Wp(C)/17664/2013 Of Pala Marketing Co-Op. Society Ltd v. The Commissioner Of Income Tax

bp IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE FRIDAY, THE 23RD DAY OF SEPTEMBER 2016/1ST ASWINA, 1938 WP(C).No. 17664 of 2013 (G) ---------------------------- PETITIONER : ---------- PALA MARKETING CO-OP. SOCIETY LTD P.B.NO.33,PALA,KERALA, REPRESENTED BY ITS ASSISTANT SECRETARY JOSEPH THOMAS. BY ADVS.SRI.BECHU KURIAN THOMAS SRI.PAUL JACOB (P) RESPONDENTS : ----------- 1. THE COMMISSIONER OF INCOME TAX KOTTAYAM-686001. KOTTAYAM-686001. 2. JOINT COMMISSIONER OF INCOEM TAX (ASSESSMENT), SPECIAL RANGE, KOTTAYAM - 686001. KOTTAYAM - 686001. R1 & R2 BY SRI.P.K.R.MENON,SC BY SRI.JOSE JOSEPH, SC, THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23-09-2016,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ---------------------------- APPENDIX PETITIONER(S)' EXHIBITS ----------------------- P1: TRUE COPY OF THE ORDER DATED 1-8-2000 P2: TRUE COPY OF THE ORDER DATED 17-11-2006 ISSUED BY CENTRAL BOARD OF DIRECT TAXES.CENTRAL BOARD OF DIRECT TAXES. P3: TRUE COPY OF THE JUDGMENT IN WP(C) 21977/2007 AS REPORTED IN 2008 (1)KLT 589.REPORTED IN 2008 (1)KLT 589. P4: TRUE COPY OF THE ORDER OF REFUND DATED 11-2-2008 ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAXISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAX P5: TRUE COPY OF THE ORDER DATED 11-11-2008 ISSUED BY THE COMMISSIONER OF INCOME (APPEALS). THE COMMISSIONER OF INCOME (APPEALS). P6: TRUE COPY OF THE ORDER DATED 13-1-2011 IN ITA 50/COCH/2009.50/COCH/2009. P7: TRUE COPY OF THE ORDER DATED 14-3-2011 IN ITA 33/2011 ON THE FILES OF THIS HONOURABLE COURT. 33/2011 ON THE FILES OF THIS HONOURABLE COURT. P8: TRUE COPY OF THE MEMORANDUM OF REVISION PETITION FILED BEFORE THE COMMISSIONER OF INCOME TAX,KOTTAYAMDATED 3-5-2011FILED BEFORE THE COMMISSIONER OF INCOME TAX,KOTTAYAMDATED 3-5-2011 P9: TRUE COPY OF THE ORDER IN THE NO.C.NO.CIT-KTM/TECH/264/01/2011-12 DATED 25-5-2013.KTM/TECH/264/01/2011-12 DATED 25-5-2013. RESPONDENT(S)' EXHIBITS : NIL. //TRUE COPY// P.A. TO JUDGE A.M.SHAFFIQUE, J * * * * * * * * * * * * W.P.C.No.17664 of 2013 ---------------------------------------- Dated this the 23[rd] day of September 2016 J U D G M E N T This writ petition is filed challenging Ext.P9 by which theCommissioner of Income Tax by order dated 25/03/2013 rejectedan application filed under Section 264 of the Income Tax Act,1961 (hereinafter referred to as 'the Act') inter alia observingthat there was justification on the part of the authorities to haverejected the assessee's request for interest under Section 244A ofthe Act. Petitioner also sought for a direction to the respondentsto pay interest on refund as provided under Section 244A of theAct from 01/04/1997. 2.The short facts involved in the writ petition woulddisclose that the petitioner, being a Primary Co-operative Society,was assessed to income tax for the assessment year 1997-98.After the mandatory audit under Section 64 of the Kerala Co-operative Societies Act, the returns could be filed only on01/02/2000. It is stated that the Society had paid advance tax ofRs.10 lakhs and Tax Deducted at Source (TDS) amounting toRs.47,957/-. W.P.C.No.17664/2013 2.The short facts involved in the writ petition woulddisclose that the petitioner, being a Primary Co-operative Society,was assessed to income tax for the assessment year 1997-98.After the mandatory audit under Section 64 of the Kerala Co-operative Societies Act, the returns could be filed only on01/02/2000. It is stated that the Society had paid advance tax ofRs.10 lakhs and Tax Deducted at Source (TDS) amounting toRs.47,957/-. W.P.C.No.17664/2013 3.When the return was filed, the taxable income wasfound to be nil and therefore the petitioner became eligible forrefund of Rs.10,47,957/- as provided under Section 247 of the Act.Application for refund was filed before the assessing authority on01/02/2000. However, the same was rejected on the ground thatthe return was filed belatedly, in terms of Ext.P1 order dated01/08/2000. Petitioner filed an application under Section 119(2)(b) of the Act before the Central Board of Direct Taxes (CBDT)seeking condonation of delay in filing the returns, which came tobe rejected as per Ext.P2 order dated 17/11/2006. WP(C) No.21977/2007 was filed challenging Ext.P2 order. By judgmentdated 26/11/2007, this Court condoned the delay and observedthat the petitioner was entitled for refund under Section 237 ofthe Act. The assessing authority was directed to process theclaim for refund. The assessing authority passed an order dated11/02/2008 directing refund of Rs.10,47,957/- However, it wasobserved that the assessee is not entitled for interest underSection 244A. Petitioner challenged the order before theCommissioner of Income Tax (Appeals) which came to bedismissed as per Ext.P5 order dated 11/11/2008. Further, appeal was filed before the Income tax Appellate Tribunal and the matterwas remitted back to the assessing officer to consider the claimunder Section 244A(b) read with Explanation (2) of the Act byvirtue of order dated 13/01/2011 (Ext.P6). The order of remandwas challenged by the petitioner before this Court filing ITANo.33/2011 which was disposed of with an observation that thepetitioner was entitled to seek revision before the Commissionerof Income Tax, pursuant to which the petitioner filed a revisionwhich came to be rejected in terms of Ext.P9. 