By Sri M.v. Sheshachala, Senior Counsel For,Sri Aravind v. Chavan, Advocate

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6 DAY OF JUNE, 2018. BEFORE THE HON’BLE MR. JUSTICE B. VEERAPPA | WRIT PETITION No.44116/2014 C/W_ WRIT PETITION Nos. 44117/2014,44118/2014,(44119/2014, 44120/2014IT) BETWEEN: M/S NEW MANGALORE PORT TRUST |PANAMBUR,|MANGALORE-5 /5010.REP. BY SRI.CHIVKULA RAMANI,FINANCIAL ADVISOR &CHIEF ACCOUNTANT OFFICER. ... PETITIONER. (common in all the petitions) (BY SRI M.V. SHESHACHALA, SENIOR COUNSEL FOR,SRI ARAVIND V. CHAVAN, ADVOCATE) AND: 1.|COMMISSIONER OF INCOME TAX C.R.BUILDINGS, N.G.ROAD, ATTAVARA, MANGALORE-5/5001. 2 |ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-1(1), C.R.BUILDINGS,CIRCLE-1(1), C.R.BUILDINGS, ? N.G.ROAD, ATTAVARA,MANGALORE-5/5001. — RESPONDENTS(common in ali the petitions) (BY SRI E. I. SANMATHI, ADVOCATE )- OK OK THESE WRIT PETITIONS ARE FILED UNDER ARTICLES226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING|TOQUASH,THEORDER.DATED2/.5.2011|VIDEANNEXURE-F, PASSED BY THE R-2 DECLINING TO AWARD.INTEREST ON REFUND AND CONSEQUENTIAL REVISION.ORDER DATED 726.3.7014 PASSED BY THE R-1 VIDEANNEXURE-G. THESE WRIT PETITIONS COMING ON FOR FINAL|HEARING THIS DAY, THE COURT MADE THE FOLLOWING:- ORDER All these writ petitions are filed by the commonpetitioner -— M/s New Mangalore Port Trust for writ ofcertiorari to quash the order dated 27.5.2011 as perAnnexure-F passed by the 2[/>]respondent declining toaward interest on refund and consequential revision order. dated 26.3.2014 passed by the 1[$3]respondent as perAnnexure-G and issue a writ of mandamus directing the. 3 respondents to award interest on the refund granted in)accordance with law. 2. The amount of refund as per the order of theAssessing Officer and the date of Demand for the differentassessment years in these writ petitions are as under: 3. Tne question involved in all these writ petitions is_one and the same. These writ petitions pertain to differentassessment years and the amount of refund varies in thesewrit petitions. For the sake of convenience, tne facts as in.Writ Petition No.44116/2014 are referred to in the order. 4. In these writ petitions, the petitioner - assessee isa Trust owned by the Government of India. It carries on. the operations of shipping. The entire income of the.assessee was exempted under Section 10(20) of theIncome Tax Act (the Act’ for short) up to 31.3.2003.Thereafter the petitioner in these writ petitions filed anapplication under Section 12A of the Act, claiming.exemption w.e.f 1.4.2003. The Commissioner of IncomeTax rejected the application filed under Section 12A of theAct in these writ petitions by an order dated 28.8.2006.(Annexure-B). Aggrieved by the said order passed by the|Commissioner of Income Tax, the petitioner filed appeal.before the Income Tax Appellate Tribunal, Bangalore Bench|‘B’. The Tribunal considering the entire material on record.by an order dated 28.9.2007 (Annexure-C) allowed all the|appeals and held that petitioner is entitled to registration|Under Section 127A of the Act w.e.f. 1.4.27003. That is the)subject matter of appeal filed Dy the Commissioner of,Income Tax before this Court in ITA No.146/2008. — 5 5 5. This Court in ITA No.146/2008 after hearing boththe parties by an order dated 7.10.2014 has recorded afinding that the Tribunal has taken pains to set out the facts.of the case, the relevant provisions, the amendment, the.object with which the trust is established, the judgments on-which reliance is placed and later has rightly come to theconclusion that the delay is a|boneafidone and therefore, itrequires to be condoned. It has also taken note of the|parliamentarylegislationwhichWaSpassedby theGovernment Major Ports, the nature of work the assessee is carrying on, the way in which they are protecting theinterest of the country, the lengthy coast line in the west)and in the east and held that therefore, it is entitled to/registration under Section 12A of the Act. The order passedby the Tribunal is flawless and there is no justification to)interfere with the said order. Accordingly, the appeal came|to be rejected by this Court. 6. In the meanwhile, the Assessing Authority by anorder dated 24.3.2006 exercising the powers under Section|143 of the Act raised a demand of Rs.41,06,58,029/-.|Thereafter the assessee filed Revision Petition before the.Commissioner of Income Tax. The Commissioner of Income.Tax allowed the revision by an order dated 27.9.2010.