TaxTMI 
TaxTMI 
2023 (11) TMI 193
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....me at Rs. 905,24,80,790/-. The case was selected for scrutiny and the assessment under section 143(3) was completed vide order dated 25/02/2000 assessing the income of the assessee at Rs. 13216,623,26,540/-. Aggrieved, the assessee filed an appeal before the CIT(A), who upheld the additions against which the assessee filed an appeal before the Tribunal. The Tribunal vide order dated 21.06.2019 granted relief to the assessee on three grounds and remanded two of grounds back to the assessing officer The assessing officer passed an order under section 143(3) r.w.s.254 dated 29.07.2021 giving effect to the order of the Tribunal whereby the assessed income was revised to Rs. 921, 37,88,870. The assessee filed an appeal before the CIT(A) against the said order of the assessing officer stating that the Assessing Officer in the order giving effect had not correctly granted interest under section 244A. The assessee submitted before the CIT(A) that Assessing Officer had granted interest under section 244A by artificially splitting the refund granted into interest and tax and adjusting the same from interest and tax refund resulting in reduced interest under section 244A being granted. 4. ....
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....27.03.1998 and in default, to pay the penal interest @ 15% per annum for the aforesaid period. 6. In our considered view, the aforesaid judgment has been misquoted and misinterpreted by the assessees and also by the Revenue. They are of the view that in Sandvik Asia Ltd.'s case (supra), this Court had directed the Revenue to pay interest on the statutory interest in case of delay in the payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period. 7. As we have already noticed, in Sandvik Asia Ltd.'s case (supra) this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to pay compensation for the same not an interest on in....
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....1 was Rs. 294,46,70,773 which included Rs. 256,23,57,925 towards tax and interest up to 14.06.2001 of Rs. 38,23,12,848. The assessing officer reworked the refund by adjusting the refund of Rs. 8,19,70,880 (which included an interest of Rs. 1,05,36,544) while giving effect to the order of the Tribunal in a certain manner which the assessee is contending that it is resulting in short grant of interest under section 244A. The manner in which the assessing officer has adjusted the refund in the order giving effect (OGE) and the manner in which assessee the assessee contending that the refund should be adjusted is tabulated below for ease of reference - Particulars Refund as adjusted by the assessing officer Assessee's contention on how refund to be adjusted Refund due - Tax A 256,23,57,925 A 256,23,57,925 - Interest B 38,23,12,848 B 38,23,12,848 Total Refund C 294,46,70,773 C 294,46,70,773 Refund granted in OGE - Tax D 7,14,34,336 D 7,14,34,336 - Interest E 1,....
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....n our considered opinion, is against the spirit of the provisions of the scheme of taxation. The provisions of section 140A of the Act specifically provides that any part payment of taxes paid by the assessee would first be appropriated towards the interest portion thereon and thereafter remaining would get adjusted towards the tax portion, meaning thereby, the exchequer should never be deprived of its legitimate dues payable by the assessee in time The same analogy would equally apply when the refund is to b< granted to the assessee with interest u/s 244A of the Act. In the instant case, the entire confusion had arose due to the fact tha the full amount of refund as determined by the Id AO was nc actually granted to the assessee, thereby making the assesse eligible for further interest for the future periods. We find that this aspect had been duly dealt with by the co-ordinate bench this tribunal elaborately in the case of Union Bank of India ACIT reported in (2016) 72 taxmann.com 348 dated 11.8.20 wherein the solitary ground taken up by the assessee before the tribunal was with regard to granting lesser amount of interest u/s 244A of the Act by the Ld AO while computing refund ar....
