Wp/22862/2008 Of Areva T & D India Ltd v. Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 30.09.2019 CORAM THE HON'BLE DR.JUSTICE ANITA SUMANTH WP.No.22862 of 2008 & M.P.No.1 of 2008 AREVA T & D India LimitedRep.by its Director-Treasury & TaxationMr.L.V.Srinivasan ... Petitioner /Vs/ 1. Commissioner of Income Tax, Chennai-I, VII Floor, New Block, 121, Mahatma Gandhi Road Chennai 600034. 2. Assistant Commissioner of Income Tax Company Circle I [1], 121, Mahatma Gandhi Road Chennai 600034. .... Respondents PRAYER: PETITION filed under Article 226 of the Constitution ofIndia praying for the issuance of writ of CertiorarifiedMandamus, calling for the records on the file of the firstrespondent in C.No.217(5)/CIT-I/264/2006-07 dated 31.03.2008 andquash the same and further direct the respondents to grantinterest under Section 244A on the self assessment tax of Rs.2crores paid by the petitioner company. For Petitioner : Mr.Joseph PrabakaranAssisted by Mr.A.S.SriramanAssisted by Mr.A.S.Sriraman For Respondents : Mrs.Hema Muralikrishnan, Senior Standing Counsel O R D E R The petitioner challenges an order passed by theCommissioner of Income Tax/R1 dated 31.03.2008 rejecting therequest for grant of interest under Section 244 A of the Incometax Act 1961 (‘Act’) of an amount of Rs.2 crores paid by thepetitioner on 28.06.1996. 2. The sequence of dates and events as submitted by thepetitioner are as follows: (i) Return of income filed by the petitioner for AssessmentYear (AY) 1996-97 on 29.11.1996. The return reflected a sum ofRs.13.75 crores inclusive of advance tax of Rs.6.44 crores, TDSof 40.06 lakhs and self-assessment tax under Section 140A ofRs.2 crores, remitted on 28.06.1996. (ii) Intimation under Section 143(1) dated 27.11.1997issued charging additional tax under Section 143(1A) andinterest under Section 234C and determining the refund at a sumof Rs. 2.28 crores (approx). The intimation was served on thepetitioner on 10.12.1997 and the refund adjusted in March 1998against the 4[th] instalment of advance tax relating to assessmentyears 1998-99. (iii) Order of assessment under Section 143(3) passed on23.03.1999 raising a demand of Rs. 1.91 crores (approx). The taxdemand was collected by way of adjustment of refund due inrespect of assessment year 1997-98 by an order dated 26.03.1999.(iv) First appeal was filed challenging the order ofassessment that was partly allowed resulting in a refund thatwas adjusted in March 2002 against demands relating to variousyears. As against the order of the Commissioner of Income Tax(Appeals) partly allowing the petitioners' appeal, cross-appealswere filed before the Income Tax Appellate Tribunal(‘Tribunal’). (v) The Assessing Officer gave effect to the order of theTribunal on 03.11.2005 granting refund to the petitioner. It isthe petitioners’ case that in computing this refund, though theAssessing Officer has taken into account the payment of Rs.2crores, interest u/s 244 A had not been granted.(vi) On 13.06.2006 the petitioner filed a petition forrectification under 154 of the Act seeking interest underSection 244 A. This was rejected on 06.07.2006 as follows:....the assessee has made a payment of Rs.2 croreson 28-06-1996 i.e., much later after the close of therelevant previous year and knowing fully well itsstatutory obligation, as is evident from the return ofincome filed by the assessee. The above act on thepart of the assesee by making a payment of Rs. 2crores which was not warranted under the given set offacts and circumstances as made out from the detailsof return of income filed, it is clear that the assessee has parked its funds for reasons best knownto it, as it was not called upon to make the adhocpayment. Under these circumstances, the claim of theassessee that it must be granted interest for the saidpayment of Rs. 2 crores is not justified and hencerejected... assessee has parked its funds for reasons best knownto it, as it was not called upon to make the adhocpayment. Under these circumstances, the claim of theassessee that it must be granted interest for the saidpayment of Rs. 2 crores is not justified and hencerejected... (vii) Aggrieved with the rejection, a petition for revisionunder Section 264 was filed before the Commissioner of IncomeTax. The petitioner reiterated that