4.The main contention urged by the petitioner is thatonce the delay in filing the return has been condoned, it becomesa valid return and therefore grant of interest is consequential.Though there is a provision under Section 244A(2) that interestcould be denied if the delay is attributable to the assessee, oncethe return is accepted and refund is ordered, such an approach isclearly illegal. This aspect of the matter had been completelyignored while passing the impugned orders. 5.Statement has been filed on behalf of the 1[st]respondent inter alia supporting the stand taken in the matter. Itis stated that the petitioner could claim interest on the refund amount in terms of 244A(1) only if the delay in issuing refundcould not be attributable to the petitioner. It is stated that thereis delay on the part of the assessee in filing the return whichrequires to be excluded while a claim for interest has beenprocessed. It is stated that the assessee has already received therefund to the extent found eligible, as directed by the High Courtand within the time limit stipulated by the High Court in WP(C)No. 21977/2007 and therefore the petitioner is not entitled forany claim. 6.Learned counsel for the petitioner placed reliance onthe judgment in Sandvik Asia Ltd. v. Commissioner ofIncome Tax and Others[(2006) 2 SCC 508] and the judgmentin Commissioner of Income tax, Bhopal v. H.E.G.Limited[(2010) 15 SCC 349]. 7.On the other hand, the learned Standing Counsel forthe respondents relied upon the judgment in Commissioner ofIncome Tax v. Gujarat Fuoro Chemicals [(2013) 358 ITR 291(SC)] and the judgment of this Court in M.Ahammadkutty Hajiv. Chief Commissioner of Income Tax and Others[(2007)288 ITR 304 (Ker.)] W.P.C.No.17664/2013 6.Learned counsel for the petitioner placed reliance onthe judgment in Sandvik Asia Ltd. v. Commissioner ofIncome Tax and Others[(2006) 2 SCC 508] and the judgmentin Commissioner of Income tax, Bhopal v. H.E.G.Limited[(2010) 15 SCC 349]. 7.On the other hand, the learned Standing Counsel forthe respondents relied upon the judgment in Commissioner ofIncome Tax v. Gujarat Fuoro Chemicals [(2013) 358 ITR 291(SC)] and the judgment of this Court in M.Ahammadkutty Hajiv. Chief Commissioner of Income Tax and Others[(2007)288 ITR 304 (Ker.)] W.P.C.No.17664/2013 8.In Sandvik Asia Ltd. (supra), the Apex Court wasconsidering the question whether the assessee is entitled tocompensate by the Income Tax Department for the delay inpayment of the amount due. The substantial question which hadarisen for consideration was whether on a proper interpretation ofthe provisions of the Act, an assessee was entitled to becompensated for the delay in paying any amount due, even ifsuch amount comprised of interest. In fact, such a question doesnot arise for consideration in the present writ petition. However,the Apex Court held at paragraph 30 to 34 as under: “30. In our view, the Act recognises theprinciple that a person should only be taxedin accordance with law and hence whereexcess amounts of tax are collected from anassessee or any amounts are wrongfullywithheld from an assessee without authorityof law, the Revenue must compensate theassessee. 31. At the initial stage of any proceedingsunder the Act any refund will depend onwhether any tax has been paid by anassessee in excess of tax actually payable tohim and it is for this reason that Section 237 of the Act is phrased in terms of tax paid inexcess of amounts properly chargeable. It is,however, of importance to appreciate thatSection 240 of the Act, which provides forrefund by the Revenue on appeal, etc., dealswith all subsequent stages of proceedingsand therefore is phrased in terms of “anyamount” becoming due to an assessee.32. The Delhi High Court in Goodyear IndiaLtd. case held that an assessee is entitled tofurther interest under Section 244 of the Acton interest under Section 214 of the Actwhich had been withheld by the Revenue.The case of the Revenue was that interestpayable to an assessee under Section 214 ofthe Act was