The Motor & General Finance Ltd v. Commissioner of Income Tax

order Date of its receipts by CIT office/AO Date of appeal effect/ refund Principle amount of refund Intt. u/s. 244A Total refund ITAT"s order dt.31.05.2001 Certain issues restored to AO to be decided afresh

26.3.2003 25,62,505 2,88,489 28,50,994 CIT(A)"s order dt.

28.11.2003

28.1.2004

31.3.2004 95,95,156 19,59,445 1,15,54,601 ITAT"s order dt.3.3.2006

15.5.2006

3.8.2006 1,37,33,468 1,14,06,380 2,51,39,848 ITAT"s order dt.29.9.2006

18.12.2006

9.1.2007 57,99,446 55,50,122 1,13,49,768

3,16,90,575 1,92,04,436 5,08,95,211

Calculations of these interests are as under :- Annexure C M/s. The Motor & General Finance Ltd. A.Y. 1994-95 Calculation of interest allowed u/s 244A along with refund to the assessee

Date of payment Amount Progressive amount Period Month Rate of interest Interest payable

14.10.96 25,00,000 25,00,000

1.10.96 to

31.10.96 1% 25,000

14.11.96 25,00,000 50,00,000

1.11.96 to

30.11.96 1% 50,000

9.12.96 25,00,000 75,00,000

1.12.96 to

31.3.97 1% 3,00,000

17.3.97 30,00,000 1,30,00,000

1.4.97 to 30.5.97 2 1% 2,60,000

29.3.97 25,00,000 1,40,00,000

1.6.97 to 30.6.97 1 1% 1,40,000

9.5.97 10,00,000 1,50,00,000

1.7.97 to 31.7.97 1% 1,50,000

9.7.97 10,00,000 1,60,00,000

1.8.97 to 31.8.97 1% 1,60,000

8.8.97 10,00,000 1,70,00,000

1.9.97 to 30.9.97 1 1% 1,70,000

21.8.97 10,00,000 1,90,00,000

1.10.97 to

30.11.97 1% 3,80,000

10.10.97 10,00,000 2,00,00,000

1.12.97 to 31.5.01 42 1% 84,00,000

16.10.97 10,00,000 2,00,00,000

1.6.01 to 28.2.02

0.75% 13,50,000

26.11.97 10,00,000 3,16,90,575

1.3.02 to 31.5.02

0.75% 7,13,037

25.2.02 1,16,90,575 3,16,90,575

1.6.02 to 30.4.03 11

0.66% 23,00,735

Less: Refund already issued on

26.3.03/29.05.03 25,62,505

2,91,28,070

1.5.03 to 30.8.03

0.66% 7,68,981

2,91,28,070

1.9.03 to 28.2.04

0.50% 8,73,842

Less: Refund already issued On 31.3.04 95,95,156

1,95,32,914

1.3.04 to 30.7.06

0.50% 28,32,272 Less: Refund already issued On 3.8.06 1,37,33,468

97,99,446

1.8.06 to 31.1.07

0.5% 3,30,569

TOTAL

1,92,04,436

It is clear from the above that the assessee had been paid the refund of the amounts collected/paid within the statutorily permissible periods.

¶17On the other hand, in Sandvik Asia Ltd. (supra), only refund of excess tax had been given, but no interest on refund had been given to the assessee along with that. This interest was retained by the department for a period of 12 to 17 years in respect of various assessment orders. It was under these circumstances, the Court opined that withholding of interest was also unjustified as this had become part of the refund due to the assessee along with tax, interest on this amount was also payable.

¶18It is, thus, manifest that at both the stages, namely, while passing intimation under Section 143(1)(a) of the Act, refund along with interest under Section 244(a) was given of the excess TDS and advance tax. Again, after the orders of the Tribunal were passed and the refund became payable as a consequence thereof, the excess amount of tax was refunded along with interest payable thereupon under Section 244(a) of the Act. Thus, the calculations are not disputed, as observed by the Tribunal also.

