Pr. Commissioner Of Income Tax v. M/S Solan District Truck Operators Transport Co-Op.society

IN THE HIGH COURT OF HIMACHAL PRADESH,SHIMLA. ITA No. 5 of 2020Decided on: 10.09.2020 Pr. Commissioner of Income Tax Versus ...Appellant. M/s Solan District Truck Operators Transport Co-op.Society …Respondent. __________________________________________________________ Coram: Hon’ble Mr. Justice Tarlok Singh Chauhan, Judge.Hon’ble Ms. Justice Jyotsna Rewal Dua, Judge. Whether approved for reporting? 1 No For the Appellant : Mr. Vinay Kuthiala, Sr. Advocatewith Ms. Vandana Kuthiala,Advocate. (Through Video Conferencing) Tarlok Singh Chauhan, Judge (Oral) This appeal is directed by the appellantagainst the order dated 7.08.2019, passed inMiscellenous Application No. 12/CHD/2019 in ITA No.279/CHD/2017, dated 31.10.2017-A.Y. 1999-2000 by theIncome Tax Appellate Tribunal Division Bench,Chandigarh, (for short, ‘the ITAT’). 2 2.The case of the appellant is that therespondent Society-assessee filed return of income forthe assessment year 1999-2000, which was processedunder Section 143 (1) of the Income Tax Act, (for short‘the Act’). The further case of the appellant is that forthe assessment years 1996-97 to 1999-2000, certainrefunds arising out of excess TDS were issued in favourof the assessee. However, interest under Section 244-Aof the Act was not paid in respect of some of the refunds,while in the case of some other refunds, interest waspaid for a shorter period than what was claimed by theassessee. It is averred in the appeal that the interest wasrefused on the ground that the delay in issuing refundwas attributable to the assessee. Against the order ofthe Assessing Officer refusing to grant interest underSection 244-A of the Act, the assessee filed an appealbefore the CIT(A) Solan. The CIT (A), Solan dismissed theappeal on the ground that the question as to whetherany part of the delay was attributable to the assessee isa question to be decided by the Chief Commissioner orCommissioner of Income Tax under Section 244-A (2)of the Act. Then, the matter was referred to the Commissioner of Income Tax, Railway Board Building, theMall, Shimla (hereinafter to be referred as ‘the CIT’). TheCIT vide its order dated 24.10.2008, dismissed theappeal while exercising its powers under Section 244 ofthe Act and the Assessing Officer was directed to payinterest to the assessee from April, 1999 to October,2001 on refund of RS.51,41,301/-. Thereafter, theAssessing Officer issued refund of Rs. 15,80,950/- on31.01.2009. It is further averred in the appeal thatsubsequently, the assessee filed an application underSection 154 of the Act on 15.02.2010, requesting thereinto allow interest on delayed interest on the refund. TheAssessing Officer vide its order dated 30.06.2011(Annexure P-2) rejected the application of the assessee.3.Being aggrieved by the aforesaid order of theAssessing Officer, the assessee filed an appeal before theCommissioner of Income Tax (Appeals), (hereinafter to bereferred as ‘the CIT(A)’, Faridabad, and the CIT (A) videits order dated 05.10.2016 (Annexure P-3) dismissed theappeal of the assessee, while relying upon the judgmentof the Hon’ble Supreme Court in case titledas Commissioner of Income Tax, Gujarat vs. Gujarat Flluro Chemicals, reported in (2014) 1 SCC126. It is further averred that the aforesaid order ofCIT(A) was again challenged by the assessee before theITAT, by way of ITA Nos.277 to 279/CHD/2017. Theappeal of the assessee was allowed by the ITAT vide itsorder dated 31.10.2017 (Annexure P-4) directing therevenue to pay compensation in the shape of simpleinterest on the amount due at the rate at which theassessee otherwise would have been entitled to, on thedelayed payment of excess tax paid. Gujarat Flluro Chemicals, reported in (2014) 1 SCC126. It is further averred that the aforesaid order ofCIT(A) was again challenged by the assessee before theITAT, by way of ITA Nos.277 to 279/CHD/2017. Theappeal of the assessee was allowed by the ITAT vide itsorder dated 31.10.2017 (Annexure P-4) directing therevenue to pay compensation in the shape of simpleinterest on the amount due at the rate at which theassessee otherwise would have been entitled to, on thedelayed payment of excess tax paid. 4.Being aggrieved by the aforesaid order,Revenue challenged the same by way of MiscellaneousApplication before the ITAT, Chandigarh, which came tobe dismissed by the ITAT vide its order dated 07.08.2019(Annexure P-A) being misconceived and not maintainableand also on the ground that there is no error apparent onthe record. Hence, by way of this appeal, theappellant/Revenue has approached this Court against theaforesaid order dated 07.08.2019, as aforesaid. 