the payment of Rs.2 croreswas only of the nature of self-assessment tax and was not anadhoc payment, as held by the Assessing Authority. TheCommissioner of Income Tax issued a show cause notice on08.01.2007 to the petitioner putting it to notice of hisproposal to reject the petition on the following two grounds: (a) that the issue does not arise from the order of theAssessing Officer dated 03.11.2005 and subsequent clarificationdated 06.07.2006 and (b) that interest was properly granted from the date onwhich the tax was collected, that is, from 26.03.1999, as aresult of order under Section 143(3) dated 22.03.1999. (viii) Vide reply dated 29.01.2007, the petitioner clarifiedthat the issue had no doubt, arisen as early as in 1999, butrefunds granted subsequent thereto had been adjusted againstvarious payments due from the petitioner. Placing reliance onthe judgment of the Supreme Court in the case of Sandvik AsiaLtd. Vs. Commissioner of Income Tax & Others [280 ITR 643] thepetitioner reiterated that the amount of Rs.2 crore had beenavailable with the Department since the date of the remittance,that is 28.06.1996, and hence, was eligible for interest fromdate of such remittance. 3. Notwithstanding the submissions made, the Commissionerof Income Tax passed an order dated 31.03.2008 rejecting theclaim for refund as against which the present writ petition isfiled. The Commissioner rejects the claim on three grounds- (a) that the sum of Rs.2 crores constituted an adhoc payment(b) if at all such claim for interest could have been made,it ought to have been upon receipt of intimation under Section143(1), and having not raised the same at that juncture itcannot make a claim after eight years when a consequential orderwas being passed by the Assessing Officer pursuant to an orderof the Tribunal. (c) the provisions of Section 244(A)(3) do not support thepetitioners’ case since the original computation as per theSection 143 (1) intimation could not be modified beyond theperiod of limitation. 4.The admitted position is that the return of incomereflected that the remittance of Rs.2 crores had been madeon ‘adhoc’ basis. The petitioners’ explanation in affidavitin this regard, is this. In respect of assessment year1993-94, a provision had been made by the petitioner inrespect of a Voluntary Retirement Scheme that was rejectedby the Assessing Officer, who had allowed only actualpayment. This resulted in a demand of Rs.2.17 crores forassessment year 1993-94. Since the petitioner had madesimilar claims for the later two years as well i.e. 1994-95and 1995-96, it was anticipated that the revenue would takea consistent stand in respect of disallowing the provisionfor the later years also. Thus, it was to avoid shortfallin payment of taxes and consequential levy of interest andpenalty that the amount of Rs.2 crores had been remitted,not adhoc but rather, anticipated. 5. The petitioner has relied on the following decisions insupport of its claim: (i) Rajaratna Mills Ltd. Vs. Commissioner ofIncome Tax [(2015) 64 Taxmann.com 89] (ii) Ansaldo Energia SPA Vs. Commissioner ofIncome Tax, (International Taxation), Chennai [(2016)69 taxmann.com 369](iii) Commissioner of Income Tax Vs. CholamandalamInvestment & Finance Co.Ltd. [(2008) 166 taxman 132] (iv) Commissioner of Income Tax, Bhopal Vs.H.E.G.Ltd. [(2010) 189 Taxman 335] (v) Stock holding Corporation of India Ltd. Vs.N.C.Tewari, Commissioner of Income-Tax, Mumbai City-III [(2015) 53 taxmann.com 106] 5. The petitioner has relied on the following decisions insupport of its claim: (i) Rajaratna Mills Ltd. Vs. Commissioner ofIncome Tax [(2015) 64 Taxmann.com 89] (ii) Ansaldo Energia SPA Vs. Commissioner ofIncome Tax, (International Taxation), Chennai [(2016)69 taxmann.com 369](iii) Commissioner of Income Tax Vs. CholamandalamInvestment & Finance Co.Ltd. [(2008) 166 taxman 132] (iv) Commissioner of Income Tax, Bhopal Vs.H.E.G.Ltd. [(2010) 189 Taxman 335] (v) Stock holding Corporation of India Ltd. Vs.N.C.Tewari, Commissioner of Income-Tax, Mumbai City-III [(2015) 53 taxmann.com 106] (vi) Commissioner of Income Tax-8 Vs. MelstarInformation Technologies Ltd. [(2019) 106 taxmann.com142] 6. The above decisions are distinguished by therevenue, on the ground that they deal with payment of self-assessment tax and not adhoc remittances and thus, would not beapplicable in the present case. 7. A perusal of the order of assessment for AY 1996-97, theyear in issue, reveals, at para 11, that the Assessing Authorityhas discussed the issue of allowance of claim of VRS liabilityand has disallowed the same in line with the tax treatment ofthis issue for earlier years. The apprehension of the petitionerto the effect that the provision claimed for the AY 1996-97 https://hcservices.ecourts.gov.in/hcservices/ would be disallowed is thus, not misconceived and seemsjustified. 