Though Notice Has Been Duly Served On The Respondent Andtheir Name Has Been Printed In The Cause List, None Appeared Forthem v. The Relevant Portion Of The Judgment Of The Hon'bledivision Bench Of Delhi High Court In Cit Vs. Indian Farmerfertilizer Co-Operative Reported In [2015] 374 Itr

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.04.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMYANDTHE HON'BLE MRS.JUSTICE R.HEMALATHA Tax Case Appeal No.1018 of 2014 The Commissioner of Income Tax,Chennai.... AppellantVs. M/s.Upasana Finance Ltd.,98A, Dr.Radhakrishnan Salai,Chennai – 600 004. ... Respondent Appeal filed under Section 260A of the Income Tax Act, 1961against the order of the Income Tax Appellate Tribunal, Madras"D" Bench, dated 18.11.2011 passed in I.T.A.No.78/Mds/2010 forthe assessment year 1997-98, and against the order of theCommissioner of Income Tax (Appeals)-III, Chennai-34 dated23.10.2009 made in ITA No.31/2007-2008/A-III, and against theorder of the Assistant Commissioner of Income Tax Company CircleIII(3), Chennai dated 27/03/2002, made in P.A.No.AAACU0852D. For Appellant : Mr.M.Swaminathan, Senior Standing Counsel assisted by Ms.V.Pushpa, Standing Counsel For Respondents : No appearance (Delivered by M.DURAISWAMY, J.) Challenging the order passed in I.T.A.No.78/Mds/2010 inrespect of the assessment year 1997-98 on the file of the IncomeTax Appellate Tribunal, Madras "D" Bench, Chennai, the Revenuehas filed the above appeal. 2.While giving effect to the order of the Tribunal, the ITOallowed the refund but denied the interest under Section 244Awith interest on interest and the assessee sought for a relief https://hcservices.ecourts.gov.in/hcservices/ of Rs.27,73,543/-. Aggrieved over the said order, an appeal wasfiled before the Commissioner of Income Tax (Appeals), whofollowed the judgment of Sandvik Asia Limited reported in 280ITR 643 (SC) and allowed the appeal of the assessee. Challengingthe same, the Revenue filed an appeal before the Income TaxAppellate Tribunal and the Tribunal, relying upon the judgmentreported in 320 ITR 88, dismissed the appeal, against which theRevenue has filed the above appeal. 3.The above appeal was admitted on the following substantialquestions of law:“1)Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in upholding the order of CIT(A) in grantinginterest on interest under Section 244A? 2)Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in its conclusion that the department should payinterest on interest especially when there was noinordinate delay in the payment of refund?” 4.Though notice has been duly served on the respondent andtheir name has been printed in the cause list, none appeared forthem. 5.When the appeal is taken up for hearing, Mr.M.Swaminathan,learned senior standing counsel appearing for the appellant –Revenue submitted that after the judgment of the Hon'ble SupremeCourt in the case of M/s.Sandvik Asia Limited Vs. CIT reportedin [2006] 280 ITR 643 (SC), a three Judge Bench of the Hon'bleSupreme Court in the case of CIT Vs. Gujarat Fluoro Chemicalsreported in [2013] 358 ITR 291 (SC) and in the case of CIT Vs.H.E.G. Ltd. reported in [2010] 324 ITR 331 (SC) held that theonly amount which an assessee aggrieved by delayed payment canlegitimately claim under the statute is interest and that noother interest on such statutory interest is payable. Thelearned senior standing counsel further submitted that followingthe judgments of the Hon'ble Supreme Court reported in [2013]358 ITR 291 (SC) and [2010] 324 ITR 331 (SC), the Hon'bleDivision Bench of Delhi High Court in CIT Vs. Indian FarmerFertilizer Co-operative reported in [2015] 374 ITR 56 (Delhi),held that to the extent it directs payment of any sum over andabove interest payable under Section 244A(1) to the assesseecannot be upheld. 6.The relevant portion of the judgment of the Hon'bleDivision Bench of Delhi High Court in CIT Vs. Indian FarmerFertilizer Co-operative reported in [2015] 374 ITR 56 (Delhi),reads as follows:“... 6.The relevant portion of the judgment of the Hon'bleDivision Bench of Delhi High Court in CIT Vs. Indian FarmerFertilizer Co-operative reported in [2015] 374 ITR 56 (Delhi),reads as follows:“... 7.Section 244A(1)of the Income Tax Act reads asfollows :"244A. Interest on refunds.