2016 (6) TMI 1029 - HC - Income Tax

Court rules interest on delayed payment of interest not allowable under Section 244A; dismissal of Tax Appeals upheld.

GUJARAT STATE FERTILISERS AND CHEMICALS LTD Versus DY. COMMISSIONER OF INCOME TAX, CIRCLE-1

The High Court upheld the order of the Income Tax Appellate Tribunal, ruling in favor of the revenue in a case concerning interest on delayed payment of ... Interest on delayed payment of interest - Held that:- Considering the decision of the Honble the Supreme Court in the case of Gujarat Fluoro Chemicals (2013 (10) TMI 117 - SUPREME COURT ), the question, which is raised in the present appeals is required to be answered in favour of the revenue wherein it is held that the Legislature inserted Section 244A to the Act which provides for interest on refunds under various contingencies and that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. - Decided against assessee Issues involved:Interpretation of law regarding interest on delayed payment of interest.Analysis:1. The appellant challenged the order of the Income Tax Appellate Tribunal (ITAT) regarding the denial of interest on interest due and granted under section 244A for the assessment years 1995-96 and 1996-97. The Tribunal upheld the order of the Assessing Officer and dismissed the appeals. The main issue raised was whether the Tribunal was correct in law in not granting interest on delayed payment of interest.2. The respondent, representing the revenue, cited a decision of the Supreme Court in the case of Commissioner of Income Tax vs. Gujarat Fluoro Chemicals, where the Court directed the Revenue to pay compensation for delay in refunding the amount due to the assessee. The Court clarified that the compensation was for the delay in payment, not interest on interest. The respondent argued that the legislative provision under Section 244A only allows for interest on refunds under specific circumstances, and no other interest on such statutory interest can be claimed.3. The appellant's counsel did not dispute the respondent's arguments and failed to provide any contrary decision. After considering the submissions and the Supreme Court's decision in the Gujarat Fluoro Chemicals case, the High Court held in favor of the revenue. The Court emphasized that the legislative provision in Section 244A only allows for interest on refunds under certain contingencies, and no additional interest on such statutory interest can be claimed.4. Consequently, the High Court confirmed the impugned judgment and order passed by the ITAT, dismissing the present Tax Appeals in favor of the revenue. The Court's decision was based on the interpretation of the law and the specific provisions outlined in Section 244A regarding interest on refunds, emphasizing that no further interest on statutory interest can be claimed beyond what is provided for under the statute.