not a refund as defined inSection 237 of the Act and hence no interestcould be granted to the assessee underSection 244 of the Act. The Court held thatfor this purpose Section 240 of the Act wasrelevant which referred to refund of “anyamount becoming due to an assessee” andthat the said phrase would include interestand hence the assessee was entitled tofurther interest on interest wrongfullywithheld. It is also important to appreciatethat the Delhi High Court also referred to theGujarat High Court decision in D.J. Works case and read it as taking the same view.This supports the view of the appellant onthe correct reading of the Gujarat decision.33. As already noticed in the paragraphsupra, the Madras High Court in NeedleIndustries (P) Ltd. case has also interpretedthe phrase “any amount” in the samemanner when considering the provisions ofSection 244(1-A) of the Act, which also usesthe same phrase in the context of interestpayable by the Revenue. In express termsthe Court held that the expression referrednot only to the tax but also to interest. TheCourt agreed with a similar view taken bythe Kerala High Court in Ambat EchukuttyMenon. Both these were cases where theCourt was called upon to decide whetherfurther interest was payable by the Revenueon interest which had to be repaid to theassessee. 34. In our opinion, the appellant is entitledto interest under Section 244 and/or Section244-A of the Act in accordance with theterms and provisions of the said sections.The interest previously granted to it hasbeen computed up to 27-3-1981 and 31-3-1986 (under different sections of the Act)and its present claim is for compensation for periods of delay after these dates.” 9.In H.E.G.Limited (supra), the Apex Court wasconsidering the meaning of the words “any amount due” inSection 244A. It was held that interest component on TDS wouldpartake the character of “amount due” under Section 244A. Thatwas a case in which the TDS was 45,73,528/-. It is held atparagraph 5 as under: “5. In the present case, as stated above,there are two components of the tax paid bythe assessee for which the assessee wasgranted refund, namely, TDS of Rs 45,73,528and tax paid after original assessment of Rs1,71,00,320. The Department contends thatthe words “any amount” will not include theinterest which accrued to the respondent fornot refunding Rs 45,73,528 for 57 months. Wesee no merit in this argument. The interestcomponent will partake of the character of the“amount due” under Section 244-A. It becomesan integral part of Rs 45,73,528 which is notpaid for 57 months after the said amountbecame due and payable. As can be seen fromthe facts narrated above, this is the case ofshort payment by the Department and it is inthis way that the assessee claims interest under Section 244-A of the Income Tax Act.Therefore, on both the aforestated grounds, weare of the view that the assessee was entitledto interest for 57 months on Rs 45,73,528. Theprincipal amount of Rs 45,73,528 has beenpaid on 31-12-1997 but not of interest which,as stated above, partook the character of“amount due” under Section 244-A.” 10.Going by the judgments relied upon by either side, Iam of the view that the liability to pay interest on refund arisesfrom the date when claim for refund is made with all necessaryparticulars. As already indicated, Section 244A(2) imposes arestriction on payment of interest when the procedure for refundis on account of the delay attributed to the assessee. In the caseon hand, what is to be looked into is whether the delay in refundwas due to a cause attributable to the assessee. The factsinvolved in the case would disclose that the return of income forthe assessment year 1997-98 was filed only on 01/02/2000 onaccount of delay in auditing. Return was filed belatedly andthereby it was rejected. Thereafter an application was filed underSection 119(2)(b), seeking for condoning the delay in filing the return, was rejected and ultimately the matter reached this Courtwherein this Court had directed the delay to be condoned. Therecannot be two ways to look at it. Admittedly, there had beendelay on the part of the assessee which had given rise to asituation to condone the same. Delay has been condoned only forthe purpose of accepting the return. But it cannot be stated thatthe delay was not attributable to the assessee. Even if suchinstances where the delay is condoned, still when it is attributableto the assessee, there is justification on the part of theCommissioner to deny interest under Section 244A(2). Therefore,I do not find any error in the impugned orders passed by whichthe claim for interest has been rejected. The writ petition is, therefore, dismissed. (sd/-) (A.M.SHAFFIQUE, JUDGE) jsr