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.... the facts of this case and submissions made by both sides, provisions of law as well as judgments placed before us. It is noted that the only issue to be decided by us is that while granting the refund in pursuance to the appeal effect order, whether the amount of refund granted earlier should be adjusted first against the interest component of the earlier refund and thereafter the balance amount should be adjusted against the principal component of tax in the refund granted earlier order OR vice-versa as has been done by the AO. It is noted that this issue is not coming for the first time before the Tribunal as the same has arisen for A.Ys. 1988-89, 2001-02 & 2005-06. Copies of the orders were placed before us and it was contended by the Ld. Counsel that the Tribunal had already decided this issue in favour of the Tribunal therefore, before proceeding further we find it appropriate to first reproduce and discuss the reasoning given by the Tribunal in earlier years. The relevant part of order dated 23.06.2014 is reproduced hereunder for the sake of ready reference: "4. Undisputedly for A.Y. 1988-89 the assesses entitled to refund of Rs. 14.07 crores as per assessm order a....
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.... Revenue against interest component first and thereafter against tax component, in which event u/s. 244A assessee is entitled to interest on the tax component, learned Departmental Representative could not place any decision contrary to the decision of Hon'ble Delhi High Court cited by learned counsel for the assessee. 6. We have carefully considered the rival submissions. As rightly pointed out by the assessee Hon'ble Delhi High Court rightly explained that the amount refunded by the Revenue has to be adjusted towards interest payable to the assessee and the balance, if any, shall be adjusted towards tax. On this principle there is no contrary decision placed before us, we therefore agree, with the plea of the assessee and direct the Assessing Officer accordingly." 3.5 From the perusal of the above, it is noted by us that the Tribunal has relied upon the judgment of Hon'ble Delhi High Court in the case of India Trade Promotion Organisation (supra), wherein it was inter-alia held that in a situation where only part amount is refunded by the department, then payment of interest on the balance amount due from the department to the assessee, on a particul....
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..... If the refund does not include interest due and payable on the amount refunded, the Revenue would be liable to pay interest on the shortfall. This does not amount to payment of interest on interest. An example will clarify the situation and help us to understand what is due and payable under Section 244A of the Act. Suppose Revenue is liable to refund Rs. 1 lac to an assessee witr, effect from 1st April, 2010, the said amount is refundec along with interest due and payable under Section 244/ on 31st March, 2013, then no further interest is payable. However, if only Rs. 1 lac is refunded by the Revenue 01 31st March, 2013 and the interest accrued on Rs. 1 la under Section 244A is not refunded, the Revenue would b liable to pay interest on the amount due and payable but not refunded. Interest will not be due and payable on the amount refunded but only on the amount which remain unpaid, i.e, the interest element, which should have bee refunded but is not paid. In another situation where pa, payment is made, Section 244A would be still applicable i the same manner. For example, if Rs. 60,000/- was pai on 31st March, 2013, Revenue would be liable to pa interest on Rs. 1 lac f....
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....e fundamental principle of fiscal legislation in any civilized society should be that the state should treat its citizens (i.e. tax payers in this case) with the same respect, honesty and fairness as it expects from its citizens. It is further noted by us that Hon'ble Delhi High Court has already decided this issue in clear words which has been followed by the Tribunal in assessee's own case in the earlier years. It is further noted by us that assessee is not asking for payment for interest on interest. It is simply requesting for proper method of adjustment of refund and for following the same method which was followed by the department while making collection of taxes. Under these circumstances, we find that judgment of Hon'ble Supreme Court in the case of Gujarat Fluoro Chemicals (supra) is not applicable on the facts of the case before us and thus Ld. CIT (A) committed an error in not following the decisions of the Tribunal of earlier years in assessee's own case as well as judgment of Hon'ble High Court in the case of India Organization (supra). 3.9 Before parting with, we are reminded of a recent judgment of Hon'ble Supreme Court in the case o....
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....ng Statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex aequo et bono ought to be refunded, the right to interest follows, as a matter of course.' 3.10 It is noted from, the observations of the Hon'ble Supreme Court that it has been observed that whatever money has been received by the department, it ought to be refunded ex aequo et bono. It is a Latin phrase which means 'what is just and fair' or 'according to equity and good conscience'. Something to be decided ex aequo et bono....