“4.Under This Issue The Contention Of Theassessee Is That The Interest U/S.244A Of The Actwas Not Properly Calculated And Refunded Inaccordance With Law Settled v. Wp 1033-19-O

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1033 OF 2019 Tata Communications Limited… PetitionerV/s.The Deputy Commissioner of Income Tax 1(3)(2), Mumbai and ors.… Respondents --- Mr.Jehangir D. Mistri, Senior Advocate with Mr.Anil R.Wani with Ms.Supriya S. Devergudi i/by M/s ANS LawAssociates for the Petitioner.Mr.P.C.Chhotaray for the Respondents. --- CORAM : AKIL KURESHI AND S.J.KATHAWALLA, JJ. DATE : JUNE 24, 2019. P.C.:- 1.Heard learned counsel for the parties for finaldisposal of the petition. Petitioner has challenged anorder dated 15[th ]November, 2018 passed by the AssessingOfficer-respondent No.1, copy of which is produced atannexure-P to the petition. 2.The petition arises in following background.Petitioner is a public limited company regularly assessed Priya Soparkar to tax. The petitioner would have a claim refund from theDepartment which may comprise of tax deducted atsource or out of the refund claims arising out of theorders of assessment. The refunds would also carryinterest. For the assessment year 1994-95, the questionof correct computation of interest payable undersection 244A of the Income Tax Act, 1961 (“the Act” forshort) on the petitioner’s claim of refund reached theIncome Tax Appellate Tribunal (“Tribunal” for short). TheTribunal by an order dated 16[th] June, 2017 gave certaindirections to the Assessing Officer to compute and paysuch interest. Relevant portion of this order reads asunder:- “4.Under this issue the contention of theassessee is that the interest u/s.244A of the Actwas not properly calculated and refunded inaccordance with law settled in by the Hon’bleSupreme Court in case titled as CIT Vs. H.E.G.Ltd. 324 ITR 331 and Hon’ble Delhi High Courtin case titled as India Trade PromotionOrganization Vs. CIT 361 ITR 646. Thereforenecessary direction should be given in thisregard. However, on the other hand learnedDepartmental Representative has refuted thesaid contention. The contention of theassessee is that the interest u/s 244A of the Acton refund issued was not granted inaccordance with law. Therefore, the same is required to be granted in view of the lawsettled by the Hon’ble Supreme Court in casetitled as CIT VS. H.E.G. Ltd. 324 ITR 331 andHon’ble Delhi High Court in case titled asIndia Trade Promotion Organization Vs. CIT 361ITR 646. Since the interest is payable on therefund no doubt the same is liable to bepayable in view of the law settled by theHon’ble Supreme Court in case titled as CIT Vs.H.E.G. Ltd. 324 ITR 331 and Hon’ble DelhiHigh Court in case titled as India TradePromotion Organization Vs. CIT 361 ITR 646.Therefore, in the said circumstances we setaside the finding of the CIT (A) on this issueand direct the Assessing Officer to calculatethe interest u/s 244 A of the Act on refundpayable to the assessee in view of the lawsettled in Hon’ble Supreme Court in case titledas CIT Vs. H.E.G.Ltd. 324 ITR 331 and Hon’bleDelhi High Court in case titled as India TradePromotion Organization Vs. CIT 361 ITR 646.Accordingly, this issue is even decided infavour of the assessee against the revenue. 5.In the result, the appeal filed by theassessee is hereby ordered to be decided forstatistical purpose.” 3.Pursuant to this order of the Tribunal thus, theAssessing Officer was required to pay interest to thepetitioner in terms of the law laid down by SupremeCourt in case of CIT Vs.H.E.G. Limited[1]and has furtherfollowed and expanded by Delhi High Court in case of Priya Soparkar .India Trade Promotion Organisation Vs. CIT[1] 3.Pursuant to this order of the Tribunal thus, theAssessing Officer was required to pay interest to thepetitioner in terms of the law laid down by SupremeCourt in case of CIT Vs.H.E.G. Limited[1]and has furtherfollowed and expanded by Delhi High Court in case of Priya Soparkar .India Trade Promotion Organisation Vs. CIT[1] 4.The Assessing Officer passed his impugned orderpursuant to such directions of the Tribunal. In such orderhe did not agree with the contention of the assessee thatinterest as per the said decision of the Delhi High Courtin case of India Trade Promotion Organization(supra) was outstanding and payable. He referred to therelevant portion of the judgment of the High Court andpresented his understanding of the working of theinterest as per the said judgment. He compared this withthe assessee’s computation of interest payable. He heldthat the assessee’s computation of interest is notconsistent with the decision of the Delhi High Court. Hereferred to a decision of the Income Tax AppellateTribunal in which the formula propounded by him wasaccepted. Relevant portion of the impugned order readsas under:- “2.3 Thus, the working suggested by theassessee is not consistent with Hon’ble DelhiHigh Court’s decision. The assessee’s contention that refund has to be first adjustedtotally against the total interest refund dueand thereafter against the tax refund due isunfounded and there is no specific section orprovision in the Income Tax Act, 1961 for thesame. The example considered by Hon’bleHigh Court clearly shows that this is notimplied from the same. The assessee’scontention will lead to granting of interest oninterest. 