TMI Blog2015 (3) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... was the factual position in Sandvik Asia Ltd. v. CIT [2006 (1) TMI 55 - SUPREME Court]. In contradistinction, where the interest is paid along with the amount payable as refund, the question of payment of interest on interest does not arise. Present cases fall under this category. In the present case, the order of the CIT (Appeals) would demonstrate that he had taken into consideration that the assessee is entitled to interest for a period from January 1, 1999 to March 19, 2010 and accordingly, he granted the same. Interest on interest is not at all the subject matter of the order passed by the Assessing Officer under section 154 of the Income-tax Act on June 2, 2011. Being so, in the present case, the assessee has been granted interest under section 244A of the Income-tax Act as due to him and the calculation of the interest was not disputed by the assessee. The assessee cannot widen the scope of the provisions of section 154 by putting various debatable issues. The various case law relied on by the learned authorised representative is of no relevance in view of the latest judgment of CIT v. Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT] wherein held that it is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 1,18,092 was refunded to the assessee along with interest under section 244A with effect from January 1, 1999 to March 19, 2010. According to the Assessing Officer, interest under section 244A was eligible only from April 1, 2002 to March 19, 2010. Being so, excess interest for a period from January 1, 1999 to March, 2002 amounting to ₹ 43,070 was withdrawn vide order under section 154 dated June 2, 2011. Against this, the assessee went in appeal before the Commissioner of Income-tax (Appeals) stating that the assessee is entitled to refund and also interest on interest in view of the judgment of the apex court in the case of CIT v. Narendra Doshi [2002] 254 ITR 606 (SC) and the order of the Cochin Bench of the Tribunal in the case of Deputy CIT v. State Bank of Travancore [2007] 106 ITD 308 (Cochin). 4. On appeal, the learned Commissioner of Income-tax (Appeals) observed that there is no leviable demand pertaining to the assessment year 1990-91 and he directed the Assessing Officer to refund the amount with interest after verifying from the record that such refund has not been issued in the past. However, he observed that after the judgment of the hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 643 (SC) relates to awarding compensation for inordinate delay in paying interest on the refund amount but it did not lay down the correct law. Reconsidering the issue it is held that it is clarified that it is only that interest provided for under the Statute which may be claimed by an assessee from the revenue and no other interest on such statutory interest. 9. According to the learned authorised representative, the question referred to in the above judgment is doubting the correctness or otherwise of the two-member judgment of the apex court which is as follows (page 293 of 358 ITR) : The question which arises in this case is, whether interest is payable by the Revenue to the assessee if the aggregate of instalments of advance tax of TDS paid exceeds the assessed tax ? He submitted that it was held in Sandvik Asia Ltd.'s case [2006] 280 ITR 643 (SC) that the court considered only the issue of compensation for prejudice caused and directed to pay compensation and not interest on interest. After giving the said finding, new section 244A was brought to the notice and when this was so brought to the notice, it was only clarified that it is only th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows : Interest on refunds .- Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely :- (b) in any other case, such interest shall be calculated at the rate of one-half per cent. for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. (Clause (a) is not relevant to the facts of the case) (one and one- half per cent. was the rate before October 1, 1991). 12. According to the learned authorised representative only the amended section 244A with effect from April 1, 1989 alone is applicable to the facts of the case. This Tribunal has decided the issue in the case of Deputy CIT v. State Bank of Travancore [2007] 106 ITD 308 (Cochin) and the issue is dealt with. The said decision refers to the Board Circular, the apex court judgment in the cases of CIT v. Narendra Doshi [2002] 254 ITR 606 (SC) and Sandvik Asia Ltd. v. CIT [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee-judge Bench of the apex court affirmed the decision of the High Court where interest on interest was granted. As already noticed in paragraph supra, the Madras High Court in CIT v. Needle Industries Pvt. Ltd.'s case [1998] 233 ITR 370 (Mad), has also interpreted the phrase 'any amount' in the same manner when considering the provisions of section 244(1A) of the Act, which also uses the same phrase in the context to interest payable by the Revenue. In express terms the court held that the expression referred not only to the tax but also to interest. The court agreed with a similar view taken by the Kerala High Court in the case of CIT v. Ambat Echukutty Menon [1988] 173 ITR 581 (Ker). Both these were cases where the court was called upon to decide whether further interest was payable by the Revenue on interest which had to be repaid to the assessee. In our opinion, the appellant is entitled to interest under section 244 and/or section 244A of the Act in accordance with the terms and provisions of the said sections. 