TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 193
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....d 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. The CIT(A) relied on the decision of the co-ordin....
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....num 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 interest. 8. Further it is brought to our notice that the Legislature by the Ac....
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....6.2001 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 1,05,36,544 E 1,05,36,544 Total Refund F 8,19,70,880 F 8,19,70,880 Refund adjusted - Tax (A - D) = G 24....
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.... 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 arising as a result of passing impugned order for giving effect CIT(A)'s order (i.e appeal effect order) for Rs 64.53 crores against correct amount of Rs 65.73 crores as claimed by assessee. We find that the issue before us is exactly similar the question....
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....ed 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 and interest payable thereon works out :o Rs. '. crores; thus total refund due is Rs. 15.65 crores. Assessing Officer granted refund of Rs. 12.03 crc The dispute between the Assessing Officer and the assessee is with regard to adjustment of refund: according to the assessee refund ....
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....earned 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 particular date, does not amount to payment of interest on interest. Their lordships, taking support from the judgment of Hon'ble Supreme Court in the case of CIT v. HEG Ltd. [2010] 324 ITR 331/189 Taxman 335, observed as under: '14. Matter was taken by the Revenue before the Supreme Court in the case o....
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....e 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 from 1st April, 2010 till 31st Marci 2013 and thereafter on Rs. 40,000/-. Further, intere. payable on Rs. 60,000/-, which stands paid, will I quantified on 31st March, 2013 and on this amount, i.e interest amount quantified, Revenue would be liable TO pc interest under Section 244A till payment is made. ..... 3.6 The facts of the case be....
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....ribunal 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 of L'nic-India v. Tata Chemicals Ltd. 12014] 363 ITR / 822 Taxman 225/43 taxmann.com 240 wherein Hon'ble Court has discussed at length about moral and legal obligation of the department to refund the amount of tax collected from the tax, payers which was more than the amount actually due as per law, along with interest. Some of the useful observations are reproduced....
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....ies. 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 is something that is to be decided by principles of what is fair and just. A decision-maker who is authorized to decide ex aequo et bono is not bound by legal rules but may take account of what is just and fair. Thus, if we decide the issue before us ex aequo et bono, then it would be decided by the principles of what is fair and just and not necessarily as per strict rule of law. Thus, since....