2.4In the case of the assessee involvedhere, whenever any part refund was issuedto the assessee it was clearly bifurcated intothePrincipalcomponentandthecorresponding interest u/s 244A. The interestcomponent (which was due and payable onthe principal paid) is not withheld and isissued whenever the corresponding principalis issued. So, the situation that interest whichshould have been refunded but is not paiddoes not arise. Therefore, facts andcircumstances of the case are different fromthe case of India Trade Promotion Organisation(supra) considered by Hon’ble Delhi HighCourt. After issue of any part refund, principalpart refunded is adjusted against the totalprincipal outstanding and any subsequentinterest u/s 244A is computed on the balanceprincipal outstanding. This working alsoensures that interest component is notwithheld indefinitely and whenever anyprincipal amount is paid the correspondinginterest is also paid. 2.6Accordingly, the above principle wasadopted in granting interest to the assesseeu/s 244A of the Act of Rs.283,71,61,850/- inthe order passed u/s 154 of the Act dated23.07.2012 for A.Y. 1994-95 and the assesseeis not entitled for any further interest u/s 244Aof the Act. 3.Total income of the assessee remains unchanged at Rs.281,13,70,604/-. Give creditfor the taxes paid, if any, after due verification.Charge interest as per law and as discussedabove and directed by CIT (A). Issue DemandNotice /Refund accordingly.” 2.6Accordingly, the above principle wasadopted in granting interest to the assesseeu/s 244A of the Act of Rs.283,71,61,850/- inthe order passed u/s 154 of the Act dated23.07.2012 for A.Y. 1994-95 and the assesseeis not entitled for any further interest u/s 244Aof the Act. 3.Total income of the assessee remains unchanged at Rs.281,13,70,604/-. Give creditfor the taxes paid, if any, after due verification.Charge interest as per law and as discussedabove and directed by CIT (A). Issue DemandNotice /Refund accordingly.” 5.Learned counsel for the petitioner submitted thatthe Assessing Officer has exceeded his jurisdiction. Hewas directed by the Tribunal to apply the decision of theDelhi High Court in case of India Trade PromotionOrganisation (supra) and grant interest to the assesseeunder Section 244A of the Act. It was not open for theAssessing Officer to distinguish the said judgment orindirectly hold that the directions issued by the Tribunalwere not in consonance with law. In any case, it is heldby the Delhi High Court in case of India TradePromotion Organisation (supra) relying and referringto the decision of the Supreme Court in case of H.E.G.Limited (supra) that interest under Section 244A of theAct would be available on the entire amount which isdue and payable not only on the principal tax dueignoring the interest component comprised in suchoutstanding amount. 6.On the other hand, learned counsel for theDepartment contended that this petition should not beentertained on the ground of availability of the alternativeremedy. Against the impugned order passed by theAssessing Officer appeal is maintainable before theAppellate Commissioner. On merits he submitted that theAssessing Officer has applied correct principles of law andcome to the conclusion that no further interest ispayable to the petitioner. 7.In the present case, the Tribunal has alreadyexamined the question of interest payable to thepetitioner under Section 244A of the Act. The decision ofthe Tribunal lays down certain parameters for paymentof such interest. We have reproduced the relevant portionof the order of the Tribunal. As per this order theAssessing Officer was required to compute the interestunder section 244A of the Act following the principleslaid down by the Delhi High Court in case of India TradePromotion Organisation (supra). It was not open for Priya Soparkar 8 21 wp 1033-19-o the Assessing Officer thereafter to dissect the ratio ofthe decision of the Delhi High court in case of IndiaTrade Promotion Organisation and came to theconclusion that further interest under Section 244A is notpayable. His role was limited to giving effect to thedirections of the Tribunal. The question whether theinterest is or is not payable was already decided by theTribunal. Undoubtedly, if the Department had any legaldispute with the decision of the Tribunal, it was alwaysopen to the Department to challenge the same inaccordance with law. The Department has infactexercised such option by first filing an application forrectification before the Tribunal and when suchrectification application came to be dismissed, by filingincome tax appeal before the High Court. We areinformed such appeal is pending. 8.At any rate, the limited role of the Assessing Officerwas to implement the directions of the Tribunal. In theprocess, in our opinion, he exceeded his brief virtuallycoming to the conclusion that the Tribunal was not 921 wp 1033-19-o justified in issuing such directions and distinguishing theratio of the decision of the Delhi High Court in case of.India Trade Promotion Organisation (supra) 8.At any rate, the limited role of the Assessing Officerwas to implement the directions of the Tribunal. In theprocess, in our opinion, he exceeded his brief virtuallycoming to the conclusion that the Tribunal was not 921 wp 1033-19-o justified in issuing such directions and distinguishing theratio of the decision of the Delhi High Court in case of.India Trade Promotion Organisation (supra) 9.In view of such position, we would not relegate thepetitioner to alternate remedy. Availability of appeal isnot an absolute bar on the High Court exercising itsjurisdiction under Article 226 of the Constitution. Whenwe find that the order passed by the Assessing Officer ispalpably bad in law and exceeds its jurisdiction,relegating a litigant to appeal remedy will be whollyfutile and in facts of the present case also lead to unduehardship. 10.Under the circumstances, impugned order dated15[th ]November, 2018 is set aside. The Assessing Officeris directed to compute the interest payable to thepetitioner under section 244A of the Act by applying theprinciples laid down by the Delhi High court in case ofIndia Trade Promotion Organisation as directed bythe Tribunal. This shall be done within a period of six Priya Soparkar 10 21 wp 1033-19-o weeks from the date of copy of the receipt of this order.Before closing we clarify that nothing stated in thisorder shall prejudice the Department in pursuing to itsIncome Tax Appeal assessment order passed by theTribunal and interest which would be paid shall besubject to outcome of such appeal. 11.Petition disposed of accordingly. (S.J.KATHAWALLA, J.) (AKIL KURESHI, J.) ….