5.The following substantial questions of lawarise for consideration in this appeal: 5 i.Whether the Hon’ble ITAT was rightin law in directing the departmentto pay compensation in the shapeof simple interest on the amountdue at the rate at which theassessee otherwise would havebeenentitledtowithoutappreciating the fact that assesseewas duly paid interest u/s 244A ondelayed refund upto the date ofissue of refund?in law in directing the departmentto pay compensation in the shapeof simple interest on the amountdue at the rate at which theassessee otherwise would havebeenentitledtowithoutappreciating the fact that assesseewas duly paid interest u/s 244A ondelayed refund upto the date ofissue of refund? ii. Whether the Hon’ble ITAT was rightin law in ignoring the fact thatthere is no provision under theIncome Tax Act for payment ofcompensation on delayed refundand interest paid and henceagainst the Statute?in law in ignoring the fact thatthere is no provision under theIncome Tax Act for payment ofcompensation on delayed refundand interest paid and henceagainst the Statute? iii. Whether the Hon’ble ITAT on Misc.Application filed by the Departmenterred in holding that the issuecannot be decided u/s 254(2) of theAct and the only remedy is to fileappeal before Hon’ble High Court?Application filed by the Departmenterred in holding that the issuecannot be decided u/s 254(2) of theAct and the only remedy is to fileappeal before Hon’ble High Court? 6.Learned Senior Counsel for the appellantsubmits that there is no provision under Section 244-A ofthe Act in respect of payment of interest on delayed refund. To substantiate his submission, he has placedreliance upon the judgment dated 18[th] September, 2013,passed by the Hon’ble Supreme Court in case titled asCommissioner of Income Tax, Gujarat vs. GujaratFlluro Chemicals, reported in (2014) 1 SCC 126,wherein it has been held that in a case of inordinatedelay in the payment of compensation by way ofinterest, it is only that interest provided for under theStatute which may be claimed by an assessee from theRevenue and no other interest on such statutory interestcan be claimed. He further submits that the directionissued by the ITAT in the impugned order is contrary tothe ratio laid down by the Hon’ble Supreme Court in theaforesaid judgment. He prays that the impugned orderpassed by the ITAT may be set aside. 7.We have heard learned Counsel for theappellant and have carefully perused the materialplaced on record. 8.As far as the submission of the learned SeniorCounsel for the appellant to the effect that there is noprovision under Section 244-A of the Act in respect ofpayment of interest on delayed refund is concerned, the Hon’ble Supreme Court in Commissioner of Income Tax Vs. HEG Ltd, (2010) 324 ITR 331 (SC) haselaborated the words ‘any amount’. It is apt toreproduce the relevant portion of the aforesaid judgmentherein:- 7.We have heard learned Counsel for theappellant and have carefully perused the materialplaced on record. 8.As far as the submission of the learned SeniorCounsel for the appellant to the effect that there is noprovision under Section 244-A of the Act in respect ofpayment of interest on delayed refund is concerned, the Hon’ble Supreme Court in Commissioner of Income Tax Vs. HEG Ltd, (2010) 324 ITR 331 (SC) haselaborated the words ‘any amount’. It is apt toreproduce the relevant portion of the aforesaid judgmentherein:- “The next question which we are requiredto answer is-what is the meaning of thewords “refund of any amount becomesdue to the assessee” in Section 244A? Inthe present case, as stated above, thereare two components of the tax paid bythe assessee for which the assessee wasgranted