(Annexure-E) and directed the Assessing Officer to make|fresh assessment in view of registration of the petitioner.under Section 12A of the Act in respect of the impugned|assessment years. The order passed by the Commissioner|directingtO.grant|exemptionalsoreachedfinality.Thereafter the Assessing Officer by an order dated27.5.2011 (Annexure-F) has given effect to the order of.the Commissioner of Income Tax, Mangalore and granted.refund of Rs.14,22,18,130/-. However the Assessing|Officer held that the petitioner is not entitled for interest on>refund amount in view of the provisions of Section 244A(2) of the Act. It was held that the entire delay was| 7 attributable to the assessee and therefore no interest can.be awarded. Aggrieved by the said order, the petitioner|filed Revision under Section 264 of the Act before the.Commissioner of Income Tax, who after hearing both the.parties by the impugned order dated 26.3.2014 (Annexure-G) rejected the revision confirming the order passed by theAssessing Officer. Hence the present writ petitions are filed. — 7. I have heard the learned counsel for the parties to.thelis 8. Sri M.V. Seshachala, learned senior counselappearing for the petitioner vehemently contended that theimpugned orders passed by Respondent Nos.1 and 2)rejecting to award interest on the refund amount, are)erroneous and contrary to the material on record. He|would further contend that the 1[$3]respondent exercised |jurisdiction illegally and unlawfully by not taking into.account the relevant material on record. He would also|contend that the respondents have erroneously attributed| all the delay on the assessee and refused to award intereston the refund, which is impermissible. He would further|contend that the 1[$3]respondent —- revisional authority hascommitted an error in holding that the assessee should.obtain a new Permanent Account Number as a charitable|trust i.e., AOP, when the certificate of registration issued.u/s 12AA of the Act, did not prescribe such a procedure and|in fact, exempted the petitioner from obtaining any such|new number if it had already obtained the same andrecorded a perverse finding contrary to the materials on|record. Therefore the order passed by the revisionalauthority cannot be sustained. He would further contend.that the respondents while interpreting Section 244A(2) ofthe Act, has failed to take into consideration the period tobe excluded which was attributable to the delay caused by|the revenue and the same should have been decided by thePri. Chief Commissioner or Commissioner, whose decision.would have contributed to the correct’ interpretation 9 9 regarding grant of interest on refund. Both the authorities|have not considered the same. We would further contend|that in view of the provisions of Sections 244A(1), 244A(2).244(1A) and 153 of the Act, if the proceedings resulting in)the refund are delayed, period of delay for which interest is.payable shall De decided by the Pri. Cnief Commissioner or|the Commissioner. Therefore the impugned orders passed |by Respondent Nos.1 and 2 cannot be sustained. Hencehe sought to quash the impugned orders by allowing the|writ petitions. 9. Per contra, Sri E.I. Sanmathi, learned standingcounsel for the respondents sought to justify the impugned.orders passed by Respondent Nos.1 and 2 in all these writ.petitions. He would further contend that it is for the|assessee to satisfy the provisions of Section 244 A(2) of theAct, which he has not discharged and therefore the order.passed by the authorities cannot be interfered by this|Court. | 10. I have given my anxious consideration to thearguments advanced by the learned counsel for the parties.and perused the material available on record carefully. | 11. It is an undisputed fact that in all these petitions,the petitioner - assessee is a Trust. It is owned by theGovernment of India and it carries on the operations of.Shipping. The entire income of the assessee was exempted |under Section 10(20) of the Act up to 31.3.2003. It is also|not in dispute that the assessee filed an application on)31.3.2006 under Section 12A of the Act claiming exemption w.e.f 1.4.2003 and the same was rejected by theCommissioner of Income Tax by an order dated 28.8.2006.(Annexure-B). 12. The said order passed by the Commissioner ofIncome Tax was the subject matter of appeal before the.Income Tax Appellate Tribunal, Bangalore Bench ‘B’ in ITA.No.924/2006. The Tribunal considering the entire material| on record, recorded a finding that the assessee falls within the provisions of Section 2(15) of Act ever since its.inception. Further when substantial justice and technical|considerations are pitted against each other, cause of.substantial justice deserves to be preferred for the otherside cannot claim to nave vested right in Injustice Deing|done because of a non-deliberate delay, as per the ratio ofthe Hon'ble Supreme Court in the case of COLLECTOR,LAND ACQUISITION vs. MST. KATIJI & OTHERS reported in|167 ITR 471. Therefore, considering all the facts and the|ratio laid down by the Hon’ble Supreme Court, the Tribunal|condoned the delay and directed the Commissioner ofIncome Tax, Mangalore to grant registration under Section.127A w.e.f. 1.4.7003. The Tribunal also taken note of the.fact that the assessee was granted exemption under the.provisions of Section 10(20) of the Act till 31.33.2003.Accordingly, the appeal came to be allowed. 