TMI Blog2009 (3) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) TMI 2 - SUPREME COURT] squarely supports this view. The fact that the quantum of such interest might vary at a later date, because of one of the reasons mentioned in sub-section (3) of section 244A, does not affect this conclusion. Therefore, we respectfully follow the decision of the Tribunal (SB) in Avada Trading Co. P. Ltd [ 2006 (1) TMI 465 - ITAT MUMBAI] and reverse the orders of CIT(A) on this point and restore those of the both the years. The ground is accordingly, allowed. - U.B.S. BEDI, JUDICIAL MEMBER AND AHMAD FAREED, ACCOUNTANT MEMBER ORDER AHMAD FAREED, ACCOUNTANT MEMBER 1. These two appeals by the department, directed against the orders of CIT(A) dated 22.03.2007 for AY 2001-02 and 2002-03, were heard together and therefore these are being disposed off by a common order for the sake of convenience. Ground No. 1 1. The order of the Commissioner of Income Tax (Appeals) is contrary to law and facts of the case. 2. This ground is general in nature and therefore does not require adjudication. Ground No. 2 2. The learned CIT(A) erred in deleting the addition on interest Under Section 244A on the ground that the order gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore the decision of ITAT (Special Bench) was not applicable to this case. that in the case of Avada Trading Co.(P) Ltd. (supra), interest Under Section 244A was payable on tax refundable in the proceeding Under Section 143(1)(a). that attention was invited to the observation of ITAT (Special Bench) in paragraph 14 of its order that if interest granted Under Section 244A(1) was varied under Sub-section (3) of that section, then, the income on account of interest if assessed can be rectified Under Section 154. that the facts in the present case were totally different in as much as in the present case, the refund had not a reason consequent on intimation Under Section 143(1). that the observation of the Tribunal (Special Bench) that AO was not under obligation to make assessment Under Section 143(3) could make a difference from the assessee's case. that an appeal to the Tribunal with the further appeal to the High Court and the Supreme Court might take years and the intimation Under Section 154 would expire long before these proceedings are completed. that the apprehension of the assessee was taken care by the Tribunal in paragraph 14 of its order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve not reached finality, the Assessing Officer was not justified in bringing to tax the interest of Rs. 1,92,43,578, the addition therefore is deleted. This ground of appeal is Allowed. 9. The ITAT, Chennai in its order dated 14.11.1991 (supra), in the assessee's own case for AY 1984-85, decided the issue in favour of the assessee and against the department for the reasons given in paragraph 24 of its order as under. 24. We have considered the rival submissions. We find that interest under Section 244(1A) is granted in pursuance of refund made available to the assessee while giving effect to appellate orders. These orders have been contested by the department in further proceedings before higher fora. It follows that the quantum of refund has not been finally determined in the case of the assessee, for the earlier years in appeal. When the refund amount itself has not been quantified or finally determined, it follows that interest payable thereon would also be non-determinable. In other words, the amount received by the assessee during the previous year relevant to the assessment year 1984-85, though nomenclature 'interest' under Section 244(1A), is not retainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year of receipt. [Para 8] III. There was no merit in the contention of the assessee that such right was contingent as the interest so received could be varied or withdrawn after the assessment under Section 143(3). According to the dictionary meaning, a right or obligation can be said to be contingent when such right or obligation is dependent on something not yet certain. According to Section 244A, the only condition for grant of interest is that there must be a refund due to the assessee under any provision of the Act. There is no other condition in the said provision affecting such right. Therefore, the moment a refund becomes due to the assessee, an enforceable debt is created in favour of the assessee and the assessee acquires a right to receive the interest. Sub-section (3) of Section 244A only affects its quantification under certain circumstances and not the right of interest. The Supreme Court in the case of CIT v. Shri Goverdhan Ltd. [1968] 69 ITR 675 has observed that once a debt is created, then the liability cannot be said to be contingent merely because it is to be quantified at later date. Under Section 244A, even the interest is quantified immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 244A(1) is varied under Sub-section (3) of such section, then the interest originally granted would be substituted by the reduced/increased amount, as the case may be. Thus, income on account of interest if assessed can be rectified under Section 154. [Para 14]. 12. One can see very clearly that the conclusions of the Tribunal (SB) at S. Nos. (I), (II), and (III) above are applicable to all the cases where an assessee becomes entitled to a refund and to interest Under Section 244A in respect of such refund. These conclusions are based on the charging Sections 4 and 5, read with the judgment of the Supreme Court in the case of E.D.Sassoon Co. Ltd. v. CIT [1954] 26 ITR 27. There is no rider attached to these conclusions, and there is nothing in the order of the Tribunal (SB) to suggest that the above conclusions are applicable to only those cases where the refund arises as a result of an order Under Section 143(1)(a). 12.1 The Tribunal (SB) has made it very clear that according to the charging provisions of Sections 4 and 5, the income was taxable in the year in which it either accrued or was received as the case may be. 12.2 And, the issue regarding accrual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under Section 250 and 254, it cannot be said that a legal right was not acquired on the date of refund. 13. After having given their decision with regard to the taxability of interest received by the assessee Under Section 244A, the Tribunal (SB) proceeded to deal with the arguments of the learned AR with regard to the facts of that particular case. The arguments based on the facts of that particular case were discussed and dealt with by the Tribunal (SB) in their conclusions at S. Nos. (IV), (V), and (VI) above, which do not affect, in any manner whatsoever, their conclusions at S. No. (I), (II), and (III) above. 14. The plea of the learned AR that the facts in the case of Avada Trading Co. (P) Ltd. (supra) are distinguishable, and therefore, the decision of the Tribunal (SB) in that case is not applicable to the present case has no merit. There is nothing in the order of the Tribunal (SB) to suggest that the conclusions at S. No. (I), (II), and (III) above are applicable to only those cases where the refund arises as a result of an order Under Section 143(1)(a). 15. The learned AR placed heavy reliance on the decision of the Tribunal in the assessee's own case in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erse the orders of the CIT(A) on this point and restore those of the AO for both the years. The ground No. 2 is, accordingly, allowed. Ground No. 3 3. The learned CIT(A) erred in holding that allocation of administrative expenses to dividend income is not permissible unless the expenditure is incurred specifically for that purpose. 3.1 The learned CIT(A) ought to have followed the decision of the Tribunal for assessment year 1998-99 in the assessee's own case and in the case of Sundaram Finance Ltd. for the assessment year 1989-90 to 1991-92, wherein estimated disallowance @ 2% on gross dividend income has been directed. 3.2 The learned CIT(A) has failed to note that the Hon'ble ITAT has accepted that in the absence of separate books, estimated disallowance of administrative expenses is called for and in the present case the disallowance made is just about 2% of the dividend income only. 20. This ground relates to the disallowance of Rs. 1,52,022 representing proportionate administrative expenses relating to dividend income Under Section 14A of the Act. 21. We find that this issue is covered by the decision of ITAT, Mumbai (Special Bench) in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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