- (1) Where refund of anyamount becomes due to the assessee under this Act, heshall, subject to the provisions of this section, beentitled to receive, in addition to the said amount,simple interest thereon calculated in the followingmanner, namely :-- (a) where the refund is out of any tax paid undersection 115WJ or collected at source under section 206Cor paid by way of advance tax or treated as paid undersection 199, during the financial year immediatelypreceding the assessment year, such interest shall becalculated at the rate of one-half per cent] for everymonth or part of a month comprised in the period fromthe 1st day of April of the assessment year to the dateon which the refund is granted: Provided that no interest shall be payable if theamount of refund is less than ten per cent of the taxas determined under sub-section (1) of section 115WE orsub-section (1) of section 143 or on regularassessment; (b) in any other case, such interest shall becalculated at the rate of one-half per cent for everymonth or part of a month comprised in the period orperiods from the date or, as the case may be, dates ofpayment of the tax or penalty to the date on which therefund is granted. Explanation.--For the purposes of this clause, "date ofpayment of tax or penalty" means the date on and fromwhich the amount of tax or penalty specified in thenotice of demand issued under section 156 is paid inexcess of such demand." 8. In Sandvik Asia Ltd. (supra), the Court admittedlywas dealing with facts prior to the insertion ofSection 244A. Therefore, it would be inappropriate forthis Court to consider that judgment now as bindingauthority. More importantly, Sandvik Asia Ltd. (supra)was explained by the larger Bench i.e. three JudgeBench decision in Gujarat Fluoro Chemicals (supra)where the Supreme Court categorically held that theonly amount which an assessee aggrieved by delayedpayment can legitimately claim under the statute isinterest and that "no other interest on such statutoryinterest" is payable. This ruling, in the opinion ofthis Court, rendered by a larger Bench, would have to be followed as opposed to theratio in H.E.G. Ltd. (supra) where the Supreme Courthad expressed a contrary opinion by indicating that theinterest component towards the delayed payment of thetax refund would partake of the character of the'amount of due' under Section 244 A. In other words,H.E.G. Ltd. (supra) seems to suggest that there wouldbe dues on bar, refund and delayed interest. Clearly,that view has not been approved in Gujarat FluoroChemicals (supra). It was urged during the hearing thatIndia Trade Promotion Organisation (supra) has becomefinal since the revenue's appeal was withdrawn. ThisCourt is of the opinion that such detailnotwithstanding, the law declared in Gujarat FluoroChemicals (supra) is binding and permits no deviation.” 7.The learned senior standing counsel further submitted thatthe ratio laid down by the Hon'ble Supreme Court of India andthe Division Bench of the Delhi High Court squarely covers thesubstantial question of law that are raised in the presentappeal. 7.The learned senior standing counsel further submitted thatthe ratio laid down by the Hon'ble Supreme Court of India andthe Division Bench of the Delhi High Court squarely covers thesubstantial question of law that are raised in the presentappeal. 8.On a reading of the judgments of the Hon'ble Supreme Courtas well as the Division Bench of the Delhi High Court, we aresatisfied that the questions of law that are raised in thepresent appeal are covered by the said decisions. Following theratio laid down by the Apex Court and the Delhi High Court, thesubstantial questions of law are decided in favour of theappellant - Revenue and the order passed by the Income TaxAppellate Tribunal is set aside and the matter is remitted backto the Assessing Officer for fresh consideration. The AssessingOfficer is directed to decide the matter afresh, following theratio laid down by the Hon'ble Supreme Court of India in thejudgments reported in [2013] 358 ITR 291 (SC) [CIT Vs. GujaratFluoro Chemicals] and [2010] 324 ITR 331 (SC) [CIT Vs. H.E.G.Ltd.] and pass orders after giving notice to the assessee. 9.With these observations, the Tax Case Appeal standsallowed. No costs.Sd/- Assistant Registrar(CS III) //True Copy// Sub Assistant Registrar va To 1. The Income Tax Appellate Tribunal, Madras "D" Bench, Chennai. Chennai. 2.The Commissioner of Income Tax (Appeals) III, Chennai-34. Chennai-34. 3.The Assistant Commissioner of Income Tax Company Circle III(3), Chennai. +1cc to Mr.M.Swaminathan, Advocate Sr.22929 Tax Case Appeal No.1018 of 2014 br[co]srg 21/06/2021