8. I am, in the light of the facts as above, of theconsidered view that even though the remittance was styled as an‘adhoc’ remittance, the use of such nomenclature by itself,would not lead to the conclusion that the assessee had merelyparked its funds without any justification as, in the presentcase, the petitioner has effected remittances in anticipation ofliabilities of tax, interest and penalty. This apprehension ofthe petitioner is also not misconceived as the officer has alsoadopted a stand disallowing its claim, as anticipated by it.This argument of the revenue is thus rejected. 9. Yet another argument advanced by the revenue is that theclaim for interest is wholly belated and such claim, if at all,ought to have been made immediately upon receipt of theintimation under section 143(1) on 27.11.1997 and not only on13.06.2006 by way of rectification petition. The argument ofthe petitioner is that all refunds computed between the period1997 and 2005 have been adjusted towards some pending liabilityor the other and it was, for the first time, only in 2005 thatthe Assessing Officer computed and issued a refund withoutadjustment. This position has not been disputed in fact. Thus,it was only at that juncture that the petitioner claimedinterest on the amount deposited. This explanation appearsreasonable to me. In my view, the eligibility to interest inthe present case is in terms of 244A(1)(b), which governs thegrant of interest in ‘any other case’, apart from thosesituations covered under sub-clause (a) being interest onrefund of tax paid or collected at source or paid by way ofadvance tax or in terms of Section 199. I am thus of theconsidered view that a delay in putting forth a claim forinterest, especially in the light of the facts and events asnarrated above, certainly cannot be fatal to the claim itself. 10. In CIT V. Gujarat Fluro Chemicals ((2013) 358 ITR 291) athree judge Bench of the Supreme Court rendered in the contextof a refund sought under Section 244 A, explained the earlierjudgement of the Supreme Court in the case of Sandvik Asia(supra). While laying down clearly that the grant of interesthas to be strictly in terms of the applicable statutoryprovision, the Bench also observes that in a situation where thestatue does not provide for a refund, even under general law, anassessee, in appropriate cases, has to be compensated fordepreciation of capital. 10. In CIT V. Gujarat Fluro Chemicals ((2013) 358 ITR 291) athree judge Bench of the Supreme Court rendered in the contextof a refund sought under Section 244 A, explained the earlierjudgement of the Supreme Court in the case of Sandvik Asia(supra). While laying down clearly that the grant of interesthas to be strictly in terms of the applicable statutoryprovision, the Bench also observes that in a situation where thestatue does not provide for a refund, even under general law, anassessee, in appropriate cases, has to be compensated fordepreciation of capital. 11. In the present case, the petitioner has, admittedly,remitted the amount in question on 28.06.1996. I am thus of thecategoric view that it is entitled to interest in regard to thesame, as claimed, in terms of Section 244 A of the Act. 12. This writ petition is allowed. No costs. ConnectedMiscellaneous Petition is closed. Sd/-Assistant Registrar// True Copy// Sub Assistant Registrar skaTo1. Commissioner of Income Tax, Chennai-I, VII Floor, New Block, 121, Mahatma Gandhi Road Chennai 600034.2. Assistant Commissioner of Income Tax Company Circle I [1], 121, Mahatma Gandhi Road Chennai 600034. +1cc to Mr.Joseph Prabakar, Advocate, SR.No.83529.+1cc to Mr.Hema Murali Krishnan, Advocate, SR.No.83481. WP.No.22862 of 2008 & M.P.No.1 of 2008VD(CO)CSR: 17.03.2020