17. The three-member Bench of the apex court in the case of CIT v. H. E. G. Ltd. reported in [2010] 324 ITR 331 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x authorities, though they cannot be enforced adversely against the assessee. Normally, these circulars cannot be ignored. A circular may not override or detract from the provisions of the Act but it can seek to mitigate the rigour of a particular provisions for the benefit of the assessee in certain specified circumstances. So long as the circular is in force, it aids the uniform and proper administration and application of the provisions of the Act. 21. Further he relied on the judgment in the case of State of Tamil Nadu v. India Cements Ltd. [2011] 2 KLT (SN) 82 wherein it was held that : Circulars issued by the Revenue are binding on the Departmental authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law. 22. He relied on the three-member Bench of the Supreme Court in the case of CIT v. Kulu Valley Transport Co. P. Ltd. reported in [1970] 77 ITR 518 (SC) wherein it was held as under (headnote) : Even if two views are possible the view which is favourable to the assessee must be accepted while construing the provision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justifying reason. 27. On the other hand, the learned Departmental representative submitted that the assessee's appeal against the order under section 154 dated March 19, 2010 has been decided by the learned the Commissioner of Income-tax (Appeals) vide order dated January 23, 2014. Technically, the appeal has been partially allowed. The learned Commissioner of Income-tax (Appeals) held that there is no leviable demand pertaining to the assessment year 1990-91. The Assessing Officer was directed to refund the amount with interest after verifying from the record that such refund has not been issued in the past. The assessee's claim for interest on interest was rejected by the learned Commissioner of Income-tax (Appeals) vide order dated January 23, 2014. In this regard, the learned Commissioner of Income-tax (Appeals) placed reliance on the decision of the Larger Bench of the Supreme Court in the case of CIT v. Gujarat Fluoro Chemicals [2013] 358 ITR 291 (SC), wherein it was clarified that only that interest provided for under the statute which can be claimed by an assessee from the Revenue and no other interest on such statutory interest. On perusal of the summary of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on refund which is due to the assessee. The Assessing Officer sought to recover the excess interest of ₹ 43,017 granted to the assessee vide rectification order dated covering the period from January 1, 1999 to March, 2002. Against this, the assessee has carried the matter in appeal before the Commissioner of Income-tax (Appeals). Before the Commissioner of Income-tax (Appeals), the assessee also claimed interest on interest. The Commissioner of Income-tax (Appeals) observed that the claim of the assessee with regard to the refund of the amount with interest is justified and accordingly, he directed the Assessing Officer to refund the amount with interest after verifying from the record whether such refund has not been issued in the past. However, the claim of the assessee with regard to interest on interest was not allowed by the Commissioner of Income-tax (Appeals). Against the disallowance of interest on interest on refund, the assessee is in appeal before us. 29. We have heard both parties and perused the material on record. In this case, the assessee's claim is with regard to interest on interest on refund and the learned authorised representative placed much rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. 243. Interest on delayed refunds.-(1) If the Assessing Officer does not grant the refund- (a) in any case where the total income of the assessee does not consist solely of income from interest on securities or dividends, within three months from the end of the month in which the total income is determined under this Act, and (b) in any other case, within three months from the end of month in which the claim for refund is made under this Chapter, the Central Government shall pay the assessee simple interest at twelve per cent., per annum on the amount directed to be refunded from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund. Explanation.-If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable. (2) Where any question arises as to the period to be excluded for the purposes of calculation of interest under the provisions of this section, such question shall be determined by the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the amount of tax paid by the assessee is to be refunded if such refund becomes due as a result of any order passed in appeal or in other proceedings. Section 243 deals with interest on delayed refunds. Such an interest becomes payable if the amount is not refunded within three months from the end of the month in which the total income is determined or within three months from the end of the month in which the claim for the refund is made under that chapter. Interest payable is at 12 per cent per annum from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund. 32. No doubt, when the tax paid is more than what is due, as a result of certain additions, etc., made by the Assessing Officer and in appeal when those are deleted by the appellate authority, the refund of the excess amount is to be made along with interest, as envisaged under section 243 of the Act. It is only when this interest is not refunded that the assessee would become entitled to the interest on the said interest as well. That was the factual position in Sandvik Asia Ltd. v. CIT [2006] 280 ITR 643 (SC). In contradistinction, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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