refund, namely TDS of Rs.45,73,528 and tax paid after originalassessment of Rs. 1,71,00,320. TheDepartment contends that the works “anyamount” will not include the interestwhich accrued to the respondent for notrefunding Rs. 45,73,528 for 57 months.We see no merit in this argument. Theinterest component will partake thecharacter of the “amount due’ underSection 244A. It becomes an integral partof Rs. 45,73,528 which is not paid for 57months after the said amount becamedue and payable. As can be seen from 8 the facts narrated above, this is the caseof short payment by the Department andit is in this way that the assessee claimsinterest under Section 244A of theIncome-tax Act. Therefore, on both theaforestated grounds, we are of the viewthat the assessee was entitled to interestfor 57 months on Rs. 45,73,528. Theprincipal amount of Rs. 45,73,528 hasbeen paid on December 31, 1997 but netof interest which, as stated above partookthe character of “amount due” underSection 244 A.” 9. In view of the ratio laid down by the Hon’bleSupreme Court in the judgment (supra), the interest onthe delayed refund becomes part of the principleamount and the delayed interest includes the interestfor not refunding the principle amount. Accordingly, italso includes the interest on the delayed refund. 10. We find that the Revenue Authorities havebeen directed vide Notification dated 08.08.2019 to fileappeals in income tax cases before the High Courtwhere the monetary limit is less than Rs. 1.00 crore andwhere it is above the said amount, that shall not be asubject matter of appeal before the High Court. But in the Notification dated 11[th] July, 2018, there is anexception to the effect that in certain circumstances, anappeal should be contested on merits notwithstandingthe fact that the tax effect entailed is less than Rs. 1.00crore. It is apt to reproduce para-10 of the saidNotification herein, which reads as follows: “10 Adverse judgments relating to the following issues should be contested onmerits notwithstanding that the taxeffect entailed is less than themonetary limits specified in para 3above or there is no tax effect. (a) Where the Constitutional validity of the provisions of an Act or Rule isunder challenge, or under challenge, or (b) Where Board’s order, Notification, Instruction or Circular has been heldto be illegal or ultra vires or (c) Where Revenue Audit objection in the case has been accepted by theDepartment, or” 11.In light of the above, it can be said thatthough, the monetary limit to prefer an appeal beforeHigh Court is less than Rs.1.00 crore, but if there is avalid question, where an Order, Notification, Instruction or Circular is to be challenged as illegal or ultra vires, anappeal could be filed before the High Court. In thepresent case, no such exception is available to theappellant. (a) Where the Constitutional validity of the provisions of an Act or Rule isunder challenge, or under challenge, or (b) Where Board’s order, Notification, Instruction or Circular has been heldto be illegal or ultra vires or (c) Where Revenue Audit objection in the case has been accepted by theDepartment, or” 11.In light of the above, it can be said thatthough, the monetary limit to prefer an appeal beforeHigh Court is less than Rs.1.00 crore, but if there is avalid question, where an Order, Notification, Instruction or Circular is to be challenged as illegal or ultra vires, anappeal could be filed before the High Court. In thepresent case, no such exception is available to theappellant. 12.Similar question of law has already beendetermined by this Court while adjudicating ITA No.20/2019, titled as Pr. Commissioner of Income Tax vs.M/s Ambuja Darla Kashlog Mangoo Transport Co-operative Society, decided on 25.11.2019 and we havenot been persuaded to take a different view. 13.In view of the aforesaid observations, we findno merit in the appeal. Hence, the same is dismissed. 14.It is made clear that observations madeherein above shall not be treated as a precedent.However, liberty is reserved to the appellant to seekappropriate remedy. 15.Pending application(s), if any, standsdisposed of. (Tarlok Singh Chauhan) Judge 10[th] September, 2020.(krt/st) (Jyotsna Rewal Dua) Judge