¶19When the refund of tax becomes payable as a result of orders passed in appeal or other proceedings under the Act, this refund is to be given along with interest, which is to be calculated as per Section 244 of the Act. If that interest is paid along with the excess tax, no further payment is to be made. It is only when the excess amount of tax is refunded but the interest is not refunded along therewith, the retention of interest amount would become unjustified and interest on interest would also become payable. The reason is simple. It is the tax which was paid in excess by the assessee which became refundable. The assessee would be compensated by paying interest thereupon. It is only when the interest is not refunded along with excess tax that the withholding of the said interest becomes unjustified and it becomes an "amount due" to the assessee on which the assessee can claim further interest. Such a situation has not happened in the present case as the amount of interest is calculated and refunded along with the refundable tax amount.

¶20The Tribunal, in these circumstances, rightly held that the principle laid down in Sandvik Asia Ltd. (supra) would not apply to the present fact situation. We, therefore, answer the question of law in favour of the revenue and against the assessee and as a consequence dismiss all these appeals with costs quantified at Rs.5000/- per appeal.

(A.K. SIKRI) JUDGE

(SIDDHARTH MRIDUL) JUDGE October 30, 2009 nsk

*

IN THE HIGH COURT OF DELHI AT NEW DELHI

+

ITA Nos. 39, 27, 29, 32, 38, 31, 33, 37, 26,

28, 34, 36 and 30/2009

%

Reserved on : October 06, 2009 Pronounced on : October 30, 2009

¶1ITA Nos. 38/2009, 39/2009, 27/2009, 29/2009, 32/2009

The Motor & General Finance Ltd.

. . . Appellant

through : Mr. O.S. Bajpai, Sr. Advocate

with Mr. V.N. Jha and

Mr. B.K. Singh, Advocates

VERSUS

Commissioner of Income Tax-VI, New Delhi

. . . Respondent

through : Ms. Prem Lata Bansal, Advocate

¶2ITA Nos. 31/2009, 33/2009, 37/2009

MGF India Ltd.

. . . Appellant

through : Mr. O.S. Bajpai, Sr. Advocate

with Mr. V.N. Jha and

Mr. B.K. Singh, Advocates

VERSUS

Commissioner of Income Tax-VI, New Delhi

. . . Respondent

through : Ms. Prem Lata Bansal, Advocate

¶3ITA Nos. 26/2009, 28/2009, 34/2009, 36/2009

Goodwill (India) Ltd.

. . . Appellant

through : Mr. O.S. Bajpai, Sr. Advocate

with Mr. V.N. Jha and

Mr. B.K. Singh, Advocates VERSUS

Commissioner of Income Tax-VI, New Delhi

. . . Respondent

through : Ms. Prem Lata Bansal, Advocate

¶4ITA No. 30/2009

MGM (India) Ltd.

. . . Appellant

through : Mr. O.S. Bajpai, Sr. Advocate

with Mr. V.N. Jha and

Mr. B.K. Singh, Advocates

VERSUS

Commissioner of Income Tax-VI, New Delhi

. . . Respondent

through : Ms. Prem Lata Bansal, Advocate

CORAM :-

THE HON"BLE MR. JUSTICE A.K. SIKRI

THE HON"BLE MR. JUSTICE SIDDHARTH MRIDUL

¶1Whether Reporters of Local newspapers may be allowed to see the Judgment?

¶2To be referred to the Reporter or not?

¶3Whether the Judgment should be reported in the Digest?

A.K. SIKRI, J.

For orders, see ITA No. 35/2009.