13. It is also not in dispute that the above orderpassed by the Tribunal was the subject matter before this|Court in ITA No.146/2008 filed by the Commissioner ofIncome Tax. The Division Bench of this Court by an orderdated 7.10.2014 dismissed the appeal holding that the.assessee is entitled for registration under Section 12A ofthe Act and there is no error committed by the Tribunal and.the said order passed by this Court has reached finality. Itis also not in dispute that the jurisdictional authority has)issued certificate under Section 12AA of the Act declaring|that the assessee is a charitable trust w.e.f. 1.4.27003 asper Annexure-D dated 27.7.2009. 14. The material on record clearly depicts that in view.of pendency of the proceedings stated supra, the Assessing Authority passed an order on 24.3.2006 raising a demand.That was the subject matter of the revision before the.Commissioner, who after hearing both the parties by an.order dated 27.9.2010 (Annexure-E) allowed the revision. 13| anddirectedtheAssessingOfficer.tO|makefresh|assessment in view of registration of the petitioner under.Section 12A of the Act in respect of the impugnedassessment years. The said facts are not in dispute. | 14. The material on record clearly depicts that in view.of pendency of the proceedings stated supra, the Assessing Authority passed an order on 24.3.2006 raising a demand.That was the subject matter of the revision before the.Commissioner, who after hearing both the parties by an.order dated 27.9.2010 (Annexure-E) allowed the revision. 13| anddirectedtheAssessingOfficer.tO|makefresh|assessment in view of registration of the petitioner under.Section 12A of the Act in respect of the impugnedassessment years. The said facts are not in dispute. | 15. Inspite of the order granting exemption by theTridDunal and certificate issued by the jurisdictional authorityand confirmed by this Court, the 2[/>]respondent proceededto pass the impugned order on 27.5.2011 (Annexure-F) and.granted refund of Rs.14,22,18,130/- and observed that.interest under Section 244A cannot be granted under|Section 244A(2) and the question with regard to interest.payable on the refund shall be decided by the Chief)Commissioner or the Commissioner, whose decision is final. _The same is affirmed by the revisional authority as per.Annexure-G. 16. Both the authorities below have not at allconsidered the material facts stated supra in the proper. perspective and the orders passed by the Tribunal grantingexemption w.e.f 1.4.2003 and confirmed by the Division.Bench of this Court in ITA No.146/2008 on 77.10.2014. The!respondent authorities have to decide from which date the)petitioner - assessee is entitled for interest on the refund)amount in view of the exemption granted by the Tribunal as_long.back|on28.9.700/7(Annexure-C)though.the|application filed on 27.3.2006 (Annexure-A). All these.aspects are not considered by Respondent Nos.1 and 2. Itis also relevant to state at this stage that in view ofSections 244A(1), 244A(2), 244(1A) and 153 and other.relevant provisions of the Act, the Prl. Chief Commissioner|or the Commissioner is the final authority to decideregarding the date from which interest on refund to be)granted. In all these writ petitions, order of refund to theassessee is not at all challenged by the Revenue. There is.no dispute with regard to the refund amount to the)assessee. The order of refund is final. The dispute is only. with regard to the date from which interest on refund.amount to be awarded i.e, either from the date of|exemption or from the date of the application. The samehas not been considered by the authorities below. © 17. In view of the above, the impugned orderspassed by the respondents as per Annexures-F and G|cannot be sustained and the matters require re-adjudication by the authorities only on the interest payable on the|refundable amounts of Rs.14,22,18,130/-, Rs.7,65,59,/764/,Rs.11,18,19,414/-, Rs.35,93,73,090/- & Rs.29,41,93,320/-.under Section 244A(2) of the Act after consideration of the|material dates, orders passed by the Tribunal & this Court|and the relevant provisions of the Income Tax Act. For the reasons stated above, the writ petitions areallowed. The impugned orders dated 27.5.2011 passed by |the 7[/>]respondent declining to award interest on refund as.per Annexure-F and consequential Revision Order dated| 16| 26.3.2014 passed by the 1[$3]respondent as per Annexure-G,in all these writ petitions are hereby quashed. The matters|are|remandedTO.the2[/>]respondent.Assistant.Commissioner of Income Tax for re-adjudication aftergiving effect to the orders passed by the Commissioner ofIncome Tax under Section 264 of the Act and £ fodetermination of interest under Section 244A of the Act on.refund amounts mentioned supra and take decision to refer|to the jurisdictional authorities in accordance witn the.provisions of the Act. The 2[/>]respondent shall take into.consideration the material dates, orders passed by the.Tribunal and this Court and the relevant provisions of theIncome Tax Act and pass appropriate orders strictly in.accordance with law. | Gss/- Sd/- JUDGE |