECISION OF AHMEDABAD BENCH OF THE TRIBUNAL THIRD MEMBER IN THE CASE OF NIRMA CHEMICAL WORKS LT D. (SUPRA). WE HAVE PERUSED THIS DECISION. THE TRIBUNAL NOTED THE DIFFERENCE IN LANGUAGE USED IN SECTION 244 AND SECTION 244A AND HAS CAME T O A CONCLUSION THAT THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. (SUPRA) DOES NOT APPLY WHEN REFUND IS DUE U/S . 244A. WE FIND THAT THE JUDGEMENT OF HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF HEG LTD. 310 ITR 341 (MP) HAS NOT BEEN CITED BEFOR E THE THIRD MEMBER. HON'BLE MP HIGH COURT AFTER EXTRACTING SECTION 244 AND SECTION 244A AND THE INDIAN HOTELS CO. LTD. 4 OBSERVING THE LANGUAGE THEREIN AT PAGE 347 HELD AS FOLLOWS IN VIEW OF THE AFORESAID ENUNCIATION OF LAW WE ARE OF THE CON SIDERED OPINION THAT GRANT OF INTEREST ON INTEREST IS PERMISSIBLE AND TH E CHANGE IN THE PROVISION DOES NOT AFFECT THE SAME. HON'BLE SUPREM E COURT ON APPEAL BY THE REVENUE IN THE CASE OF CIT VS. HEG LTD. 324 I TR 331 (SC) HELD AS FOLLOWS :- THE ASSESSEE CLAIMED STATUTORY INTEREST FOR DELAYE D REFUND OF RS. 45 73 528 FOR 57 MONTHS BETWEEN 1ST APRIL 1993 AND 31ST DEC. 1997 IN TERMS OF S. 244A OF THE IT ACT. THEREFORE THIS IS NOT A CASE WHERE THE ASSESSEE IS CLAIMING COMPOUND INTEREST OR INTEREST ON INTEREST AS IS SOUGHT TO BE MADE OUT IN THE CIVIL APPEALS FILED BY THE DE PARTMENT. THE NEXT QUESTION WHICH WE ARE REQUIRED TO ANSWER I SWHAT IS THE MEANING OF THE WORDS 'REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE' IN S. 244A ? IN THE PRESENT CASE AS STATED ABOVE THERE ARE TWO COMPONENTS OF THE TAX PAID BY THE ASSESSEE FOR WHICH THE ASSES SEE WAS GRANTED REFUND NAMELY TDS OF RS. 45 73 523 AND TAX PAID AFTER ORI GINAL ASSESSMENT OF RS. 1 71 00 320. THE DEPARTMENT CONTENDS THAT THE W ORDS 'ANY AMOUNT' WILL NOT INCLUDE THE INTEREST WHICH ACCRUED TO THE RESPONDENT FOR NOT REFUNDING RS. 45 73 528 FOR 57 MONTHS. WE SEE NO ME RIT IN THIS ARGUMENT. THE INTEREST COMPONENT WILL PARTAKE OF THE CHARACTE R OF THE 'AMOUNT DUE' UNDER BECOMES AN INTEGRAL PART OF RS. 45 73 528 WHI CH IS NOT PAID FOR 57 MONTHS AFTER THE SAID AMOUNT BECAME DUE AND PAYABLE . AS CAN BE SEEN FROM THE FACTS NARRATED ABOVE THIS IS THE CASE OF SHORT PAYMENT BY THE DEPARTMENT AND IT IS IN THIS WAY THAT THE ASSESSEE CLAIMS INTEREST UNDER S. 244A OF THE IT ACT. THEREFORE ON BOTH THE AFORESTA TED GROUNDS WE ARE OF THE VIEW THAT THE ASSESSEE WAS ENTITLED TO INTEREST FOR 57 MONTHS ON RS. 45 73 528. THE PRINCIPAL AMOUNT OF RS. 45 73 528 HA S BEEN PAID ON 31ST DEC. 1997 BUT NET OF INTEREST WHICH AS STATED ABO VE PARTOOK THE CHARACTER OF 'AMOUNT DUE' UNDER S. 244A. FOR THE AFORESTATED REASONS THE CIVIL APPEAL ARISI NG OUT OF SLP (C) NO. 18045 OF 2008 FILED BY THE DEPARTMENT FAILS AND IS DISMISSED WITH NO ORDER AS TO COSTS. 10. ARGUMENT OF THE LEARNED DEPARTMENTAL REPRESENTA TIVE THAT INTEREST ON INTEREST CAN BE PAID ONLY WHEN THERE I S SUBSTANTIAL DELAY BETWEEN ORDER QUANTIFYING THE REFUND AND ACTUAL PAY MENT THEREOF IS NOT SUPPORTED BY ANY CASE LAW OR ANY PROVISIONS OF LAW. REASONABILITY OF THE PERIOD CANNOT BE DECIDED BASED ON PERCEPTION. 11. IN VIEW OF THE JUDGEMENT OF HON'BLE SUPREME COU RT WE HAVE NO OTHER ALTERNATIVE TO FOLLOW THE SAME AND ALLOW THRE E APPEALS OF THE ASSESSEE FOR A.Y. 1995-96 1997-98 AND 2006-07. THE ASSESSING OFFICER SHALL EXAMINE THE FACTS AND FIGURES AND GRANT INTER EST ACCORDINGLY. THE INDIAN HOTELS CO. LTD. 5 12. IN THE RESULT THESE THREE APPEALS OF THE ASSES SEE ARE ALLOWED AND APPEAL FOR A.Y. 2000-01 IS DISMISSED. ORDER HAS BEEN PRONOUNCED ON 28 TH DAY OF SEPTEMBER 2011. SD/- (VIJAY PAL RAO) JUDICIAL MEMBER SD/- (J.SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED : 28 TH SEPTEMBER 2011. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT CONCERNED. 5. THE DR CONCERNED MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI PS