Commissioner Of Income Tax-2, Mumbai v. M/S Tata Power Company Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1560 OF 2013 Commissioner of Income Tax-2, Mumbai ..Appellant Vs. M/s Tata Power Company Ltd...Respondent .... Mr. Suresh Kumar, Advocate for Appellant.Mr. Dinesh Vyas, Senior Advocate a/w Mr. Srihari Iyer, Advocatei/b Srihari for Respondent. .... CORAM : M.S. SANKLECHA & N.M. JAMDAR, JJ.DATED : 7 JULY 2015 P.C.: This appeal by revenue under Section 260A of the Income Tax Act, 1961 (the 'Act') challenges the order dated 6 March 2013passed by Income Tax Appellate Tribunal (the 'Tribunal'). Theimpugned order dated 6 March 2013 relates to the Assessment Year1997-98. 2.Mr. Suresh Kumar, the learned Counsel for revenue urges the following questions of law as framed in the appeal memo forour consideration: 1 / 4 “A.Whether, the Tribunal erred in law inholding that the interest portion of the refundarising out of the order giving effect to appellateauthority has to be ignored for the purpose ofcalculating interest under section 244A to theassessee? B.Whether, the Tribunal erred in law ininterpreting provisions of section 244A of theAct?” 3.The only controversy in this appeal before us is: Whether while granting refund to the assessee, consequent to theTribunal order is the revenue entitled to adjust only the refund paidearlier or is the revenue entitled to adjust also the interest paidalongwith the refund earlier and pay interest only on the balance. 4.In the present facts for the subject assessment year therevenue granted refund of Rs.76.43 crores in 2007 being the taxpaid in excess. The same was handed over to the respondent-assessee alongwith interest of Rs.9.74 crores for the delayed refundof Rs.76.43 crores. Thereafter on 10 May 2010, the AssessingOfficer while giving effect to the order of the Tribunal for the S.S.DESHPANDE 2 / 4 subject assessment year determined the assessee's refund atRs.126.63 crores. The Assessing Officer while determining theinterest payable on the refund, reduced the refund of Rs.86.17crores (Tax amount of Rs.76.43 crores + Interest of Rs.9.74 crores)out of the refund of Rs.126.63 crores as determined. Consequent tothe above adjustment the appellant granted interest to therespondent on Rs.40.46 crores and not on Rs.50.20 crores asclaimed by the respondent-assessee. 5.Being aggrieved, the respondent-assessee carried the issuein appeal. Both the Commissioner of Income Tax (Appeals) (the'CIT(A)') and the Tribunal have on examination of facts correctlyheld that when a refund of tax has to be reduced by refund alreadygranted it is only the tax element which has to be adjusted and notthe interest element paid on the delayed refund of the tax. This isso as the interest which is paid to the assessee is for the wrongfulwithholding of the assessee's refund by the revenue. It has noelement of tax which would justify reducing the same from therefund due while computing the interest payable on the delayedpayment of refund. 6.In appeal before us the revenue has not been able to pointout how the questions of law as formulated arise in the presentappeal. Further the ground of appeal also does not indicate in whatmanner does the impugned order on a reading of Section 244A ofthe Act gives rise to the question framed for our consideration. 7.We find that no fault can be found with the impugnedorder of the Tribunal. In any event the impugned order does notgive rise to any substantial question of law as proposed or at all. 8.Accordingly, the appeal is dismissed. No order as tocosts. [N.M. JAMDAR, J] [M.S. SANKLECHA, J.]