(A.K. SIKRI) JUDGE

(SIDDHARTH MRIDUL) JUDGE October 30, 2009 nsk

Reportable * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA Nos. 35, 39, 27, 29, 32, 38, 31, 33, 37, 26, 28, 34, 36 and 30/2009 % Reserved on : October 06, 2009 Pronounced on : October 30, 2009 1. ITA Nos. 38/2009, 39/2009, 27/2009, 29/2009, 32/2009, 35/2009 The Motor & General Finance Ltd. . . . Appellant through : Mr. O.S. Bajpai, Sr. Advocate with Mr. V.N. Jha and Mr. B.K. Singh, Advocates VERSUS Commissioner of Income Tax-VI, New Delhi . . . Respondent through : Ms. Prem Lata Bansal, Advocate 2. ITA Nos. 31/2009, 33/2009, 37/2009 MGF India Ltd. . . . Appellant through : Mr. O.S. Bajpai, Sr. Advocate with Mr. V.N. Jha and Mr. B.K. Singh, Advocates VERSUS Commissioner of Income Tax-VI, New Delhi . . . Respondent through : Ms. Prem Lata Bansal, Advocate 3. ITA Nos. 26/2009, 28/2009, 34/2009, 36/2009 Goodwill (India) Ltd. . . . Appellant through : Mr. O.S. Bajpai, Sr. Advocate with Mr. V.N. Jha and Mr. B.K. Singh, Advocates VERSUS Commissioner of Income Tax-VI, New Delhi . . . Respondent through : Ms. Prem Lata Bansal, Advocate 4. ITA No. 30/2009 MGM (India) Ltd. . . . Appellant through : Mr. O.S. Bajpai, Sr. Advocate with Mr. V.N. Jha and Mr. B.K. Singh, Advocates VERSUS Commissioner of Income Tax-VI, New Delhi . . . Respondent through : Ms. Prem Lata Bansal, Advocate CORAM :- THE HON"BLE MR. JUSTICE A.K. SIKRI THE HON"BLE MR. JUSTICE SIDDHARTH MRIDUL 1. Whether Reporters of Local newspapers may be allowed to see the Judgment? 2. To be referred to the Reporter or not? 3. Whether the Judgment should be reported in the Digest? A.K. SIKRI, J. 1. These appeals are preferred by few assessees, including Motor & General Finance Ltd. and Goodwill India Ltd. The appeals also relate to different assessment years, but the question involved in all these appeals is singularly common, namely, whether on the facts and circumstances of the case the Income Tax Appellate Tribunal (hereinafter referred to as the "Tribunal") was correct in law in holding that the appellant was not entitled to the interest by way of compensation to be calculated for "every month or part of the month" on the amounts of taxes paid from the date of actual payment as provided in Section 244A(1)(b) of the Income Tax Act, 1961 (for short, the "Act") for the entire period of wrongful retention as defined in the judgment of the Supreme Court in the case of Sandvik Asia Ltd. v. Commissioner of Income Tax I, Pune & Ors., (2006) 2 SCC 508 where the entire or almost entire additions and disallowances made by the Assessing Officer (AO) stand ultimately deleted wiping out the entire or almost entire additional demand so created. In essence the assessees are claiming interest on interest by way of compensation on the premise that the interest amount was wrongfully withheld by the respondent. 2. For the sake of convenience, the synopsis and the facts as they appear in ITA No. 35/2009 are taken note of. 3. This appeal is filed by Motor & General Finance Ltd., which relates to the assessment year 1994-95. The assessee had filed its return of income tax showing a particular income. Tax payable had been paid in the form of TDS and advance tax. On the basis of income tax return filed, tax payable was less than what was already paid in the form of TDS and advance tax and, therefore, refund was claimed. An intimation under Section 143(1)(a) of the Act had been passed and refund, along with interest, under Section 254A of the Act had been issued to the assessee. It was paid within the time prescribed under the Act. Subsequently, the assessment had been completed under Section 143(3) of the Act in which various additions had been made. Demand was raised on the basis of those additions and the tax, as demanded, was paid by the assessee in instalments. The assessee, however, preferred appeal thereagainst before the Commissioner of Income Tax (Appeal). The CIT(A) deleted many additions thereby reducing the demand made in the assessment order. Even at that time, certain demands were still due